San Diego OKs steep hike in hotels’ valet parking fees, holds off on on-street dining

San Diego sharply raised fees Tuesday that hotels must pay for valet parking spots but postponed a decision on a proposed hike in the fees restaurants must pay for on-street outdoor dining areas.

City officials say the valet fee hikes are justified because San Diego loses revenue when valet spots occupy on-street space that could otherwise be a paid parking spot with a meter.

But critics, including the county lodging association and several hotels, say the increases are too steep and predict that they will worsen traffic congestion by prompting hotels to eliminate some valet spots.

The City Council approved the valet fee hikes in a 7-1 vote. But the increases the council approved are somewhat smaller than what Mayor Todd Gloria’s staff had proposed.

The hikes that staff had proposed would have generated just over $1 million in new city revenue. The revised increases are expected to generate about $780,000.

Even with the reduction, many hotels will see their annual costs for valet spots jump from less than $1,000 to more than $50,000 — depending on how many spots they now use and how many they decide to keep.

“This proposal would not only discourage valet operations, but it would simultaneously increase traffic congestion, pose safety risks and raise costs for guests — ultimately hurting tourism and local businesses that are vital to San Diego’s economy,” said Fred Tayco, executive director of the San Diego County Lodging Association.

Jeff Berg, general manager of the San Diego Marriott Gaslamp Quarter, sharply criticized the city proposal despite saying he understood the city’s motivation.

“We completely understand and appreciate the need for increased revenues for the city,” he said.

But he said the hikes were way too steep.

“That is a tremendous, unheard-of amount of money,” said Berg, calling valet spots a crucial part of his business that allow smooth guest drop-offs by cabs, charter buses and services like Uber and Lyft.

“It takes more than a moment or two to get out of the car and be greeted properly by the valet and unload your bags, especially if you have kids,” Berg said.

Councilmember Raul Campillo, who voted for the increase, still criticized it.

“We can’t simply continue to demand more and more out of residents and visitors alike without improving the experience that people are paying for,” said Campillo, noting that this new fee comes with no enhancements in service to guests.

Councilmember Sean Elo-Rivera, who cast the lone “no” vote, said the council should have stuck with the more aggressive fee hike proposed by Gloria’s staff.

“Curbs, streets and sidewalks are public spaces — assets that belong to San Diegans,” he said. “When private, for-profit businesses use those spaces to generate revenue, I think it’s fair that they contribute to the cost of maintaining and improving them.”

Councilmember Stephen Whitburn — who represents downtown, where many of the affected hotels are located — said it made sense to compromise and impose a smaller fee hike.

“This policy ensures that valet services remain possible while also enabling the city to recover the cost of lost parking revenue,” he said. “This is a thoughtful step that’s the result of quite a bit of dialogue and helps to keep downtown vibrant, supports our businesses and ensures fairness in how the public right-of-way is used.”

Annual fees for the two subsidized valet spots every hotel gets will rise from $634 to $5,000. Fees for any additional spots go from $317 to $7,500 — 25% less than the $10,000 proposed by Gloria’s staff.

In special event zones like one recently established near Petco Park, annual fees for additional spots will jump from $317 to $10,000 — one-third less than the $15,000 proposed by Gloria’s staff.

Gloria’s staff agreed to provide the council a six-month update on what impact the higher fees are having. They noted that the new fees won’t be imposed in neighborhoods without parking meters.

Council President Joe LaCava said a related proposal to increase fees on outdoor dining in on-street parking spaces was sent back to city officials for revisions, but he didn’t specify what those revisions would focus on.

Under that proposal, fees for outdoor dining would rise by nearly 32% in most neighborhoods and even more in special event zones. Also, a fee exemption would be eliminated for seating that is open to the public, instead of reserved only for restaurant customers.

Leaders of the local restaurant industry have harshly criticized the proposal, contending it would damage an industry that is already struggling.