Solvang leaders discussed their record-breaking financial year, bringing in $13.1 million in funding, at Thursday’s State of the City event.
The annual event, which is held by the city and the Solvang Chamber of Commerce, drew over 100 people from various city organizations, county officials and residents alike.
Throughout the meeting, the city highlighted its financial strength driven by tourism, which accounts for approximately 70% of the city’s general fund revenue, according to city marketing and events coordinator Candice Libera. In the last fiscal year, which ended June 30, the city generated a record-breaking $8.4 million in transient occupancy tax revenues, which is paid by guests who stay in short-term rentals, hotels and motels.
With that, in addition to $2.2 million in regular sales tax and $2.54 million from the Measure U sales tax, Solvang brought in $13.1 million in funding last fiscal year.
“These results demonstrate that Solvang is currently in a strong financial position and can provide critical resources for city services, infrastructure, public spaces, and community programs,” Libera said.
However, while the general fund is currently stable, Administrative Services Director Wendy Berry warned under the city’s new 30-year capital improvement plan, water and wastewater enterprise funds are projected to fall into deficit by 2030. While she said this doesn’t represent an immediate emergency, she warned the city of this potential deficit now to act accordingly.
Community Development Director Rafael Castillo announced that the city has slashed its municipal permit processing time from 151 business days down to under 30. Therefore, the city’s construction valuation has risen to $10.7 million as local business owners can reinvest their profits back into their properties due to the shorter wait times, he said.
Castillo also pointed toward the city’s unaffordability. He said renters make up 43% of the community and 30% of those monthly payments exceed $3,000.
He said the state-mandated rezoning of three high-density sites “tore (the) community apart,” and that there are only 12 affordable housing units currently planned for development.
Castillo also spoke on the contentious Wildwood apartments, which was planned to initially be 100 units. Now, the project is now sitting at 50 units to remain compliant with zoning. However, he noted the project’s application is still under review.
Noticeably absent from the meeting was discussion of demands from Teamsters Local 986, the labor union which represents Solvang employees. The group declared an impasse in contract negotiations due to rejecting the city’s proposed pay increases.
Solvang leaders offered Teamsters members working for the city an annual 4% cost-of-living increase for the next three years, which the union unanimously denied.
The evening before the State of the City, all union-represented employees but one demonstrated outside of Solvang’s Music in the Park downtown in order to bring attention to their demands.
“We’re not trying to be disruptive by any means, but we think it’s important that the city leadership hear directly from us, and we certainly don’t want anyone to paint a picture that everything’s wonderful and great and Solvang,” Teamsters Business Representative Jeff Lee said.
With talks stalled, the City Council plans to conduct a public hearing on Sept. 14 to discuss whether it should implement the 4% increase for workers.
