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Harris Sherline: Small Minority Thwarts Santa Barbara County Planning Process

Miramar Hotel project an example of the few overriding the will of the many

Government regulation is a major contributor to the high cost of housing in Santa Barbara County, and although the approval process for real estate development has reportedly been improved, there is still much to be desired.

Over time, private property rights in Santa Barbara County gradually morphed into public rights, enabling a small minority to drive the approval process. It has become possible for just a few people to frustrate the wishes of an overwhelming majority of the community, making it too easy for a small group of obstructionists to game the system or make unreasonable demands and extract inappropriate concessions from property owners.

There are built-in protections to ensure that the minority is fairly represented through hearings and appeals. But just how small a minority? And what about the majority? Especially an overwhelming majority?

The issues that surfaced during Ty Warner’s acquisition of the Miramar Hotel and his protracted efforts to restore the Coral Casino clearly demonstrate that there is a long way to go before processing of land-use applications in Santa Barbara County will be truly fair to applicants.

Just about everyone seemed to have been in favor of Warner’s purchase of the 17-acre Miramar parcel to build a new hotel. However, notwithstanding this reality and the fact that the property’s construction rights were extended, only one individual needed to raise an objection to conceivably kill the project. Not because of the merit of his claim, but because of the delays, expense and uncertainty inherent in the appeals process.

One party initially claimed that the prior owner and/or Warner should be assessed for the county’s loss of bed tax revenues since the Miramar Hotel closed, which reportedly could be as much as $20 million. But nothing was said about the fact that those visitors who would have stayed at the Miramar and paid bed taxes surely must have obtained lodging at some other hotel and paid bed taxes anyway, which makes it hard to see how there could have been any loss of tax revenue at all.

Although both the county and the California Coastal Commission rejected the appeal as “frivolous,” he persisted in opposing the project, changing his arguments against it and saying he will shift his appeal to the courts, if necessary. Just why he did this is not really clear, but no matter, he has that right, and that’s the problem.

There was overwhelming support for Warner’s acquisition of the property. People are sick of looking at the eyesore that once was the charming Miramar Hotel with its famous blue roofs.

Warner has an excellent reputation as a hotel owner and developer and has both the desire and the financial wherewithal to make the Miramar a premier facility.

Unfortunately, the support of the vast majority is not enough to guarantee approval. The Miramar situation shows how just one person can conceivably kill a major project simply by advancing even an off-the-wall notion. In this case, that a landowner should pay taxes based on a prior use of the property after that use is discontinued. By simply raising an objection, even a specious one, it became possible to delay or potentially block a project that was obviously an appropriate and desirable use of the property.

The Miramar property was subsequently sold to Rick Caruso, who scaled back the size of the project to make it more financially feasible.

Potential objections, legitimate or not, can stall a project to the extent that many applicants decide it’s not worth the aggravation and expense. In the case of the Miramar Hotel, in effect, one person would have been empowered by the county’s review and appeal process to block an important project that almost everyone wanted.

Another example of the problem was the Montecito Planning Commission’s review of Warner’s effort to renovate the Coral Casino, which spanned more than 100 meetings over a period of five years. Supporters of the project worried that he might finally get fed up and drop the project.

Furthermore, we never hear anything about the cost of the extended delays and excessive review of projects. In the case of the Coral Casino, a rough estimate of the fees for attorneys, architects, engineers, planners and the like to attend 100 meetings at an average hourly rate of, say $150, and an average of four hours per meeting adds up to about $240,000, not including the staff, administrative and professional time spent in preparation. In addition, the carrying cost of the properties involved — that is, interest, taxes, insurance, maintenance, etc. — can run into hundreds of thousands of dollars. How many applicants are willing or able to absorb such expense?

Over the years, this has resulted in a succession of land-use and development decisions that have been abusive and unfair to property owners, large and small alike, many of whom have just been homeowners who merely wanted to improve or expand their homes. The landscape is littered with the shattered dreams and wasted finances of many applicants who simply could not afford the high cost and delays involved in the county’s planning process.

Why should this matter to the residents of Santa Ynez Valley? Because a large part of the valley is in unincorporated county territory. This means that much of the planning and processing for real estate projects in the valley is controlled on the “South Coast,” where the Planning and Development Department has historically been directed and staffed by people who are opposed to growth.

Real property development in the valley will probably continue being controlled out of Santa Barbara for the foreseeable future. And although the county Board of Supervisors reorganized P&D, my guess is that it will still be possible for a small minority to thwart the interests of the majority for a very long time. It has taken more than 40 years to establish Santa Barbara’s anti-growth culture, and it will take many years to change it in any meaningful way, if that’s possible. The current political composition of the Board of Supervisors portends a very long and difficult journey to reform the process.

— Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who as lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his blog, Opinionfest.com.

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