Carlsbad Ponders Developer Tax : Revenue: The creation of a special district would allow builders to be assessed before any buildings are erected, permitting the city to plan for growth.

The city of Carlsbad, population 62,000 and possibly heading for 135,000, is considering a special tax on developers to raise $109 million in seed money for a new city hall, library and other projects.

Top city officials have proposed that the City Council put 10,261 acres into an assessment district, in which developers would pay yearly taxes--even before buildings are put on the land--so the city can set aside money to prepare for growth.

“This lets you issue bonds to build things up front, before the people are here, not after they arrive,” city finance director Jim Elliott said Monday.

According to a staff report, putting the acreage in a so-called Mello-Roos Community Facilities District would generate $109 million to finance construction of public buildings, street improvements and interchanges.

Among the earmarked funds is $23 million for a new city hall, $14 million for a 280-acre Macario Canyon Park, $11 million for a new library in south Carlsbad and $4 million to remodel the existing library on Elm Avenue.

Construction is scheduled to occur from 1991, the first year the taxes would be collected, through 2010.

Carlsbad’s growth plan already requires developer fees expected to raise $290 million between now and the time the city is built out around the year 2020, when its population is expected to be about 135,000.

Elliott said the Mello-Roos district would let the city immediately begin setting aside revenue to pay for infrastructure, rather than waiting until homes or businesses are actually built. A Mello-Roos district, named for the state legislators whose bill established it in 1982, is an assessment district that allows developers to be taxed on raw land.

“Under the pay-as-you-go concept . . . projects cannot be funded until sufficient developer fees are available,” according to Elliott’s report to the council.

“Generally, fees do not become available until the developer builds a building or home. The city must wait for development to occur before infrastructure improvements can be funded,” he said.

All property with an existing house or other building on it would be excluded from the district, and no assessment, lien or tax would be placed on that land. Also, once a home is constructed in a Mello-Roos district, the buyer is not required to continue paying the special tax to the city.

The council will hold a public hearing tonight to vote on forming the district. So far, developers appear to support the idea and are working with city officials to fine-tune the plan.

“We believe this is the way to go,” said Doug Buie, chief financial officer of Carlsbad Highlands, which seeks to build 740 units on 264 acres in northeast Carlsbad.

However, he said developers and the city must work out the details to make sure the tax district isn’t too great a financial drain on developers.

“We’re burdening our land with a tax with no ability to pay for itself,” he said.

If council members approve the resolution, another meeting will be held in 60 days to hear protests. If fewer than half the property owners, based on acreage, oppose the district, the matter will be put before all the affected property owners for a vote.

A two-thirds vote of the affected property owners, based on a one-acre, one-vote procedure, is required to form a Mello-Roos district.