Cory Briggs – the left-wing San Diego litigator who works with local gadfly group CATER to fling monkey wrenches into economic development initiatives – has suffered another court room loss. At least, a tentative loss. The OTMD is funded by self-assessing hotels and promotes business and leisure travel in Ontario and Rancho Cucamonga.
Brigg’s front group, the Inland Oversight Committee (IOC), is suing the City of Ontario; Briggs/IOC claim the formation of the Ontario Tourism Marketing District (OTMD) is actually a tax and not what it is – a self-assessment by participating businesses – and must therefore be put to a vote of the people.
This news alert from Civitas Advisors provides more details:
Court Issues Favorable Tentative Ruling in Ontario TMD Case
The California Court of Appeal (Fourth Appellate District, Division Two) issued a tentative ruling in favor of the City and the TMD in the case of the Inland Oversight Committee vs. City of Ontario. It is important to note that the ruling is tentative, the Court invited oral arguments, and the ruling could be subject to change after oral arguments.
The Plaintiff in this case, the Inland Oversight Committee (IOC) challenged formation of the Ontario Tourism Marketing District (TMD), claiming that the TMD assessment is actually a tax subject to approval of the cities’ voters rather than an assessment subject to approval by the hotel payors. If the Plaintiff were to be successful, it could mean that future TMD formation and renewals would need to be approved by a vote of the electorate, rather than the payor hotels.
The Plaintiff’s claim revolves around the meaning of a portion of Article XIIIC of the California Constitution, Proposition 26. Prop 26 states that every levy by a local government is a tax that must be approved by the voters – unless it qualifies for at least one of seven exceptions. The two exceptions pertinent to TMDs are levies that provide a “specific benefit” or a “specific government service.” Unfortunately, neither of these exceptions were clearly defined in Prop 26. To create clarity around these terms, in 2013 a coalition of TMDs, CalTravel, and Civitas joined forces to work with the Legislature to draft and secure adoption of AB483, which further defined the terms “specific benefit” and “specific government service.”
The Court considered both Prop 26 and AB483. The tentative ruling states that, “the assessments are not ‘taxes’ within the meaning of article XIIIC” because they provide specific benefits and specific government services and “fall under the first and second exceptions to the definition of ‘tax’ in article XIIIC.”
In its reasoning, the Court noted that “The Legislature’s findings and declarations in enacting Assembly Bill No. 483 lend further support to our interpretation of article XIIIC as excluding District Law assessments on businesses from definition of a ‘tax’.”
Although it isn’t final yet, this well-reasoned positive ruling starts to reduce the threat posed by Prop 26. Big thanks to CalTravel, and all of the bureaus and TMDs around the state who made AB483 possible! Together, our efforts will make a difference and protect TMDs for years to come.
This is noteworthy not only because CATER ally Cory Briggs has encountered another legal defeat. Anaheim has its own counterpart to the OTMD: the Anaheim Tourism Improvement District (ATID), which markets the Anaheim Resort and will also underwrite the operation of the proposed Anaheim Rapid Connection system. If Briggs manages to turn things around and win the Ontario case, it’s possible the CATER wrecking crew will team with him again and go after the ATID in order to submarine ARC.