Grand jury urges Central Coast city of Guadalupe to dissolve

A speck along the Central Coast, the city of Guadalupe, population 7,080, has seen a lot of history: Father Junipero Serra hauled in the now-agricultural mecca’s first cattle, and the sets for director Cecil B. DeMille’s silent 1923 epic “The Ten Commandments” rose in the majestic dunes just outside the town limits.

Now the city six miles west of Santa Maria, and four from the ocean, may be facing another historic landmark. A Santa Barbara County grand jury has recommended that cash-strapped Guadalupe dissolve, which would make the city the first in the state to disincorporate since 1973.

In a report titled “Guadalupe Shell Game Must End,” the grand jury concluded that more than a decade of financial mismanagement, a declining tax base and increasing debt obligations have all but ensured the doom of the 1.3-square-mile working-class town that was first established in 1840.

According to the grand jurors, well-intentioned but incompetent bureaucrats “inappropriately” transferred about $7.6 million from restricted funds to cover budget shortfalls and ignored the recommendations of city audits and prior grand jury reports to trim expenses. With costs expected to outpace revenue, the report urged the city to pull the plug.

By “moving money from one account to another to keep the city afloat,” Guadalupe has engaged in a “shell game” that must come to an end with disincorporation, the jury said.

City Administrator Andrew Carter said he doubted that the Guadalupe City Council would follow the grand jury’s recommendation, which is not binding. Disincorporation is a multi-stage legal process that can either be forced on the city by the state Legislature or approved by city voters.

“There’s nothing in the report that we don’t already know,” said Carter, who has held the post since 2013. He faulted grand jurors for dwelling on missteps by past management and giving short shrift to recent efforts to turn the city around.

City employees have taken a 5% pay cut, and this winter, ground broke on a long-awaited housing and commercial development that is expected to boost tax revenue by adding 800 homes. In November, voters overwhelmingly approved three tax initiatives that are expected to bring an additional $315,000 to the city’s coffers.

“I doubt that any other community voluntarily imposed three tax measures on themselves,” Carter said. Additional changes in utility and other taxes should yield a balanced budget for the next fiscal year, he said.

Carter said county officials’ suggestion that Guadalupe disband strikes some in the city as representative of a larger chasm between the farming town and the well-heeled county seat.

“The demographics of Guadalupe are the exact opposite of the demographics of Santa Barbara’s,” Carter said.

According to the U.S. Census, about 87% of Guadalupe’s residents are Latino; 6% of them have a college degree. In Santa Barbara, about 42% of residents have a college degree; 38% are Latino.

No city has dissolved in California since tiny Hornitos in Mariposa County in 1973, one year after the city of Cabazon lost its legal status and was integrated into unincorporated Riverside County. In recent years, Jurupa Valley, Vernon and Maricopa have edged close to dissolution.

At a meeting Tuesday night — the first time the City Council has met since the report was issued last week — members were expected to appoint two of their peers to draft a response to the grand jury. The response is due within three months.

matt.hamilton@latimes.com