Money plays an important role

Lolita Harper

COSTA MESA -- On one side of the debate is cold, hard cash. On the

other is more intangible talk of quality of life, which can’t be bought

at any price.

In the middle is the proposed Home Ranch project, which could bring

the city millions of dollars, supporters say. But opponents ask, at what

price?

Since the inception of the most recent Home Ranch design, officials

from C.J. Segerstrom & Sons have touted the money the project would bring

to city coffers.

There would be more than $15 million for city roads and schools, plus

about $31 million in sales tax they say the project would bring Costa

Mesa over the long haul.

But against that backdrop, opponents of the project have consistently

said city officials and residents should not be wooed by big dollar

signs. Quality of life is really what is at stake, they claim, and it is

not for sale.

While city officials vow to consider the project on its own merits, it

is difficult to ignore the recompense offered in the development

agreement, especially in the current uncertain economic times.

City Manager Allan Roeder said people must keep in mind that sales tax

is the No. 1 source of financing in the city. Roeder said the large

amount of sales tax Costa Mesa collects is the reason the city’s tax

rates are among the lowest in the county.

With the economy slowing, many supporters of the project look

anxiously to the increase in sales tax the Ikea furniture store is

expected to generate. Financial predictions done by an independent

consultant and city staff show the furniture store generating about $31

million in sales tax revenue over the next 20 years.

“Were the project approved, the sales tax would certainly be a benefit

to the city,” Roeder said, though he stressed the importance of not being

dependent on one form of revenue.

In addition to the forecasts, a $5-million sales tax guarantee was

added to the Home Ranch development agreement, which stipulates yearly

sales tax totals the city is certain to receive. If the amount is not

met, the Segerstroms will cut a check for the balance, spokesman Paul

Freeman said.

Burbank City Manager Bud Ovrom, who remembers negotiating with Ikea

furniture store in the early 1990s, said his city also received a sales

tax guarantee. Ovrom said there were fewer than a handful of times the

furniture store did not meet the designated quotas. When it didn’t, the

Swedish company cut the city a check, he said.

Almost a decade later, Ovrom said he would no longer need the

guarantee -- Ikea is one of the highest-producing sales tax generators in

Burbank.

“That’s very generous,” Ovrom said about the $5-million sales tax

guarantee offered to Costa Mesa in the development agreement. “If they

were coming to Burbank today, we wouldn’t require any of that.”

The threat of losing all that revenue has also been picked up by

opponents, who point to recent state-level discussion about the

distribution of sales tax.

Roeder acknowledged that those talks go as far as to suggest that

sales tax be taken away from cities all together. Some legislators say

sales tax distribution to the cities encourages retail development and

takes the focus away from housing, he said.

The rumors and suggestions of such action have circulated for years,

Roeder said, and it is difficult to determine what action could come from

the state level. What Costa Mesa can be sure of is that the state will

consider anything to close the gap in the state budget, he said.

“There’s never a shortage of the imagination in Sacramento of how to

squeeze more out of local budgets. We know that cities and counties will

be at the top of the list to come up with revenue to meet the shortfall,”

Roeder said.

The proposed development agreement also includes $2 million in

endowment funds for Costa Mesa and Estancia high schools and TeWinkle

Middle School, as well as the preservation of the Segerstrom family’s

historic home ranch on the property in perpetuity. In exchange, the

developers want the building rights on the property for the next 20

years.

The $2 million designated for the schools was originally proposed to

be paid in yearly installments of $450,000, with the first check being

cut when the first building permit was issued, but planning commissioners

were able to convince the Segerstroms to give the entire sum upfront.

School officials have consistently stated that any money for the

schools is much needed and appreciated but that they have not taken an

official stance on the project itself. Opponents of the project have

called the school money a bribe and charge it should be given regardless

of how the city votes on the Home Ranch project.

Freeman defends the company’s action, saying it is common practice to

offer certain community benefits in exchange for exclusive rights to the

land. The $2 million is no different from any of the other benefits being

offered in the agreement, he said.

The last and less controversial component of the proposal includes the

preservation of the Segerstrom home and barn on the Fairview Road side of

the property.

The plan calls for a 1.5-acre parcel of land to house the historical

monument and an endowment to provide for maintenance, operation and

public access to the house.

* Lolita Harper covers Costa Mesa. She may be reached at (949)

574-4275 or by e-mail at o7 [email protected] .