The Santa Barbara County Board of Supervisors voted Tuesday to reject the City of Santa Maria’s tax proposal for the Richards Ranch development land, saying annexation would be a financial hit. 

The 44-acre development proposes homes and commercial buildings on the border of Orcutt and Santa Maria, and has set up a showdown between the government entities. 

At the heart of the dispute is whether the development should remain in Orcutt, an unincorporated community, or become part of the city.

The availability of water services is another major issue.  

After initial negotiations led to mediation and then arbitration over how to split property tax revenues in a potential annexation, an independent arbitrator favored the city’s offer.

However, the Board of Supervisors decided 3-1 to reject the arbitrator’s decision.

Supervisors Bob Nelson, Laura Capps and Roy Lee voted to turn down the offer, Joan Hartmann opposed the motion and Steve Lavagnino was absent. 

Nelson, who represents Orcutt and the southern portion of Santa Maria as Fourth District supervisor, said the decision to reject the city’s offer was “unfortunate” but “predictable.” 

The project site is important to the Orcutt community plan, he said, adding that the county should honor that plan.

Developer Michael Stoltey said the county evaluated the site “based on what it could be in the county compared to what it is.” 

There has been “no feasible path to development” for decades on this property, Stoltey said during public comment.

“The county has not solved water, has not initiated a project, has not rezoned the site,” he added. 

A financial analysis showed the county with gains from annexation, he said. Undeveloped, the county Fire Department gets essentially no revenue from that land, he added. 

The third-party arbitrator selected the city’s offer, “clearly demonstrating it was the most reasonable,” said Chuen Wu, Santa Maria’s assistant city manager. 

The county had “an unusually high number of requests” for infrastructure funding as part of its offer, Wu added during public comment. 

Assistant County Executive Officer Wade Horton presented the staff recommendation to reject the city’s offer. The county wants any change to protect its ability to provide and pay for services, he said. 

Overall, accepting the city’s offer would mean an estimated county loss of $212,000 in annual tax revenues, the county’s financial analysis reports. 

Richards Ranch proponents asked for a continuance to June, but Horton told the supervisors there wasn’t a reason to delay. Even with more time, staff would not recommend taking a $212,000 annual loss, he said. 

Hartmann asked whether negotiations on different offers could continue. Horton said the county could direct staff to engage with the city and developer again, but the city’s offer was the only thing on the table for consideration Tuesday. 

The Local Agency Formation Commission is considering the annexation application and held a hearing on the issue last year. 

LAFCO cannot approve the application if either the county or city rejects the tax offer, which sits with the county now. 

In terms of next steps for the project, Horton said he “can’t speak to that.” 

Richards Ranch Project Pathways

Stoltey is pursuing two paths to get the project built: through the city, which would require annexation, and through the county planning process. 

The land is on Union Valley Parkway east of Highway 135 in Orcutt. 

The developer’s application to Santa Maria proposes 500 apartments, 100 townhomes, plus businesses. That would require the city to annex the land, which many Orcutt residents oppose. 

A second application submitted to the county proposes 750 apartments under the state’s builder’s remedy provisions, which allow projects to bypass some local design and zoning standards. 

There are two active lawsuits challenging the way the county handled the builder’s remedy project application, according to Superior Court records.  

The city and county have gone through mediation and arbitration over splitting property tax revenues for the site as part of the annexation application process.  

Both entities made offers, and an arbitrator chose the city’s offer to present to the Board of Supervisors and City Council. 

That offer includes a 50-50 split of ongoing general fund and fire protection district property taxes, and county staff say it would not be enough to pay for its ongoing services to the area. 

Annexing the Richards Ranch development into the city would leave the Orcutt Facilities District, county staff said, and mean an estimated annual loss of $425,000. 

Overall, accepting the city’s offer would mean an estimated county loss of $212,000 in annual tax revenues. 

Stoltey and the city disagree with the county’s financial conclusions.