It’s interesting, albeit ironic, that the same people who accuse me of relying on talking points all seem to be reciting the same talking points.

A business (including a developer) does not and cannot be made to pay taxes. The owner of the company may write a check to the government, but that cost is ultimately passed on to and paid by the consumer. Here, that consumer is people buying a home in Dana Point.  So our residents do ultimately pay that tax. In fairness, that’s not originally my concept; it’s Milton Friedman’s. You can look him up or even buy one of his books. Henry Hazlitt’s Economics In One Lesson would also be a good read for you.

Further, in an arrangement such as the Transportation Corridor Agencies (TCA), which continues to sink deeper into debt with no apparent way out, eventually creditors will no longer allow them to refinance or extend them additional credit. When and if the TCA goes bankrupt, the taxpayer will ultimately be held responsible and will bear the cost of their debt, currently approaching $7 billion, according to a press release issued by the City of San Clemente.

I’m not against the toll roads. I use them regularly. But the toll roads were intended to be self-sufficient, relying on toll revenue to pay back the cost of construction financing. Even with the additional taxes they collect, their debt continues to explode. The taxpayers shouldn’t be forced to subsidize my drive to work. And the TCA’s mission creep into boondoggle consulting contracts and political advocacy needs to be stopped.

I’m against government waste, cronyism and government agencies that operate as though they aren’t accountable to the taxpayers.  Any honest representative of the people shouldn’t need to take a “wait and see” approach.  You’re either against government waste or you’re not.  The City’s resolution didn’t do anything but voice support for an independent audit, since the TCA has proven incapable of policing itself.  Like I said, that should be an easy thing to endorse.

So you shouldn’t disparage my integrity or motivations. I speak only as a private citizen and taxpayer.  However, everyone should question the integrity and motives of the three councilmembers who can’t bring themselves to vote against wasteful spending at the TCA. Anyone should be able to do that without hesitation. Anyone who isn’t hoping to benefit from it.

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comments (2)

  • Thank you for the lesson in real estate economics. I have updated our acquisition models to reflect “ultimately passing costs onto customer”. This entire time we have been documenting our future revenue assumptions based off this crazy market value concept. The real estate development world needs to thank you.

    Later tonight I will be removing the required market analysis- as our project out will be simply passing costs incurred along to the homeowner.

    Monday- I will be reaching out to the Limited Partners and renegotiating the pref. from 10%-12% down to 6%. Not really a lot of risk since we ultimately pass down the costs. Also- not sure why we can’t change the split on the promote.

    Finally, that ever so problematic loan guarantee for our final sources can hopefully be removed. Why require a strong balance sheet from the developer if the disposition of the asset not relative to the fair market value?

    Thanks again, you have taught everyone a lot about the mechanics of how developers “pass costs along”

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