OFFICE OF THE CITY ATTORNEY CITY OF SAN DIEGO JAN I.

GOLDSMITH CITY ATTORNEY

Key Legal Points February 20, 2013

What I can discuss and cannot discuss 1. The four requests (I call them requests to avoid involvement as to whether they were demands or not.) I can discuss the four requests proposed by Mayor Filner. 2. The Mayors refusal to sign the TMD contract I cannot discuss whether Mayor Filner is legally required to sign the TMD contract. That threat of litigation will be discussed in closed session on February 26. If litigation is filed, our office would handle it. Litigation strategy would be discussed and decided upon in closed session as per the Brown Act, not in a press conference. The Four Requests Of the four requests, one is clearly illegal, one is already in the TMD contract the Mayor is refusing to sign and the other two are up to the City Council and not unilaterally the Mayor. As reported by the media, the four requests made by the Mayor before he would sign the TMD contract are as follows: (1) Indemnification for the City should the hotel room levy be found illegal by the courts; (2) more money for the City Treasury; (3) a short-term marketing agreement of one or two years instead of the 39-1/2 years approved late last year by the City Council; and (4) a living-wage requirement for downtown hotels. 1. Indemnification for the City should the hotel room levy be found illegal by the courts An indemnification for the City should the hotel room levy be found illegal by the courts is already in the TMD contract Mr. Filner is refusing to sign. In addition, the TMD funds would be frozen until waivers are signed further protecting the Citys general fund. The issue of legality has been discussed in public well before the TMD was approved. Our July 27, 2012, legal opinion discussed it at the top of page 6 and suggested an alternative for consideration on page 9. a. The legality issue The Mayor claims the TMD assessment is an illegal tax. Our office and the City Council addressed this issue in public. Although the TMDs attorney strongly believes the assessment is not an illegal tax, we took the foregoing steps to protect the City in the event he is wrong. Under Californias Constitution, taxes can only be imposed if approved by voters. Fees can be imposed without a vote. The TMDs lawyers attempted to

City Attorney Key Legal Points

February 20, 2013

structure the assessment to be a fee. The standard for being a fee is very stringent under Proposition 26, approved by voters in 2010. Generally, Prop 26 states it is a fee only if the activities to be funded by the assessment are limited to benefits or services provided directly to the charged businesses and not to others who are not charged. This is a very difficult standard to meet. Comparing to water ratepayers, you pay for the water you use. That is a fee. Here, the payors are the hotels. In order to try and meet that standard, the TMD and its lawyers structured its budget to spend money only on those activities benefiting the payors. There are pending lawsuits as to whether the standard has been met. 2. More money for the City Treasury This would be illegal. It would certainly eliminate any basis for arguing that the TMD assessment is a fee. It would be like demanding from water ratepayers that the only way we will continue supplying water is if part of their payment goes to the Citys general fund. 3. A short-term marketing agreement of one or two years instead of the 39-1/2 years approved late last year by the City Council This is a policy decision for the City Council. If the term is changed, the TMD would need to be redone. 4. A living-wage requirement for downtown hotels Again, this is a policy decision for the City Council. Requests 3 and 4: Policy Decisions for the City Council The City Charter governs the roles of the Mayor, City Council and City Attorney. We have a bifurcated government. The legislative power to make policy is vested in the City Council. The Mayor is empowered to recommend measures to the City Council and he has a veto power over legislation adopted by the City Council. He cannot unilaterally impose policies, just as the City Attorney cannot impose policies. If the Mayor wants to shorten the term of the TMD or impose an increase in the minimum wage in the City of San Diego, he can submit those recommendations to the City Council. He cannot simply use his signing power to extract policy changes, just as the City Attorney cannot use his signing power to extract policy changes. Again, whether the Mayor has an obligation to sign the TMD contract is a different issue and I am not commenting upon that.

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