Where are Sebastopol's Downtown Business District taxes going?
With the Sebastopol Downtown Association seemingly dead in the water, a Chamber of Commerce subcommittee of downtown business owners may determine how to spend funds from the business district tax
UPDATE/CORRECTION: We have added a quote from Acting City Manager Mary Gourley regarding where this issue stands with the city of Sebastopol. In addition, we have removed a phrase about Gourley confirming that the SDA had lost its 501(c)(3) status. The evidence for that fact was provided not by Gourley, but in a copy of a letter from the IRS to Andrea Caron. We apologize for this error.
In the last few months, several local business owners have asked the Sebastopol Times what was happening with the Sebastopol Downtown Association—and more to the point, what was happening with the tax money downtown business owners pay every year if they’re located in the Sebastopol Downtown Business District.
The Sebastopol Downtown Association was originally set up to receive and spend the funds derived from the taxes paid by businesses within the business district. According to the city of Sebastopol Administrative Services Director Ana Kwong, businesses within the district pay a business-district tax based on the cost of their business license. For some businesses, the tax is equal to 50% of the cost of their business license; for other’s it’s based on 25%. Either way, it’s capped at $125 a year, and most businesses pay much less than that. Combined, the business district generates around $8,000 to $10,000 a year. This money has traditionally been spent on things like radio ads, social media buys and events that draw attention to Sebastopol’s downtown.
Last week, Silk Moon owner Andrea Caron sent out a letter to all members of the Sebastopol Downtown Association (SDA), explaining “several important developments related to the management of our downtown business district funds and structure.”
For much of the last two years, the board of the SDA and the Sebastopol Chamber of Commerce have been working to merge the two organizations. (See our previous articles on this topic here and here.)
In November to December 2023, the SDA held an election for its members on the following proposal:
“That the Sebastopol Downtown Association reorganize under the umbrella of the Sebastopol Chamber of Commerce. Further that the SDA maintain control of the Business Improvement District monies collected for support of our members by having approval and veto power over how those funds are spent through the existing SDA board of directors. And finally, that the SDA and the Chamber continue to pursue the expansion of the Sebastopol Business District to include all businesses within the town of Sebastopol. This will include the dissolution of the SDA as it exists, and a new entity called the Sebastopol Business Association would be formed.”
Very few SDA members voted (just 15 out of the roughly 200 members), despite several informational emails and coverage of the election in the Sebastopol Times. Those that voted approved the proposal 13 to two, according to Volk.
But when the SDA board collapsed late last year—leaving Caron as the last woman standing, things changed.
“I was asked to assist with the transition of the SDA back under the Chamber’s umbrella,” Caron wrote in her recent email to downtown business owners. “While I initially expected to be part of a shared process, the responsibility ultimately fell to me after several dedicated board members stepped away due to personal and professional commitments. I have great respect for all who served before me—their volunteer efforts helped keep things going during a particularly challenging time for downtown.”
Caron soon discovered that the SDA hadn’t filed its required tax forms since 2020. As a result, the IRS had revoked the SDA’s 501(c)3 nonprofit status.
Instead of merging with the SDA, Caron and Chamber Director Myriah Volk, in consultation with Sebastopol city staff, including former City Manager Don Schwartz, decided that the Chamber of Commerce should simply take over SDA’s duties and the roughly $8,000 to $10,000 a year in taxes paid by business owners in the Downtown Business District.
This cannot be done by fiat. The changeover has to be approved by the Sebastopol City Council.
Now, according to Chamber Director Myriah Volk, it’s almost a done deal.
“We’ve been working hard behind the scenes for more than two years,” Volk said, speaking for herself, Caron and a changing array of folks from the now defunct SDA board.
If this effort is successful, it will mark the second time in the last dozen years that the Chamber of Commerce has taken over the duties of the SDA.
A little background
There was one significant error in Caron’s email message to businesses. Attempting to give some history on the SDA, she got the timeline wrong, which made it look like the Chamber had had the say over business district funds for much of its history.
According to documents from the files of former Councilmember Michael Carnacchi, who has been involved with the SDA for a long time, that is not the case.
Here is the timeline we were able to deduce from looking at these documents:
The Downtown Business District was created by the Sebastopol City Council in 1976.
A little more than ten years later, the Sebastopol Downtown Association was formed by a resolution of the Sebastopol City Council in 1987 to give recommendations to the council on how business district funds should be spent.
