Among the region’s larger cities, Camarillo probably has the strongest retail environment — and a much better-than-average fiscal position.

Oxnard, Santa Maria and Paso Robles probably have some of the best long-term growth prospects, thanks to affordable housing and a pro-business attitude. San Luis Obispo has a dynamic new city manager with a laser-like focus on micro-neighborhoods and greening up her city.

But Santa Barbara is not to be counted out as the business cycle begins its next upward climb.

City Manager Jim Armstrong and newly elected Mayor Helene Schneider gave a sobering outlook for the financial condition of the South Coast’s major city on March 16.

The near-term outlook was bleak indeed. A $9 million budget gap looms, retail and hotel taxes are down sharply and declining property taxes are a vexing problem. There will be extended and testy negotiations with unions this spring as the city looks for givebacks in the neighborhood of 10 percent in order to shore up its sagging general fund.

But behind the headlines there’s reason to believe that Santa Barbara will not relinquish its role as the region’s flagship tourist destination. It’s also highly likely that the South Coast will continue to attract a surprisingly large number headquarters for national and international companies.

When it comes to luxury hotels, Santa Barbara 2.0 is pretty much shovel-ready. The La Entrada project on lower State Street, Fess Parker’s luxury small hotel on Cabrillo Boulevard, the Miramar in nearby Montecito and El Encanto near the Santa Barbara Mission are all positioned for construction as soon as the hotel financing market unthaws. City officials think El Encanto will be first off the blocks and they have extended La Entrada’s building permit for a year.

Second, the decline in retail tax revenue, some 16 percent over two years, is not as bad as it seems. A return to a more “normal” tourism environment and increased spending by what economist Bill Watkins calls “the gentry class” will fill a lot of this pothole.
Finally, there is a fair amount of infrastructure improvement under way. Widening  Highway 101 part way through Montecito will make the Ventura commute vastly easier, elevate productivity and help spur a tourist revival. The new terminal at Santa Barbara’s airport will make travel easier — including bathrooms on the secure  side of the screening area. There’s also a drive toward a greener Santa Barbara, which will help homeowners upgrade systems, help restaurants cut costs through recycling and help the city save money.

Santa Barbara 2.0 will be a busier and more streamlined city. Don’t write it off.

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