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Carmel Valley: Wrestling with the Question of Incorporation: Should A City Go Here?

Monterey Herald, Jan. 5, 2003



By Victoria Manley
vmanley@montereyherald.com



Fran Farina and Bob Sinotte both agree that Carmel Valley should safeguard the rustic beauty that has made it a world-renowned mecca for golfers, wealthy homeowners and others looking for paradise. But when it comes to blocking growth, Farina wants the valley to break away from Monterey County and form a new city. Sinotte, who also wants to limit growth and preserve the valley’s rural character, says session would be a terrible mistake.

Farina and Sinotte are two of the people behind a raging debate over whether the scenic valley should become Monterey County’s first new city in nearly three decades.

The outcome will eventually affect everyone who lives in the county and depends on the valley’s affluent tax base to help pay for road maintenance, libraries and other services countywide.

Although Carmel Valley residents have been chewing over the notion of cityhood since at least the 1960s, supporters have never gotten this far. They aim to gather about 1,200 signatures in support of an official feasibility study, a necessary step before valley residents can vote on whether to become self-governing.

The lure of local control is irresistible to residents who are fed up with the county’s spotty record on growth and development. The latest outrage is a scarred hilltop in Mid-Valley that developers bulldozed despite assurances from county planners that the road cut wouldn’t be visible. Other affronts include court findings that plans and permits signed off by county officials for one controversial subdivision had actually been written by developer’s attorneys.

Farina, a water-use attorney who has sued developers, says forming a city would empower Carmel Valley residents to oversee development and block unwanted growth.

“It doesn’t mean that developers are in charge of the situation,” said Farina, who has moved to the newly formed city of Goleta in Santa Barbara but plans to stay involved. “If that’s what it meant, I wouldn’t have associated myself with it.”

But cityhood also holds tantalizing possibilities for development interests. The group exploring incorporation, the Carmel Valley Forum, includes developers, real estate agents and ex-politicians, as well as environmentalists such as Farina.

Local developer Tom Gray, a member of group, donated $10,000 toward an unofficial study that found that Carmel Valley would be financially feasible as a city.

The reason builders in other parts of the state have often favored incorporation is that new cities typically face serve financial pressure, which often leads to increased development.

That’s because under a 10-year-old state law, the new city has to continue paying the county the same amount of hotel, sales and property taxes as before, often for decades.

The law allows the new city to keep only what the county was spending in the area prior to incorporation.

To fund a new municipal government, as well as any improvements in road maintenance or other services, a new city often has to either increase taxes – which is nearly impossible under the Proposition 13 tax cap – or rely on new hotel rooms, resorts, stores or housing tracts for extra revenue.

Sinotte, a 16-year resident of Carmel Views, contends that an incorporated Carmel Valley would find itself having to raise taxes or approve more commercial development to survive. Sinotte also has expressed concern that residents at the wealthy mouth of the valley where he lives would end up bearing the brunt of funding improvements in the rural east end.

He’s formed a small anti-incorporation committee, Carmel Valley Watch, and is polling homeowners to see where they stand on the issue. Few opposition leaders have surfaced, but Sinotte’s poll results indicate there may be a sizable group of residents that believes cityhood would create more problems than it solves.

“It would be a city,” Sinotte insists, “with big-city problems.”

Would ambiance remain?

Carmel Valley is a stretch of oak-studded hills and wild grasses along Carmel Valley Road, it main artery. The valley is anchored by Highway 1 to the west and Carmel Valley Village to the east.

Its picture-perfect scenery has been the backdrop in nearly a dozen films – from “The Muppet Movie” in 1979 to the Arnold Schwarzenegger comedy “Junior,” in 1994 – and dozens of television commercials.

If incorporated, it would encompass 28,000 acres, an area bigger than the other seven Peninsula cities combined.

Today, the valley retains a simplicity that residents treasure. Children ride horses along Carmel Valley Road. Wood fences border ranches and remnants of apricot and fig orchards, the valley’s original industry.

Supporters insist that the new city wouldn’t change the unique character of the community. They plan to call it the Town of Carmel Valley – not city, not village. But it’s no country outpost. There also are shopping centers, with big retailers such as Safeway and Albertsons grocery stores, high-end restaurants and smart antique shops

Longtime residents like Randy Randazzo worry about preserving the atmosphere.

“There are big changes happening here, Randazzo said, owner of Carmel Valley Market for 30 years.

He says that neighbors and longtime customers often confide in him their worries that their valley will become more urban.

“We like to be different, we like to be unique, and we’d like to stay country,” he said.

The Carmel Valley Forum includes Scott MacClelland, founder of classic radio station KBOQ. There is also Skip Marquard, a third-generation real estate developer and Realtor, and local environmentalist Rod Mills.

In the past two years, the county has taken a virtual no-growth stance in Carmel Valley, prohibiting new subdivisions until conditions on Carmel Valley Road improve. The county’s new general plan, which dictates growth the next 20 years, states that development should be limited to areas surrounding the mouth of the valley, Mid-Valley and Carmel Valley Village.

But supporters of incorporation point to past decision by the county as a reason for mistrust.

In the past decade, valley resident have seen hundreds of new larger homes approved for construction, draining the water supply and overburdening roads.

The area is represented by county Supervisor Dave Potter, who also represents other parts of the Peninsula and lives in Monterey.

