After a four year stalemate, Fresno city and county leaders are closing in on an agreement that will cement a new development path for the next decade, signaling a clear shift away from westward expansion and towards the southeast megadevelopment, SEDA, instead.
The new tax-sharing agreement creates a stronger financial incentive to push new development towards SEDA, through a more favorable revenue split, with the city getting 51% of new revenue generated from development annexed into the city, while the county will get 49%.
It also comes with little time for public review.
Council President Annalisa Perea, who led the negotiations with the county for the city, along with Councilmembers Tyler Maxwell and Mike Karbassi, called for a special meeting on Friday afternoon to approve the new deal points with the county, only released to the public until after 6 p.m. Thursday.
Perea, Karbassi, Maxwell, and Mayor Jerry Dyer could not be reached for comment as of Friday morning.
The favorable deal is contingent upon the city annexing two intersections within the southeast development area within the next year: Belmont and Minnewawa; and, Clinton and Millbrook Avenues.
The deal — if both parties agree — keeps the door open for the county to keep its exurban growth plans as well. If approved, the city is expected to discuss dropping their litigation over Fresno County’s General Plan, which called for new town development along the San Joaquin River and in the foothills above Sanger.
Other undeveloped areas in the city’s sphere of influence — most of which remain west of 99 — would generate a majority 60/40 split of revenue to the county, versus the city — a better deal for the city than the old agreement’s 63/37 split, favoring the county.
The deal also increases the city’s portion of sales taxes collected from the county, and creates a stronger fiscal disincentive for the city to annex county islands — as well as create new ones.
The city let the former MOU lapse in June of 2020, saying that the old agreement made expanding the city limits into a financial loser.
“I’m tired of answering to residents in the center of our city who are subsidizing the growth on the edge of our city,” said former city councilmember Esmeralda Soria, in a June 2020 meeting where the council decided to bail on the former agreement.
Data from Economic Planning Systems, a city consultant, found that under the expired agreement, the city only received 32% of revenue generated from new development, but paid for over 62% of services provided to those new communities.
But the county disputes those claims: their own consultants at Finance DTA produced their own study, finding essentially the opposite to be true.
Some urban planning experts say that the numbers don’t really matter that much: annexation, in most cases, is a money loser for cities.
“Annexation can work if it’s revenue neutral, but it rarely is,” said Joe Minicozzi, an urban finance expert with North Carolina-based Urban3.
But cities need housing, and developers in the Fresno area have developed a strong preference for building nearly predominantly in Clovis Unified, saying they can’t make enough money by building in Fresno Unified, despite planners saying there’s capacity for tens of thousands of new homes on land already within city limits.
Fresno city officials have shown they’re willing to accommodate demand for land for single-family homes in Clovis Unified – even though the full cost of these decisions is still unknown. Public infrastructure costs to build out the new area have been estimated in the billions, yet year-old promises to share with the public the infrastructure costs haven’t been met.
In a post Proposition 13 world, cities have increasingly relied on development impact fees, along with Mello-Roos assessments added to residents’ property tax bills to pay the cost of building and maintaining new roads, water and sewer systems, parks, police and fire stations.
But the fees are never enough to cover the cost, and as services get spread out over a larger area, they become more expensive to provide, while emergency response times lag.
It’s not a problem unique to Fresno: Clovis voters recently approved a 1% sales tax increase to cover increased costs of providing police and fire protection to their rapidly sprawling city.
The special council meeting will be held on Friday at 3:00 p.m. at Fresno City Hall, Council Chambers.
