LAGUNA BEACH : City Doubles Tax on New Construction

The City Council has agreed to double the city’s construction tax, which will tack an additional $1,500 on to the price of building a home in Laguna Beach.

By a 4-1 vote, council members gave preliminary approval Tuesday to raising the building construction tax, which is assessed on all homes and businesses built in the city. Money generated by the tax is used for capital improvements, such as developing parks and repairing walkways.

As a result of the council’s action, the tax will jump from $1,500 to $3,000 for new homes and from 75 cents to $1.50 per gross square foot for new businesses. The increase is expected to bring an additional $60,000 to city coffers.

Councilwoman Martha Collison voted against the measure.

“That cost is passed on to the citizens of this community when they purchase or sell,” she said. “And it’s just going up, up, up.”

While no other general tax increases have been approved since 1979, it is the second time the new construction tax has been raised in the past two years, City Manager Kenneth C. Frank said.

In the past, Frank said, the tax has been “way too low” and “did not reflect what other cities are charging for infrastructure.”

“Things are falling apart,” Frank told the council Tuesday night. “We had a whole list of capital improvements we weren’t able to do this year.”

A staff report to the council said capital improvement projects approved in this year’s budget exceed available funds by $270,610. The difference was expected to be made up by using money set aside for open space needs.

Final approval of the tax hike is expected at the next council meeting in August.