2019 State of the City Touches on Good, Bad & Problematic

From “soft” sales tax revenues to Amazon’s remodeling of the old Saks building to more efforts to deal with homelessness, Santa Barbara’s State of the City presentation March 21 covered a range of bright spots and difficult issues. 

While Mayor Cathy Murillo presented mostly bright spots during her part of the event, City Administrator Paul Casey discussed some hard fiscal facts during his speech. 

The fact that many large chain stores, such as Sears, have left or are leaving is “unsettling,” Casey told the audience of several hundred at the Lobero Theater. 

While property tax revenue is growing, he described the city’s share of sales taxes as “soft.” His data showed that while the city’s sales tax revenue has had an annual 5.3 percent growth, it dropped 4.1 percent last year, one of fire and mudslides, but is expected to increase this year. 

Casey said Amazon’s lease of the old Saks building at State Street and Carrillo Boulevard and the highly anticipated opening of a pick-up Target store on State and La Cumbre may be signs that retail isn’t dead yet. Casey said the city is trying to adjust to the “changing retail climate.” 

The old Saks building is being heavily remodeling with scaffolding surrounding it and workmen carving large rectangular openings in its upper walls, apparently for windows. Reports indicate building permits have been pulled and Amazon is making the structure into a technology center expected to open late this year.

Target is finishing the remodeling of the old Galleria building in a space with almost no customer parking. The idea is for customers to call in orders and pick them up at a drive-through window. Casey acknowledges that the traffic will be an issue there. 

The city administrator said Santa Barbara’s third source of revenue, the Transient Occupancy Tax appears to be rebounding after a tough 2018 with all its disasters. The TOT has had a 7.1 annual growth rate.  

In what might turn out to be the fourth key revenue source in the future, more cannabis retail outlets are expected to sprout during the coming year. Casey said it’s difficult to estimate how much revenue cannabis will bring the city, but he seemed optimistic about its future. 

While first noting that the Santa Barbara Airport brings in $205 million annually, the mayor said the issue of “how much retail can the city support” will be a topic of a May public meeting with a report due in June. That’s also when a consultant paid $85,000 by the city is supposed to deliver a report on what to do about State Street’s woes. 

As for signs that things are improving on State Street, Murrillo touted such things as Paseo’s Nuevo’s $20 million renovation, seven pop-up businesses, helping new storefronts get proper signage and plans to install no-smoking signs. 

She also tackled the 500-pound gorilla in the room: unattractive homeless transients, which business people say is the most problematic downtown issue.

Th mayor displayed a video that discussed a group called City Net, which is reaching out to the chronic homeless and trying to provide them with medical aid and other support. She said software company Logic Monitor, which has a State Street office, has set up a fund to help with the homeless issue. 

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