Metro Rail Benefit Tax

Some observations on the Metro Rail benefit assessment tax that the RTD has imposed:

The RTD claims that the special taxes are justified because of new business that the subway stations will attract to nearby merchants. But many of the “merchants” are not retail businesses, and so Metro Rail will have little effect on them.

The RTD cites huge land value increases near transit systems in other cities. The tax is therefore a property tax, but the RTD does not want to use the words “property tax” because it does not have authority to levy a property tax. Proposition 13 prevents that.

This is somewhat of an unusual property tax, in that the tax has been imposed even though property values have not yet gone up. It is a property tax imposed in anticipation of increased property values.

The Los Angeles Area Chamber of Commerce members supported the assessment at the RTD hearing. If they support it, they must be claiming Metro Rail is good for the majority of their members. Since the Chamber of Commerce represents a much larger geographical area than the area that has been assessed, this is clear testimony that the benefit assessment district is too small and should be increased to cover the whole area represented by the Chamber of Commerce.

The Central City Assn., a lobbying organization for large downtown businesses, supported the assessment at the RTD hearing. Once more, here are businesses stating Metro Rail is good for them. If anyone is to be assessed to pay for it, I think we just found some volunteers.

RTD manager John Dyer says the 30 cents per square foot assessment represents only about 1.4% of the average downtown square footage rental rate. What does average mean here? Does a 10-million-square-foot hotel get averaged on a per-property basis or on a per-area basis with a 40,000-square-foot restaurant? On area basis, the hotel will weight the average 250 times more than the restaurant and the result will be the hotel rate. Even on a per-property basis, the average could be much higher than the rate being paid by the restaurant. If the 1.4% number is not misleading, then I would agree that those being assessed can afford it. But just because they can afford it does not mean that they and they alone should pay it. If that were a valid criteria, then we should tax the businesses in Marin County to pay for it--they can afford it.

DAVID FINK

Los Angeles