Local Elections : Del Mar’s Money Problem Is Too Much of It, Hence Proposition Z

Del Mar, the county’s smallest city, has a big-city problem.

Just as the city and county of San Diego were forced to do, Del Mar is going to the voters, asking that it be allowed to lift its limit on city revenues.

The happy-sad fact that prompted Del Mar city officials to place Proposition Z on the ballot Nov. 8 is that the seaside community is likely to take more tax money into its municipal coffers than is allowed under the Gann appropriations limit of 1979.

The Gann limit, a follow-up to Proposition 13, the landmark 1978 property tax-limitation measure, restricts local governments’ intake of funds. It was designed by activist Paul Gann to stem the tide of “special taxes� and other assessments that cities and counties were levying to replace reduced property-tax revenues caused by Proposition 13.

Now, however, even small cities the size of Del Mar (population 5,100) are finding it difficult to stay within the Gann limit. With increases in tax revenues expected from two major commercial developments, the city must obtain voter approval to accept the additional sales and transient-occupancy taxes, or return some of the revenue to the people who paid it.

Not Too Worried

Anita Bingham, Del Mar finance director, is not too worried that the city’s request will be turned down, because Del Mar voters went against the tide and approved the county’s limit-waiving measure, 59% of the voters endorsing it. The measure failed countywide in June and is back on the Nov. 8 ballot. The city of San Diego’s measure squeaked by with 50.16% voter approval last year.

However, Bingham reported, other cities and counties haven’t been so lucky. In 1985, Kern County voters decided that a $94-million windfall from mineral land assessments should be given back to the taxpayers. Other cities, faced with a windfall that pushed them over the Gann spending limit, have not gone to the voters, using creative bookkeeping instead to allocate the excess income to specific future uses--a practice that allows a city to sidestep the tax-limitation measure.

Del Mar has never done that, believing it to be against the spirit of the Gann initiative, Bingham said.

The City Council, after spirited debate, came up with wording for Proposition Z that tells it like it is:

“Shall the City of Del Mar, without increasing tax rates, adopt an ordinance which increases the City of Del Mar’s appropriations limit to equal revenues from the proceeds of taxes for the four fiscal years, 1988-89 through 1991-92?�

The city’s revenue limit now is $2,310,507. If Proposition Z fails, and city revenues exceed the limit, Bingham said, the city must return the excess to taxpayers, either by a tax credit, a refund, temporary suspension of tax rates or some other suitable method.

Groans at the Thought

Lew Hopkins, former Del Mar mayor and veteran city finance committee member, groans at the specter of having to determine which tax revenues should be returned and to whom.

“It boggles the mind,� Hopkins said, stressing that he doesn’t think Del Mar will ever face the problem.

However, if Proposition Z should fail, Hopkins said, there’s a very good chance that this fiscal year, and most certainly next fiscal year, the city would face the problem. Two major new tax sources--the Del Mar Plaza shopping center opening in February and the Chateau del Mar hotel and commercial center, opening, it is hoped, late next year--will generate almost $450,000 a year in new taxes.

Plaza developers estimate that their new center will mean $140,000 to city coffers during the first year of operation; hotel developers estimate that their yearly contribution to the city will be $244,000 in transient occupancy taxes, $29,000 in sales taxes and $34,000 in added property taxes.

Del Mar Fairground revenues to the city are generally exempt from the Gann limit, Hopkins said, so the additional revenues due the city because of year-round satellite betting at the race track aren’t involved in the Proposition Z issue.

Meanwhile, in the new city of Solana Beach to the north, November’s ballot does not contain any city propositions, but does pit three incumbent council members against three newcomers.

Barbs for Incumbents

All six candidates for the three openings stress their experience and governmental know-how, with the challengers adding a few barbs aimed at the incumbents’ two-year records.

Jim Hennenhoefer, a 47-year-old attorney, says land-use decisions provided the incentive for him to run for a council seat. The existing council majority, he said, is operating outside reality, “like a Mad Hatter’s tea party.�

Hennenhoefer, a 25-year North County resident, moved to Solana Beach about two years ago as the city was incorporating and had his eyes opened when he represented a Solana Beach property owner seeking to build along the ocean bluffs.

The council has endorsed a general plan that will prevent bluff-top property owners from using their lots, rebuilding or even remodeling, he said. “Most of those properties along the bluff will have only 10 or 11 feet of buildable land on their lots.�

In effect, he said, “the value of their property has been greatly reduced� by new city provisions to be enacted in the proposed general plan.

“I want to get responsible people into the position of making responsible decisions,� Hennenhoefer said. “That’s why I am running.�

‘Capricious’ Criticism

Incumbents argue that Hennenhoefer is ignoring the problems that bluff property owners face, problems that have caused the current council members to call his criticism “capricious.� The small homes that now line the top of the bluff do not observe the 40-foot setback requirement, a restriction that is designed to prevent more damage to the fragile bluffs.

Another challenger, 32-year-old Joseph Hogan, has another bone to pick with the council as constituted. The 25-year resident of Solana Beach, who says he knows “the heartbeat� of the 2-year-old city, points to what he calls the “shameless waste� of the “Solana Beach Drive Fiscal Follies.�

Hogan is referring to the council’s 3-2 vote to change the name of Lomas Santa Fe Drive, the city’s main connection to Interstate 5, back to its old name of Skyline Drive or to Solana Beach Drive. An outcry from Lomas Santa Fe residents that their inland area would lose its identity convinced the council to place the issue before a citywide vote, and Lomas Santa Fe Drive won out, saving the city up to $40,000 it would have spent to change freeway and surface street signs.

Teri Renteria, the third challenger and a native of Solana Beach who was an opponent of incorporation during the cityhood election two years ago, apparently has decided to work for her goals within the civic framework.

Renteria, a financial services representative with First Interstate Bank, said that “in the past two years, we have all experienced the effects of incorporation. Now is the time to lessen some of the complexities of local government upon the people of Solana Beach.�

She contends that “not everyone is getting a fair shake� from the council. Businessmen, especially those who opposed incorporation, have been subjected to “arbitrary� turndowns by the council, Renteria said.

Spending Questioned

She also questions the city’s budget expenditures, especially salaries for top city officials, and proposes that a time study be made to determine if the new city government is being run as efficiently as possible.

Incumbent council members Celine Olson and Marion Dodson claim impressive records of civic service and list unfulfilled goals for the city.

Both women worked hard for incorporation, but see many issues still to be resolved before Solana Beach takes control of its own destiny. Olson points out that, despite “careful and thoughtful progress . . . many of our most important programs, such as a strong anti-drug program, are still in their infancy.�

Dodson lists among her goals for her next term: adoption of a workable general plan for the city, expansion of recreation opportunities for seniors and youth, support for Eden Gardens residents’ fight against crime and encouraging redevelopment of Old Highway 101 through the city. One important goal that must be met, she stressed, is upgrading and expanding the San Elijo Lagoon sewage treatment system, serving both Solana Beach and Cardiff.

The two women split on the Lomas Santa Fe Drive renaming issue. Olson championed the change, and Dodson opposed it.

“I call this my half-time job,� Dodson joked about her council duties. “I spend half my days and half my nights on it.�

Incumbent Richard Hendlin, 36, a state deputy attorney general, also wants to finish up the work he began two years ago.

He seeks to implement the general plan, revitalize Old 101 and Cedros Avenue, upgrade the city’s sewage system, tackle beach parking and drug use and minimize the negative effects of Del Mar Fairgrounds on residents.