Del Mar council considers sales tax increase for November ballot

In an effort to help cover the costs of undergrounding utilities throughout the city, Del Mar voters could be asked to approve a one-cent sales tax increase in November.

“It’s no secret that undergrounding is something that would be extremely desirable and very profitable if you’re thinking of it as an enhancement to your property,” said Bud Emerson, a member of Del Mar’s Finance Committee, during a presentation to the City Council on April 18. “We think that adding 1 percent to the sales tax would be a smart way to go. Of course, you’d have to get the public to agree to that.”

A one-cent sales tax increase would generate an estimated $1.6 million a year for the project, which is expected to cost between $25 million and $30 million, according to committee members. The council did not vote on the proposal, but committee members said they have to begin discussing the matter now if they plan to place the measure on the ballot.

“Any source of revenue, we strongly recommend that it have a project attached to it so that it’s not just money that you get from a source without any specific intention of how you’re going to use it because that has often caused problems in local government,” Emerson said. “Citizens don’t want to do that. They like to know what their money’s being used for.”

Furthermore, visitors should pay their fair share, he said.

“In a visitor-rich town like we are, we ought to be looking at ways that people who visit us and enjoy our services and cause us to spend money on our services, help us pay for them,” said Emerson, adding that as much as 70 percent of the city’s sales tax comes from people who aren’t Del Mar residents.

In February, the council approved a $25,000 study to better estimate the costs a citywide undergrounding project.

The community has long identified undergrounding utility poles as a top priority, but the last undergrounding project along a portion of Camino del Mar was completed almost four years ago.

At the request of council liaisons Deputy Mayor Terry Sinnott and Councilman Al Corti, the Finance Committee began researching a long-term project about a year ago.

Dan Quirk, chairman of the subcommittee working on the project, said he spoke with representatives from San Diego Gas & Electric, who explained that costs are based on the number of poles and linear feet. Quirk counted about 377 poles in the city and calculated approximately 53,000 linear feet.

At approximately $450 per linear foot, the subcommittee estimated it would cost about $25 million to underground all utility poles in Del Mar except for some along Via de la Valle and near the Del Mar Fairgrounds. Still, the subcommittee requested an independent estimate. The study by consultant Utility Specialists Southwest, Inc. is due May 23.

“Undergrounding is a strong desire by the community,” Sinnott said.

Although some council members supported moving forward with the proposal, Councilman Don Mosier said the community could reject the measure because voters will be asked to approve another sales tax hike on the November ballot. The San Diego Association of Governments has proposed a half-cent sales tax increase to pay for decades of infrastructure projects.

“I think the timing is awful, piling on top of the regional TransNet tax issue, which has benefits for Del Mar,” Mosier said. “I think it’s just the wrong election to do it.”

City Manager Scott Huth said the council would have to take action by the end of July to get a measure on the November ballot.

“We’re sitting OK right now,” he said.

Council members would also have to decide whether the increase would be tied specifically to the undergrounding project, which would require a two-thirds majority for approval. A general sales tax increase would require only a simple majority.

SANDAG’s half-cent sales tax increase would require a two-thirds majority for approval.

“That’s going to be confusing,” Mosier said. “It’s possible that our sales tax could ride on the coattails of the TransNet, so I’m not sure which way that scenario will play out. To me, it’s pretty complicated. You’ve got two potential sales taxes on one ballot and a different voter threshold for each one.”