Obstinance of San Diego City Council and big hotel interests stymieing TMD deal, tourism ad campaigns.

The Bob Filner era in San Diego is only in its infancy stages, but it has certainly not disappointed in the fireworks department.  The sometimes brash yet affable new mayor has left no doubt that there’s a new sheriff in town, and the old wink-wink nudge-nudge ways of doing business Downtown have come to an end.  Filner made his disdain for the “downtown special interests” a major focal point in his campaign, and thus far he’s held true to his word.

The most recent big controversy at City Hall—until yesterday, that is—was Filner’s refusal sign, and thus finalize, a contract drafted during the Sanders administration to provide the Tourism Marketing District $30 million per year for the next 39 years, ostensibly for the purpose of promoting San Diego as a major tourism destination in various media markets around the country.  The agreement calls for levying an additional assessment on hotel guests on top of the transient occupancy tax that even San Diego City Attorney Jan Goldsmith calls legally dubious (he says it’s in a “legal gray area”).

Filner instead is asking for an alternative, one that would better protect the city’s coffers should the deal be found illegal, and require the hoteliers to pay their employees a living wage, among other things.  Which brought about an interesting question:  Is the TMD agreement covered by the city’s living wage ordinance?  In other words, does the TMD contract, by nature of it being a contract with the City of San Diego, require the hoteliers to pay their employees a living wage as defined by the San Diego Municipal Code?

The short answer to that question is no.  “The Tourism Marketing District is a separate legal entity from individual hotels.  It cannot require individual hotels to pay higher wages,” wrote Goldsmith in an email.

The answer is actually even simpler than that:  The Living Wage Ordinance (LWO), as modified in 2008, specifies the city owned venues at which the LWO applies.  If an employer contracts with the city to provide services or goods at city owned properties such as Petco Park, Qualcomm Stadium, or the Convention Center among several other sites, that employer is required by law to pay its employees a living wage, originally defined as $10 per hour, with a $2 per hour premium added if health benefits are not provided.

The LWO also mandates that the minimum required hourly wage be adjusted annually according to changes in the Consumer Price Index.  The current living wage in San Diego is $11.38, $13.38 without health benefits.

But Filner’s supporters clearly think that he’s on to something here.  “You can’t put $1 billion into an industry and have people live below the poverty line,” said Brigette Browning, president of the Unite Here Local 30, the union that represents local hotel and restaurant employees.

Back in 2005, when the LWO was first passed by the City Council, business interests cried foul, insisting that the ordinance would so damage their profitability that they would be forced to either take their business elsewhere or shut down, neither of which has happened.  In fact, the LWO has been deemed a rather stunning success.  Which begs the question:  Why not extend it to the TMD?

It could be done, but it would have to be done via separate legislation.  “If the City Council and Mayor want to require a higher wage scale, they should ask our office to review and advise them of the options to do that by way of an ordinance.  San Francisco did something along those lines,” said Goldsmith.

But thus far, neither the City Council nor the hotel interests have demonstrated any flexibility in moving in that direction.  “When given the opportunity to suggest amendments at last week’s (Feb. 25) hearing, no Councilmember offered any related to any part of the agreement,” noted a spokesperson from Council President Todd Gloria’s office in response to a query about the City Council’s willingness to consider such a path.

Which is rather telling given Gloria’s stated position on a living wage requirement:  “As the son of a former hotel maid, I strongly support the Mayor’s goal of improving compensation and conditions for workers in San Diego’s hospitality industry.  I would welcome a direct proposal from the Mayor to accomplish that aim,” he said, adding that “sabotaging the TMD’s ongoing success as an economic generator and job creator is not the appropriate means.”

It is also obvious that the hotel interests—particularly the large hotel interests—are vehemently opposed to such a requirement, despite their insistence that their workers already earn subsistence wages.  “If they already pay their employees a living wage, then why are they opposed to a living wage ordinance?” said Browning, noting the irony of an unwillingness to be required to do something the hotel owners say they already do anyway.

Requiring the hotels to pay a living wage makes sense for the San Diego economy, says Browning.  “Every major hotel is owned by corporations based out of state,” she said.  “Those profits get taken out of the San Diego economy and shipped elsewhere.  But if you put four dollars into the pockets of local workers, it has a ripple effect on the San Diego economy,” she said.  “It makes more sense to keep more money here in San Diego.”

Although the Mayor’s office has not responded to multiple inquiries for this story, for his part Filner does not seem opposed to the TMD itself, only to the way that it is implemented.  Thus there would seem to be a reasonable middle ground with obstacles that can be overcome.  Chief among them is the dubious legal status of the current TMD contract.

Should the courts rule that the TMD agreement is illegal—which could take a year or more to determine—any money spent by the TMD would have to be returned.  That money will likely come from the city’s general fund, despite Goldsmith’s adamance that the city is indemnified against such a ruling.  But once the money is spent, it’s gone.

“Who is going to pay back money that has already been spent?  The vendors who have already provided services aren’t going to refund it, and the hoteliers never agreed to be responsible for it,” said Browning.  The city, then, would ultimately be the responsible party, putting the general fund on the hook for any TMD expenditures.

“Work out a short term agreement and go from there.  That way the hotel interests get the money they’ve been demanding for their advertising campaign, and the courts will have time to sort through it,” she suggested.

The dispute would seem to be perfectly solvable, if not for a Congress-like unwillingness by one side to negotiate.  Given yesterday’s developments as reported by the Voice of San Diego’s Scott Lewis (see link above), it is clear that Mayor Filner is not going to back down any time soon.  Filner has presented a number of areas where he’s willing to compromise.  But in this case, the hotel interests and the City Council are unwilling to come to the table.

“We can be very reasonable on our side,” said Browning.  “But if you can’t sit down and have a conversation, I don’t see how a deal is ever made.”

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Andy Cohen

Andy spent 15 years working in the highest levels of the San Diego professional sports world, including both the Padres and the Chargers. He began his foray into writing while a volunteer for Francine Busby's 2010 Congressional campaign, eventually becoming a contributor to the now defunct SDNN. He has reported on local and national politics for both the OB Rag and the San Diego Free Press. When not reporting news and events, he offers political and policy commentary from a liberal perspective, occasionally turning back to his sports roots.

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