At some point toward the end of the first decade of the 2000s, the SDA disbanded and turned its duties over to the Chamber of Commerce. It’s unclear how long the Chamber managed those funds, perhaps a year or two. Various people involved at the time don’t recall exactly.
What is clear is that, with the support of several local businesses, the SDA re-formed in 2011 and basically took back control (with the city council’s blessing) of the business district funds from the Chamber of Commerce.
In January 2015, the city council agreed to deposit the business district funds directly into the bank account of the SDA.
After that, for many of the intervening years, marketing consultant Rei Blaser and a changing cast of local business owners ran the SDA, sponsoring sidewalk sales, holiday and craft fairs and running ads in local publications and on radio. Blaser also created a sophisticated website for the SDA, which is now no longer online, and did social media for the organization. She did all of this as a labor of love—but eventually Blaser stepped back from the SDA to concentrate on her own career.
In August 2022, former councilmember, bootmaker, and then SDA president Michael Carnacchi (who is now married to Blaser) oversaw what seemed to be a renaissance for the SDA. New business members joined the SDA’s board.
Then in 2023, the SDA board began to explore the idea of merging with the Chamber. SDA Board members involved in this decision included Adam Parks of Victorian Farmstead Meats, Aubury Doherty from Copperfield’s Books, Adam Bulbulia from Bridging Worlds, Angelina Kidd from Pilates with Angelina and Carnacchi.
Over time, uncomfortable with the SDA’s direction, Carnacchi stepped back from the board. All of the other board members eventually stepped down as well, but not before handing the project of the merger over to Caron.
On the face of it, combining the two organizations makes a lot of sense. One of the problems that has plagued the SDA in the past is that board members have been so busy running their own businesses that they don’t have time to create and run marketing campaigns and events for the business district as a whole. By combining the two groups, downtown businesses would have the advantage of having the services of a full-time executive director—Chamber Director Myriah Volk—whose main job is already thinking of ways to promote local business. It makes sense for the Chamber too, because it gives them roughly $10,000 more per year to spend marketing businesses in downtown Sebastopol.
As outlined in the proposal above, the original plan was that the SDA board would continue as a subcommittee of the Chamber. After the SDA board disintegrated, that plan changed. The new plan is that any business owner in the downtown business district can individually become members of the Chamber’s Downtown Subcommittee, which will vote to decide how to spend the tax money from the Downtown Business District.
Volk said that any business owner in the business district is welcome on the subcommittee. They do not have to be a member of the Chamber of Commerce.
Initially, that subcommittee will consist of the three downtown business owners on the Chamber Board: Todd Hudelson of Sprint Copy, Melena Moore of Bliss Organic Day Spa, and Bill de Carly of Hopmonk. If you’re a downtown business owner interested in joining the subcommittee, contact Myriah Volk.
The idea of creating a citywide business district, which was part of the original proposal SDA members voted for, is on hold for now. It is still popular with some SDA members, and only time will tell if they will undertake the political and bureaucratic efforts required to move that project forward.
Follow the money
Legally changing which organization can be the recipient of the funds raised by the Sebastopol Downtown Business District will ultimately be a matter for the Sebastopol City Council to decide.
Interim City Manager Mary Gourley said that the city attorney is currently reviewing the legal paperwork required to do this and that the legal changeover is on hold until the attorney renders his opinion. Gourley said they’ll then present some options to the city council for approval.
“We are reviewing the options that the council can consider, regarding the distribution of the business assessment district funds,” she wrote the Sebastopol Times on May 21. “Our city attorney is reviewing the current ordinance, resolutions and/agreements and will be bringing an item to the Council within the next couple months for a Council on options for consideration.”
In the meantime, what’s happening with the money from the business district taxes? Roughly $11,000 is sitting in the SDAs bank account, waiting for the city to decide that the Chamber of Commerce has a right to spend it.
As the owner of a downtown business, Caron is keenly aware of the need to draw more customers to downtown Sebastopol, but she has been hesitant to spend any of the SDA money on marketing because of the virtual disappearance of the SDA as an organized body.
“It puts me in a quandary,” she said, noting that she did buy a radio ad for downtown Sebastopol this spring. She said she’d reached out to SDA members asking for help in marketing the downtown but didn’t receive any replies. “It’s frustrating,” she said, “because I know our local businesses need help now.”
Caron is looking forward to having the Chamber subcommittee up and working—and quite frankly, she’s eager to step back from the time-consuming volunteer position she’s found herself in.
