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Tuesday, December 11 , 2018, 10:54 am | Fair 63º


Debate Continues Over Goleta’s Proposed Detachment from GWSD

Conflicting financial reports and responses remain at the forefront

In the back-and-forth detachment debate of the Goleta West Sanitary District, each side has used financial consultants to advocate for or against detachment.

After the city of Goleta filed to detach from Goleta West, the district hired consultants to do a report evaluating the financial outcome of detachment.

The city then created its own report, by Bartle Wells Associates, that refuted much of Goleta West’s report. It concluded that it would fiscally benefit the city to detach and would not imply raised rates for residents.

At Goleta West’s board meeting Tuesday night, Raftelis Financial Consultants presented an analysis of the city’s financial report that centered on pointing out questionable conclusions of the Bartle Wells report. In short, it was an analysis of a report that was a response to its report.

The two reports used different fiscal years as a basis, and there’s a wide discrepancy in the numbers. Goleta has found that detachment would be a boon to the city’s finances, while Goleta West has found the conclusions to be based on unsupported assumptions.

The “questionable” assumptions included overlooking the revenue neutrality agreement, all property taxes being used for sewer enterprise instead of general services, underestimated post-detachment costs and overestimating cost savings.

As presented by Sudhir Pardiwala of Raftelis, the city assumes that its revenue neutrality agreement with the county will be renegotiated so that all property tax revenue will go to the city upon detachment.

As of now, the county would get a large portion of the taxes, and district counsel Steve Amerikaner said he doubts the county would give up that additional revenue during these economic times.

Bartle Wells consultants also presented incorrect estimates for future operating and maintenance costs, capital project costs and district reserve balances, Pardiwala said.

Board members held a constant conversation with Pardiwala as they asked questions about the discrepancies between the reports. Dr. Dave Bearman found the differences “troubling,” and all members at Tuesday’s meeting said they felt that the city’s report didn’t accurately portray the financial outcome of detachment.

They also doubted that Goleta could provide sewer service any better than their district, which has served a portion of Goleta, Isla Vista and EMID for more than 50 years.

“The city chastised us for using property tax funds, and now the city wants to do the same thing,” Craig Geyer said.

There has been no direct communication between Goleta and Goleta West, and no city representatives attended Tuesday’s board meeting.

The city of Goleta has talked about detaching from the Goleta West Sanitary District since its incorporation in 2002, but it’s weeks away from having the detachment go before the Local Agency Formation Commission.

LAFCO has the final say in detachment and the allocation of reserve funds if it’s approved. The issue is expected to be addressed in its March meeting.

Regardless of detachment, Goleta West must contribute $20 million to the Goleta Sanitary District’s wastewater treatment plant upgrade.

Notes from the Raftelis analysis of the Bartle Wells report:

» Rate increases for residents would increase in the next few years, but Bartle Wells expected a large, one-time increase while Raftelis expects more gradual increases over a five-year period.

» The EMID is currently served by Goleta West, though it’s out of its coverage boundary area. After detachment, Goleta West assumes that the city would take on coverage, while Goleta assumes that the district would continue its coverage.

» Capital project costs are underestimated by Bartle Wells, especially in calculating the cost of pipe replacement.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address).

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