Council Approves Bed-Tax Increase : 1% Levy to Benefit Arts Groups, Mission Bay, Balboa Park

With District 4 Councilman Wes Pratt casting a crucial fifth vote, the San Diego City Council on Thursday agreed to raise the tax on local hotel rooms from 7% to 8%, effective Aug. 1.

City and hotel industry officials also have informally agreed to raise the transient occupancy tax to 9% after the city’s new convention center opens in 1989, but that measure was not formally approved Thursday. A committee of city, arts and tourist-industry officials to be appointed by Mayor Maureen O’Connor will make recommendations on the timing of the second increase.

The actions came as the council approved plans to spend $22.3 million in hotel taxes on arts groups, museums, tourism and promotion projects in fiscal 1989.

In a separate action, the council tentatively altered a $24-million improvement plan for Mission Bay Park, adopting a schedule to spend the money in varying amounts over six years, instead of $6 million annually for four years.

For 1989, the council funded $4.36 million in renovations for the park and redistributed the remaining $1.64 million for projects in other parts of the city.

A $6-million annual expenditure for Mission Bay Park, promised as a going-away gift from the previous City Council to outgoing District 6 Councilman Mike Gotch last November, would have meant spending all of the city’s discretionary capital improvement money on the park. The new plan was recommended by an oversight committee appointed by new District 6 Councilman Bruce Henderson.

Thursday’s 5-3 vote on the hotel room tax was a victory for O’Connor, who had fought for the 2-year tax-increase plan to raise revenue for arts groups, improve Balboa and Mission Bay parks and develop a city protocol office without forcing the city’s hotel industry to bear a 2-cent-per-dollar increase in one year.

Each penny of increase in the tax is worth an estimated $3 million in revenue to the city.

The council deadlocked on the mayor’s initiative in two 4-4 votes Monday. With Pratt home sick, council members Bruce Henderson, Ed Struiksma, Judy McCarty and Bob Filner voted for a proposal made by Henderson to approve a 2-cent increase this year.

Henderson’s plan would have gradually raised the tax to 12 cents by 1995, using the revenue to pay off bonds that would give the city $850 million over 30 years. But his proposal never came up for a vote Thursday, as Pratt sided with council members Abbe Wolfsheimer, Ron Roberts, Gloria McColl and O’Connor to approve the mayor’s plan.

Henderson, Struiksma and McCarty opposed the idea. Filner was absent from the meeting to attend 25th reunion of his class at Cornell University.

Pratt said he voted for the 1-cent increase because it was “more reasonable at this time.

“I looked at both proposals. The 1-cent proposal is more reasonable in light of circumstances facing the tourist industry,” Pratt said.

Ted Kissane, president of the San Diego County Hotel-Motel Assn., said the construction of about 3,000 new hotel rooms during the last 18 months in anticipation of the opening of the convention center has led to an approximately 4% decline in the occupancy rate at many hotels this year.

Citing those statistics, the association had lobbied for no increase in the room tax when O’Connor talked of a 2% increase earlier this year. Later, the association agreed to a compromise at 1%.

“I think that’s a very fair compromise from our original position,” Kissane said.

The council devoted $967,000 of the increase to three projects, and assigned O’Connor’s committee to report to the council in September for suggestions on spending the remaining revenue. The suggestions must be limited to arts, culture and tourism projects.