Judge confirms Tourism Marketing District ruling, backs Mayor Filner

Door open for future legal remedy for TMD

SAN DIEGO - A San Diego Superior Court judge Friday upheld his tentative ruling that Mayor Bob Filner had discretion to not sign an operating agreement with the city's Tourism Marketing District.

Judge Timothy Taylor, however, left the door open for a future legal remedy for the TMD, depending on how things play out over the next couple of weeks.

When the City Council renewed the TMD in November, it authorized the mayor or his designee to sign an operating agreement, which releases administrative funds to the agency, according to Taylor. It did not require the mayor's signature or specify a specific document, he said.

Ex-Mayor Jerry Sanders wasn't able to sign the deal before he left office and Filner, his successor, has refused to give his blessing, calling it bad for taxpayers. He has suggested several changes, but has been rebuffed by the hotel industry.

Filner said after the hearing he's ready to return to the negotiating table.

"It's the hotel owners that have delayed that, not me," Filner said. "I asked to talk for three months -- they just kept saying 'non-starter,' 'no deal,' whatever. I hope now they talk to me."

The TMD's next hope is a new resolution scheduled to be considered by the City Council Tuesday. This one would require the mayor's signature on the original operating agreement.

The judge said if the City Council passes the new resolution and overrides a veto, and Filner still refuses to sign it, the TMD could file a new lawsuit.

"He knows he has to sign it" if the new resolution passes, the judge said.

The mayor said one shouldn't assume what the City Council will do next week. He noted after the court hearing that the new resolution had been scheduled for this week, but was never introduced.

He didn't indicate whether he would sign the original operating agreement if directed to by the City Council.

"I don't know what kind of resolution they're going to pass," Filner said. "They may adopt my counter-offered contract."

He said he will argue that his version of the agreement is best.

"Many of the council members thought many of my provisions were better," Filner said.

Filner's counter-offer to the TMD includes, among other things, stronger indemnification for the city in case a judge rules against the agency's funding mechanism, which is being challenged in a separate court action.

He also demanded that the TMD spend $6 million on the 2015 centennial celebration of Balboa Park, encourage member hotels to pay a living wage to employees, and prohibit funding to organizations that pay annual salaries above $160,000. The agency rejected the demands.

The TMD receives a 2 percent surcharge on room rates to advertise San Diego as a destination. Money also goes to organizations that stage events that attract visitors.

Tourism officials have already issued layoff notices to employees if their funding is cut off, and say a $5.4 million campaign advertising San Diego as a vacation destination for this summer has been put on hold.

Some local hotels estimate they've lost $20 million and counting because of the battle over tourism marketing dollars.

Andrew Kalfayan, a 7-year employee of the Hilton Garden Inn in Torrey Hills, said it's not just the big downtown hotels that are being hurt by the dispute.

"It all directly affects every employee," said Kalfayan. "If we don't have the occupancy, we don't have the hours."

An industry survey obtained by 10News shows that among the top 25 U.S. hotel markets, San Diego reported the largest occupancy decrease (down almost 7 percent) in just the week of March 10 alone.

"Today's leisure traveler books in a very short booking window. They look online and boom, they book," said Bob Rauch, co-owner of the Torrey Hills Hilton Garden Inn

Rauch, a board member of the TMD, said putting San Diego in front of travelers using marketing ads is what makes the difference.

"The San Diego authority spending translates to about 10 to 1," said Rauch.

That means for every dollar spent on marketing, hotels say they make up to 10 times back. So if all $30 million of marketing money in question isn't spent, that could be a loss of up to $300 million in revenue.

"Right now it's very damaging," said Rauch. "It affects the entire economy."

"If you want to help us, use the money for marketing," said Kalfayan. "Bring in the guests, bring in that booking so that we can work."

TMD lawyer Michael Colantuono said the resolution before the City Council next week is simple, and his clients hope it will pass with the six votes necessary to override a potential veto.

The lawyers in the case conceded that more litigation might be ahead. If Filner refuses to sign the document as directed in the new resolution and the TMD takes him back to court, he could appeal an adverse ruling, which would take several months to be heard.

Funds would not be released while the case is being litigated, per city policy.

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