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Business fees survive court challenge

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A San Diego Superior Court judge has quashed a lawyer's attempt to stop the city from spending $1 million collected from businesses to fund neighborhood improvements.

"Those funds are used to promote neighborhood events such as farmers markets, street fairs and festivals, and projects including lighting, planters, banners and promotions," read a statement issued Thursday by the San Diego City Attorney's office. "Had [the attempt] been successful, such events and projects would have been jeopardized throughout the city."

Attorney Cory Briggs, who has sued municipalities throughout California over a variety of environmental and tax-related issues, had argued that the fees collected in the city's business improvement districts, or BIDs, should be considered as taxes, subject to a public vote, rather than fees.

As part of a broader suit to ban the fees entirely, Briggs asked the city to freeze the $1 million or so in assets it collected most recently from the districts.

But Judge Ronald Prager refused his request, with an opinion so strongly worded that it challenged the central notion of the entire lawsuit.

“BID assessments are not taxes for the general benefit of the City," Prager wrote on July 2. "Rather they are assessments imposed on businesses to fund activities which confer a special benefit upon the businesses assessed.”

Since Briggs' suit was based on the idea that the assessments were taxes, Prager said he could not yet see any reasonable likelihood that it would succeed.

BIDs were authorized by state law in 1994 to levy annual assessments on businesses within specific communities in order to fund neighborhood improvements, promotional activities and economic development services.

There are 18 business improvement districts in San Diego, with the largest in Pacific Beach, stretching from Interstate 5 to the shoreline and centered around the large retail hub on Garnet and Grand avenues.

Unlike taxes, the money must be spent within the specific neighborhood where it was collected, on projects that would directly or indirectly aid the local business community.

“By enacting the BID Act,” Prager said, “the California Legislature determined it was in the public interest to promote the economic revitalization and physical maintenance of business districts in the state’s cities to facilitate the creation of jobs, to attract new businesses, and to prevent erosion of the business districts throughout the state.”

City Attorney Jan Goldsmith said BIDs "are very popular in our neighborhoods. Residents of Little Italy are proud of their festivals and special neighborhood touches, for example. This decision allows BIDs to continue enhancing our neighborhoods.”

Goldsmith noted that Briggs has filed several similar suits against similar local fees, including assessments to fund the expansion of the Convention Center and promotional activities of the Tourism Marketing District.

He said Prager's decision is not necessarily a signal for what might happen in those cases because they each involve unique issues.

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