What's at stake?
Fresno has an affordable housing crisis – but is building expensive single-family homes, over water and sewer infrastructure financed by city residents, the way out? Two new studies released this past week provide a deeper picture of what financial obligations the city could take on, leaving a $3 billion shortfall, even if developers pay their fair share of the costs.
On Wednesday, Fresno’s planning commission will take one of its most important votes of the decade: Approving the final documents for the southeast development area, known as SEDA, a massive 45,000-home development that could reshape the city for generations and potentially burden taxpayers with $4.3 billion in infrastructure costs.
The decision to bring the project up for a vote, reporting by Fresnoland shows, is operating outside the normal bounds of financial and planning transparency.
The city is racing toward approval despite its own financial analysis showing the project isn’t viable – with developer fees covering just 20% of infrastructure costs – and contrary to Mayor Jerry Dyer’s public opposition to most of the project. Officials have withheld critical studies, misrepresented state requirements, and are set to greenlight development that the city’s own market report shows would fail to significantly increase overall housing production or address Fresno’s affordability crisis.
Planning commissioners have been given less than 48 hours to read the long-promised infrastructure report which shows the projecting have a $3 billion infrastructure funding shortfall, with city staff saying the council’s backs are against the wall to get the project approved by the end of the month or else the city will owe the state $625,000.
But Paul McDougall, the state housing official responsible for administering the grant, told Fresnoland there is no threat.
All phases of SEDA are not financially viable, according to a financial analysis released Wednesday morning from city manager Georgeanne White, because the high infrastructure costs of the project overwhelm the potential profits of building the project in the first place. The city’s report holds out hope that somebody can make up for the $3 billion funding shortfall.
The planning commission is going to vote Wednesday on the final review for the project anyways — without that final review even being finished.
Planning director Jennifer Clark says it is perfectly legal for the planning commission to certify the final documents before they’re completed.
“We’re asking them to certify the final [review] based on the draft,” said Clark, in an interview with Fresnoland.
A timeline of city decision making by Clark and City Manager Georgeanne White shows that, to get the massive project approved, results of studies have not been disclosed. The planning department, overseen by White, is moving forward with SEDA despite financial liabilities.
The city has spent over $200,000 to study the costs of SEDA on the general fund, with the first draft of that tool delivered to the city five years ago. The tool was even updated in late 2023 at the request of White. The results of that general fund impact analysis – how much tax burden city residents will assume – are not known by council members.
White’s boss, Mayor Jerry Dyer, says he doesn’t want most of SEDA to be built. He’s recently pulled his support for the big eastern part because he says it would saddle Fresno residents with $1.5 billion in upfront debt for sewer and water mains.
But Clark says they plan on greenlighting the eastern portion anyways – allowing developers to start building in the east within five years of breaking ground on the southern portion.
The much-awaited infrastructure study shows that starting SEDA would require billions of dollars in subsidies from city residents via municipal bonds or private sector debt.
Whoever takes on this debt, they will face a massive uphill battle on paying it off. A market study delivered by White to the Fresno City Council on May 13 confirms Dyer’s fears that it would take generations to pay off the infrastructure debt of the eastern part of SEDA.
Less than 25% of East SEDA will be built out by 2050, the report shows, and 37% overall. In other words, it’s likely that whoever pays the price for SEDA’s infrastructure – either Fresno residents or the private sector – will still hold the majority of the debt by mid-century.
That’s because SEDA is not going to increase housing production, the report also shows.
SEDA homes could be most expensive in Fresno area
For the so-called “abundance” movement, Fresno is a key case study for what happens after local leaders rip housing regulations to the studs.
Over the last decade, mayoral administrations and the Fresno City Council have followed the “abundance” recipe to a T: cutting red tape and accomplishing the sorts of rezone reforms advocated for growthers like New York Times columnist Ezra Klein and state senator Scott Wiener. Today, the city of Fresno has zoned itself for roughly 100,000 homes – enough to last until the year 2100 at the city’s current building rates.
Fresno seemed ripe to reap the rewards of these rezones too. Over the same time span, the city has experienced an economic miracle that is unlikely to be repeated in our lifetimes. Wages have gone up, poverty rates down, and unemployment hit all-time lows.
This is because the two biggest sectors of the city’s economy– healthcare and education – were the beneficiaries of unprecedented policy changes from the Brown and Newsom administrations. Fresno Unified, the city’s biggest employer, saw its annual budget double by $700 million virtually overnight in the mid-2010s, due to new state laws that redistributed property taxes from wealthy coastal areas to Fresno. And Obamacare made the city’s healthcare economy flush with cash too.
Despite this unprecedented growth in residents’ purchasing power in the 2010s, builders increased their price of homes rather than building more. Home building rates stagnated in the city to about 1,300 units a year, according to state housing data.
