The Fresno City Council is expected to approve on Thursday a resolution that would effectively halt new development outside of current city limits until a more equitable tax sharing agreement with the county has been negotiated.
The tax sharing agreement, a seemingly mundane policy document, has significant impact on where future growth can occur and whether the city can afford to provide services to new developments while maintaining similar levels of service in older neighborhoods.
City and county officials have been unsuccessful in renegotiating the current agreement, which originally expired in June 2017. The latest and fourth extension expires on August 29, 2020. The temporary halt of annexations of new developments will generate additional pressure from the suburban development community on city and county officials to find a solution.
Mike Prandini, president and CEO of the Building Industry Association of Fresno and Madera Counties, said in a letter to the city council this week that the move will slow new housing growth west of Highway 99 and outside of southeast Fresno. Prandini requested that the city and county continue negotiations.
Keith Bergthold, executive director of Fresno Metro Ministry, said a new agreement “is critical for achieving equitable land use policy and fiscal sustainability of the city.”
Bergthold, who is also a member of the Fresno General Plan Implementation Review Committee and a former planning director for the City of Fresno, noted that “some annexations since the last agreement [in 2003] have likely not been fiscally productive and may be net money losers — preventing Fresno [city] from meeting the extreme needs for public investment in our many neglected existing neighborhoods.”
Fresno County has an agreement with every city within it stipulating how property and sales taxes are shared and who carries the financial burden for delivering services to new developments — such as police and fire protection, water and sewer service, or road maintenance. The current agreement between Fresno and the county stipulates that the city can receive 38 percent of taxes collected in new growth areas. A report prepared by a consultant to the city found that Fresno pays for roughly 62 percent of services in these same areas.
Many advocates have long expressed concerns about the impact of new developments located outside existing neighborhoods on the city’s ability to provide basic services in older neighborhoods. Last year, Fresno declined to apply for state grant funds to build additional parks in some south Fresno neighborhoods because it lacked funding for ongoing maintenance and operations. Community organizations offered to apply and seek their own support in the city’s absence.
The city’s 2014 General Plan states that “low-density residential developments on the urban fringe in county areas that require annexation are expensive to serve with both physical infrastructure (roads, water, and sewer) and services (fire and police)…..because of tax sharing arrangements with the county of Fresno, these annexed areas contribute significantly less revenue to the general fund than land developed within the city limits.”
“Until a comprehensive fiscal impact analysis of all of the costs of growth and development is completed, we shouldn’t be making any substantive updates to the General Plan or tax sharing agreement,” Bergthold said. “Knowing and managing the costs of new growth is sound business practice and will ensure equitable service provision for existing city residents and taxpayers.”