Tuesday, June 14, 2011 | Downtown Inc., which is responsible for promoting and sprucing up Santa Ana’s downtown core, has proposed a significant reduction in the area it serves, a move the organization’s executive director said will mean more focus on Fourth Street and Artists Village.

However, some members of a group of property owners who are fighting the tax that funds Downtown Inc., say they are suspicious that the new boundary proposal is part of an attempt by the organization’s leaders to break up their coalition.

The current boundary lines run as far as Flower Street and Civic Center Drive to the west and north, to Walnut Street and French Street to the south and east. The whole district includes some 282 plots and 102 individual property owners.

The new proposed boundaries carve out much of the Civic Center properties and some properties on the fringes. Ross Street and Santa Ana Boulevard would be the farthest western and northern borders. It’s unclear how many property owners would be removed from the new district, but dozens of plots would be cut out.

“They’re twisting and turning this thing to try and get us [the tax opponents] to dissolve,” said Herb Rose, owner of LaBell Exchange and one of the more vocal property owners. Rose would be exempted from paying the tax under the new boundaries, but he vowed that the nearly 60 property owners seeking to end the tax district will continue to pursue that goal. “We’re not going to dissolve,” he said.

A battle over the special property tax first erupted last December when 34 property owners signed a petition requesting an end to the assessment district. Since then, the number of property owners against the tax has grown to nearly 60.

Anti-tax property owners maintain that the district was created illegally. Marco Li Mandri, a consultant specializing in such districts, said that while not illegal, the district’s formation process appears to have been manipulated.

One major problem, the consultant said, was the city’s participation in the election. The vote was tallied according to the amount each property owner would pay under the district, essentially one vote per dollar. Since the city was the swing vote, having 38 percent of the votes, it shouldn’t have voted, said property business improvement district consultant Marco Li Mandri.

Members of the group also argue that they receive little benefit from Downtown Inc.’s services, which, they say, is geared toward promoting the restaurants at Artists Village on Broadway.

Even Mayor Miguel Pulido’s brother, Jose Pulido, opposes the tax. He says the family’s auto care shop receives no benefit for the taxes paid. The shop would be outside the proposed new borders.

Jose Pulido reacted to news of the Downtown Inc. proposal with skepticism and said that other property owners still within the new boundaries shouldn’t have to keep paying.

“What about everybody else? That’s not fair,” Jose said. “I think it’s still a mess, I don’t like the way it’s going at all.”

Downtown Inc. Board of Directors President Ryan Chase — a partner in the group that owns much of Fourth Street’s Fiesta Marketplace — would say only that it’s a “complicated issue with a lot of factors.”

Downtown Inc. Executive Director Vicky Baxter said the boundaries were redefined to “focus on the core of the downtown.”

The new boundaries would also mean an approximate $220,000 reduction in the organization’s annual revenue, Baxter said. It’s a substantial loss, considering the current district boundaries provided nearly $900,000 in revenue for a recent fiscal year, according to Downtown Inc. financial review documents.

Baxter said the hope is to make up the lost revenue through future sponsorship of downtown events.

City Council members were updated on the situation in a closed meeting last week.

Council members Michele Martinez and Sal Tinajero said that while they haven’t examined the proposal in detail, they hope it leads to settlement of the dispute.

“When it’s all said and done, it’s up to us,” Martinez acknowledged. “If we can make 90 percent of the people happy, that’s progress.”

Tinajero said he wanted to see whether the weight of the city vote would be needed to pass the district under the new boundaries. But the proposal is a move “in the right direction,” and if the anti-tax property owners aren’t willing to compromise, “at that point it makes them look like the bad guys,” he said.

Rose, meanwhile, says members of the group are continuing to pool money for a lawsuit against the city. Rose maintains that the group’s gripe is not with Downtown Inc. bureaucrats but with the City Council for approving the district.

“I don’t feel that Vicky Baxter is victimizing us,” Rose said. “I feel that the City Council is victimizing us.”

Rose is also incensed that council members haven’t put the assessment district on a council meeting agenda for discussion, despite public statements from Tinajero that it would be.

“It’s just a whole messed up affair,” Rose said, “and to me the city is being driven by Downtown Inc. and Irv Chase,” who is a Downtown Inc. board member, managing partner of Fiesta Marketplace Partners, and Ryan Chase’s father.

“And yes, we are going to sue them. We have an attorney working on it,” Rose said.

The city is attempting to gather the parties to discuss the proposal. A meeting was proposed for Friday with representatives of Downtown Inc., anti-tax representatives, the city and a facilitator from the Orange County Human Relations Commission.

A previous version of this story misspelled the name of the business LaBell Exchange. We regret the error.

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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