Saturday, July 21 , 2018, 1:22 am | Overcast 65º


Ron Fink: Tax-exempt Projects — A Drain on Tax Revenue

Recently, a project for a large community medical clinic was approved by the Lompoc Planning Commission. One aspect of the project, a change to the General Plan, must now be approved by the City Council before the action is final.

Ordinarily, this wouldn’t raise any eyebrows in the grand scheme of developing a city, but an issue came up during the Planning Commission discussion that wasn’t within the purview of the commission's authority.

The project is being developed by a nonprofit group, and one commissioner asked if the group would be applying for tax-exempt status. Of course, said the developers’ representative.

This project is located on two large parcels of prime commercial property on West Ocean Avenue adjacent to a shopping center, which is the only large shopping location in that part of the city.

The Planning Commission directed the planning manager to include an analysis of this project's removal from the tax rolls to the City Council when they discussed the General Plan amendment.

The project is indicative of a much larger problem: Nonprofits are exempt from paying sales tax and property taxes. They also are exempt from parcel taxes, such as those used to fund schools, the hospital district, and in Lompoc, the Park and Pool Assessment District.

Nonprofits operate numerous “low-income” housing projects that occupy large tracts throughout the city, and more are added each year. This removes these properties from the tax/assessment rolls.

Others operate projects on commercially viable parcels that could have produced sales and property taxes but won’t now.

Large public-housing projects exist on eight square blocks near the post office on West Ocean Avenue; four square blocks at Ocean Avenue and Seventh Street; nine square blocks on West College Avenue and I Street; and six square blocks on East North Avenue at Palm Drive, to name a few.

Of course, the occupants and clients of these facilities use all the services those taxes/assessments are supposed to fund, especially the schools, so they are a significant drain on revenue for the services provided.

This problem isn’t unique to Lompoc, every other city in the U.S. is faced with the same situation. Larger cities may be able to absorb these impacts, but small communities like Lompoc are having a challenging time sustaining service levels due to shrinking General Fund and school district revenues.

To qualify for low income-assisted housing, the income level for a family of four is $61,700, and the poverty rate in Lompoc is more than 20 percent.

What can be done about it? Nothing.

Housing quotas for affordable (and subsidized) housing are dictated by Sacramento. The need for low-income medical clinics is based on the income levels for poverty established by the federal and then multiplied to 200 percent of the national standard by Sacramento.

Los Angeles County's homeless population is an example that the need is increasing faster than the supply of new housing, even with the addition of thousands of beds in the last two years and millions of dollars beginning to flow in from two ballot measures targeting the crisis, according to a long-awaited report by the region's homelessness agency.

This ever-increasing gravitation toward socialism, that is adopting economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods through taxes and assessments to those who contribute little to produce them, is strangling our economy.

During the hearing, the developer highlighted another factor no one talks about, but everyone seemed to think has been happening for years.

Lompoc has the highest number of eligible Medicare and Medi-Cal recipients in the county. For a town the size of Lompoc, that’s a stunning fact.

Recently, the City Council approved the commercial sales of cannabis in the Lompoc. What does this have to do with tax-exempt nonprofits you ask? 

Well, during the debate, one proponent said the industry was offering “high-income” jobs to Lompoc; his reasoning was that $16 an hour constituted “high income.”

I hate to break the news to this guy, but even if the people worked 40 hours a week, they still would qualify for low-income housing and benefits provided by the nonprofits.

With the median income in Lompoc at $44,800, this would leave the employee above with $11,000 below the average income and the low-income level of $43,200 or less a year in California for one person.

The City Council’s vision for economic development seems to be an endless do-loop of projects that create more low-income service industry jobs. 

Creating more of these jobs may sound good to a politician, but the fact is, it creates a larger problem for cities trying to provide needed services for their residents.

It’s past due time to start focusing on creating better paying manufacturing and high-tech jobs in the city to try to raise the income level of our residents to a point where they don’t need assistance from government programs.

— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at [email protected]. Click here to read previous columns. The opinions expressed are his own.

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