During a recent Lompoc City Council meeting, a plan to annex property along Bailey Avenue in order to build new dwellings and 125,000 square feet of commercial space was discussed. Whether this annexation will be approved, or the project will ever be built, is an open question.
Currently in Lompoc there are several approved development plans to build 680 new homes. However, all have been on hold for several years, with some for 15 years.
Only one project, which would eventually produce 44 homes starting at $500,000 each, is in the early construction phase. Like other housing tracts, this one will be built in phases.
When each of the projects was presented for approval, the proponents always emphasized the value of their projects to politicians. Their predictions of producing increased revenue from property taxes and sales taxes from the purchasing power of new residents caused optimism for City Council members.
To buy a $500,000 home, you’ll need to come up with a down payment, then you’ll have to pay monthly mortgage payments, plus property taxes of well over $5,000 a year.
That’s a lot of money, and prospective new owners will need to earn a substantial income to afford one.
But if you’re making enough money to afford one of those homes, would you chose to live in Lompoc or try to find another community closer to where you work, has better shopping choices or that has more “curb appeal”?
During a Nov. 19 City Council meeting, Councilman Jim Mosby, who is a supporter of the new project and the building of more houses in general as a way out of the current fiscal crisis, tried to explain the value of such projects to the city General Fund.
He asked the finance director “how much tax would 1,000 new homes produce?”
The finance chief said, “Assuming the homes were valued at $500,000, we would expect about $600,000 in property taxes. And if you’re talking about a person who could afford a house in the $500,000 range, you’re talking about a revenue generator of sales tax in about the $300,000 to $400,000 range”.
Some intoxicating drift smoke must have found its way into the council chamber when Mosby then made the point that building a thousand new houses “could produce almost $1 million in revenue for the General Fund.”
But Mosby’s fiscal fantasy needs a reality check.
First, it assumes that all the homes included in projects currently approved, and those of the Bailey Avenue annexation request, will be built and sold in the first year; that never happens with these projects. It usually takes multiple phases spread over several years to build out the entire project.
Second, the project being considered was only going to produce 450 homes, not the 1,000 in the example.
Lastly, it assumes that people in that income bracket would shop exclusively in Lompoc’s discount stores and thrift shops, which seem to dominate the local shopping experience.
If the Bailey Avenue project, which was the subject of this meeting, is completely sold out, the annual property tax revenue would only be around $300,000, minus what the county will skim off as part of the annexation deal, and potential sales tax revenue would be about $150,000. That’s just half of what Mosby suggested.
I would call that misleading the public and his fellow council members concerning the value of the project. And who knows if this annexation will be approved or the project will ever be built.
Many developers have proposed projects like this over the last two decades, but approved market value residences remain in limbo.
Mosby likes to consider himself a “budget expert” but he frequently oversimplifies financial issues. He wants to convince us that he is an “expert” by waiving sheets of paper in the air and playing “gotcha” with the staff.
Some of us aren’t convinced that he really knows what he is talking about most of the time.
If he really wants the title of expert, then he needs to put some reality into his calculations. As an experienced council member and local businessman, he should know that a property that has only a development plan, but no completed buildings to sell, will bring considerably less property tax than the completed project.
Mosby needs a new algorithm if he is going to succeed as a budget expert. He also needs to improve his credibility if he intends to run for re-election to his council seat or another office next November.
— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committees since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at email@example.com. Click here to read his previous columns. The opinions expressed are his own.