Council Drops TMD Stance
October 2008 | by Wayne Dernetz

In an effort to avert opposition to its proposed hotel-room tax (TOT) increase on the November 4 ballot (known as Proposition H), the City Council, on September 22, unanimously rescinded an ordinance it introduced in August that contained language referring to the possibility of a tourism marketing district (TMD). The ordinance was intended as the first step toward implementing the TOT increase, if approved by voters in November.

The controversial provision known as Subdivision D was added by the Council on August 11, three weeks after the Council voted to place the TOT measure on the ballot. Subdivision D provided that if a TMD is formed, the City Council would consider the combined effect of both the TOT and the TMD room assessments on the competitiveness of Del Mar room charges when it adjusts the TOT rate. The City Council added Subdivision D in an effort to address concerns of hotel owners worried that the TOT proposal would forestall their efforts to study the TMD proposal introduced during the City Council budget deliberations.  

After the August 11 meeting, a group of five former council members filed a ballot argument opposing the TOT measure. Their ballot argument, which will be included with voter materials for the November election, accuses the City Council of “a last minute sleight-of-hand” and of conceding as much as $300,000 annually in TOT revenues to the hotel owners. [But see Letter to the Editor on page 5, ed.]

In response to the opposition’s assertions, City Council members at their September 8 meeting retorted that the Subdivision D provision and the Council’s intentions were misunderstood by the opposition group. 

On September 22, prior to rescinding the ordinance, Councilor Crystal Crawford said, “I regret that the misinterpretation of our intentions has caused anxiety, distress and dismay.” “I prefer we go back to the way things were,” she added. 

Councilor Carl Hilliard asserted that “the opposition group’s premise, that the City Council has committed TOT funds to the TMD without considering the City’s other pressing needs, is incorrect.” He added that “nothing in Subdivision D prevents the City Council from raising TOT up to the full amount the voters approve, even if there is a TMD.” 

Councilor Richard Earnest said, “Our error was in not fully explaining the process of the TMD to the community in the first place; we were acting under time pressure to get Proposition H on the ballot.”