Ruling upholds San Diego tax to fund convention center renovation

San Diego won a legal ruling upholding a voter-approved tax the city plans to use to fund a convention center expansion.

The Fourth District Court of Appeals upheld the San Diego District Court’s ruling saying the California Constitution holds that tax hikes placed on the ballot through the initiative process can be approved by a simple majority.

The opinion, published Friday, supports Measure C, a hotel bed tax approved by voters in 2020 to fund the convention center expansion, reduce homelessness and pay for street repairs.

The challenge to the measure argued that a two-thirds supermajority was required, because that language was included in the ballot materials. The measure garnered a 65.25% majority, shy of two-thirds.

“This ruling is a win for San Diego — and for the voters who overwhelmingly said yes to this back in 2020,” San Diego Mayor Todd Gloria said in a statement.

City of San Diego

“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 Council now needs to introduce and approve a clarifying ordinance to realign timelines that were delayed during the legal process, according to the mayor’s office.

San Diego can begin securing financing for the convention center upgrades; but under a legal settlement with a nearby property developer Fifth Avenue Landing LLC, the city cannot pursue any expansion that encroaches on the company’s leasehold until after 2026.

“We have to take another look at the entire expansion program given how much has changed since the project was designed and its last cost update in 2019,” a mayor’s spokeswoman said. “The project has more or less been on ice since 2020, until last spring, when we felt sufficiently confident we could prevail and began collecting the funds and sequestering them while we awaited the ruling that finally came on Friday.”

Measure C proponents completed all the requirements of the citizen initiative process to put the measure on the ballot, as opposed to seeking City Council action.

“Nothing more was required for Measure C to be considered a bona fide citizens’ initiative that required only a simple majority vote,” said the opinion written by Associate Justice Terry B. O’Rourke.

The city began collecting the increased hotel taxes in Measure C on May 1.

The initiative stipulated 59% of the funds collected can be used for convention center expansion, modernization and operations, the spokeswoman said.

“The next step is determining how best to deploy the funds,” she said. “The convention center is studying/updating their space needs.”