Santa Ana Downtown Tax Likely to Expire

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A Santa Ana downtown property tax that squared property owners against each other and was criticized as part of a wider gentrification plan will probably end, as the Santa Ana City Council is unlikely to make an Aug. 10 approval deadline.

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

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

Monday’s meeting however, was Bustamante’s first appearance at a council meeting since the arrest. Bustamante called to order Monday night’s open session of the council meeting and then attended the closed session. He did not attend the regular open session of the meeting afterward.

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 antitax 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 to 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.

Since Bustamante’s arrest, the council has been unable to achieve a quorum to vote on the issue. With Bustamante and three other council members out, only council members Sal Tinajero, Claudia Alvarez and David Benavides have been able to consider the tax.

And on Monday night, Tinajero was absent, leaving only Benavides and Alvarez in the room.

To implement the tax for the next year, council members must either approve the tax at a special meeting before Aug. 10 or obtain an extension from the assessor’s office. Neither scenario is likely, Carvalho said.

Although the lack of quorum could effectively mean the end of the tax, Alvarez has been clearly upset that council members haven’t been able to vote to dissolve the tax district altogether.

Alvarez directed her ire at Carvalho, asking her repeatedly whether she has done all she can to obtain opinions from the Fair Political Practices Commission that might declare that Councilman Vincent Sarmiento and Councilwoman Michele Martinez don’t have conflicts after all.

Alvarez at one point asked whether she should call the FPPC herself to move things along.

“I would hate to have people just walk away when it’s convenient,” Alvarez said.

Carvalho replied that she has insisted to the FPPC that the city is confronted with a “very grave” and “very unusual” situation. She said she expects an FPPC opinion on Martinez by the end of August. City officials have yet to submit a request to the FPPC on behalf of Sarmiento, Carvalho said, because they are waiting for Sarmiento to confirm some facts about his business.

Martinez owns a condominium within the tax district, which probably constitutes a conflict, Carvalho said. Sarmiento’s law firm has clients within the district, which Carvalho said is likely an income conflict. And Pulido has since been definitely determined to have a conflict because of his interest in the family’s auto care shop, which borders the tax district.

“Vince has indicated that if he can participate, he would like to,” Carvalho said.

Although the tax probably won’t 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 choose not to 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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