SDOG Prepares to Sue City of San Diego for More Illegal Business Taxes and City’s Advisors for Conflicts of Interest

Today SDOG’s board voted to authorize litigation against the City of San Diego and numerous corporate advisors for violating the state’s taxation and conflict-of-interest laws. 

Several months ago, the city council hired nearly 20 private corporations to serve as advisory boards for each of the City’s business improvement districts (BIDs) for the coming fiscal year. The law requires these advisory boards to make recommendations about how BID taxes should be spent in order to maximize public benefits, not with an eye toward their own private gain. The law also requires voter approval of new tax levies (like the City’s illegal convention center tax that SDOG and Mel Shapiro successfully defeated last year).

But last week, all of the advisory boards recommended that the City give them every penny of the money to spend as they see fit, and the city council unanimously agreed. The city council did not solicit alternative proposals from any other source before levying next year’s BID taxes without a public vote and based its decision only on the advice of the private corporations recommending the money for themselves. If SDOG prevails, the tax will be declared unconstitutional and the City will have to stop collecting it until the voters approve it; the advisors could have to repay all monies they receive for the fiscal year without an offset for any tax monies they might spend during the year (even if spent in good faith while the lawsuit is pending). 

Because the City already spent the illegal BID taxes it levied and collected for FY 2013-14, today SDOG’s board also voted to dismiss a pending lawsuit challenging those taxes. The dismissal was without prejudice, meaning those legal issues may still be pursued in the future. The new lawsuit will cover the same issues and more, including the advisors’ conflicts of interest, and will be filed in the next few weeks. 


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