After five years of legal challenges over Measure C, a 2020 ballot measure to tax hotels to fund a convention center expansion, the city was given an affirmation from the courts to move forward.
The Court of Appeal’s Fourth Appellate District in San Diego last Friday upheld a judgment that the 2020 ballot Measure C was indeed a citizens’ initiative, meaning it only needed a simple majority to pass as law.
Measure C was listed on city-written ballot materials sent to voters as needing two-thirds of votes to pass. It fell short of that threshold in 2020, earning 65.25% approval. The Court of Appeals ruling said that was plenty. According to the California Constitution, tax hikes can be approved with a simple majority.
San Diego Mayor Todd Gloria Monday applauded the appeals court ruling and reiterated his desire to get to work.
“This ruling is a win for San Diego — and for the voters who overwhelmingly said yes to this back in 2020,” Gloria said. “It finally allows us to move forward with long-overdue improvements to our convention center, stronger investments to reduce homelessness, and real dollars to fix our streets. This decision clears the way for progress that benefits everyone — our workers, our businesses, and our city’s future.”
The city said the increase to the Transient Occupancy Tax will generate around $82 million in fiscal year 2026 and about $1.04 billion in the first 10 years. The funds will be used to expand the convention center, address homelessness and support street repair.
The ballot measure increased the city’s transient occupancy tax by varying rates depending on the hotel’s distance from the San Diego Convention Center. In early May, the rates rose from 10.5% to 11.75%, 12.75% and 13.75% — the highest rate closest to the convention center.
The tax applies to anyone who stays in a property for less than 30 days, so hotels, motels, recreational vehicle parks and bed and breakfasts are all included.
According to the city, for the first five years of the increased tax, 59% of additional revenue will go towards the convention center’s improvements and operations and 41% for the city’s use in homelessness — including shelter and support programs, permanent supportive housing and associated costs.
For the next five years, the same percentage will go to the convention center, 31% to efforts to prevent homelessness and 10% to street repairs.
The mayor said the measure will first return to the San Diego City Council, which voted 6-3 to approve the measure in 2021 despite not technically meeting the as-written ballot requirements, in order to “pass a clarifying ordinance to realign timelines that were delayed during the legal process,” according to a statement from Gloria’s office.
As a result of the ruling, the city can begin securing financing for the convention center upgrades, though due to a settlement with Fifth Avenue Landing LLC, the city cannot begin any expansion until after 2026.
When the council did elect to pass the measure, some members of the majority claimed the state constitution overruled the city-written ballot material.
“Voters should be able to rely on ballot materials,” then-Council President Pro Tem Stephen Whitburn said. “But the constitutional right is more fundamental. We need to go with the state constitution and 65% of voters and say it was approved.”
The three council dissenters claimed approving the ballot measure set a bad precedent and sent a disheartening message to voters who may already be distrustful of government.
“The will of the voters must be maintained,” said then-Councilwoman Monica Montgomery Steppe, who argued the ballot language was clear. “This can breed more cynicism during a time when faith in the government is at an all- time low.”
Councilwoman Vivian Moreno also voted no on the council’s retroactive action.
“The ballot materials informed the voters that passage of Measure C required a two-thirds vote and the voters depend on that information being accurate and reliable,” she said. “Taking this action today to change the criteria for passage under which Measure C was presented to the voters is not forthright and I cannot support it.”
Councilmen Joe LaCava and Raul Campillo voted to pass the measure, but only to get a legal perspective on it. Similar such retroactive changes and eventual court decisions in Fresno, Oakland and San Francisco in the past year were cited by both sides.
“I can’t make that declaration,” LaCava, now the City Council president, said as to the legality of the council’s retroactive maneuvering. “Let the courts have the final say.”
Councilwoman Marni von Wilpert, an attorney, said last year’s council had punted on certifying the measure’s passage. She said “sufficient clarity now exists” on the issue.
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