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Sewage and Money in G-Town

Is This a Slick Move?


Monday, November 15, 2010

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.

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