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Saturday, February 16 , 2019, 8:50 am | Fair 52º


Goleta, GWSD Waiting for County to Weigh In on Detachment Debate

Mayor Eric Onnen says the move to detach would put the city on better footing in renegotiating its revenue neutrality agreement with the county

The detachment debate of the Goleta West Sanitary District has reached a bit of a stalemate.

Goleta City Manager Dan Singer has the application about 95 percent completed, but he — and the rest of the city — are waiting for Santa Barbara County’s opinion on the matter.

The county can decide to respect the city’s decision to detach, pull out of the unincorporated areas the district covers or oppose the detachment.

GWSD serves Isla Vista and the Embarcadero Municipal Improvement District, as well as western part of the city of Goleta.

County input will have a big influence, as it had jurisdiction over much of the district’s coverage area and still holds financial power over Goleta with its revenue neutrality agreement.

As a condition of Goleta’s incorporation, the county receives 50 percent of the city’s property taxes, 50 percent of sales taxes and 40 percent of hotel bed tax revenues.

The biggest financial incentive to detachment is the property taxes that will flow to the city instead of Goleta West — which won’t happen if the revenue neutrality agreement isn’t renegotiated.

The idea to detach isn’t new, but Goleta has its reasons for pursuing it now.

Besides the threat of the state taking special district assets away, the city wants political courage in pursuing revenue neutrality agreement negotiations, Mayor Eric Onnen said. Part of the agreement has already “softened,” as the county forgave the city’s $1.5 million start-up loan because of competing tax proposals, he said.

Onnen said he sees the agreement as unfair, and although he admits it may be naïve, he hopes the county will be understanding and cooperate with a more reasonable agreement. “We continue to pay for the privilege of being a city,” he said.

Because of the agreement’s tight hold on city taxes — which amount to millions of dollars per year — Goleta has looked for other sources of revenue, including the chunk of taxes currently going to Goleta West.

Goleta Mayor Eric Onnen wants the city's residents to receive a larger portion of property tax revenue, some of which goes to the county through a revenue neutrality agreement
Goleta Mayor Eric Onnen wants residents to receive a larger portion of the city’s property tax revenue, about 50 percent of which goes to the county under a revenue neutrality agreement. (Giana Magnoli / Noozhawk photo)

Goleta has paid $62,005,532 to the county through the revenue neutrality agreement since its incorporation, including the projected $6,924,933 for the 2009-10 fiscal year, finance director Tina Rivera said.

The millions of dollars come from transient occupancy taxes, sales taxes and property tax revenues, with about half coming from sales taxes.

County staff are analyzing the financial reports — which have been commissioned by both Goleta and the Goleta West Sanitary District and often contradict the other’s conclusions — as well as continuing revenue neutrality agreement discussions, Third District County Supervisor Doreen Farr said.

While the detachment decision ends at the Local Agency Formation Commission, or LAFCO, the county’s opinion could be a major factor. About half of Goleta West’s coverage area is within the city and half is unincorporated county territory.

Farr is an alternate on LAFCO, which has seven members, with fellow Supervisors Janet Wolf and Joe Centeno getting votes on the subject. The issue hasn’t been scheduled for a meeting yet, and Farr is primarily concerned about how unincorporated areas would be affected by detachment.

“My first obligation is to people of my district, in or outside of the city,” she said.

The county also may consider its bank account, as it will be losing a chunk of revenue neutrality revenues come 2012, when all bed taxes and 20 percent of the sales tax taken by the county revert back to the city. However, the 50 percent portion of property taxes flows to the county forever under the current agreement.

The board previously voted to allow Goleta to pursue detachment, but it has made no final decision. A big question is, if the city detaches, what would happen to the remainder of Goleta West’s service area?

Farr’s concerns center on quality of service, effects to rates and street-sweeping duties.

Isla Vista and the Embarcadero Municipal Improvement District are raising the most opposition to detachment — besides Goleta West — given their uncertain future.

Outside the city limits, their fate could rest with the county.

EMID has a separate contract with Goleta West since it is unincorporated and outside the coverage area, and board officials have opposed detachment and are “nervous” about the impacts of detachment, Singer said.

Isla Vista landowners also have been organizing opposition, as their community most likely would be hit hardest with rate increases to make rates equal across the board, Singer said.

Goleta West’s rates have historically been lower than the Goleta Sanitary District because it subsidizes it with property tax revenues. “Isla Vista’s had it good for a long time,” Singer said.

Portions of Goleta West’s service area that are detached — if any — most likely will be contracted out to the Goleta Sanitary District so rates are equal throughout the city, he said.

The district board has submitted a proposal to Goleta discussing coverage and also has discussed the hiring of Goleta West’s few employees, which is a key concern of the county and LAFCO. Goleta West has a five-member board of directors as well as about five employees who could lose their jobs if detachment goes through.

For now, the detachment and revenue neutrality agreement seem “tangled,” Farr said.

Without a renegotiation, there’s no financial incentive to pursue detachment, Onnen said.

While Goleta West was prudent with its money — “they weren’t off the reservation,” he said — the property taxes should have been invested to bring community benefit on a reasonable time line.

Goleta’s interest is being fair to taxpayers, which is why Onnen wants to pursue renegotiated agreements with the county and detach from Goleta West — to give city citizens the slice of property tax pie he says they deserve.

“We won’t stop until we’ve exhausted every means to get a fair outcome for the city of Goleta,” he said.

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

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