Plan to Return Bed Taxes to Port Area Hits Council Snag

A longstanding effort to promote tourism in the harbor area ran into trouble Wednesday when the Los Angeles City Council balked at a proposal to return some of the area’s hotel bed tax revenues for local promotional campaigns.

Instead, lawmakers sent the proposal to a council committee for further review in a move that foretold new problems for an old idea. “I knew it would never be a slam dunk,” Harbor Councilwoman Joan Milke Flores said after the council’s action.

Debate on the matter was delayed until April 24 after Councilman Zev Yaroslavsky voiced concerns over the legality and precedent-setting nature of the proposal.

The proposal calls for 0.5% of the bed tax money collected locally to be redirected to a harbor area tourism council rather than to the city’s general fund, which each year provides about $6 million to the Greater Los Angeles Visitors and Convention Bureau.

For the last several years, increasing tourism in the harbor area has been a primary goal of the San Pedro Peninsula Chamber of Commerce and others who hope to transform the image of the waterfront and replace tax revenues that were lost with the closure of fish canneries, shipyards and other employment centers.

Toward that end, the chamber two years ago urged the city of Los Angeles to return a portion of the bed tax monies collected in San Pedro, Wilmington and Harbor City for the promotion of tourism. The plan called for 1% of the bed tax money collected locally to be redirected to a harbor area tourism council.

Initially, the proposal moved forward slowly but surely at City Hall, winning an enthusiastic endorsement a year ago from Councilman Robert Farrell and the Community and Economic Development Committee he chairs. After some fine-tuning of the proposal, Farrell’s committee recommended the full council agree to a three-year pilot program providing the harbor area with 0.5% of the funds collected locally from the bed tax.

But that proposal, endorsed by Flores, ran into trouble Wednesday when it came before the full council.

Although the proposal would have provided only an estimated $40,000 a year for tourism in the harbor area, Yaroslavsky told Flores and other lawmakers that the measure could pose some legal and political problems for the city.

“This is a tax issue,” Yaroslavsky told Flores in urging that the measure be referred to his Budget and Finance Committee for study.

The issue, Yaroslavsky explained later, was not only whether the hotel bed tax revenues could be legally redirected to specific communities, but whether doing so would prompt a rush of similar proposals in other parts of the city.

“I think it’s a bad precedent to start taking increments of tax and applying it to one area,” he said. “Philosophically, I have a problem with it . . . and it may be illegal.”

While convinced that the proposal is legally permissible, Flores acknowledged after the council session that it may be politically unpalatable to a majority of her colleagues, who will reconsider the measure at their April 24 meeting.

“I know it will probably not be approved,” she said. “There is no way I can get the council members to do something in my district that they can’t do in their own.”

At the same time, Flores said she will continue pushing the proposal in the hope that it--or a compromise--will bring tourism dollars to the harbor.

“My concern and the concern of the community has been that . . . we are not getting our money’s worth” in the promotion of tourism by the city and the visitors and convention bureau, Flores said.

“We have more city museums than any other district in the city. We have Ports O’ Call. A lot of neat things have been happening down there, and nobody knows about it,” Flores said of her district.

By the time the measure returns to the council, Flores said, she is hopeful that it can be reshaped to make it more acceptable to her colleagues. And that, she added, may largely depend on pending discussions, including one today between officials of the Visitors and Convention Bureau and representatives of the harbor area business community, including Leron Gubler, executive director of the San Pedro Peninsula chamber.

After the council’s session, Gubler said he remains optimistic that a compromise can be struck that would provide the harbor area with money for tourism at a time when its hotel bed tax receipts for the city are growing.

In the last two years, Gubler said, the addition of two new hotels in San Pedro has meant that the harbor area now generates almost $1 million annually in bed tax revenues for Los Angeles. The amount is more than twice the estimated $386,000 generated there in 1988, before the opening of the Sheraton and Compri hotels.

Moreover, Gubler said, promoting tourism in the harbor area promises some financial benefits to the city beyond the amount it would return to local communities through the bed tax proposal.

“If we raise the hotel occupancy by 10%, the city would more than recoup its money,” Gubler said. “And if it goes up more than that, the city will really have a major return on its investment.”