Marco Li Mandri wants to get around Prop 13

Residential property owners throughout San Diego might be finding an additional charge on their annual property-tax bills if a local businessman gets his way. The extra assessment would pay for enhanced services such as trash and graffiti removal, sidewalk cleaning, and promotional events, provided in specific neighborhoods through community benefit districts.

Since 1978, when Prop 13 was passed, declining tax revenues have forced cities across the state to cut programs and scale back on services. The trend is evident in San Diego’s neighborhoods, where street trees go untrimmed and abandoned couches clutter alleyways for weeks on end.

In response, beginning in the 1990s, some residents and community leaders have taken matters into their own hands, searching for creative ways to fund local improvement projects and prevent blight.

One popular tool is a maintenance assessment district, an area where an annual tax is levied on each property to fund maintenance services such as landscaping. Currently, the city of San Diego has 55 maintenance assessment districts, with more neighborhoods such as Barrio Logan looking to join the list.

But assessment districts have come under fire in recent years. Reports of flawed assessment engineer’s reports and allegations that the districts were illegally formed and ill conceived have made some residents rethink the benefits that maintenance assessment districts offer. In February, a judge ordered the dissolution of the maintenance assessment district in Golden Hill and South Park. Last year, residential and commercial property owners in North Park defeated a proposal to create a second maintenance assessment district. And downtown, after three years of waiting, residents still have not been refunded hundreds of thousands of dollars they paid in miscalculated assessments.

Marco Li Mandri, whose for-profit company New City America has formed 61 districts across the country, hopes to change the local law that regulates assessment districts so as to make it easier to establish them in San Diego neighborhoods.

The current law requires that to initiate the process, a petition must be signed by property owners who will be paying more than 50 percent of the total assessment. And once established, the district must be renewed by a vote of the property owners after five years.

Li Mandri proposes to create a new type of assessment district, a “community benefit district,” whose life would be extended to 20 years. And instead of a petition signed by property owners who will be paying more than 50 percent of the total assessment, a community benefit district would require only 30 percent to start the process. Li Mandri’s proposal also broadens the services that can be offered to include such improvements as parking facilities and kiosks and such activities as promotion of community events and furnishing of music in public places.

On November 2, 2011, Li Mandri appeared before the city council’s Public Safety and Neighborhood Services Committee during public comment to pitch his new ordinance.

His proposal was met with a glowing reception from councilmembers. “Assessment districts of all shapes and colors have been transformational in my council district,” said Councilmember Todd Gloria, “and Mr. Li Mandri is nationally recognized for his work on this issue. If there are suggestions to make it better, then I am all ears.”

And as city councilmembers and other city officials looked over the proposal, the same proposal appeared in the state legislature as Senate Bill 949, introduced on January 4 by Senator Juan Vargas.

Vargas’s bill, however, was met with resistance from constituents and taxpayer groups. “As it stands, we are taking an ‘opposed until amended’ position,” David Wolfe, legislative director for the Howard Jarvis Taxpayers Association, said earlier this month. “We have concerns, mainly how the assessment is implemented.” In mid-April, Vargas pulled the bill from committee, and last week his spokesperson in Sacramento confirmed that the bill is dead.

The same month that Vargas introduced the bill in the state legislature, Li Mandri was busy studying state law and working on the local ordinance. At the end of January, he submitted an invoice for $10,000 to the Downtown San Diego Partnership, which administers the Downtown Property and Business Improvement District, where Li Mandri serves as a consultant. On the invoice, Li Mandri listed among his accomplished tasks “Work on Proposition 218, Section 36600, MAD [maintenance assessment district], CBD [community benefit district], Golden Hill packets.”

Li Mandri did not respond to a request for comment about his proposal.

Vladimir Kogan, PhD candidate at the University of California San Diego and an expert on assessment districts, has looked over Li Mandrel’s proposal.

“This is clearly a full-employment act for [Li Mandri], who would get a lot of new business as a consultant for forming [maintenance assessment districts],” wrote Kogan in an email.

“[Maintenance assessment districts] are terrible ways of financing local needs. It’s incumbent on those of us who don’t like [them] to identify an alternative funding source. Currently, there is none. The city can’t afford to do it and will not be able to afford to do it unless its revenue structure changes.”

Kogan prefers funding mechanisms “that allow all residents, rather than just property owners, to participate and don’t require expensive consultants like Li Mandri to take a substantial cut of the proceeds. They are really the people that benefit the most from the status quo.”