Three midtown property owners have filed a lawsuit against Sacramento’s streetcar project, saying a part of the city’s funding plan is illegal.
The suit, filed last week in Sacramento Superior Court by a San Diego law firm, challenges a downtown financing district the city has set up to help with the four-mile streetcar, which would connect West Sacramento, downtown and midtown, traveling over the Tower Bridge.
The city established the district, which is made up of about 300 properties, after owners of those properties agreed in a vote to tax themselves $50 million over the next 25 years. That money would go toward helping pay the ongoing operating costs after a streetcar line is built.
City officials and streetcar advocates are expected to obtain the $200 million project’s construction money by signing a $100 million grant agreement with the Federal Transit Administration later this year, and by cobbling together another $100 million in local and state funds.
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An attorney for the petitioners’ law firm, Eric Benink, citing a San Diego court case, said the city should have held a vote for all city residents. The San Diego case involved a hotel room tax to fund a convention center expansion. An appellate court ruled the tax was invalid without approval of city voters. In that case, the city had set up a citywide taxing district. In the Sacramento case, the taxing district is limited to a group of commercial properties downtown.
Eye on Sacramento, a group that has challenged local government spending, provided the initial funding to launch the lawsuit, member Steven Bourasa said. Bourasa said his group opposes the streetcar project and believes the city concocted a gerrymandered Mello Roos voting district to assure a yes vote.
Two of the lawsuit plaintiffs are listed as property owners in the district, Horizon Capital Investments and William Gekakis. The third is Delphine Cathcart, a city resident who lives outside the financing district.
Officials with the city attorney’s office could not be reached for comment.