Since 2019, Fresno residents have experienced some of the worst home price increases in the entire state, according to the Legislative Analyst’s Office, with the cost of owning a home doubling here since 2019, while the costs to build have increased by about 20%, according to census data.
Now, Fresno’s land development industry is pushing city officials into the most speculative outskirts of high prices: southeast Fresno.
For the last 25 years, SEDA has been the most expensive neighborhood in Fresno – its median home price consistently 25-40% pricier than the Woodward Park area, Fresno’s second-most expensive neighborhood. A middle-of-the-road rural residential home in SEDA is the fourth-most expensive neighborhood in the entire San Joaquin Valley. It is only outranked, according to Zillow, by a handful of small McMansion tracts in northwest Visalia. Nothing in the region combines SEDA’s combination of price and sheer size.
Source: Zillow Housing Price Index, average median-tier home price
Since 2018, home prices in SEDA have risen faster than anywhere else in Fresno. Today, a home in SEDA sells for 75% higher than Fresno’s fast growing neighborhoods west of 99. Zillow’s estimate of a mid-tier home there, primarily rural residential, is $700,000.
Within this context, White, the Fresno city manager, has led the way in helping put more southeast land into the rezone pipeline for developers, prompting a revival of planning for SEDA since the plan was scrapped in 2008.
“There’s a market for $700,000 houses,” White said. “If there’s a market for that product, why shouldn’t we also be part of offering that market?
“We’re not saying it’s going to solve the housing crisis.”
Planning commission won’t know SEDA’s financial impact on Fresno taxpayers
When Dyer first proposed SEDA in summer 2023, home prices had never been higher in SEDA. With the nearly million-dollar homes selling like hot cakes, Dyer uncorked the city’s plan for the southeast area, which had been collecting dust since the world economy collapsed in the late 2000s.
Early on, Dyer promised that city residents wouldn’t foot the bill for the 45,000-home proposal.
“I am committed to making sure those who decide to build outside of the core are not subsidized with tax dollars, and that they pay for the infrastructure needed to support their development,” Dyer said in 2023 when his administration announced it was bringing back SEDA for the first time since the 2008 financial crisis.
White has occupied the inner circle of nearly every mayoral administration in Fresno since the late 1990s, becoming chief of staff for Mayor Jim Patterson, according to her LinkedIn, as the FBI’s Operation Rezone wrapped up its conviction of Fresno developer John Bonadelle and other Clovis City Council members.
White herself has witnessed the city’s lowest points, when the unchecked costs of Fresno’s chase with smaller wannabe towns to build the next boomer neighborhood have become clear on the city’s ledger sheet.
In the late 2000s, she was chief of staff during the Swearengin administration as the city neared the brink of bankruptcy during the city’s biggest housing bust to date. The only time she was outside of city hall over the last 25 years, she worked for developer Ed Kashian for three years and was a water policy consultant. She served as president of the board of Kashian’s foundation, according to tax records, drawing $180,000 in consulting fees before she came on as Dyer’s top official. Kashian is the biggest retail developer in Fresno, planning Fancher Creek, the $200 million regional mall in southeast Fresno.
“That work [for Kashian] has no bearing on my role as City Manager, and in fact, I have vehemently argued for Fancher Creek to abide by its development agreement requirements,” said White in a text to Fresnoland.
In a town famous for “planning gone wrong and development gone wild,” the city’s planning department has often found itself in the role of pouring lighter fluid on epic housing bubbles.
“Politicians and developers scrambled to propose projects that would have a market in the shrinking economy and produce adequate short-term profit margins but which, in the long term, were not likely to serve the community’s interests,” wrote a Fresno Bee reporter in 1984, attempting to summarize the city’s entire planning history up to that point, in a multi-volume history of Fresno’s growth.
When credit was cheap in the early 2000s, history found a way to repeat itself. Fresno developers learned they could jack up home prices to extraordinary amounts, nearly tripling the amount of housing permits they filed with the city and causing the seventh-highest increase in home prices in the nation over a four-year span, according to national housing data from Zillow analyzed by Fresnoland.
The city’s population growth rate was declining over that same time, and when not enough people arrived here to fill up the space of all those tract maps, Fresno’s home prices lost almost all their newfound gains. As a result, the city found itself in a financial straitjacket of having to pay for all the new slices of sprawl they had greenlit even as their tax base shrunk.
Source: US Census; California Department of Finance
Only four months after Dyer’s initial announcement, White paused SEDA for similar reasons. She cited a mismatch between the mega-project’s overall infrastructure costs and the city’s low population projections from the state, saying the Dyer administration needed to settle on a “timeframe” for the massive plan.
The population growth projections the city had originally used in the late 1990s to justify SEDA were, almost 30 years later, out of date. The city had used a 2.9% growth rate when it first considered annexing SEDA in 1997; now the state says the city will grow at .28% on average until 2070.
