Supervisors consider excessive energy use tax for 2016: Measure would target illegal indoor marijuana grows in unincorporated Humboldt County

The Humboldt County Board of Supervisors directed staff and a board subcommittee on Tuesday to lay the groundwork for an excessive energy users tax for unincorporated areas of the county.

The proposed tax would be similar to the City of Arcata's Measure I -- a tax measure targeted at illegal indoor marijuana grows -- which implemented a 45 percent tax on residential homes in areas of the county that exceed the residential energy use baseline by 600 percent or greater.

County Administrative Officer Phillip Smith-Hanes said that about 3,000 homes served by Pacific Gas and Electric Co. in the unincorporated county area would have qualified for this tax over the last three years.

"If there had been a tax on the non-care customers last year at the 45 percent level ... the county would have generated almost $8 million from that tax," Smith-Hanes said.

Since Arcata's tax was implemented in October, Smith-Hanes said a three-month survey of data has shown a 91 percent decrease in these excessive energy users and a 65 percent decrease in the number of kilowatt hours. While this was the intention of the tax, Smith-Hanes said it also "substantially" reduced its revenue to the city. If the same effect resulted with the county's tax, Smith-Hanes said the revenue would drop from $8 million to the "$300,000 range."

Third District Supervisor Mark Lovelace said that the tax would benefit the county in three ways -- reducing environmental impacts, reducing housing stock that is "being consumed by grows" and generating revenue -- but could not have them all at once.

"That benefit plays squarely against the other two," he said. "The more of the first two benefits we realize, the less revenue we bring in."

Arcata City Councilman Michael Winkler said that Arcata's tax was made to target large illegal grows, which usually exceeded the baseline energy usage by "about 1,200 percent."

Winkler said the tax has not affected qualified medical marijuana patients who follow the law.

"Under Arcata regulations, somebody is allowed to have a maximum of 50 square feet of indoor marijuana grow," Winkler said. "According to calculations ... if someone did a maximum grow, they would be using about 200 percent over baseline alone."

Since the tax was implemented, Winkler said complaints concerning large-scale grow houses "have virtually disappeared."

With there being "no such thing as an excessive energy use tax," and Measure I only implementing a "differential rate" within Arcata's existing utility users tax, Smith-Hanes said the county would have to start from scratch.

"The county has never had a utility users tax in the unincorporated area, so we'll need to do some legal research about that," Smith-Hanes said.

Second District Supervisor Estelle Fennell voiced concern over county users reacting to the tax by dropping off the PG&E grid and obtaining energy from more environmentally harmful sources such as generators.

"This was presented as something to address impacts on the environment," Fennell said. "A big concern brought up was about ... diesel, which would have a big impact on the environment."

As the tax would have to be voted on during a general election, the board also addressed the topic on whether to make it a general purpose tax -- which would require a majority vote of the electorate -- or a special tax, which would require a two-thirds vote.

Fourth District Supervisor Virginia Bass expressed caution about implementing a new tax measure.

"We have to be very careful with what we bring forward," Bass said.

Fennell also said she wanted to know more on what the baseline rate would be for unincorporated areas and other discussed topics before deliberating on any measure.

"We've asked a few questions, but there haven't been clear answers," Fennell said. "I'd like there to be clear answers before we move forward," Fennell said.

Lovelace said that more time should be given to "get some sense of the community's receptivity to this."

The board unanimously voted to have staff and the subcommittee -- consisting of 1st District Supervisor and Board Chairman Rex Bohn and 5th District Supervisor Ryan Sundberg -- create a work plan for the tax with the goal of a measure being placed before the voters on the 2016 general election ballot.

Will Houston can be reached at 707-441-0504 or whouston@times-standard.com. Follow him on Twitter.com/Will_S_Houston.

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