8:19 PM PDT, July 7, 2012
I’ve been hearing rumblings about this for years, and in the midst of the 2012 tax season, I started getting the telephone calls asking me to write about it. But because of timing of it, and the amount of research I needed to do on it, it kind of fell by the wayside.
However, I will never forget that first conversation I had with Newport Beach/UCLA basketball legend John Vallely. He said the city was looking into raising the “fees” (read: taxes) involved with owning a commercial dock. He then started throwing out numbers that in no way could be true: a 20% tax/fee on gross income, a 20% tax/fee if you sell or refinance your marina property, and a 4% tax/fee if you try to improve your property through capital improvements.
If you own a business, after paying your federal and state income taxes, your payroll taxes and your sales taxes, could you imagine if you also had to pay another 20% tax on your gross income, not to the federal government, not to the state, not to the county, but to your city?
How fast would you be taxed out of business?
In an informal chat with City Councilman Keith Curry last month, we discussed this subject. His response was that the city was just expecting these commercial marina operators to pay their fair share and market rates to maintain the harbor, and that these fee (tax) increases would take place over five years, just like the 300% rent increases doled out to Newport Harbor mooring owners.
And before each of you discount these tax increases as just “rich people” problems — like it “must be nice to own a commercial dock” — consider this: Your family wants to rent a Duffy boat to cruise the harbor for your 25th wedding anniversary. If you can even find an operator who hasn’t been taxed out of business, you will then have to pay way more than you did before.
Or if the city can just inflict a 20% tax on this, what makes you think that they wouldn’t be so willing to inflict a 10% tax on donations — oops, the city already did that.
But it isn’t the 300% fee increases to the mooring owners or the 20% gross income tax on the commercial docks that caught my attention. No, it was the actions of Balboa Island resident Bob McCaffrey, when he formed the Stop the Dock Tax Political Action Committee that piqued my interest. Their website is stopthedocktax.com and it has plenty of information on this important cause.
McCaffrey believes the city will be turning its attention soon onto the residential dock owners. You see, it turns out that their private docks extend out over public tidelands and the city.
As Councilman Steve Rosansky said, “We’re supposed to charge fair market value for the use of the tidelands.” While the homeowner may own the home and the dock, he or she doesn’t own the water under it, so the city will want its share of payment. Sound familiar? (Balboa Peninsula beach encroachments?)
But instead of threatening with attorneys or going to City Council meetings to protest (he has), McCaffrey has decided to confront the council members by going political.
And this is something which has eluded many of the activists in Newport Beach and Costa Mesa for years now, and something I’ve been challenging them to do. If you sue, the city and its $1-million-a-year city attorney’s office will just legally respond. If you threaten a council member’s political existence, that ball will move much faster.
With Newport Beach, all you need to do is count to four (there are seven council members) to get a law passed or reversed.
By rattling a political sword in an election year, don’t you think that Curry, Councilman Ed Selich (both up for reelection) and council candidate Tony Petros might think twice before completely discounting McCaffrey’s PAC?
It’s a PAC that has already retained attorneys, a professional treasurer and supposedly a high-powered and well-connected political consultant (but “no one he wants to discuss right now,” McCaffrey said. Most importantly, it’s a PAC that has already been raising significant funds from other residential dock owners.
And if any of the council members want to run for higher office, the road to county supervisor or state Assembly might be much more difficult if they make themselves an enemy of a well-organized and well-funded PAC.
But again, “rich people” problems, right?
JACK WU is an accountant who lives in Newport Beach and practices in Costa Mesa. He is a longtime Republican Party loyalist and a volunteer campaign treasurer for Rep. Dana Rohrabacher (R-Costa Mesa). His column runs Sundays on the Daily Pilot Forum page. He can be reached at [email protected].