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Legal protections for the city included in the latest Tourism Marketing District contract just hit the Tourism Authority hard.

Tourism Authority chief Joe Terzi, whose organization markets the region, told U-T San Diego he’ll be forced to lay off 40 percent of staffers next week because of a stipulation that got little attention during hoteliers’ months-long standoff with Mayor Bob Filner.

The new rule in the contract Filner signed requires hotels to submit documents that ensure the city’s day-to-day fund won’t take a hit if a judge ultimately voids the arrangement. The current deal allows hoteliers to collect a 2 percent surcharge on hotel stays, which then goes into a pot of money used for marketing efforts. Hoteliers who sign the now-required waivers promise they won’t seek refunds of those collections or forward future legal bills to the city.

We summed up the possible result here:

Hotels that don’t sign the indemnification paperwork can still tack an extra 2 percent charge on visitors’ bills. But the money they collect won’t be released to the Tourism Marketing District.

This could severely restrict the district’s budget next year.

And the Tourism Authority, which relies on district funds for much of its budget, panicked when many of the city’s hotels refused to sign on, as the U-T explained:

So far, the city’s hotelier-run Tourism Marketing District, responsible for distributing the marketing money, has only received 34 waivers out of more than 200, accounting for just 16 percent of the expected $28.5 million in revenues forecast for the 2013-14 fiscal year. For the Tourism Authority, that means an allocation of less than $4 million compared to last year’s nearly $20 million.

The Tourism Authority isn’t the only group likely to be affected by this development.

In May, the Tourism Marketing District agreed to devote $2.3 million to marketing efforts for the 2015 Centennial celebration at Balboa Park.

The new deal suggests the Tourism Marketing District board allocate 10 percent of tourism marketing funds to Centennial promotion efforts in 2014 and 2015.

If hotels continue to resist signing waivers, Centennial organizers may still receive 10 percent of cash the marketing district collects this year but they’ll likely have much less money to market their year-long event.

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Lisa Halverstadt

Lisa is a senior investigative reporter who digs into some of San Diego's biggest challenges including homelessness, city real estate debacles, the region's...

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