A few of the major projects that some incorporation proponents say prompted them to study cityhood include:

September Ranch: An 891-acre ranch proposed as the site of a planned residential development. The project was blocked in 1999 when the Ventana chapter of the Sierra Club and two activist groups successfully sued to challenge the county environment impact report and use permit on grounds that traffic and water issue had not been adequately addressed.

The proposal is back before the county, and includes 109 houses, most zoned for additional caretaker and guest house, for a total of about 300 houses.

Carmel Valley Airport: The 29-acre property, owned by Peter and Mary Delfino, had been an airstrip occasionally used by private pilots and emergency flight crews. The Delfinos proposed a 75-unit senior housing project; the county wanted a 277-unit low-cost housing development.

The notion that so many low-cost houses would be build in the upscale valley roused a lot of residents, who signed a petition urging the county to limit growth in the airfield. County officials ignored their petition, however, and still are considering the housing project.

The future of the airfield is particularly important to Randazzo – he lives across the street from the property, and today sees an open field where neighbors walk their dogs. The prospect of viewing several dozen homes from his front room window worries him.

“I don’t think my life would change if Carmel Valley were to be incorporated, but I’d feel more comfortable knowing that our issues are being settled at home,” Randazzo said.

Rancho San Carlos: Part of the Santa Lucia Preserve, the development included 350 main houses, many of which also are zoned for additional caretaker or guest houses. The project, which has been approved and partially built, would total about 1,000 houses once it is finished.

Gray, the developer who donated funds for the feasibility study, is a managing partner of the Santa Lucia Preserve. Though Gray is a major developer, he said he’s not on the incorporation committee to promote his own interests.

“I don’t have a dog in this fight,” he said. “They’ve come up with this allegation that (incorporation) is a developer’s scheme …but the notion that there’s some skullduggery in the background doesn’t have any foundation.”

“I thought that it (incorporation) was worthy of exploration,” Gray said.



Very slow process



The current incorporation effort isn’t a first for Carmel Valley. The idea of forming a town first surfaced in the late 1960s, when a group of area business and property owners commissioned a feasibility study with the nonprofit Coro Foundation.

According to the 1968 study, written by foundation intern Roy Sussman, incorporation was a possibility even then. “Whether it is desirable depends on which concerns are of greatest importance to the residents,” Sussman wrote.

The disadvantages then, Sussman wrote, included higher taxes and a “more highly charged political atmosphere.” The advantages, he said, included the possibility of having more public services and the power to curtail growth.

“There are many relevant variables,” Sussman wrote. “Only the local residents can decide which are of greatest significance to them, and on that basis, plan for the future.”

The arguments are relatively the same today, but the path to incorporation takes longer and is far more complicated financially. Becoming a city now requires tens of thousands of dollars and takes years.

“This is going to be an issue that’s going to take us through step by step by step,” said Kathy West, executive director of the Monterey County Local Agency Commission. LAFCO’s board of directors – which include county supervisors, City Council members, board members of special districts and a member of the public – would commission a feasibility report if the proponents’ petition drive is successful. The study could cost as much as $90,000 and would be paid for by supporters.

If the study finds that incorporation is feasible, and if LAFCO approves the concept, then the issue would go on the ballot in the following general election. Only some 5,000 registered voters in the proposed city of Carmel Valley would participate.

But it’s much more difficult to found a new city now than it was a decade ago.

In 1992, the state enacted a law that required all new cities to work out a “revenue-neutral” agreement with the county where they are located. Enacted during the recession, the law was intended to protect county property tax revenues by making it financially difficult to create new cities.

The law has virtually eliminated the formation of new cities, said Dan Carrigg, an analyst with the League of California Cities. The state averaged about three new cities a year from the 1850s through 1992. But despite California’s phenomenal population growth in the past 10 years, only a handful of new cities have formed.

One new city – Citrus Heights in the Sacramento Valley – spent 10 years in a political and legal battle over incorporation. In the end, the new city negotiated an agreement to turn over its entire property tax base to the county for 25 years and keep its other revenues.

If Carmel Valley incorporates, the new city would have to pay off Monterey County for years, Carrigg said. The duration of the payments is negotiable but typically last for at least 10 years, he said.

“The way this law works depends on the attitude of the county,” Carrigg said. “If the county doesn’t want the city to incorporate, this (law) works as a great hammer.”

Carmel Valley – with its high-end resorts, boutiques and wineries – brings in millions of dollars for Monterey County, which county officials most likely would be reluctant to ever lose.

The valley generates slightly less than $7 million in annual tax revenues for the county, according to a fiscal analysis commissioned in 2001 by valley property owners.

Most of that comes in the form of hotel taxes. Carmel Valley is home to some of the county’s largest hotels, including Quail Lodge & Resort, Rancho Canada Golf Club and Carmel Valley Ranch.

The county currently spends about $3 million a year to maintain Carmel Valley’s roads.

Potter, the county supervisor, hasn’t taken a position on Carmel Valley’s secession yet. But he cautioned that if valley residents were to break away, it would cost them.

“These incorporations historically fall apart when the price tag is made clear,” Potter said. “There’s usually some sticker shock when people realize the cost involved with incorporation.”

But Glenn Robinson, a valley resident and member of the county’s Carmel Valley Land Use Advisory Committee, believes the idea still has merit.

“It may be our last best chance,” he said, “to keep our area rural.”



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