Reject Tax District

The San Diego City Council is about to approve a new form of taxation that sets a bad precedent for the city and which is of benefit only to selected developers. The Lusk/Lyons development in Tierrasanta has applied for, and is about to receive, a “Special Assessment District” for their 1,000-plus home development in that area. The purpose of such assessments is required to be for “extraordinary” amenities that benefit the community as a whole.

In this case, the “amenities” include roads, sewers, lighting and storm drains, which to my mind hardly qualify as anything out of the ordinary. In most developments these days, the city Planning Department requires these features to be included in the subdivision design. The costs are then passed directly to the buyer, and the marketplace decides the profit margin for the developers. When the buyer takes out a mortgage to pay for the home, the interest is fully deductible for income-tax purposes.

The buyers of these homes, of which I am one, are expected under this district to place an additional mortgage on their homes of about $20,000-$25,000. The mortgage is to be in the form of a bond issue backed by the homes themselves. The city would lend its good name to the bonds. The interest paid on this bond will not be fully deductible, as it would have been with a conventional mortgage.

The developers claim that the selling prices of their homes have been lowered to reflect this assessment. In fact, they have sold their homes for the maximum that the market would bear. Since last November, the prices have increased about 12%--an amount which by itself would cover the entire assessment costs. There has been no attempt at all to restrain the prices of these homes. This is simply a case of state-guaranteed profits in place of fair market valuation of a product.

The city will receive absolutely no benefit from this assessment, the buyers will pay twice for normal services, and the developers will reap enormous profits that have no relationship to their costs or risks. I fervently hope the City Council will reject this ill-conceived measure when it makes its final vote on May 9.

MAURICE D. GREEN

Spring Valley