Former city planning director Nick Yovino told Fresnoland that the city became interested in SEDA in the late 1990s after developers in southeast Madera announced their Rio Mesa Plan. The Fresno planning department had assumed, Yovino said, that SEDA was needed because Fresno’s population was going to double every decade or so.
That didn’t happen, and now the state estimates Fresno’s population will start declining before SEDA even reaches 50% build out.
In her role as city manager, White had plenty of tools to work with on whether, given these new facts on the ground, SEDA was a net winner or loser for the city’s finances.
The city’s general plan implementation committee even helped file a motion that ended up setting aside roughly $200,000 to create a tool that could fully assess the costs of new sprawl on the general fund.
In June 2020, a first draft of that tool was delivered to city officials, according to the consultant’s contract with the city. The results of that study have not been made public, nor to city council members.
As it turned out, by the time White had put SEDA on pause, she had already commissioned an update to the tool a month earlier, according to the city’s contract. White’s update of the fiscal impact tool was supposed to give a new estimate on what the financial impacts of new annexations have on the general fund. That report has also not been made public, nor to the city council.
Follow-through with the city council on what the results of the fiscal impact analysis were – how much tax burden city residents will assume – have been sparse to none.
“I have not heard of it,” said Nelson Esparza, the city council member who set aside money to create the tool in the first place a few years ago. “It’s one thing I’m going to have my staff look into.”
“I don’t know about the general plan [impact tool],” White said about the fiscal impact tool. “The one I’ve been focused on is the infrastructure financing for SEDA.”
By December 2024, White was given another report, this time on the infrastructure costs of SEDA.
Since the start of this year, the problems with SEDA have become harder for White to ignore. Members of the Fresno city council have expressed concern about the potential infrastructure costs of extending the city’s infrastructure to SEDA’s outskirts.
In the face of this resistance, the planning department, which White oversees, has resorted to pressure tactics with the city council.
State pushes back on White and Clark’s claims about repayment
Two weeks ago, the planning department and White gave a presentation about SEDA to the city council in which they mischaracterized the key facts about the project.
Planning staff refused to even acknowledge they had used inflated population projections to justify SEDA — one almost 10 times higher than the gold-standard projections from the state’s department of finance.
“They’re the same, in a general way,” said city planner Sophia Pagoulatos about the different numbers.
Both Clark and White also tried to convince the city council that their backs were against the wall in approving SEDA in the coming months, or else they’d owe the state $625,000.
“If we don’t adopt [approve SEDA], we’ll have to pay the money back,” White told the city council about the state grant that had jumpstarted the city’s planning efforts for SEDA in 2023.
The state contradicts White’s claim.
According to Paul McDougall, the state official at HCD who oversees the city’s grant, the city is not at risk of having to return funds, at least for now.
McDougall said HCD expects city planners to complete the documents on the final specific plan, environmental review and infrastructure spending plan. It’s unclear whether adoption by the city council is formally required as a condition of the grant.
“Repayment is not under consideration at this time,” McDougall wrote to Fresnoland in an email. “The Department has broad discretion to require repayment,” he added, answering a question about whether repayment of the grant is possible if the city didn’t adopt the plan.
As White and Clark continued the presentation, it emerged that White was now one of the few, if only, voices at the top of City Hall who still believed that the 9,000-acre version of SEDA could still work.
Dyer came down from his top floor office at city hall, where he had been watching the planning department’s presentation go up in flames.
“Sorry, Georgeanne,” Dyer prefaced his comments. “But I wanted to say the things that I think need to be said.”
Dyer revealed to the council that breaking ground on the eastern flank of SEDA, the side that holds so much promise for developers to realize large profits within Clovis Unified, was going to trigger over a billion dollars in debt.
Water and sewer mains needed to be built there before anything else, he said, which was too “cost prohibitive” for city residents to pursue, already having the highest utility bills in America.
Unless the private sector was willing to hold $1.5 billion in interest-bearing debt for decades, city residents were likely to be left footing that bill, Dyer said.
“The potential for it [the costs of SEDA] to fall on the general fund and ratepayers, I believe it’s all true,” Dyer said. “That return on investment would have taken so long, it would have been on the backs of ratepayers.”
Dyer said that he only supported the Southern part of SEDA to move forward, which already has water and sewer access. It appeared that it was the only part of SEDA that could pay for itself.
“I believe we need to move forward during my administration with the opening of south SEDA and south SEDA only,” Dyer concluded.
The council asked Dyer if they could approve only South SEDA. Dyer deferred to White.
White insisted the council approve the whole SEDA plan. At that point, she had still not disclosed either the net operational costs on the general fund nor the total infrastructure costs that Dyer was alluding to.
Contrary to Dyer, East SEDA will start five years after South SEDA
Over the last three weeks, White has delivered two remarkable documents to the city council.
