San Diego Hotel Tax Measure C Cleared for Convention Center Expansion After Court Ruling
A five-year legal battle over Measure C, a 2020 ballot initiative to increase hotel taxes for a San Diego convention center expansion, concluded favorably for the city last Friday, paving the way for long-delayed improvements and significant investment in local priorities. The Court of Appeal’s Fourth Appellate District affirmed that the measure qualified as a citizens’ initiative, requiring only a simple majority for passage – a threshold it surpassed despite initial concerns.
The dispute centered on conflicting information presented to voters. While city-written ballot materials indicated a two-thirds vote was needed for approval, the court determined that, as a citizens’ initiative, Measure C was subject to the California Constitution’s simpler majority rule for tax increases. The measure garnered 65.25% approval in 2020, exceeding the required simple majority.
San Diego Mayor Todd Gloria hailed the ruling as a victory for the city and its residents. “This ruling is a win for San Diego – and for the voters who overwhelmingly said yes to this back in 2020,” Gloria stated. “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.”
The increased Transient Occupancy Tax is projected to generate approximately $82 million in fiscal year 2026, escalating to $1.04 billion over the first decade. These funds will be allocated to three key areas: expansion of the convention center, initiatives to address homelessness, and much-needed street repairs. The tax, which applies to stays of less than 30 days in hotels, motels, RV parks, and bed and breakfasts, currently ranges from 11.75% to 13.75%, depending on proximity to the San Diego Convention Center, having increased from rates of 10.5% to 12.75% in early May.
The allocation of funds will shift over time. For the first five years, 59% of the additional revenue will be directed towards the convention center, while 41% will support homelessness programs, including shelter, supportive housing, and related services. In the subsequent five years, the convention center will continue to receive 59%, with 31% allocated to homelessness prevention and 10% dedicated to street repairs.
The City Council will now revisit the measure to “pass a clarifying ordinance to realign timelines that were delayed during the legal process,” according to a statement from the Mayor’s office. While the ruling allows the city to begin securing financing for the convention center upgrades, a prior settlement with Fifth Avenue Landing LLC prevents any physical expansion from commencing before 2026.
The council’s initial 6-3 vote to approve the measure in 2021, despite the ballot’s stated two-thirds requirement, sparked debate. Some council members argued that the state constitution superseded the ballot language. As one former council member explained, “Voters should be able to rely on ballot materials, but the constitutional right is more fundamental. We need to go with the state constitution and 65% of voters and say it was approved.”
However, dissenting council members voiced concerns about setting a precedent that could erode voter trust. “The will of the voters must be maintained,” argued a former councilwoman. “This can breed more cynicism during a time when faith in the government is at an all-time low.” Another council member emphasized the importance of accurate ballot information, stating, “Taking this action today to change the criteria for passage…is not forthright.”
The debate mirrored similar situations in other California cities, including Fresno, Oakland, and San Francisco, where retroactive changes to ballot measures were challenged and ultimately upheld by the courts. One councilman acknowledged the uncertainty, stating, “Let the courts have the final say.”
The current City Council president noted that the previous council had delayed certifying the measure’s passage, but that “sufficient clarity now exists” on the issue. The ruling marks a significant step forward for San Diego, unlocking funding for critical infrastructure improvements and social programs, and reaffirming the power of citizen initiatives within the framework of the California Constitution.
