You can learn a lot about the state of Patagonia by talking with Town Manager Ron Robinson about the budget he is presenting to the Town Council.
For starters, the budget, which is for the fiscal year 2024-2025 beginning July 1, is nearly $3 million—an increase of more than $400,000 over the previous year. If you count the number of potential grant opportunities, the total budget is close to $6.8 million.
The budget increase is mainly a result of the increase in sales and bed tax revenues. Patagonia’s coffers have seen a 152% increase in sales and bed tax revenue since 2019, growing from $373,861 in 2019 to $941,967 in 2023.
Speaking from his office in the Town Hall, Robinson explained where all the new revenue was coming from.
“There’s just a lot more activity in town,” Robinson said. “Different businesses around town have really seen an increase [in business]. The Patagonia Lumber Company is now really rolling, Gathering Grounds’ sales have doubled, and Gerry [Isaac] has been busy at the Stage Stop Inn. And there has been a sharp increase in both short and long-term rentals.”
Robinson attributes much of the growth in business to tourism.
“We’re seeing people come into town, we’re getting more exposure in print media, people are becoming more aware of us,” he said. “We’re not a forgotten area anymore.”
There are now nearly four dozen short-term rentals registered with the Town—about 10% of the town’s housing stock. This sharp increase is reflected in the increased bed tax revenues the Town is taking in.
In addition, in the last year the number of workers on site at South32’s Hermosa project has increased by 100 to 350. And Releaf, the marijuana store, was approved to sell medical as well as recreational marijuana, increasing its sales.
Meanwhile, the population of Patagonia has declined, dropping from 914 in 2019 to 793 in 2023. (Robinson estimates that roughly 10% of the town’s population are only here in the winter, so are not counted in the census as residents.) The median age of Patagonia residents is 61; the median age for Santa Cruz County overall is 37.
“The aging population has been passing,” Robinson said. “People are selling out to speculators who are renting the properties. The younger people can’t afford the cost of buying a home or even rentals. If this downward trend [in affordable housing availability] continues, young people [will] have to leave. That’s why there’s a push from the council to provide affordable housing.”
Robinson has allocated $150,000 in the proposed budget for planning for affordable housing, as the town council hopes to build 25 units—a mix of container homes and duplexes—on land along Harshaw Road that the Town is receiving from South32 in a land swap.
Beyond sales and bed taxes, other sources of revenue for the Town are revenue sharing from State sales taxes, income taxes and vehicle license fees. Patagonia’s portion of these is largely based on official population headcount, and fees, including business and building permits, fines and contributions. Robinson pointed out that the Town of Patagonia does not levy a property tax—although the school district does—and the only funds it receives from South32 are for specific projects, like the playground and paving on McKeown Avenue.
Patagonia’s financial shape is much improved by the Town’s overall large increases in revenue and grants, said Robinson.
“It means we are debt-free with no interest costs, and have a healthy contingency cushion for unexpected emergencies,” Robinson said. “There will be $1.8 million in projected surplus. There is a little more than $500,000 in the reserve fund that can be used for just about anything.”
There is a separate water and sewer reserve fund with a little more than $500,000 in it, more than double the amount in reserve in 2019. These funds help put the Town in a position to go after state and federal grant opportunities.
“The town can proactively plan for infrastructure improvements as state and federal grants become available, and put up matching funds as required,” Robinson said.
Replacing old water lines and updating the Town’s water infrastructure are two programs in the 2024-2025 budget.
“60% of the town’s water mains date back to 1965, and are reaching end-of-life,” Robinson said. “We have applied for three grants and are definitely getting two of them.”
Improvements to Town roads are also included in the budget.
“Last summer we got an unexpected $1.5 million to finish McKeown Ave,” Robinson said. “We’ll [soon] have all-new roads in the business district connecting to 82.”
Robinson is sanguine about Patagonia’s present and possibilities for future growth.
“I love it the way it is,” Robinson said. “I know it will change—[but] I don’t want the mindset of commercialization to set in to our town. We have these hometown businesses, and it would be great for somebody to come in with a small hardware store.
“That’s how we want to organically grow our town.”