Volk is also ready to spend the money. “For me, it’s like that money is just sitting there, right? The business owners need help now. So what can we do to expedite this, to get the money where it needs to be spent? Get a radio ad. Plan some summer stuff. It’s time, and the funds are there. We need to use those funds to get things going. That’s why we’ve been trying to push things forward.”
Danielle Connor, the owner of Retrograde, is also frustrated that the money’s just sitting there, but she’s also frustrated with the process to date. Rather than radio ads, for example, she’d prefer to see events.
“Those funds aren’t doing anything for the businesses downtown by sitting in a bank account, and personally I don’t think radio ads just advertising Sebastopol as a city are all that helpful. We need to give people a reason to come to town, and events are a great way to do that. People know that Sebastopol exists, but why should they visit? To my knowledge, no events are being planned downtown so I’m not sure what events will be advertised in the future as noted in the email.”
“I also believe there should be a process that determines how the funds are spent that includes all business owners downtown,” Conner said. “This is noted in the email but not noted as to how that will actually happen or what we should expect. I hope that once the city gives guidance, there will be some sort of organization and reliable communication from whoever is in charge of the funds.”
“Unfortunately, I don’t have very high expectations,” Conner said. “In my 8 years in business, I have sort of just learned that if you want something to happen you need to organize it yourself.”
Volk takes a different view.
“We just have to figure out how to adapt to this new situation, right?” she said. “We’re hopeful this is going to be good for everyone. If you’d like to be a part of the Chamber’s Downtown Subcommittee and help make decisions on events, radio ads or how you want this money spent, then, please speak up.”
If you are a downtown business owner and you have questions about or would like to get involved in the decision-making process for the funds from the Downtown Business District, contact Myriah Volk.
Really important info here! Thanks for explaining all of these situations that are happening behind the scenes that are affecting our business in town. We want to do everything we can to support them. I hope, as Danielle stated so clearly, that more events need to be planned to bring people into downtown. As well as that all small businesses feel they are being heard and supported. They all work so hard and we are LUCKY to have such wonderful people running businesses that make our town feel special. I know they are feeling the squeeze right now, we all need to support them as much as we all can.
As a lifelong Sebastopolian, I can confidently point out that the reason people don’t shop in Sebastopol isn’t because of a lack of promotion. It’s because downtown is almost nothing but a bunch of new age shops, probably trust fund baby-owned stores that sell things that real people don’t even want, like crystals and tarot card readings and the godawful hug parties for Perverts.
There isn’t a single music store in Sebastopol anymore and no place to get good food on the run. There are no legitimate clothing stores that would keep people in Sebastopol like Carlson‘s used to. I suspect it’s because of the Berkeley infiltration, in which there are very few native families or businesses left here downtown and only Berkeley Transplants (attorneys mostly, I suspect) who have made themselves useful pawns for the UN Agenda 21 plan, serving on sebastopol’s city council.
Growing up, Sebastopol had everything here and we didn’t have to go to Santa Rosa to shop for anything. Whoever’s been running things the last 20 or 30 years are clearly not native Sebastopolians, clearly don’t have Sebastopol‘s best interest at heart, clearly don’t have Sebastopol children’s or youth’s best interests at heart and don’t have normal people‘s best interests at heart. It appears to be a bunch of outsiders who really don’t give a crap what happens to Sebastopol because they weren’t born here, they didn’t grow up here and they have no affinity, no real affinity, for Sebastopol.
And that, Laura, is what seems to be the problem here in Sebastopol. These city Council outsiders have shoved things down our throat like the homeless RV camp that did nothing but bring a bunch of freeloaders, criminals and bums to Sebastopol (4 murders the first year after the RV camp opened), despite every citizen on that zoom call voting no and voicing their displeasure with that plan. Only one person said yes, everyone else said no, and these outsider city council people approved it anyway, at 8 AM the next day, which means they didn’t even consider anything that all the citizens said. They already had their plan to approve it. Don’t even get me started about the garbage thing, because that was the same hidden agenda.
And as long as Sebastopolian‘s aren’t paying attention to the fact that the city council people they keep electing, who have the most signs or the biggest signs, are not people who even give a crap about Sebastopol, we will keep getting the same bad leadership. Servant leadership, I might add, but this City Council/Mayor team don’t seem to get that: Public SERVANTS serve the CITIZENS (public). We don’t have that here in Sebastopol anymore.