Downtown Promotion Tax Receives Stay of Execution

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The special downtown Santa Ana property tax that funds a controversial booster organization has received a stay of execution, as Orange County officials granted a deadline extension for the City Council to approve a required submission for next year’s property tax roll.

According to city Public Information Officer Jose Gonzalez, the extension gives council members until Aug. 31 to approve the tax. If it is not approved, the tax won’t appear on property owners’ December tax bills.

“It does look like we still have a few days of cushion left,” Gonzalez said.

However, it still seems unlikely that the City Council will vote to continue the levy.

At least three council members most likely have conflicts of interest and cannot vote on the tax. And Councilman Carlos Bustamante has not been present for a vote since his July 2 arrest on multiple felony sex charges.

That leaves only three council members to vote, not enough to constitute a quorum.

Nonethess, City Attorney Sonia Carvalho has requested opinions from the Fair Political Practices Commission as to whether council members Michele Martinez and Vincent Sarmiento may cast votes on the matter. Carvalho says Mayor Miguel Pulido definitely has a conflict of interest because of his family’s auto care shop.

Carvalho said she expects an opinion on Martinez’s case “any day.” Martinez leases a condominium within the tax district’s borders, which could be a conflict because council members may not vote on any issue within 500 feet of a property that a council member owns or leases, according to Carvalho.

But even if Martinez is allowed to vote, the tax likely won’t pass. Council members Sal Tinajero and Claudia Alvarez have stated their intentions to dismantle the district. A 2-2 vote doesn’t muster the majority necessary to approve the levy.

To pass the tax, Martinez and Sarmiento would both have to be cleared by the FPPC and cast votes in favor of the district.

Revenue from the tax, which sometimes doubled or even tripled property tax bills, is used to fund Downtown Inc., the organization that promotes, secures and cleans the city’s downtown core. That revenue is estimated at between $720,000 and $740,000 annually, according to City Attorney Sonia Carvalho.

The booster organization has been under fire since late 2010, when anti-tax property owners circulated a petition demanding an end to the tax. Nearly 60 property owners at one time had signed the petition, including Mayor Miguel Pulido’s brother Jose Pulido, who runs the family’s auto care shop on First Street.

Opponents — mostly small-business owners — argue that the tax has been an insufferable burden while a slow economic recovery takes its toll on cash registers. They also argued that Downtown Inc. only benefited the restaurants and bars of the popular Artists Village and not the mom-and-pop Latino businesses that have existed in the downtown for decades.

Supporters, meanwhile, say the organization is instrumental in transforming the downtown core into a vibrant commercial center. Some, like Irving Chase, whose family owns parts of the heavily Latino Fourth Street, say that a much greater economic calamity awaits the downtown should the booster organization and plans to diversify the urban core fail.

Although the tax might not be levied for a year, it’s possible that the council could approve the tax in 2013, the last year of the district’s five-year lifespan, Carvalho said. If council members do not extend the district, then it dissolves, she said.

But that doesn’t mean Downtown Inc. dies with the tax. Those property owners who want to continue the organization can fund it by other means, Carvalho said.

— ADAM ELMAHREK

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