Orange County Tax District Urged for Jail, Courthouse

In a second attempt to find money to build the controversial Gypsum Canyon jail, the Orange County administrative office has recommended a taxing scheme that would raise about $700 million, part of which would be used to build a new courthouse in Santa Ana.

The plan calls for creation of a countywide Mello-Roos Community Facilities District, which could be used to impose a tax through a variety of formulas. Creation of such a district would require approval by two-thirds of the registered voters in the county.

County officials said Thursday that they were not ready to reveal specifics about what kind of a tax would be imposed or what it would mean to the individual taxpayer.

In August, the Board of Supervisors decided against a November ballot measure asking voters to approve a $700-million general obligation bond issue to pay for the jail and courthouse because they were convinced that it would fail.

John Sibley, associate county administrator, said Thursday that the taxing district, if approved by the supervisors, probably will be on the June, 1990, ballot. That is the same election in which voters will decide the fate of a citizens initiative designed to eliminate the proposed Gypsum Canyon jail.

By then, Sibley said, county officials are hoping voters will be more receptive to a funding measure for the jail. He added that “there really isn’t any reason” the taxing district would be more successful at the polls than a general obligation bond measure and said the supervisors were mostly “concerned about the timing” when they voted not to put a measure on next month’s ballot.

Sibley said one of the advantages of the taxing district is that it could be used to pay for the operation of the jail once it is built, as well as to cover construction costs. The operating costs are expected to be at least $40 million a year.

Rick Violett, leader of the group that qualified the centralized jail initiative for the June, 1990, ballot, said Thursday that the county would have difficulty getting voters to pay for the jail through any financing mechanism and that any approach the board takes is certain to be challenged. Violett’s initiative attacks the Gypsum Canyon plan by requiring that all future jails be built in the county seat, Santa Ana.

“They’re trying everything they can,” Violett said of the taxing district proposal. “It’s a tough sell.”

In August, the supervisors asked the county staff to study the possibility of creating the taxing district as well as other financing mechanisms for the jail and the courthouse. But the supervisors had not seen the staff’s proposal late Thursday and declined comment.

They are scheduled to consider it at their meeting Tuesday, but Sibley said the issue might be postponed because the staff report was not ready yet.

The county has used Mello-Roos Community Facilities Districts to pay for new roads, libraries, fire stations and other public construction in undeveloped areas of the county. It was the central financing tool for the Foothill Circulation Phasing Plan that generated $240 million from developers for a network of new roads east of Mission Viejo.

But because those plans involved creating taxing districts in undeveloped areas, there was no need for a vote; only the concurrence of the developer or property owner was necessary. The county has not operated such a taxing district in a developed area.

Steve Kozak, a bond analyst in the county administrative office, said he is not aware of any county in the state that has attempted a Community Facilities District on a countywide level. Usually, they are done on a smaller scale so the costs of a specific road, for example, will be paid by those who benefit from it the most.

The Legislature created the Community Facilities District mechanism in 1982 to give local government some of the taxing ability that it lost because of the impact of Proposition 13 on property taxes.

County officials said in August that the general obligation bond issue being considered then would have added about $70 in annual taxes for every $100,000 of assessed property value.

When a Community Facilities District is used, however, the tax imposed is not necessarily tied to assessed property values. It could, for example, relate to square footage--or any of a number of other variables--allowing the government in theory to more accurately assign the cost of a project to those who benefit the most from it.

When such a taxing district is created, the county sells bonds that are repaid through the taxes assessed within the district.

The $700 million the county is seeking includes $450 million to cover the first phase of the Gypsum Canyon jail near Anaheim and another $250 million for a 14-story courthouse in Santa Ana.

The complete jail is expected to cost more than $600 million and include about 6,000 beds. It is to be a maximum-security facility.

It was scheduled to open in 1992, but the lack of financing has forced the county to scuttle its plans, and now there is no schedule for beginning the construction.

Financing for the Gypsum Canyon jail is probably the biggest obstacle to its construction, although there are others. In addition to the centralized jail initiative, those obstacles include the fact that the county does not own the Gypsum Canyon site. It is owned by the Irvine Co., which is reluctant to sell.

The Gypsum Canyon jail site was approved by the supervisors on a 3-2 vote last year after a search that was ordered by a federal judge concerned about overcrowded conditions in the county’s jails.