Should the City of Goleta take on the additional responsibility of running a sewer district, and with it, take over the approximately $29 million the Goleta West Sanitary District (GWSD) has in reserves? Without having to dedicate the money, necessarily, to the running of the sanitary district?
Would the approximately $1.3 million in annual property tax income now going to the sewer district be better used by the city? Or by the city and county?
The City of Goleta started the process of “detachment” from the Goleta West Sanitary District a few years ago, working on an application to the Local Agency Formation Commission (LAFCO) in order to take over managing sewer services for businesses and residences within the city limits.
Martha Rairden Lannan
Questions about future rates, financial reserves, and use of property tax revenue are just some of the reasons widely differing opinions exist about the wisdom of such a move.
Proposition 13 provisions, in place for 55 years, granted Goleta West Sanitary District a portion of property tax income, rare for a special district. Most operate on fees alone, not property taxes and fees. Because of the tax income, Goleta West Sanitary District currently charges its customers much less — about half as much — as the Goleta Sanitary District does.
The city contends that it — not the sanitary district — should receive property tax income now going to GWSD, and that it could use the money for recreation programs, the library budget, roads, etc. while paying for sewer services from fees alone.
However, there’s at least one fly in the ointment. Santa Barbara County and the City of Goleta have a Revenue Neutrality Agreement that would allocate 70 percent of any new property tax revenue the city receives to the county. City officials have hoped for a renegotiation of these terms, but nothing has changed. As things stand now, if granted detachment, the city would receive just 30 percent of $1.3 million the sanitary district currently receives. The county would garner the rest.
If approved by LAFCO, the detachment is likely to leave only Isla Vista and Rancho Embarcadero customers in the Goleta West Sanitary District, and even that is not a certainty.
Consultants for GWSD contend that rates for Isla Vista properties, which would still be served by the sanitary district, would increase substantially should the reorganization take place. Advisors to the City of Goleta, on the other hand, predict little change in rates for the remaining Goleta West customers if the detachment proposal is approved.
The proposed change would clearly benefit the city financially. Millions in property tax revenues the sanitary district has accrued and put away — which are now committed primarily to upgrades at the processing plant operated by Goleta Sanitary District — would be transferred to the city’s coffers. And the city would have discretion over how that money is spent.
At its October 14 special meeting, LAFCO determined that the City of Goleta’s application to detach from Goleta West Sanitary District was complete. A public hearing on the merits of the proposed detachment will take place at 2 p.m. on Thursday, December 2, in the County Administration Building, 105 E. Anapamu Street in Santa Barbara.
Comments
Great article. Factual and correct. Hope that the public is paying attention.
drdan
drdan93109 (anonymous profile)
November 15, 2010 at 6:57 a.m. (Suggest removal)
Seems to me that City needs to prove two things before it gets a dime from this:
1. that the property taxes aren't needed by the District.
2. that the property taxes aren't needed by the taxpayers.
I'm hoping LAFCO understands that question 2 is something begging an answer.
OldDawg (anonymous profile)
November 15, 2010 at 8:06 a.m. (Suggest removal)
Please check facts before you publish an article. The following needs to be corrected.
1. Prop 13 was passed in 1978, so the provisions have been in place for 32 years, not 55.
2. Rather than being unusual, it is actually the norm that special districts operate on both fees and taxes.
3. The City of Goleta's rate study on the impact of detachment predicts a drastic change in rates for Isla Vista and the remaining GWSD customer. In fact, the City predicted even higher rate increases than what GWSD's consultant predicted.
4. Despite arguing before LAFCo last month that they are prepared for a hearing, the City's agenda for Tuesday the 16th includes a resolution to withdraw the application. Their reason is that their money grab only works if they renegotiate the revenue neutrality agreement and they haven't done that yet.
masiegle (anonymous profile)
November 15, 2010 at 11:17 a.m. (Suggest removal)
Didn't GWSD have to borrow $20 million dollars just to cover the $50 million dollar sewage upgrade project that was mandated by the State Regional Water Quality Control Board because the plant was operating at marginal health standards?
Seems to me the only thing the City gets out of taking over is $20 million dollars in debt. I don't think they can stop the State-mandated project upgrade without incurring violations and plant closure. Does the City of Goleta really want to take on the State of California's mandate?
The money seems tempting but a full analysis by the City of Goleta should cause them to avoid this deal. Perhaps after all the plant upgrades are complete and GWSD is out of debt.
http://www.noozhawk.com/local_news/ar...
Georgy (anonymous profile)
November 15, 2010 at 7:40 p.m. (Suggest removal)
Ahem...That's Goleta Sanitary District (not Goleta West Sanitary District) that borrowed $20 million for upgrades to the processing plant.
Goleta West, through prudence and careful planning, has the necessary money already set aside to pay for their portion of the upgrade work.
mangomamma (anonymous profile)
November 16, 2010 at 5:23 p.m. (Suggest removal)