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state inquiry could delay c.v. incorporation vote -- businesses say they want no part of proposed town

CARMEL Pine Cone, May 26, 2006



By CHRIS COUNTS

THE MONTEREY County Board of Supervisors unanimously approved an alimony deal this week which would allow the Town of Carmel Valley to pay off 10 years of lost county revenues in 16 years. But hopes for a November election could quickly fade as opponents of incorporation announced they are willing to spend at least $25,000 to fund a state review scrutinizing the economic viability of the proposed city. The study would delay a public vote on the issue until at least next June.

Before the meeting, incorporation proponents suffered another blow. In a letter to the Local Agency Formation Commission, land use attorney Tony Lombardo announced that seven of his prominent clients — the Barnyard and Carmel Rancho shopping centers, Rancho Cañada Golf Club and Quail Lodge Resort — do not wish to be included in the incorporation. And he accused LAFCO of rushing the incorporation issue to a vote for the benefit of a “special interest group.”

Incorporation clears a big hurdle The revenue neutrality agreement between Monterey County officials and proponents of Carmel Valley’s incorporation was reached after 18 months of negotiations. Former 5th District Supervisor Karin Strasser Kauffman — who represented proponents in negotiating the alimony deal — urged supervisors to endorse it.

“The agreement before you is fair,” Strasser Kauffman insisted. “It meets the letter and spirit of the law. It allows the city to get off to a sound financial start and provides the county with a soft landing.”
Incorporation opponent Melvin Steckler disagreed, calling the deal a “gift” to proponents.
“It could have been for 20 years,” Steckler countered. “It could have been for 30 years. Is this agreement really revenue neutral?”

According to a Monterey County staff report released May 18, the proposed Town of Carmel Valley would pay the county a total of $15,919,280 in alimony payments. A state law requires prospective cities to compensate county governments for revenues lost as a result of incorporation.

As part of the agreement, the town would make no revenue neutrality payments for the first two years of its operation. At the end of its third year, it would be required to make a payment of $827,406. In its fourth year, the payment would drop to $709,875 before slowly escalating each year until the 15th year, when a bill for $1,656,571 would be due.

The town would conclude the agreement with a payment to the county of $120,377 in its 16th year of operation.

Election in June 2007?

Last month, the Local Agency Formation Commission voted to accelerate the incorporation application process in an effort to get the issue on the November 2006 ballot, making it LAFCO’s primary focus. This week, the commission endorsed a revised timeline for the process, essentially giving its staff a green light to move forward.

But California law allows for the review of an incorporation’s fiscal analysis by the state controller’s office, provided the party requesting the audit is willing to pay for it. And opponents of Carmel Valley’s incorporation announced this week they are willing to fund a study that could cost as much as $50,000.
“It will happen,” predicted Bob Sinotte, one of the opponents who will challenge the financial data the revenue neutrality agreement is based on.

“If someone requests a review, it will most likely postpone the election,” explained Kate McKenna, LAFCO executive officer.

Incorporation proponent Glenn Robinson, who conceded the review could push the election to next June, is confident the numbers will withstand scrutiny.

“It would be a waste for them,” Robinson said. “But if that’s what they want to do, it’s their money.”
If opponents do ask for a review of the fiscal analysis, it won’t come cheap.
“Some reviews have cost as much as $50,000,” McKenna added. “The preliminary estimate from the state is $25,000, but it could cost more.”

‘Leave us out’

The letter from Lombardo to LAFCO also identifies the Carmel Mission Inn, Tehama Development and Property Reserves, Inc. as businesses opposed to being included in the Carmel Valley incorporation. According to Lombardo, his clients are “particularly concerned by what they perceive as a rush by LAFCO to placate the special interest group in Carmel Valley which is attempting to use the incorporation process in order to accomplish a political agenda, rather than following the steps necessary to provide accurate financial analysis.”

Sinotte believes the lack of business support will ultimately doom the incorporation proposal.
“If the business district opts out, there’s not enough money to fund the city,” claimed Sinotte. “This forces a reexamination of the revenue neutrality agreement.”

Robinson, though, said it’s not up to the businesses to decide whether they want to be included in the new city.

“Only voters can opt out,” he insisted.

McKenna agreed with Robinson’s assessment.

“There is no procedure for opting out,” she said. “LAFCO will make the decision.”
A public hearing — set for July 12-13 — was scheduled by LAFCO this week. According to McKenna, the commission will consider public comments on the boundaries of the proposed city before making a decision July 12. If the public comment portion of the hearing takes longer than anticipated, the decision on the boundaries will be pushed to July 13. Currently, the boundaries of the proposed area of incorporation correspond with those of the Carmel Valley Master Plan, which includes most of the land from Highway 1 to Los Tulares and from ridgeline to ridgeline.

Aside from boundary issues, the July 12-13 hearing will be perhaps the most critical juncture in the incorporation process because it could be the last opportunity to prevent it from going to a vote.



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