Key issue is higher tax rate for residents of new developments

Santa Rosa is being sued over the taxing structure underlying plans to intensify development around the future rail station near Coddingtown mall.

Resident James Duncan filed suit against the city last month seeking to block the North Station Area Plan passed by the City Council in September.

Duncan, a 71-year-old retired paralegal, hopes to one day subdivide his northwest Santa Rosa property into four lots.

In his lawsuit, he claims the city continues to pursue a taxing scheme on new development that has been found unconstitutional. He said the city still effectively requires people who want to develop their properties to join a special taxing district to pay for the increased costs of providing police and fire service to the new homes.

He claims the city is doing so despite a 2010 court ruling that found unconstitutional the part of the law that required people to vote in favor of annexation to the special tax district in exchange for development rights.

The law was passed in late 2008 when the city was desperate to raise cash as tax revenues plunged from the accelerating recession. Some developers likened the law to extortion.

The Homebuilders Association of Northern California sued to overturn the special tax, and Sonoma County Superior Court Judge Mark Tansil sided with the group, finding that it "unfairly tampers with the elective process."

In response, instead of requiring annexation to the special citywide tax district, the city now gives property owners several ways they can offset the increased cost of city services to their subdivisions.

They can voluntarily join the district, creating an annual tax on future homebuyers of about $430 for new homes and $310 for units in multi-family buildings.

Other options include paying a lump sum to offset future costs of police and fire service, or paying to provide private police, fire and ambulance service to future subdivisions.

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