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Property Values Plummet Over $1.3 Billion in Wake of Montecito Debris Flows, Thomas Fire

Santa Barbara County property tax revenue losses estimated at $7 million this year and $14 million in 2018-2019, with financial repercussions throughout community

Numerous homes in the Glen Oaks Drive area of Montecito were destroyed in the Jan. 9 flash flooding and debris flows, leaving many properties nothing more than a sea of mud and boulders. Santa Barbara County officials estimate that the loss of property values from the debris flows and the Thomas Fire total more than $1.3 billion.
Numerous homes in the Glen Oaks Drive area of Montecito were destroyed in the Jan. 9 flash flooding and debris flows, leaving many properties nothing more than a sea of mud and boulders. Santa Barbara County officials estimate that the loss of property values from the debris flows and the Thomas Fire total more than $1.3 billion. (Bill Macfadyen / Noozhawk photo)

Beyond the death, destruction and disruption caused by the Jan. 9 flash flooding and debris flows in Montecito, there will be a staggering decline in assessed property values — one that likely will negatively affect local communities for years to come.

A preliminary estimate indicates that the assessed value of the nearly 400 homes, businesses and other real property damaged or destroyed by the mud and debris flows will plummet a cumulative $1.2 billion, according to Santa Barbara County Assessor Joe Holland.

That’s on top of the estimated $163 million in lower property assessments attributable to the 80 homes in the county damaged or destroyed by December’s Thomas Fire, which set the stage for the deadly onslaught of water, mud, boulders and debris.

That plunge in assessed valuations will translate to significant revenue losses for local public agencies — most notably schools in Montecito, but including the county, cities and various school and special districts.

The estimated combined revenue loss is $7 million for the current fiscal year, which ends June 30, and $14 million for the 2018-2019 fiscal year, Holland told Noozhawk.

A team of 17 people from the Assessor’s Office has been in the field for weeks, since shortly after the debris flows, trying to calculate the current values of damaged or destroyed properties.

“Reassessing property when there has been a fire is really straightforward,” Holland said.

For a structure that burned down, he explained, the Assessor’s Office typically removes the value of the improvements — the home or business and any accessory structures — and reduces the land value by 10 percent to 20 percent.

Things get considerably more complicated when it comes to the damage incurred on Jan. 9, however.

“For the debris flow and mudslide event, it’s a completely different animal,” Holland said. “I don’t know that many places have experienced this in my lifetime.”

The Assessor’s Office commissioned a detailed aerial survey to help with the process.

A home on Park Lane in Montecito was one of several destroyed in the neighborhood when the Thomas Fire swept through on Dec. 16. Officials estimate a loss of $163 million in property assessments attributable to the 80 Santa Barbara County homes damaged or destroyed by the wildfire. Click to view larger
A home on Park Lane in Montecito was one of several destroyed in the neighborhood when the Thomas Fire swept through on Dec. 16. Officials estimate a loss of $163 million in property assessments attributable to the 80 Santa Barbara County homes damaged or destroyed by the wildfire. (Urban Hikers / Noozhawk photo)

“It became real clear when we started looking at aerial pictures that entire lots were just gone,” Holland said. “You couldn’t even drive down the street and tell where the houses were.

“In some cases, nothing is there but a pile of boulders. Obviously, that’s going to remove the assessed value of the improvements, but now you have to ask yourself, what’s this lot worth?

“There are places where you could see that the creek bed went from being 20 feet wide to 200 feet wide, and a few of the lots are smack dab in the middle of it.”

In that scenario, it’s possible that some property owners will not be allowed to rebuild, Holland said, which means some parcels “may not have any value — close to zero.”

Reassessment of damaged or destroyed properties is not automatic; affected property owners all need to sign forms asking the county to lower their assessments, Holland said.

Affected property owners also may be eligible to defer property tax payments.

Click here for information from the Assessor’s Office and to obtain forms.

The following are the estimates for property tax losses for public agencies in Santa Barbara County due to the Thomas Fire and the Jan. 9 debris flows (2017-2018/2018-2019 fiscal years):

» School Districts: $2,680,964/$7,725,176

Virtually nothing is left but a vast sea of mud and boulders where the Old Spanish Town conclave once stood along Montecito Creek below East Valley Road. Click to view larger
Virtually nothing is left but a vast sea of mud and boulders where the Old Spanish Town conclave once stood along Montecito Creek below East Valley Road. (Bill Macfadyen / Noozhawk photo)

» Santa Barbara County: $1,286,545/$3,142,153

» Education Revenue Augmentation Fund: $928,664/$1,922,721

» Dependent Districts: $602,838/$280,535

» Community Colleges: $392,754/$838,829

» Cities: $390,980/$19,168

» Independent Districts: $346,793/$2,242,071

» Santa Barbara County Office of Education: $269,829/$576,053

[Scroll down for a complete list]

Officials at affected agencies have begun to grapple with how to respond to the loss in revenues.

