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The airport this week joined a lawsuit by two rental car companies that alleged the Port was using an illegal tax to build a parking garage as part of a major redevelopment project on Chula Vista’s waterfront, including a convention center, hotel, retail space and marinas. The airport’s involvement in the suit caused such an uproar, Assemblywoman Lorena Gonzalez scrapped a compromise bill she had settled on instead of a plan to force the airport to merge with the Port.
She pledged to re-introduce her original bill to merge the agency.
There’s been a lot of talk about the politics, but what about the actual case?
The legal issue: At issue is a $3.50 fee on rental cars on Port property. It would bring in $5 million a year and pay for a crucial $40 million garage for the Chula Vista bayfront. The rental car companies argue the fee is really a tax, and therefore needs to be approved by two-thirds of voters in the Port’s jurisdiction.
“The overwhelming majority of car rentals will not use the convention center’s parking facilities, and the overwhelming majority of cars that will use the convention center’s parking facilities will not be rental cars originating from car rental companies on Port Property,” the rental companies wrote in their lawsuit.
This is an important point because the line between a fee and a tax is in whether the person paying it actually is using the benefit it provides. If you pay to stay at a reserved site at a campground, that’s a fee. But if there was a, say, $2 fee imposed on the sale of tents to pay for campgrounds, that would be a tax.
The case will hang on interpretation of a handful of state laws passed by ballot initiative that restrict the ways in which governments can pass taxes for public purposes.
Proposition 13: Passed in 1978, Prop. 13 required that taxes dedicated to specific purposes – like parking garages – need to be approved by two-thirds of voters.
Proposition 218: Passed in 2006, Proposition 218 solidified what had already been accepted case law – that special taxes are anything that go to a specific government purpose, and that general taxes need only a simple majority to pass.
Proposition 26: Passed in 2010, Proposition 26 broadened the definition of a tax to include a bunch of things governments had considered fees. Fees are now limited to direct charges to use something – like a park entry fee – or a regulatory charge – like forcing a developer to pay for a permit.
The Airport Authority didn’t take issue with the last time the Port used a rental car fee to build a parking garage. From 1999 through 2006, the Port used the same fee – when it levied the fee for Chula Vista, it was technically reinstating it – to collect $29 million to build a parking structure near the downtown Convention Center and Petco Park.
A lot of people have pointed that out as a reason why the airport’s intervention now is so bizarre – it’s taken as evidence of discrimination against the South Bay. Why would the airport be OK with the old fee and parking garage downtown but now furious about the same fee for one in South Bay?
The airport’s case: Late Friday, the Airport Authority’s board chair, April Boling, released a statement. In it, she emphasized her and the agency’s support for the South Bay project. She also acknowledged that the fee had been in place before. But she said two things have changed:
1) the Airport Authority was created in 2003 and, as part of that creation, authority for collection of any revenue on the Airport’s leasehold was transferred to the Airport Authority and 2) In 2016, many of the rental car facilities were consolidated from other tidelands onto the Airport. Those two changes are key to our concerns about the legality of the recent fee.
She said the airport needed a seat at the table for this legal fight because it would determine the agency’s ability to collect fees.
But her statement didn’t acknowledge something in the Airport Authority’s filing: The agency also made it clear it directly objected to the fee itself.
Boling said airport and Port officials met to try to hash things out.
This post originally appeared in the Aug. 4 Politics Report.