Although there will be no specific initiative or ballot question regarding Downtown Inc. on next month’s ballot, the future of Santa Ana’s downtown booster organization in many ways hinges on the outcome of the election.
The council this year couldn’t muster the votes to submit the tax to the Orange County Assessor’s office, so it will not show up on property tax bills for December.
For nearly two years, a group of property owners have protested the tax at council meetings. They argue that the tax is an injustice perpetrated against property and business owners who are suffering from a sluggish economy and receive no benefit from it.
Downtown Inc. leaders and the tax’s proponents say the organization is vital to the momentum of a downtown renaissance. The area — particularly an artists and restaurants hub known as Artists Village — has spiked in popularity in recent years.
But the tax is not dead. The tax district has a five-year lifespan and is in its fourth year. That means a new council could opt to renew the tax in 2013.
Dissolving the tax district altogether requires at least four council votes. Three council seats and the mayor’s seat are up for election.
If candidates who oppose the district win the three open council seats, the council will have the four votes needed to dissolve the district. Similarly if candidates who support the district capture at least two seats, the council will have enough votes to reinstate the tax.
Council members now are split 3-2 over the tax, with council members Claudia Alvarez, Sal Tinajero and Vincent Sarmiento having voted against it. Council members David Benavides and Carlos Bustamante have been consistently supportive.
Mayor Miguel Pulido and Councilwoman Michele Martinez have been prohibited from voting on the tax district because of financial conflicts of interest arising from downtown properties they own or use.
Sarmiento was thought to have had a similar conflict of interest but was recently cleared to vote by the state’s Fair Political Practices Commission.
Dismantling the tax district has been Alvarez’s signature issue, but she is termed out and will return to the council next year. Bustamante has decided not to run for reelection after being charged with a series of sex crimes. Sarmiento is running against Estela Amezcua to retain his seat.
Benavides, meanwhile, is challenging Pulido for the mayor’s seat. If Pulido wins, Benavides will retain his council seat, but if Benavides wins, the council will likely appoint someone to fill his council seat.
Sarmiento will likely win his reelection bid, but the seats belonging to Alvarez and Bustamante are up for grabs.
Council candidates who could be reached for this article held reservations about the tax.
Brett Franklin, who is running for Bustamante’s seat and is considered a top-tier candidate, said he would not support the tax again because people have been excluded from the decision-making process, part of a larger leadership problem at City Hall, he said.
Franklin also said that the way the tax was approved is unfair. Only 25 percent of property owners actually participated in the election to create the tax, and the majority of them voted against it.
“It was set up in a way that wasn’t fair or equitable to the folks involved. What it ended up doing was pitting good business against good business and created a lot of bitter feelings on all sides,” Franklin said. “I think what they need to do is start over, bring together the businesses and find a new plan that makes the majority of the businesses feel like they have a stake in what’s happening there.”
Candidate Roman Reyna, who is running for Alvarez’s seat, said that he would support the tax only if it works for everyone.
“It has to make sense for all parties involved or else we’re not going to have any success; we’re not going to move anywhere. And that’s kind of where we’re at right now,” Reyna said.
The only other candidate for Alvarez’s open seat is businesswoman Karina Onofre. She did not return calls seeking comment.
Other candidates for Bustamante’s open seat — including attorney and Planning Commissioner Eric Alderete and county manager Charles Hart — also did not return calls seeking comment.
An alternative solution to the conflict over the tax district is also possible. The two sides — anti-tax property owners and Downtown Inc. leaders — are negotiating to resolve their dispute.
What form a solution will take isn’t yet clear, and both city and Downtown Inc. officials have declined to comment to prevent “negotiating in public.”
City officials said they are considering bringing an impartial moderator into the negotiations.
Other issues remain unresolved.
Downtown Inc. still owes the city $118,000 from a city startup loan, City Manager Paul Walters said. Unless Downtown Inc. makes changes to its funding model, the organization — which had a little more than $300,000 in the bank two months ago — is likely to run out of money by the end of December, Walters said.
The city is also holding $35,000 in special downtown tax revenue until a resolution is found, Walters said.
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