Commentary: $4.4 million is not enough to cover Banning Ranch impacts

In reading Byron De Arakal’s commentary in the Aug. 7 issue (“Commentary: Politics aside, Banning Ranch agreement is good for Costa Mesa”), I am once again surprised that a respected former columnist would miss simple facts.

For example, De Arakal correctly indicates that because the Banning Ranch project is in Newport Beach, all property rights are controlled by Newport Beach and Costa Mesa has no control. That also means that all sales, property and occupancy taxes generated on the project would go to Newport Beach and not a cent to Costa Mesa.

He also indicates that, because the residents of the 1,375 homes will mostly travel through Costa Mesa (65%), they will stop at gas stations in Costa Mesa thereby generating “not an insignificant amount of gas-tax and sales-tax revenues.”

And he further states that the increase in gas and sales taxes will go a long way to “offset the remaining road improvement costs,” and that this gas-tax increase will be very long-termed.

By stating that these taxes will offset the remaining road improvement costs, he is acknowledging that $4.4 million (the value of the contract) probably will not cover all the costs of road improvements for Costa Mesa due to this project.

As for the tax benefits, nothing could be further from reality. Gas tax is collected at the pump by the state and then redistributed to each community, based on the population of that community, and is not the amount of gas tax a community actually collects.

All those extra people living in the Banning Ranch project area would be living in Newport Beach, so Newport Beach’s population would increase, but the population of Costa Mesa will remain the same.

With the population increase, Newport Beach will realize an increase in gas tax availability, and Costa Mesa will see none, even though they have the wear and tear on Costa Mesa streets from a minimum of 65% of the traffic generated by the project.

If the California Coastal Commission approves the project, but does not approve the access to West Coast Highway, then 100% of the traffic generated by Banning Ranch would come through Costa Mesa, again, with no ongoing increase in gas tax to Costa Mesa in perpetuity.

And the double whammy — the sales tax on gasoline is not 7.75% but is 2.25%. So even though Costa Mesa is selling all that gas, it gets even less sales tax to take care of our roads in perpetuity. As can be seen, Banning Ranch tax generation will be far smaller than council majority supporters want you think.

Also, the quoted traffic impact fee of $1.7 million is actually below the actual cost to fix the intersections and roads. That fee is based on the project being in Costa Mesa with the resulting property, sales and occupancy tax going to Costa Mesa to help off-set any part of the mitigations not covered by the traffic impact fee.

The quoted traffic impact fee is not intended to pay for the wear and tear on our roads into “perpetuity.” Maintaining our roads comes from a mixture of property, sales, occupancy taxes, and grants from the federal, state and county governments and funds set aside in Costa Mesa’s budget.

Don’t think the $4.4 million is a windfall. It may not even cover the costs to build the mitigation measures in Costa Mesa — mitigation measures already required by Newport Beach of the developer as part of approval.

And finally, I agree that it’s only fair for us to not point our guns at the project, ready to shoot at any little change that might happen. However, by this agreement, Costa Mesa not only gives up its right to protect its residents, but has to lock those guns in a safe and store that safe in a storage facility far away.

Yes, it can be pried open; it just depends on how much you want to pay.

JAY HUMPHREY is a former Costa Mesa city councilman.