Their options typically are rather limited — digging in to reserve funds, reducing staffing and other expenditures, appealing to the public for donations, or some combination.

Many also are hoping the Legislature comes through with a bailout — a backfill of lost property taxes — to soften the financial blow.

Gov. Jerry Brown has proposed a 2018-19 budget that includes $24 million in backfills for agencies in Northern California affected by that region’s massive wildfires last fall.

It is expected that additional money will be added for Southern California agencies affected by wildfires and flooding — including those in Santa Barbara County — when Brown releases his May budget revise, according to Marly Young, communications director for state Sen. Hannah-Beth Jackson, D-Santa Barbara.

A look at three affected public school districts — one large and two small — gives a sense of how public agencies are planning to deal with this financial challenge.

The Montecito Union School District faces an estimated loss of almost $1.6 million in property taxes in the next fiscal year due to a decline in property values resulting from the Thomas FIre and the Montecito flash flooding and debris flows. Click to view larger
The Montecito Union School District faces an estimated loss of almost $1.6 million in property taxes in the next fiscal year due to a decline in property values resulting from the Thomas FIre and the Montecito flash flooding and debris flows. (Zack Warburg / Noozhawk photo)

The Montecito Union School District faces an estimated loss of almost $1.6 million in the next fiscal year.

To address that shortfall, the single-school, kindergarten-through-sixth grade district is planning to tap its sizable reserves, trim administrative expenses, reduce staffing, and cut back on other expenditures, according to Anthony Ranii, district superintendent.

The cutbacks are starting at the top, Ranii said, noting that he is forfeiting a scheduled 3-percent raise for the coming school year, and administrators will work fewer days, essentially being furloughed, with corresponding reductions in pay.

In the face of declining enrollment, the district will have fewer classes, and will trim staff by 5.6 Full-Time Equivalents (FTEs) in the instructional and specialist ranks.

“We’re ‘right-sizing’ our district,” Ranii said, noting that district enrollment has declined about 20 percent in the last seven years, and is expected to fall to about 375 students next year from 402 this year.

The tiny Cold Spring School District, which experienced two student deaths in the Jan. 9 debris flows, is facing a potential loss of $485,000, or roughly 9 percent of its budget, next year, according to Amy Alzina, superintendent/principal.

The K-6 single-school district is reaching out to the public to address the shortfall.

“Without the community’s help, the consequence of such a major economic loss would be the loss of teaching staff and treasured arts and music programs,” Alzina said in a recent statement.

“Cold Spring’s children have been deeply impacted by the death of two students (kindergartener Peerawat “Pasta” Sutthithepa and sixth-grader Sawyer Corey) and the devastation of neighborhood homes.

“We cannot add to that tremendous loss by eliminating teaching staff and arts and music programs. We are turning to the community to help our school keep the high-quality teaching staff and programs currently at risk because of the Thomas Fire-flood devastation of homes and property.”

Donations can be made to the Cold Spring School Foundation.

At the other end of the scale, the Santa Barbara Unified School District is facing a loss of $2.3 million next year out of a roughly $169-million budget, according to Assistant Superintendent Meg Jetté. The district handles junior high and high school for Montecito.

The district’s Board of Education “has made no decisions on what is going to happen or what’s not going to happen” to address that shortfall, Jetté said.

Possible approaches include putting less money into the district’s reserve funds next year and leaving vacant positions open, she said.

The weaker financial position also is likely to affect contract negotiations with the teachers and other employee groups, Jetté added.

Ranii and Jetté both pointed out that the decline in assessed valuation — and accompanying drop in tax revenues — is not a one-time occurrence, and will require budget adjustments in future years.

No one knows how long it will take the community to substantially rebuild and boost the assessed valuation back to what it was, but the timeline undoubtedly will be measured in years, not months.

Noozhawk executive editor Tom Bolton can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

Santa Barbara County: Preliminary Estimated 2018-2019 Property Tax Losses by Giana Magnoli on Scribd

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