Omission in Santa Ana Downtown Tax Law Riles Property Owners

Facade work being done on Santa Ana's Fourth Street, where property owners are angry over an assessment tax. (Photo by: Adam Elmahrek)

Facade work being done on Santa Ana's Fourth Street, where property owners are angry over an assessment tax. (Photo by: Adam Elmahrek)

Tuesday, February 15, 2011 | The law in Santa Ana that makes it possible for the city to levy an assessment tax on downtown property owners is written almost entirely from a state law that allows for the creation of, and taxation within, property business improvement districts.

Almost.

There are a couple of important differences. The state law includes a so-called disestablishment clause that calls for a window of time where a group of property owners who pay more than 50 percent of the assessment can petition to end it. Once a city receives such a petition, the law requires it to take steps to dissolve the district.

But when Santa Ana had its law crafted -- which taxes hundreds of property owners in the downtown core -- it omitted this clause. A group of downtown property owners who are fighting the tax  say the omission shows the city's disregard for their rights.

"The way they delete our right is going back to older times," said Nina Jun, owner of owner of Coin Laundry at the corner of French street and E. Santa Ana Blvd. and spokeswoman for the group. "This is not a democratic city."

The tax covers the city's 66-block community management district and funds Downtown Inc., the organization responsible for promoting and sprucing up the city's urban core. It also pays for the area's clean and safe services, paying for security guards and cleanup workers.

The assessment district was put out to a vote by property owners for approval in 2008 and managed to pass because the city law allowed a minority of votes to push it through.

City officials say that as a charter city, Santa Ana has the right to form its own law. And Downtown Inc. President Bob Stewart said it is common practice for city's to drop the disestablishment clause from the state's model law.

"As far as I know everything has been done by the book with the city, and they've covered all their bases," Stewart said.

However, the city of Pasadena didn't omit the disestablishment clause when it adopted a law to renew a property business improvement district in Old Pasadena, according to a staff report. Neither did Folsom City, San Jose, or Fresno, according to public records from those cities.

Jun and the other property owners fighting the tax -- a group that has grown to 50 property owners -- say Downtown Inc.'s services benefit trendy restaurant-bars and other stores in an area of the downtown known as the Artists Village, but do little for smaller property owners -- especially those on the heavily Latino Fourth Street.

They've filed a petition and other complaint letters with the city and are awaiting a response from interim City Attorney Joe Straka, which Councilwoman Claudia Alvarez recently indicated could come Feb. 17. If the city stands by the assessment district, Jun said the group will file a lawsuit and has an attorney willing to take the case pro bono.

The city also rewrote the state model law in another important way that the business owners say is undemocratic.

The state law requires that those owning more than 50 percent of the area's assessed value petition in favor of creating the district -- and the accompanying tax -- before it can be established. In Santa Ana, the threshold is 30 percent.

In the subsequent election, the city was also allowed to cast a ballot in the election to establish the district because it owns property in the area. The city's property alone was worth over one third of the votes in favor of the district, according to Jun.

In the 2008 vote that passed the assessment district, 27 property owners who would be paying the tax voted for it, while 43 voted against.

"Democracy is the majority right? Well in this case, the minority prevails," said Art Lomeli, a dentist on Fourth Street and one of those fighting the tax. "We're protecting our democracy."

Clarification: A previous version of this story did not make it clear that the 30 vote threshold to establish the downtown assessment district applied to the petition to hold the election to establish the distirct, not the election itself.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek. And add your voice with a letter to the editor.

 

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