The future looks rosy for the city of Solvang, according to a report delivered to community leaders Wednesday by City Manager Brad Vidro at the Chamber of Commerce’s 11th annual State of the City luncheon.
“Revenues are up, reserves are healthy — I think we’re ready for the future,” Vidro told about 150 people, ranging from business owners and members of other chambers to law enforcement and government representatives from the county and city of Buellton as well as Solvang, who gathered at Root 246.
Vidro’s report addressed how well the city is meeting the 11 points of a community vision developed by the City Council, starting with No. 11 — becoming water independent — and working down to No. 1 — improving financial stability.
Along the way, he threw in some humor with wry comments and visual jokes in his Powerpoint presentation.
“This is all going to be ‘real news’ because I’m from the government,” he said as a preamble, drawing the first of multiple laughs from the audience.
Among the notable highlights:
Solvang increased the amount of money in each of its reserve funds, resulting in a net reserve of $24 million the city could draw upon in the event of an unanticipated expense.
Reserves in individual funds range from $900,000 for the transit fund to $9.6 million for the general fund.
“Financial advisers say you should have (the equivalent of) 50 percent of your general fund budget in reserves,” Vidro said. “We have over 100 percent in our general fund reserves.”
Vidro’s figures also showed the city’s revenues exceeded expenses last fiscal year by more than $2 million.
Expenses in 2016 totaled $14.1 million, with the largest share — 29 percent — being spent on water, followed by public works at 14 percent, culture and recreation at 13 percent and public safety, wastewater treatment and general government at 12 percent each.
Total revenues, on the other hand, hit $16.5 million, with the bulk of that — 46 percent — coming from charges for services, with transient occupancy taxes accounting for 25 percent and sales, property and other taxes bringing in 16 percent.
Sales tax revenues have remained almost flat for the last five years, with food products accounting for most of the small increase there, although only three of the city’s top 10 sales tax generators directly involve food products.
“The top 10 generate 41 percent of our sales tax, so we’re thankful for those businesses,” Vidro said.
Restaurants generated 30 percent of the more than $1.1 million in sales tax as of the third quarter of 2016, followed by miscellaneous retail at 16 percent and building materials at 12 percent.
Although sales taxes have barely increased, property taxes have shown a steady climb since 2010-11, rising from less than $1.1 million to more than $1.2 million, while the city’s total assessed valuation increased 6 percent.
Transient occupancy tax revenues were among the brightest of the city’s bright spots, climbing steadily by about half a million dollars each year since 2011-12 and providing 53 percent of the general fund budget.
Going hand in hand with that, the occupancy rate for the city’s hotels hit 74.22 percent.
“Most tourist towns would die for that kind of occupancy,” Vidro said.
He credited much of that to the Solvang Conference and Visitors Bureau, which the city supported with $720,000 in funding in addition to a $400,000 pass-through from the Tourism Improvement District.
In turn, the CVB has generated recurring tourism through programs like China Ready; promoted the city as dog-friendly among other draws; targeted markets ranging from the LGBT community, wine drinkers and beer drinkers to cruise ships in Santa Barbara, Northern and Southern California and Denmark; and used a variety of channels, including social media.
“So, what did we get done?” Vidro asked. “We had a successful election and brought a new council member on board, we completed Sunny Beach at Sunny Fields Park — although that was this year we’re going to credit it to last year.”
The Solvang Senior Apartments were completed, Alisal Bridge was seismically upgraded — a $1.1 million project that only cost the city $18,000 — and the Hans Christian Andersen Park South Well was put into service, he said.
Vidro said 200 land use clearances went through the Planning Commission, 73 projects went through the Board of Architectural Review, 232 building permits were issued and 21 new businesses opened in the city.
“Now you can buy Swedish candy in a Danish town,” he quipped.
Recounting the City Council’s accomplishments, Vidro said the drought penalties were eliminated and the Americans with Disabilities Act Transition Plan and the Conservation and Open Space elements of the General Plan were all updated.
“We live-stream our City Council meetings,” he added. “We’re on YouTube — but in a good way — so you can watch the City Council meetings online. Now you can sit through them just like I have to.”
Then, as groans arose from the audience, he quickly added, “Just kidding.”
The council also approved a Sidewalk Master Plan, adopted new California Building Codes, approved the city’s participation in the Tajiguas Resource Recovery Project and passed an urgency ordinance banning recreational marijuana operations until a permanent ordinance can be hammered out.
“But it’s not all positive, so I’ll tell you what we’ve got,” Vidro said.
Solvang is facing a $2.6 million unfunded pension liability and the California Public Employee Retirement System is projecting a lower rate of return, resulting in the city’s contribution rising from 18.5 to 29.1 percent, he said.
The city also is facing a $2 million unfunded actuarial liability for other post-employment benefits, but the council has established a trust to help reduce that.
Payments to the Central Coast Water Authority for the city’s state water debt are $2.9 million a year, Vidro said, although he added the CCWA debt service will be paid off in 2022-23, saving the city $900,000 a year.
Still, Vidro said there are more good things on the horizon for the city.
Solvang will be upgrading crosswalks on Mission Drive, including adding a new crosswalk near Solvang Park; upgrading the Hans Christian Andersen Park restrooms to make them compliant with Americans with Disabilities Act regulations; and improving Solvang Park.
One of the bays will be extended at Fire Station 30 to accommodate a new ladder truck being purchased for the city and County Fire Department by the Santa Ynez Band of Chumash Indians.
Drainage will be improved on Second Street; sidewalk and access ramp improvements will continue; the Chalk Hill water tank will be recoated; and Creekside Well 22 will be put into operation, he said.