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The way Golden Hill funds many of its neighborhood maintenance services has been ruled illegal by a San Diego Superior Court judge who said it didn’t conform with state law.
Those services include neighborhood trash cleanup, sidewalk sweeping and graffiti removal. They are paid for by a special tax assessed on Golden Hill property owners through a financing tool known as a maintenance assessment district.
The tool allows the city to collect a tax from property owners and use the revenue to provide services within their neighborhood. Neighborhoods across San Diego have established the districts to pay for services not regularly provided by the city.
But under state law, those services must benefit the properties of those paying the tax more than they benefit the general public. In Golden Hill, Judge Richard Whitney finalized a tentative ruling issued last month that stated the city didn’t demonstrate how the services would provide these “special benefits” to property owners when it established the district in 2007.
It’s not that the special taxes couldn’t necessarily be used for these types of services. It’s that the city didn’t specifically lay out what benefits the services would provide when the district was approved by local residents.
The court ruled the benefits listed in a guiding document, like enhanced economic opportunity and creating a sense of community, were too vague to qualify as special benefits.
Because that document was voted on by property owners to establish the MAD in 2007, the court’s ruling that it was illegal could require the city to disband the district and start from scratch.
Supporters of the district argue that the assessments it collects fund important neighborhood maintenance the city does not provide, even less so as it confronts severe financial trouble that will force it to further cut existing levels of city services. They say its elimination will leave Golden Hill’s trees overgrown, sidewalks trash-strewn, and walls covered in graffiti.
Its opponents successfully argued that the district taxes property owners for services that do not provide their properties any more benefit than they provide the neighborhood as a whole. They also challenged the city’s procedure in establishing the district’s boundaries, but the judge did not rule on that issue.
“In its present formation, the MAD is illegal,” said Steve Haskins, the attorney who represented Golden Hill resident John McNab in his challenge against the city. “So far as we are concerned, it needs to be dissolved and the funding returned to residents.”
The City Attorney’s Office is considering a possible appeal and will advise the City Council of its options next month, said spokeswoman Gina Coburn. It doesn’t believe the district is barred from operating, she wrote in an e-mail.
As the City Attorney’s Office weighs its options, the future of the nonprofit organization that administers Golden Hill’s MAD funds remains uncertain. City staff has informed its director to continue providing neighborhood maintenance services pending the possible appeal.
“We’ve been asking where to go from here, and we’ve been told to keep operating,” said Pedro Anaya, director of the Greater Golden Hill Community Development Corp., the district’s administrator.
But the heightened uncertainty over whether the CDC will continue collecting and administering funds has put a hold on the organization’s future commitments. Anaya said the CDC will still clean graffiti, trim trees and sweep sidewalks at current levels, but will not take on larger commitments until it is relieved from its current limbo.
“I’m not making any major investments in equipment or long-term contracts,” Anaya said. “I have to look out for the wellbeing of this organization, and I’m not going to put us in a situation where we have contracts we have to honor or equipment we have to return.”
San Diego has 57 maintenance assessments districts in neighborhoods citywide. Each provides services according to the neighborhood’s needs. Few have come under the level of scrutiny of Golden Hill’s, where its opponents questioned the city’s definition of what qualify as special benefits in the guiding document, called an engineer’s report.
“[T]he City will continue to ensure that engineers’ reports in the future meet stringent standards for determining benefits,” Coburn wrote.
District 3 Councilman Todd Gloria, who represents Golden Hill, said he supports maintenance assessment districts and hopes the council will be able to establish one there lawfully, if the current one is determined not to be.
“In council District 3, the places where there is dynamic changes, it’s because there’s some kind of assessment district there,” Gloria said. “In Golden Hill, is there something we can do with the current engineer’s report or do we need a new report and a new ballot? We’re going to see what we can do.”
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