City Council to decide the fate of the Downtown PBID tax tonight

July 4 falls on a Wednesday this year but there will be fireworks early this week, at Monday night’s Santa Ana City Council meeting, on July 2, at 5 pm, as Council Member Sal Tinajero and Mayor Pro Tem Claudia Alvarez have placed an 85 A item on the City Council agenda to disestablish the Downtown Santa Ana property tax – the PBID.

Here is the 85 A PBID agenda item:

ADDRESS PROPERTY AND BUSINESS IMPROVEMENT DISTRICT (“PBID”) ISSUES AND CONCERNS INCLUDING BUT NOT LIMITED TO PROCESS FOR DISESTABLISHMENT, AMENDING RESOLUTION TO ADD PROCESS FOR DISESTABLISHMENT BY PROPERTY OWNERS, HOLDING ADVISORY ELECTION, AND SETTING PUBLIC HEARING FOR DISESTABLISHMENT – Mayor Pro Tem Alvarez and Councilmember Tinajero.  Continued from the August 24, September 19, October 3, and October 17, and November 7, 2011 City Council meetings.

Before this item could even be considered by the public or by the City Council, supporters of Downtown, Inc., the non-profit that administers the property tax money that funds the PBID sent email messages to the City Clerk, that are included in the Council agenda, as an addendum.  For some reason the Downtown, Inc. supporters keep referring to slanderous emails in their missives to the City Clerk.  Surely they must know that the Orange County Grand Jury recently slammed the PBID, the City of Santa Ana and Downtown, Inc. for what they have until now gotten away with regarding the PBID? 

Click here to read the Orange County Grand Jury’s PBID report for yourself.  Here are a few excerpts:

• After a preliminary investigation, it appeared that certain irregularities took place regarding the election process that established the district. It was also alleged that a sufficient number of property owners within the district objected to the process and have sought relief through a petition to “disestablish” the district and filed a petition to do so with their elected representatives on the Santa Ana City Council. This petition has been repeatedly re-calendared by the Santa Ana City Council without making any definitive decisions as to the substance of the petition. These actions or lack thereof, have prevented these petitioners from receiving their rightful consideration.
• By 2006 and 2007, actions by the city and the developers were perceived as efforts to “gentrify” the downtown area in what one newspaper reporter referred to as an “obvious effort to replace the city’s Mexican themed atmosphere with something more in keeping with a yuppie clientele.” Additional planning proposals included efforts to change the housing and business identities of the downtown area with the addition of new apartment and condominium projects. Some citizens saw this as a “Forced Gentrification Plan” along with other descriptions such as the “Remove the Poor Mexicans from Downtown Santa Ana Plan.”
• But in 2008, the City of Santa Ana initiated a program that offered financial rebates to the business owners in the downtown area to improve the facades of their buildings. The “Fourth Street Façade Program” allocated one million, two hundred and fifty thousand dollars ($1,250,000) for improvements to building fronts with a supposed limitation of $75,000 per storefront. However, for various reasons, the money went to only three (3) property owners: CM Theater LP (West End Theatre)……………….……. $ 63,814.77; Gumm & Livingston Investments (Pacific Building)…… $110,191.00; Fiesta Marketplace Partners (S & A Properties)………… $765,000.00.  The vast majority of these rebate dollars went to the same property owners/developers who comprised the majority interest in the “Fiesta Marketplace” entity, i.e. those developers who were the primary interests in changing the culture of the area. These same property owners/developers have, and continue to have, extensive connections to the newly formed non-profit business group called Downtown, Inc. As of this writing, these developers presently serve as the officers and directors of Downtown Inc., the entity the City of Santa Ana chose to manage the proceeds from the special assessment.
• On July 7, 2008, the City of Santa Ana City Council added Article XX to Chapter 13 of the Municipal Code allowing for the establishment of CMDs. This ordinance differs significantly from state law in that the ordinance set “pre-formation petitioning” at 30% of the proposed district value while the state normally required 50%. Also, the life span of the CMD was set for 10 years while state law limits the life span to five years, with renewals of 10 year periods.

Now get this – after the City of Santa Ana mailed out PBID ballots only 107 of 421 that were mailed were returned.  That means only 25% of the ballots were returned!  “A cursory review of this tabulation shows that a minority (27) of the “in support” votes controlled a majority of the total assessed value. This became a critical issue as the district became operational.” 

“It is also alleged that the City of Santa Ana voted its interest in the formation process in violation of the proper procedures established by law and that their vote constituted 38% of the votes needed to establish the district. The results have caused, on average, a doubling of the financial burdens on the respective properties.”

What does all this boil down to?  The O.C. Grand Jury nailed it in this paragraph of their report, “The 66-block special assessment district includes 312 property owners and approximately 800 businesses. Property owners have been ordered to pay assessment fees for extra security, marketing and promotional events in the immediate area. A considerable portion of these expenses are related to the “newer” businesses such as restaurants and nightclubs.”

It is clear as day.  The PBID was illegally formed in an election that the City of Santa Ana did not market or explain well.  The property owners have seen their financial burden double while only a select few have profited from this scam.  This is a serious legal problem for the City of Santa Ana – and because Mayor Pro Tem Alvarez works for the O.C. District Attorney, this matter is going to end up being prosecuted by the State Attorney General’s office.

The Santa Ana City Council has a chance this Monday to put this mess right by voting to disestablish the PBID.  Mayor Miguel Pulido and Council Member Vince Sarmiento cannot vote due to conflicts of interest.  Mayor Pro Tem Alvarez and Council Member Tinajero are likely set to vote to disestablish the PBID.  But they need two more votes.  That means we need to contact Council Members David Benavides, Michele Martinez and Carlos Bustamante. 

Benavides saw for himself what the Downtown, Inc. crowd is all about when his church, the Newsong Church of Irvine, sought recently to buy the Santora Building.  The attacks from this bunch bordered on racism and were blatantly anti-Christian.  Newsong has since backed out of the deal.  Benavides needs to do the right thing and vote for the people of our city, including our small business owners.  Click here to email Benavides.

Martinez got some tepid support from some elements in Downtown Santa Ana when she ran for the 69th Assembly District, but she did poorly in that race, even here in Santa Ana.  She will have to run for reelection to the Santa Ana City Council.  She has a chance now to show that she is with us.  Voting to keep the PBID going will be a slap to the face of our residents and small business owners.  Click here to email Martinez.

I don’t think that contacting Bustamante is worth it, as he is and has been pro PBID.  But you may click here to email him too.

It is wrong to tax our small businesses and property owners in Downtown Santa Ana just so a select few can play with their money.  Whether or not Downtown, Inc. has been effective is not the point.  Former Santa Ana City Manager Dave Ream and the City Council set up a rigged election for the PBID and gamed the system.  It is up to our Santa Ana City Council now to set right this mess.  This Monday night they simply must vote to disestablish the PBID.  The voters will be watching.  So will the California State Attorney General.  If the Santa Ana City Council punts this issue, the City could be held liable later and the eventual legal cost could be frightening for a city that already has enough financial problems.