Tax swap bill could aid Costa Mesa
Deirdre Newman
Residents concerned about a lack of housing claim that a proposed
bill to replace a portion of cities’ sales tax with property tax is
too late to revert what they consider a downward slide in the city’s
quality of life.
Assemblyman John Campbell has coauthored a bill that would swap
out half the amount of sales tax revenue cities generate for an equal
amount of property tax revenue. The goal is to spur cities to resist
the siren song of sales tax from commercial development and build
more housing instead.
While some residents, especially those who opposed the Home Ranch
development, say the concept is a good one, they fear it won’t help
Costa Mesa, which is almost built out.
“I think it would have been nice if something like this had
occurred earlier,” former mayor Sandra Genis said. “It may save some
of the cities in the Inland Empire from committing the mistakes made
in Orange County. We’re starting to have retrofitting and
redevelopment of some areas, but Orange County has made major
commitments in some areas that are not necessarily wise.”
CITY MADE MISTAKES, RESIDENTS SAY
About 46% of the city’s general fund is derived from sales tax
while only 18% comes from property tax.
That simple statistic is what’s wrong with Costa Mesa, said Robin
Leffler, one of the staunchest opponents of Home Ranch, which will
transform about 93 acres of the Segerstrom family’s lima bean field
into a mix of development, including a 17-acre Ikea; 791,050 square
feet of office space; 252,648 square feet of industrial use and 192
homes.
“Costa Mesa has made a big mistake to go for the sales tax, not
just because of our housing imbalance, but because of what it does to
the quality of life around here,” Leffler said. “Costa Mesa’s been
oriented toward a pleasant residential neighborhood, now it’s
sublimating it to the commercial interests and that doesn’t make for
a good residential community.”
During the Home Ranch approval process, opponents involved with
Costa Mesa Citizens for Responsible Growth said the project should
include a lot more housing instead of Ikea.
“The proportion of residential is shrinking while business and
commercial use are growing exponentially,” Leffler said in October
2001.
If Campbell’s bill does become law, Genis said she hopes it would
not only increase the amount of housing, but make it more affordable
as well.
“Based on supply and demand, it should result in at least less
expensive housing, but when you have a lot of retail jobs and when
people say they are going to build offices and these are good quality
jobs, for every executive, there is somebody who will be sweeping the
floor at night and answering phones on a fairly modest salary, [so]
it really creates a demand for low-cost housing,” Genis said.
CITY PROGRESSING ON HOUSING ISSUE
According to the annual review of the 2000 general plan, the city
is making progress on meeting its share of regional housing needs.
Between 1998 and 2002, the city approved 455 residential units and
granted final permits for the construction of 210 units. It also
approved the building of six units by Habitat for Humanity for
“very-low income” households.
City leaders say Campbell’s bill will not make a huge dent in
Costa Mesa because the city is already so built out.
“Where are you going to build housing?” said Planning Commission
Chairwoman Katrina Foley. “We don’t have a lot of land left and what
type of housing?”
When the Planning Commission approved a condominium project at
1901 Newport Blvd. last month, there was an outcry that the design
was too dense for the area.
BILL WOULD NOT HAVE CHANGED PROJECT
City Manager Allan Roeder said he didn’t think Home Ranch would
have necessarily turned out any differently if Campbell’s bill were
already law because he believes land-use decisions are not based
strictly on how much income they will generate. For example, although
there was a lot of discussion about putting homes on the parcel next
to the Los Angeles Times bureau on Sunflower Avenue, they were
ultimately scrapped because of environmental concerns, Roeder said.
And if more housing and less commercial development had been
included in Home Ranch, it would have cost the city, he explained.
That’s because the cost of serving residential development is
higher than serving commercial or industrial projects because of all
the services that go with it, like parks and recreation and fire and
police services, Roeder said.
BILL CAN HELP COSTA MESA
But Roeder is a fan of Campbell’s plan.
He likes the bill because it levels the playing field to give
cities more incentive to build housing and because it will hopefully
broaden Costa Mesa’s financial base, since it relies so much on sales
tax now.
“One of the things I annually bring up with the council is the
reliance the city places on sales tax dollars,” Roeder said. “It is
the leading source of our revenue and, accordingly, we are very much
subject to the ups and downs of retail sales ... A bill such as this
could broaden that base and lend us more long-term financial
stability.”
Roeder said he has talked to Campbell and that the assemblyman is
amenable to refining some of the details of the bill. While Roeder
admitted he and other city officials from around the state are
suspicious about the legislature’s motives for the revenue swap, he
is glad someone is tackling the severe dearth of housing.
“Because housing is a real crisis statewide, it really is,” Roeder
said. “In my own personal opinion, had we not had the energy shortage
of 2000-01 and now the state budget crisis and general economic
decline, housing would be an issue of the order of magnitude of
either one of those.”
NEWPORT NEARS BUILD OUT
Newport Beach officials share the same concern that Campbell’s
bill doesn’t do a lot of good for a city that is so built out.
“There’s very little land to provide any housing on and, secondly,
we just got our senior housing project,” said Councilman John
Heffernan. “I think we worked on that for 20 years to find a piece
[of land].”
Heffernan also said the state should not mess with property tax
revenue until a property tax lawsuit that is currently in the court
system is resolved. The lawsuit could require cities to refund
millions of dollars in property taxes to homeowners. The case is
based on “recapturing,” or the raising of property assessment above
the 2% limit required by Proposition 13. Orange County Superior Court
Judge John Watson declared recapturing unconstitutional in December.
Heffernan said Newport Beach would have to give back $5.5 million
the first year and then take a hit of $3 million annually if the
class-action lawsuit is successful.
“I wouldn’t be touching any taxes until that case gets decided,”
Heffernan said.
CAMPBELL’S TAKE
Campbell said, for built out cities like Costa Mesa and Newport
Beach, the bill would only be effective in areas being rebuilt or
redeveloped.
“If you take Costa Mesa, they’re not going to build another South
Coast Plaza or another Auto Row, so they really don’t have a way to
increase their sales tax substantially,” Campbell said. “But if
property values in the city improve ... then they can get some more
revenue from [property tax].”
The assemblyman tried to assuage skepticism that cities wouldn’t
get the property tax the bill guarantees by saying the state could
just take the sales tax away and not give anything back.
Campbell said the main concern he has heard from city leaders has
been a request to make the revenue swap a constitutional amendment to
provide more security. He said he would be open to discussing the
idea.
* DEIRDRE NEWMAN covers Costa Mesa and may be reached at (949)
574-4221 or by e-mail at deirdre.newman@latimes.com.
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