Financial turmoil in San Diego city government gives new life to the push for secession


In the middle of one of the worst financial crises in the history of San Diego, an independent study has found that a city of La Jolla, if formed, would enjoy a surplus of funds in its first year.

A citizens group dedicated to breaking off from the city of San Diego is raising funds to take the next step in the long incorporation process that would ultimately require a majority vote by San Diego voters in order to be completed.

The 28-member Independent La Jolla coalition argues on its Web site that a separate city would enjoy enhanced services and more efficient handling of community projects. They say San Diego has grown too big and La Jolla would be better off on its own, citing successful municipalities in San Diego County including Del Mar, Solana Beach and Coronado as examples.

“When you drive into Del Mar, it feels like somebody is home,” said Independent La Jolla board member Melinda Merryweather. “There are no potholes, there are flowers by the road, the trees are trimmed. I’m embarrassed at the condition of La Jolla. It’s hard when you’ve grown up here to see it in this condition.”

That thinking prompted the group to raise $30,000 to pay for an initial fiscal analysis to determine if an independent La Jolla would be economically feasible. The study was the first step in a process that would continue with a review of maps of the proposed city by the San Diego Local Agency Formation Commission.

If the maps were approved, a petition drive within La Jolla could follow to determine if residents are interested in secession. The next step would be a more in-depth review of the proposed city by the Local Agency Formation Commission. That group could find that La Jolla must compensate San Diego for any adverse effect on revenue that secession would have.

Finally, a simple majority of voters throughout San Diego would have to approve the incorporation. If the proapprove the incorporation. If the proposal makes it through all those channels, the city of San Diego could not stop La Jolla from breaking off.

That is a change from the last timeLa Jolla made an attempt at cityhood 10 years ago, Merryweather said, adding that La Jollans have attempted to break away from the city at least three other times, beginning with an effort in the 1940s.

“The law has changed. It used to be that the mother city had to cut you loose,” she said. “Now it’s just a vote of the people.”

The initial fiscal analysis done by consulting firm Economic and Planning Systems, completed in March, represents a promising beginning to a process that takes about three years, according to the Local Agency Formation Commission.

“People always ask, ‘Can we afford it?’ ” Merryweather said. “The answer is yes. A $30,000 study says yes.”

The study breaks down estimated revenues from sources including property, sales and hotel taxes, and estimated expenditures including public safety services and construction and maintenance.

Using figures provided by the city of San Diego, the authors of the report found that a city of La Jolla could bring in more than $39.3 million in revenue in fiscal year 2007-2008, against approximately $34.1 million in expenditures.

The report states that an initial fiscal analysis is intended to serve as a “fatal flaw” analysis of incorporation feasibility, and that a comprehensive fiscal analysis is required to refine the figures.

All the territory in the 92037 area code fell under the scope of the initial study, as that is the boundary proposed by Independent La Jolla. The approximately 13 square-mile area stretches from Torrey Pines to the north, east past Interstate 5 to include all of UCSD and south to Turquoise Street, which would form the southern border between La Jolla and the Pacific Beach neighborhood of San Diego. That configuration could change as the incorporation process moves along.

The report estimates that property taxes would bring in more than $19.5 million, nearly half of total revenue. Transient occupancy taxes, the official name for hotel taxes, would account for nearly $6.6 million, about 17 percent of the total. Sales taxes would be the third largest source of revenue, bringing in more than $5.3 million, or 13.5 percent.

Public safety services would constitute roughly half of the proposed city’s $34.1 million in expenditures in fiscal year 2007-2008, according to the study. About 18 percent of expenditures would go to building and maintenance.

Coronado, which is listed in the report as a comparable city, is similar to La Jolla in that a strong tourism base propels the local economy. With a population of 26,450, Coronado is smaller than the proposed city of La Jolla at around 43,000 - which dwarfs Del Mar’s population of about 4,500 - and its revenue was estimated to be around $26.6 million for fiscal year 2004-2005.

A comparison of Coronado and La Jolla shows that the two draw revenue from slightly different places and that La Jolla would be spending much less funding per capita on many services than does Coronado.

Coronado gets about 30 percent of its revenue from hotel taxes, about twice as big a portion of the total as in the proposed city of La Jolla. Coronado only draws 7 percent of its total revenue from sales taxes. Though both cities bring in a similar amount per capita in sales taxes - $72 per capita in Coronado and $67 per capita in La Jolla - La Jolla’s larger population and shopping district means the proposed city would draw about twice as much of its revenue from sales taxes as does Coronado.

