City is in Good Shape, Mayor Says in State of the City Address

Before an audience of Scotts Valley business owners, Mayor Dene Bustichi gave the city’s first “State of the City” address on Wednesday afternoon at a Chamber of Commerce luncheon.

Bustichi discussed several things, but before delving into some of the bigger issues, he said that although Scotts Valley is a low-tax city, meaning it receives the smallest amount of property taxes back from the county, the city is still in good shape. However, he said he wanted to give a perspective to people.

“We get 3.7 percent of every 1 percent of property taxes,” he said. “Santa Cruz gets almost 20 percent, and Capitola gets almost 8 percent.”

Bustichi went on to discuss various happenings around the city, including the new library, the town center, the city’s budget and development in the area.

Here is a breakdown of what he had to say:

Local Economics and the City’s Budget

“Economically, property has been devalued here in Scotts Valley by about $30 million,” he said. “That is a direct hit to the property taxes we receive. So between that, the decrease in sales tax, Measure C, which was our temporary sales tax that [expired], we’ve taken a hit of probably about $800,000 to $1 million a year in sales tax and property tax.”

Bustichi added that coincidentally, this year’s deficit was a little more than that figure.

“We are going to be looking at balancing our budget with some reserves, which is not always a good thing but we have all had to do it at times.”

There is a silver lining though, he said. When Measure C was in place and when the economy was “jumping” between 2004-07, the city was able to save money.

“We were able to save enough reserves to hopefully glide our path out of where we’re at right now,” he said.

The city’s budget is a little under $8 million and there is about $2.5 million in the General Fund reserves, Bustichi said. He added that the city is owed $3 million from the Redevelopment Agency, which would bring the total of the General Fund reserves to $5.5 million.

“While it’s not good and we don’t have a lot of money to spend and are dipping into our reserves, we are in pretty good shape comparatively, percentage-wise, to the rest of the county and a lot of other cities,” he said.

New Library

The new library, in the site of the former roller skating rink on Kings Village Road, is set to open on June 18, and according to Bustichi will be the “jewel of Santa Cruz County.”

“It will be by far, maybe not the biggest by square footage, but as far as technologically and being clean and new and just being the best of the best, it is going to be the best library in the county so far,” he said.

Although books are already being stacked on the shelves and equipment is being brought in, the city has run into some problems with the county, which is supposed to operate the new library.

In 2002, the city and county came to an agreement that the county would operate a new library in the city as a Tier Two library. At that time, Tier Two libraries were running at 54 hours. But now, things have changed.

“Come today, the county is saying, ‘We didn’t mean we were going to run it at 54 hours; we meant we are going to run it as a Tier Two library, and the definition has changed.’”

Bustichi said that today’s version of a Tier Two library is no guarantee of any hours at all but a guarantee that it will be no less than two other libraries in the system.

“So if the JPA (Santa Cruz Library Joint Powers Authority) continues to drop in hours, we would continue to lose hours as well in our new library,” Bustichi said. “That was a little disconcerting to us when we started this, because we were always under the impression that we would get our 54 hours of operation.”

Bustichi said the city has agreed to everything the county wants in the agreement that the city would lease the library to the county for the JPA to run at $1 a year.

The only disagreement that has come up has been in the length of the lease agreement—the city wants a two-year lease; the county wants 30 years.

“We are concerned about the future and whether or not they are going to be able to provide service at all,” Bustichi said. “We think it would be foolish of us to sign into a 30-year lease when we have no guarantees as to how that library will be operated in the future.”

As of now, Bustichi said the city is waiting on the county to sign the two-year lease, and they are hopeful that will happen.

Town Center

A town center in Scotts Valley has been talked about for going on two decades, Bustichi said. And with the library near completion, it’s about to be more than just talk.

“The thing about the library is that it is phase one of the town center,” he said.

Bustichi said that the city has exclusive negotiating rights with a developer, and city officials meet with the developer every two weeks to discuss the plans.

The city is also putting together an economic development grant to submit to the federal government to help get the project off the ground.

“We are hoping to have all the information into the federal government by July and that will provide us with the funding we need to kind of grease the skids and get over the hump,” Bustichi said. “That funding should help to build roads, sidewalks, infrastructure, all the things that aren’t glitter and pretty but things that you’ve got to have to get the rest of the buildings built.”

The developer is also already looking at anchors for the town center, including possibly an IMAX theater or a healthy grocer, such as New Leaf.

“Those are two of the possible anchors they are considering, but there is still a long ways to go,” Bustichi said. “But we have begun getting letters of interest.”

Bustichi added that the city is hoping to get to a full development agreement sometime in the next two to four months.

City Development

When it comes to new development in the city, there are some things happening, but Bustichi said a more important thing is to fill the empty commercial spaces that already exist.

“That’s what is going to drive the economics in Scotts Valley,” he said. “It’s not about building new commercial buildings so much. If we could fill the almost 1 million square feet of commercial space we have in Scotts Valley, we would be in pretty good shape.”

Bustichi said there has been some interest as of lately in filling some of those empty spaces. With Seagate leaving the area, three buildings on its campus will be vacated, but Bustichi said there has been some interest in those buildings. He said there has also been interest in the building that Boreland formerly occupied.

“There is some optimism out there, and people are looking to move in,” Bustichi said.

There will be some new developments happening, too, Bustichi said.

On Scotts Valley Drive, on the site of the former quarry, a 54-unit townhouse development will break ground by possibly by next spring. The Holiday Inn Express, which was approved two years ago, will hopefully break ground in the spring of next year, Bustichi said. And 50 new homes around the town center project have been approved and will likely break ground next spring.