Solvang’s future depends on balancing tourism-driven revenue with the needs of full-time residents, Mayor David Brown said while outlining priorities around housing and infrastructure during Monday’s State of the City address.
The annual event, hosted by the City of Solvang and the Solvang Chamber of Commerce, drew about 120 local business owners and residents who gathered at the Craft House at Corque to hear updates on the city’s direction and upcoming projects.
“While Solvang means sunny fields, like every city, there are some clouds on the horizon,” Brown said before noting that this year marks Solvang’s 40th anniversary of incorporating to become a city.
Much of Solvang’s capital planning is made possible by tourism, which Brown said accounts for about two-thirds of the city’s general fund revenue. He cited steady hotel occupancy rates and more than $1 million in revenue added through the Measure E hotel tax hike as key contributors to the city’s financial stability.
“Money is only half the story, though,” Brown said.
Even with strong sales tax revenue and visitor spending, he said the city must plan ahead to protect its livability for residents. He described long-term sustainability as the City Council’s guiding objective.
“Bottom line, Solvang can’t just be a place for people to visit,” he said. “It has to be a place where people can live and work.”
To address housing needs, Brown said the city is reviewing its urban growth boundary, or area for future expansion of the city limit, and now allows commercial-to-residential conversions with limited review.
“This is a defensive strategy to state-mandated housing units for future options and for our own control,” he said. “Not multi-story housing in our area.”
Brown cited three recently approved residential units downtown as an example of thoughtful infill. He reiterated the city’s commitment to preserving Solvang’s historic, small-town character.
“Our heritage is our brand and compass,” he said.
While Solvang’s finances remain stable, Brown said the rising cost of essential services is unsustainable. Public safety contracts with the Santa Barbara County Sheriff’s Office increase 5% to 8% each year, which he described as “exorbitant,” especially for a city with low crime. The city recently approved a three-year pilot program to install AI-enabled cameras as a less expensive way to enhance law enforcement efforts and public safety.
Traffic and infrastructure were also key concerns. Brown called the congestion on Mission Drive a “hot topic” and said major traffic improvements are unlikely to move forward for at least three years, possibly closer to five, because of what he described as the “glacier pace” of the government.
He also explained the need to modernize the city’s technology and utility systems, including plans to install underground fiber-optic lines and upgrade the wastewater treatment plant to meet state requirements by 2028. Delaying those improvements, he warned, would lead to “double labor” costs.
City Manager Randy Murphy joined Brown to field questions ranging from infrastructure timelines to parking concerns.
The event included recognizing Bent Olsen of Olsen’s Danish Village Bakery, honoring more than five decades of preserving Solvang’s Danish traditions.
Olsen, a fourth-generation master baker born in Denmark, moved to Solvang in 1965 and opened the first bakery with his wife, Susy, in 1970. They have since grown their footprint to include four businesses in town.
At the start of the afternoon event, economist Mark Schniepp, director of the California Economic Forecast in Santa Barbara, the event’s keynote speaker, delivered a presentation on national and state economic trends and described California’s labor market as “feeble.”
“The labor markets, which are always key, are still creating jobs, but we’ve seen a meaningful slowdown,” he said.
Schniepp pointed to the stock market, which he said is at or near all-time highs. He said that is a sign of stronger-than-expected growth that boosts consumer confidence and drives spending.
As he offered reasons why people may remain pessimistic about the economy, Schniepp mentioned a few possible answers, such as fear of increased tariffs, high home prices and high interest rates before providing another option.
“My gardener got deported,” he read from his slide presentation, referring to immigration enforcement efforts.
Later, one audience member called the comment “very inappropriate” and “poorly done” in the current times, recommending he remove that from the presentation.
“It’s very offensive,” the woman added.
“OK, fair comment,” Schniepp said before immediately asking for another question.