In analyzing the cost of services, the report assumed that the new city would provide at least the same level of service to its citizens as the city of San Diego currently provides. Under this assumption, the city of La Jolla would be spending much less per capita than Coronado in several key areas.

The new city would be spending about $195 per person on police protection, the same amount San Diego currently spends in La Jolla, compared to $337 per person in Coronado.

The initial fiscal analysis assumes that the new city of La Jolla could contract with the city of San Diego for police protection for the first several years after incorporation and, therefore, incur no startup costs. The report notes that San Diego does not currently provide contract services to other cities, and that if La Jolla were to start its own police department down the road, significant startup costs would come into play.

The proposed city would spend $87 per person on fire protection; that’s down slightly from the $96 San Diego spends. Coronado spends $171 per person on fire protection.

Library funding in a new city of La Jolla would be equal to what the city spends now at $28 per person. In Coronado, $65 per person is spent on library funds.

Planning is one area in which spending would significantly increase in the new city. The proposed La Jolla would spend $50 per person on planning, compared to $6 per person spent now in La Jolla by San Diego and the $40 per person spent in Coronado.

Independent La Jolla’s members believe that the dollars spent on services and community projects could go further were La Jolla to become its own city.

“The main principle of this is having the control to move things along in the most efficient way,” said Avelino Cortina, a member of the Independent La Jolla board. “Not only in terms of money, but in time. Things tend to take longer than they should.”

Merryweather said an effort to preserve the stairs at WindanSea Beach is an example of how a large city process makes projects more difficult.

“It was a $25,000 project and the money was there, but it took forever because it had to go through the city process,” she said. “It shows how much waste is involved. It’s no one’s fault, the process is just too big.”

Independent La Jolla is now raising funds to pay for maps of the proposed city, which Merryweather estimated would cost around $200,000. The maps would then be sent to the Local Agency Formation Commission for review.

Michael Ott of San Diego Local Agency Formation Commission said his office would review the maps for a number of factors.

“One of the major components has to do with how to best consolidate the service responsibility,” Ott said. “Consideration would need to be given to allow the future city to have local control and accountability over critical services.” If the Local Agency Formation Commission approves the boundaries of the city, a petition drive would be required to collect signatures from a minimum of 25 percent of La Jollans. That’s more than 10,000 signatures. If that effort were successful, the Local Agency Formation Commission would conduct a comprehensive fiscal analysis of the feasibility of the new city and the impact of its secession on the city of San Diego.

If it were determined that the secession of La Jolla had an adverse impact on the general fund of San Diego, the new city would have to pay a revenue mitigation payment to the city for several years.

The initial fiscal analysis by Economic and Planning Systems estimated that the incorporation of La Jolla would cost the city $4.6 million per year. The report stated that a city of La Jolla could afford to pay that money back, given that it projected a budget surplus of more than $5.2 million in the city’s first fiscal year.

The revenue mitigation payment would be subject to negotiation and may have to be paid for four to eight years

after the new city is formed, Merryweather said.

Paula de Sousa, an attorney with a firm that specializes in incorporation cases, has been contacted by Independent La Jolla about representing the coalition should the proposal come to the legal portion following review by the Local Agency Formation Commission. She has not been retained by Independent La Jolla and said the amount of the mitigation payment would be partly determined by the comprehensive fiscal review.

“The mitigation payment ends up being negotiated based on what the fiscal analysis is,” de Sousa said. “Both entities would have to take a look at it, and any discussion of that would be premature at this point.”

In some ways, the city of La Jolla would remain somewhat intertwined with San Diego under the plan set forth in the initial fiscal analysis. Torrey Pines State Reserve and golf course would continue to be owned and operated by the city of San Diego. However, the new city could have legal jurisdiction over the properties and set land-use controls.

UCSD would fall in the jurisdiction of the new city, but it could be split between San Diego and La Jolla if the boundary of the proposed city is amended to run along Interstate 5 and not east of it. The school is considered revenue-neutral since it is exempt from property taxes but still requires services that are mostly offset from sales tax revenues from the school’s bookstore.

Cortina said he believed the city of San Diego would rather keep La Jolla in the fold, but he wondered if it could mount an opposition if the matter came before San Diego voters.

“Losing territory or control is something a big city does not want to deal with,” he said. “But it costs money to fight anything, and I don’t know if they have it.”

Merryweather said she believed the incorporation process, including mapping, petitioning, legal fees and campaign costs, would cost $1.5 million.

“I’d like to see 10 people who really care step up to the plate,” she said, “and come up with the money and be known as the godparents of the city of La Jolla.”

San Diego City Councilman Scott Peters and acting Mayor Toni Atkins did not return phone calls seeking comment.

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