An Arizona public-interest law firm specializing in libertarian-leaning lawsuits has sued the Santa Barbara County Board of Supervisors and the county vintners association on behalf of Lompoc winemaker Flying Goat Cellars. The lawsuit charges that the Business Improvement District (BID) that the supervisors approved last February violates the freedom of speech and freedom of assembly guaranteed under the Constitution to Flying Goat owners Norm Yost and Kathleen Griffith. They have objected to the one percent in gross sales that the newly created Santa Barbara County Wine Business Improvement District will take off their top to sustain what was projected to be a $1.5 million marketing campaign proposed by the vintners association to keep Santa Barbara competitive as a wine-tourism destination.
Although the Business Improvement District had been endorsed by 126 wineries — who make up 60 percent of all county wine sales — Griffith and Yost argue they should not be forced to belong to an organization they don’t support and pay fees to sustain a marketing effort they oppose.
“The dollar amount is not relevant,” Griffith said. “Anything is too much. It’s a matter of principle.”
In 2020, Griffith led the successful charge to beat back a similar wine BID proposal. Nothing has changed her mind in the ensuing four years. In legal papers, Flying Goat Cellars — a niche Lompoc winery in business about 25 years — objected to paying for the association’s proposed marketing and lobbying campaigns, notably its business trips to South Korea and Japan to promote overseas sales. Rather than focus on exports and international recognition, the Flying Goat owners said they’d rather focus on up-close-and-personal marketing efforts with local customers who come in their doors. They should not be forced to pay a percentage of sales as a membership fee to a government sanctioned trade association to which they don’t want to belong to, they argue.
Business Improvement Districts, or BIDs, are increasingly common tools for businesses or commercial property owners unified either by geography, type of business, or similarity of challenges to effectively “tax” themselves to create a more vibrant business environment. Such districts, however, require government blessing. Such blessings, in turn, require a vote of support by a majority of the affected business owners. In this case, the proposed won multiple such elections. These elections are not governed by the arithmetic of one business, one vote; instead, the ballots of businesses that generate greater revenues are afforded greater weight.
The owners of Flying Goat, who voted against the new district, found themselves in a very small minority. Griffith suggested many owners may have feared government retribution had they voted against.
“Many wineries are non-compliant in one way or the other and don’t want to draw attention to themselves,” she said.
The Flying Goat case is generating concern in part because of the law firm involved, the Goldwater Institute — named after late Arizona Republican Senator and libertarian-leaning conservative Barry Goldwater. County officials have expressed confidence that they are legally inoculated from litigation by language inserted into the agreement signed last year.
Of broader concern is the extent to which such case could set a legal precedent to challenge other business improvement districts. Last year, for example, property owners in downtown Santa Barbara voted to form a business improvement district, but the vote was hardly unanimous and complaints about the cost got loud. Coast Village Road property owners did the same earlier, and the existence of that BID is frequently credited with how well businesses there appear to be doing.
For the last 30 years, John Lambeth has run a consulting firm specializing in the creation of BIDs, and he said he’s never seen any legal challenge to a BID asserting a First Amendment argument. BIDs, he said, are often embraced by businesspeople as a way to come together and raise funds to address common challenges. Typically, he said, BID formation is accompanied by a great degree of consensus building by the affected parties. BIDs typically involve a great deal of government oversight, meaning that many BIDs are required to operate according to the same open government laws that guide government agencies to ensure transparency and accountability. Lambeth said he has no experience or familiarity with the Goldwater Institute.
