Judge to review suit against BID
Calling it “an interesting legal issue,” Judge Suzanne Kingsbury plans to review in the next few days an El Dorado County Superior Court case involving a business improvement district to promote South Lake Tahoe.
Three businessmen – Dr. Patrick Martin, John Cefalu and Lou Pierini – are legally challenging the BID, alleging the city-spawned assessment is unfair and unconstitutional.
Kingsbury needed the time to review the matter, as only two cases in California deal with this statute. Thursday’s civil court action puts the matter on hold until the judge makes a ruling. It’s anticipated to come by Wednesday.
The BID was formed in February as a means for the cash-strapped city to replace marketing subsidies to the Lake Tahoe Visitors Authority and South Lake Tahoe Chamber of Commerce amounting to $753,000 in two years. Hearings over the tax assessment created a firestorm of controversy.
“And I’d like to stress this is not a ruling on the merits of the case,” she told the 20 people who gathered in the courtroom to hear oral arguments.
Kingsbury heard arguments from City Attorney Catherine DiCamillo and the plaintiffs’ attorney, Dale Sare. He filed for a preliminary injunction on July 18 to prohibit the city from collecting and distributing money on the BID. The amount is estimated at roughly $350,000 – of which the city will pay $65,000 into the coffers as a concession to lodging’s exemption in the first year.
He pointed to most businesses paying out of pocket while hotels, motels and vacation home rentals pass on their collected tax from their guests as a big sticking point.
Sare told the court if the city wants to pay lodging’s share “it should be paying it for all businesses,” he said.
Five BID board members, Cefalu included, were present to hear the judge ask DiCamillo how the city justifies the different fee formula for lodging versus the one for the other 2,607 businesses in town.
But DiCamillo, who said she anticipated Kingsbury’s delay and review, told the court the assessment that lodging operators will pay in the following fiscal year is reasonable and more lucrative for the city. Tax rolls show the $1.50 per room, per night brings in about $1.1 million annually for the local government.
“It certainly makes sense on a practical basis. They’ve been collecting it since 2003. (And) It generates a lot of money. They will end up contributing the most,” DiCamillo said.
After the proceedings, Sare said he knew it would be an uphill battle but he thinks that the judge’s review “achieves quite a lot” in terms of the plaintiffs’ case.
The city fees are due Aug. 10 – with that money collected possibly spent when its fiscal year starts in Oct. 1.
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