Saving for a Rainy Day

Ensconced within a tiny brick building just behind UCSB’s police and fire station is Goleta West Sanitary District’s headquarters, flanked by its pumping and maintenance facilities. It’s a particularly bucolic setting, and on a sunny day, it’s easy to almost forget where you are. The dull stench wafting from the pump house brings you back to the reality of the place’s function, though. “Doesn’t smell all that bad. You should whiff it when they’re pumping,” a bearded gentleman said as a handful of people filed into the Sanitary District’s cramped boardroom Wednesday, July 22, to hear its financial committee report. Only two members of the board of directors were present, but all eyes were on a trim, energetic financial advisor – Nancy Jones, managing director of the PFM Group – who proudly asserted that she has had no losses while managing the district’s portfolio.

Although PFM has managed the investment of Goleta West’s assets for the past three years, their $29 million reserve fund has come under intense scrutiny over the past several months as the City of Goleta has expressed interest in taking over sewer service from the district within city limits. The district gets its revenue primarily from user fees and a small chunk of the property tax, 5.7 percent, which the city has stated it wants to absorb into its general fund. Facing a $1.1 million budget deficit, City of Goleta officials several months ago indicated their intention to apply to Santa Barbara County’s Local Agency Formation Commission (LAFCO) to detach the portion of the district that lies within its borders. “We feel that there are a whole lot of issues the city isn’t dealing with,” said Mark Nation, the district’s general manager, who touts his agency as one would a successfully run business. “You get into doing public works projects [such as maintaining sewage lines] and it costs millions. Our board has been diligent about putting that money aside so that it’s available for capital improvements.”

The 5.7 percent of the property tax that Goleta West takes is one of the many anomalies of Proposition 13 – passed in 1978 as an effort to prevent property taxes from getting too high – and it has been a main point of contention between the district and the city. City Manager Dan Singer said that that Goleta West has done a great job; the city’s desire to absorb it is very much about the money. “We feel that we have more use for the money,” said Councilmember Margaret Connell. “I don’t think the Sanitary District should get more of the property tax than the city does. The city has so many more services to provide.” According to state law, the Goleta West Sanitary District can use revenue gleaned from property taxes only for street sweeping-which reduces pollution into the ocean-and for capital improvements, some of which are shared with the Goleta Sanitary District, the adjacent sewage treatment agency.

Goleta West Sanitary District has been doing the unglamorous job of dealing with the business end of area pipes since 1954, when the growing Isla Vista community necessitated a sewer system that went beyond the capacity that the rest of the Goleta Valley had available at the time. Since then, Goleta West has expanded to include a large swath of western Goleta, although administrative and operational functions are carried out by a staff of only six people. Nation said that if the City of Goleta were to take over his district, it would result in sewer rates four to five times higher, particularly in Isla Vista, which would remain serviced by a remnant of Goleta West. “Goleta wants the property tax for general services, not sewer services,” he said.

Currently it is not clear when the matter will go before LAFCO, but Connell said that Bob Braitman, LAFCO’s executive officer, has encouraged the city to detach from Goleta West. Nation opined that the county officials on the LAFCO board might not vote for something that would raise sewer rates for county residents during this time of economic hardship. “Especially now, when the economy is tough and people are getting furloughed and unemployed, they don’t want to raise rates,” he said. His board will continue to save for a rainy day, which may come in the form of a legal battle requiring them to pay a hefty sum to their legal counsel, Steve Amerikaner.

With a twinkle in her eye that seemed to defy the musty odor drifting in waves through the boardroom’s open door, past a pile of turkey and roast beef sandwiches, and into the unwilling nostrils of the room’s inhabitants, Jones smartly evened a stack of papers on the edge of the table as the meeting ended. After all, with a well-managed $29 million portfolio in her care and two Goleta Water District boardmembers eagerly taking notes-potential clients-she had much to be proud of.