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La Jolla incorporation takes on new life, resumes course

Stalled by delays in the city’s budget auditing process, the drive for cityhood in La Jolla has resumed.

Independent La Jolla is a 501(c)(4) non-profit organization that believes the city of San Diego and the Jewel would best be served if La Jolla were granted status as an independent municipality. Once again, they have resumed negotiations with the Local Agency Formation Commission (LAFCO) to kick-start the process toward incorporation for La Jolla. LAFCO is the state-mandated regional agency which oversees the formation of new governmental districts, including cities.

The last two communities in San Diego County to successfully incorporate were Encinitas and Solana Beach, both in 1986.

If La Jolla is successful in incorporating, that process will involve proponents completing an updated incorporation feasibility study. They will also have to launch a voter petition drive to get cityhood on an election ballot. Ultimately, a citywide election would have to be held on a La Jolla incorporation measure.

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“The official (city) budget numbers were not released until last summer,” noted Ann Kerr Bache, president of Independent La Jolla, about why the La Jolla incorporation effort has been temporarily delayed. “Meantime, we’ve been considering the boundary issue. The present map that we have drawn up with LAFCO is the existing 92037 ZIP Code for La Jolla, with minor changes.”

An Initial Fiscal Analysis (IFA) for the proposed incorporation of La Jolla, done by Berkeley-based Economic & Planning Systems (EPS) published March 21, 2005, concluded creating a new city of La Jolla would be financially feasible. Done with the cooperation of the city of San Diego, based on cost and revenue projections for an entity within the 92037 ZIP Code boundaries, that analysis projected an approximately $5.9 million General Fund surplus for a new city of La Jolla.

Rules governing incorporation require any entity detaching from an existing city and becoming independent to pay a revenue neutrality mitigation payment, so-called “alimony,” to compensate the city it’s leaving for lost revenues. The IFA analysis also determined the city of La Jolla would appear capable of making a compensation payment for separating from San Diego, estimating San Diego could experience a $4.6 million loss of net revenue annually. “Assuming the mitigation payment is equal to the estimated $4.6 million net loss, the new city (of La Jolla) would experience an annual surplus of $1.3 million in the third year,” concluded EPS’s fiscal analysis.

The IFA pointed out taxes from new development after incorporation, such as hotels or retail uses, would improve the new city’s budget. Special taxes to fund services, like police, could also be used, as well as a utility users tax or an increase in tourist-occupancy hotel taxes charged to guests. A new city could also reduce costs via contracts for services or reduced staffing.

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Kerr Bache noted the IFA cost less than $40,000, and was funded by anonymous, private donations. She added a new, final financial analysis will have to be performed, updating the initial study’s numbers including new information from the city’s audited books. The next steps involved in the incorporation process involve hiring engineers to fine-tune the boundaries map for creation of a new city, according to Bache. “We need to do an absolutely detailed survey-level map,” said Kerr Bache, “refining it to the level where it can be presented (to LAFCO).”

On a separate track, Kerr Bache said cityhood proponents will also have to create and circulate a petition for incorporation requiring the signatures of at least 25 percent of registered voters of La Jolla. Law requires those signatures to be validated by the county Registrar of Voters. If successful, that measure could be placed on a future election ballot requiring a simple majority of the entire city of San Diego for passage.

“It’s not a checkbook problem,” said Kerr Bache about the prospects of La Jolla’s attaining cityhood, though she noted a new collection drive will have to be undertaken by her volunteer group to secure funding for engineering costs, the final fiscal analysis and costs incurred by the Registrar of Voters for validating petition signatures.

La Jollans, in Kerr Bache’s view, are willing to make the final sacrifices necessary for incorporation to come to fruition. “The whole idea about this is not to create another political bureaucracy,” she said, adding La Jollans would be able to choose how their new city is governed. “Del Mar runs their city with a light staff and a quarter-time mayor. The idea is to streamline services, giving people a direct voice in how things are run, restore a bit of the Village, turn it back to a clean place to come and visit.”

Council President Scott Peters, whose First District includes La Jolla, has remained neutral on the La Jolla cityhood proposition. Peters, however, pointed out the city has made an effort to allocate its fair share of tax funding to the Jewel. “We (city) have brought tens of millions of dollars to La Jolla in infrastructure,” he said. “Older communities, including La Jolla, are competing with the rest of the city for money for streets and the quality of life, landscaping, maintenance.”

Peters pointed out there are significant financial questions to be considered in “alimony” payments by a new city of La Jolla, such as the fair-market value for city-owned Torrey Pines Golf Course.

“I haven’t really taken a position on the cityhood issue because I represent a lot of people who might have a different interest,” Peters said. “But I’ve always provided all the information I can about what the process is, and what it would be. I’m concerned that it would cost a lot of money to separate, and that they might be overestimating the amount of money we get - only 17 cents per dollar back to the city - for property taxes. I also wonder whether you’re going to get a (citywide) vote that’s favorable on that (incorporation). I’m not saying yes, or no. I just don’t know how practical it is.”


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