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August 23rd, 2010
Local Government Watch: Tax incentives for Paso Robles

Local Government Watch – San Marcos: A column
by LAMAR W. HANKINS

Whatever one’s opinion about the development of over 3,000 new homes on the south side of San Marcos at Centerpoint Road and Hunter Road, taxpayers should understand the effect of the public financing of this project, named Paso Robles.

Paso Robles’ developer, Carma Development, is asking the San Marcos City Council to approve a Tax Increment Redevelopment Zone (TIRZ), a vehicle used to finance a portion of its “private” development project at taxpayer expense. As the project is developed and taxes are collected on the new development, those taxes are set aside to reimburse the developer for the cost of the land it acquired, the cost of the infrastructure improvements (streets, sidewalks, street lights, water lines, sewer lines, drainage , etc.), the interest paid on loans it secured for the project, professional services (engineering fees, planning fees, architectural fees, legal fees, etc.), cost of development studies, and other costs allowed by discretion of the city council.

Of great interest to all citizens should be the justification for allowing this kind of public funding of a private development. Carma has yet to reveal publicly how such public financing of its private development can be justified. The justifications allowed by law are that the area must–

substantially arrest or impair the sound growth of the municipality or county creating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety, morals, or welfare in its present condition and use because of the presence of:
• a substantial number of substandard, slum, deteriorated, or deteriorating structures;
• the predominance of defective or inadequate sidewalk or street layout;
• faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
• unsanitary or unsafe conditions;
• the deterioration of site or other improvements;
• tax or special assessment delinquency exceeding the fair value of the land;
• defective or unusual conditions of title;
• conditions that endanger life or property by fire or other cause; or

No one has explained how any of these criteria affect the over 1,300 acres that is proposed to become Paso Robles. If history is any guide, the San Marcos City Council will settle on some fiction and declare this area of a few ranch houses and hill country oaks and juniper a slum area and not worry about reality, let alone honesty, in order to give Carma what it wants.

To be clear, Carma is asking for $20 million in taxpayer money to help finance a reported $700 million project. Taxpayers should not foot any of the bill for such private development. After all, the City and its taxpayers will not share in the profits of the project. If Carma claims that the infrastructure improvements will be oversized to meet future city development, it is being disingenuous at best. The city has never planned in any specifics for development this far out and has no idea what its needs for over-sizing of water and sewer lines and streets might be in the future. In fact, all of the residential development west of Hunter Road and between Wonder World Drive and Paso Robles has private, engineered septic systems, rather than city wastewater service. Some of that area is served by city water and garbage collection and some by private water, garbage collection, and non-city electric service.

The answers to these essential questions were not discussed before the Planning & Zoning Commission because it has no jurisdiction over such matters. The answers are completely within the purview of the San Marcos City Council. Carma has not released its answers to these questions. From where I sit as a taxpayer, I cannot see that this project meets any of the criteria for becoming a TIRZ.

The City Council will conduct a public hearing on the annexation of most of the Paso Robles land at a meeting on Tuesday, August 24, 6 pm, and again on August 31. A vote on the annexation will be scheduled for a later meeting, probably its meeting on September 24. When it will consider the TIRZ has not been announced, but city staff members report that consideration of the TIRZ for the Carma project will be held some time after the October 5 city council meeting.

© Local Government Watch–San Marcos, Lamar W. Hankins

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4 thoughts on “Local Government Watch: Tax incentives for Paso Robles

  1. Hey City of San Marcos, I want to build a small house for my family, what kind of help can I expect from you? OR, your help only goes to multi-million dollar developers, not us poor San Marcos citizens?

  2. Obviously the author of this editorial has a rudimentary understanding of what a TIFF or TIRZ is. To be clear and succinct, these planning tools do allow reimbursement of fees paid, but these reimbursements come DIRECTLY from the success of the development and over a period of many years (usually 20 – 25 years). Tax generated from this new development (which otherwise would not have been generated if not for the development) go back into the project. Basically, the project pays for itself, improves an area for a strong future tax base, and encourages complimentary development. TIRZ and TIFF districts are not uncommon, even in San Marcos. The author would like you to believe that the developer is robbing the city of your tax dollar. This is hardly the case. There is much more to these districts than can be covered by a 3-4 paragraph commentary.

    I suppose we now live in a political climate that frowns on any project or district with the word “tax” in the title. Get a clue, read and research for yourselves, and understand that this type of development will benefit San Marcos in the long run. Besides, in this economic climate, as most quality development has stagnated, we should be thankful that folks want to build here.

  3. Re: Fred Flintstone’s comments: Rest assured, the author understands all too well the definitions of TIF and TIRZ (particularly in light of the fact that he served as the san marcos city attorney during the 1980’s – a period of much growth and development in san marcos when similar tax reinvestment zone legislation came into being). He also knows how TIFs and TIRZs are best utilized by cities to maximize benefits for public purposes (that wouldn’t otherwise be available or affordable), not just for private gain. Where’s the public purpose here? Will there be park(s), public spaces created, office space for city/public uses, etc.?

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