City of SLO should not be voting on downtown property tax


Downtown SLO, an organization that is funded by our business license fees, is spearheading an effort to have certain areas of our downtown deemed a PBID District — a Property Based Business Improvement District. Property owners within the District will have a new assessment levied on their property in addition to their existing property taxes. This assessment can increase as much as 5% each year for five years.

Proposition 218, the Right to Vote on Taxes Act, was introduced by the sponsors of Prop 13 and approved by California voters in 1996. According to the Legislative Analyst’s Office, the findings and declarations of the act are as follows:

“The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment, fee, and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent.”

Prop 218 added Articles XIII C and D to the California Constitution. Article XIII D states: “Nothing in this article or Article XIII C shall be construed to provide any new authority to any agency to impose a tax, assessment, fee, or charge.”

Moreover, Prop 218 does not give Downtown SLO or the city of San Luis Obispo the right to levy this assessment. Instead, it gives those who would pay the assessment the right to vote it down if a majority of them vote no. It places requirements and restrictions on the formation of such property based districts and lays out rules that must be followed when local governments propose such assessments.

One of these rules (put in place to protect taxpayers) is the Calculation Proportionality Requirement. The local government levying the assessment must set assessment rates on a parcel-by-parcel basis so that no property owner within the proposed district pays more than his or her proportional share of the assessment revenues collected. In our case, they claim to have measured the total amount of space of the entire district (square footage of all lots, of all buildings and linear street frontage). Then they measured the amount of space of your property within the whole.

Your proportional share of the assessment revenues is the percentage of your space within the district as a whole. This assessment is not attached to property value but to space. If your proportional share/percentage is 1% and the assessment revenues collected are $369,863, your annual assessment for the first year is $3,698. This is in addition to your current property taxes and listed as a separate line on your tax bill.

A second rule (put in place to protect taxpayers) is the Election Proportionality Requirement. This rule provides that a majority of the property owners in the proposed district can vote “no approval” to prevent the city from creating the district. When tabulating the property owner ballots, the ballots must be weighted in proportion to the amount of the assessment each property owner would pay. For example, if property owner Smith will pay twice as much assessment as property owner Miller, owner Smith’s vote will count twice as much as Miller’s.

Prop 218 limits the methods by which a city can exact revenue from taxpayers without their consent. How can the city of San Luis Obispo justify casting its weighted vote on an assessment it will exact? Its weighted vote is almost 20% of the needed 50%.

Do you know what proportional-share/proportional-vote is? Downtown SLO sent notices to the property owners in the proposed district identifying the owner’s proportional-share under the heading “Owner % of Total Assessment.” Unfortunately, many property owners tossed out the envelope as junk mail. And to date, that is the only notice they have sent owners.

It is galling that the local government levying this assessment on us will be the city of San Luis Obispo. Downtown SLO reports the city of San Luis Obispo is the property owner of close to 20% of the assessment, which means it controls almost 20% of the vote, and the city has refused to recuse itself from voting. The city manager, who will cast the city’s ballot, supports the proposal.

In fact, an earlier proposal by Downtown SLO was thwarted when a majority of property owners expressed disapproval. It appears the revised district boundaries were gerrymandered such that the city now has an even higher proportion of the weighted vote.

To borrow language from Proposition 218: The city of San Luis Obispo voting on this assessment frustrates the purpose of voter approval for tax increases, and this assessment threatens the economic security of all San Luis Obispo downtown businesses and all of downtown San Luis Obispo itself. This assessment will naturally be factored into the amount of rent businesses are charged. Downtown rents are already too high.

On July 16, the San Luis Obispo City Council will decide whether or not to put this measure to vote by the affected property owners. The city, with almost 20% of the vote, along with a handful of developers who need to protect their cozy relationship with the city, can deliver a majority vote in favor of the assessment. The city will then be free to adopt it.

So far, in June alone, Downtown SLO has listed the proposed assessment revenues as $370,001.30; $382,380.76 and $369,862.94. This discrepancy begs the question, How well developed is this plan? You may ask, What are they doing with the assessment dollars they want to collect from us? They are hiring four “Downtown SLO Ambassadors” with branded uniforms to provide visitor information, homeless services outreach and referrals, safety escorts, coordination with police, merchant outreach, event support and city services liaison. Oh, and add some maintenance and beautification/cosmetic improvements.

And yes, all this will require new layers of bureaucracy to govern a small section of downtown.

Does our little downtown really need the existing BIA Board of Directors, a new PBID Board of Directors, a new Downtown SLO Executive Committee, a new Owners Association and the services of a PBID dedicated Engineer?

Please add your voice to the chorus: No on PBID! Contact for more information on this underhanded manipulation of the Right to Vote on Taxes Act.

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One Comment about “City of SLO should not be voting on downtown property tax”

  1. Sulla says:

    But the City is exempt from paying the tax! Public property, Federal, State, County, City, School District, or special district, is not assessed to pay any tax. For that matter, include property owned by any Church or non-profit corporation. Only owners of parcels subject to the proposed tax are eligible to vote.

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