One document lays out the next 25 years of growth for Fresno, directly contradicting Dyer’s explicit instructions on moving forward with only South SEDA.
The city planning department is going to allow developers to build in East SEDA within five years of starting South SEDA, triggering the billion-dollar upfront infrastructure obligations that Dyer warned about. The planning department is phasing South SEDA for 2030, and East SEDA for 2035, Clark, the city planning director, confirmed.
“This is what’s identified in the general plan as essentially when demand would occur and when [SEDA] would be made available,” Clark said.
The other document produced by White shows that the city’s economic consultants could not find a way for SEDA to pay for itself – another major condition that Dyer tied his support of SEDA to.
The first phase of SEDA will cost $1.9 billion, according to the report. At maximum, developer fees will cover $559 million, and somebody needs to come up with $1.4 billion for the remaining infrastructure costs, according to the report.
It’s unlikely somebody in the private sector, like a developer or a bank, will take on that debt, the report concluded. Roughly 30% of their revenues from selling the homes would be eaten up by the debt. After factoring in land and construction overhead, the developers profit margins are likely even lower.
“Phase 1 of the Project may not be financially feasible,” the report concludes.
Phases 2 and 3 are overwhelmed with infrastructure costs for similar reasons, the report shows.
In the report, the city proposes that some sort of “SEDA Special Financing District” be created to shoulder these costs, without specifying who would shoulder the upfront debt.
Whoever takes on that debt will likely have their financial liabilities strained over the coming decades, according to the city’s market study. Only about 35% of the massive project would be profitable to build by 2050.
At SEDA’s predicted rate of build-out – roughly 900 homes a year – Fresno residents would be paying down infrastructure debt for the 45,000-home project until 2082, if the city decided to finance the water and sewer.
The market study also serves as a gut check for the idea that all this financial risk has a benefit to the broader public. In order for the free market to reduce home prices by 1%, data shows, housing production needs to increase by 10%.
But even with giving developers free reign to sell the $700,000 homes in southeast Fresno, overall housing production is not expected to increase significantly over the next 20 years, the report shows.
Developers are expected to pour increasingly more resources into premium SEDA properties, dominating the majority of the city’s housing production by 2050. The report predicts almost no changes in the city’s total housing production, however. Instead, every other part of the city will see no gains in housing production (Downtown, the West area, South of Shaw), the report shows, or losses (North of Shaw).
For a risk-averse private sector, it is unclear if they would be willing to shoulder SEDA’s long-term debt for a few generations. The financial liabilities of the project are outside the normal realm of feasibility for them, the report said.
White has said repeatedly that the new towns in Madera County prove that developers can shoulder the upfront infrastructure costs. But with most of SEDA drawing at least a billion dollar debt that the city’s own market study shows would take generations to fully pay off, not even the planning director knows if Madera’s much-smaller development up the road, having less than 10,000 people there today, is an apples-to-apples comparison.
“That’s a great question. I don’t have the answer for that,” Clark said. “I wish I knew that number. I don’t even have a ballpark in my head.”
Clovis Unified keeps pressure on Dyer
Since Dyer came out against most of SEDA earlier this month, it’s become clear who tries to reframe the conversation of whether to greenlight new sprawl when market studies and lobbying fail: educational boards.
At the peak of the subprime boom, Clovis Unified staked a claim for SEDA decades before growth came there. From north Fresno to Madera, a high-performing school district and a nearby hospital have proven to be the two main ingredients developers need to establish a market for their high-priced products, no matter how thin that market actually is.
Even though Clovis East is still not completely built out – the Clovis Fire Department says they finally reached 60% build-out only a few years ago – CUSD has plopped down half a billion dollars to build another new campus called Clovis South. With home prices already so high there, the school district can use its bond money to play tip of the spear for sprawl.
The day after Dyer said East SEDA was too expensive – where all the future Clovis Unified homes would be located – the school district sent a letter to Dyer saying they were banking on filling up their new school with the homes Fresno would rezone in East SEDA.
White said Clovis Unified usually forces the city’s hand when it comes to deciding how to grow.
“Usually, they build the school, and then we’re all playing catch-up,” White said at the council meeting.
Extending the school district there, with a campus named after Clovis finance legend Terry Bradley, is arguably the reason SEDA has managed to stay alive, even through Fresno’s boom, bust and ensuing stagnation, says Bradley.
“It (SEDA) was put on a back burner, but I think it’s coming to life again, because of the Ed Center being built in Clovis Unified,” he said, who still has an office at Harris Construction, which is building schools in SEDA.
As SEDA comes closer to a vote, businesses are noticing.
Michael Kennedy, a retail agent from Retail California with clients in southeast Fresno including Kashian’s Fancher Creek development, has observed how the renewed planning efforts have already affected business decisions in the area. Fancher Creek secured its first major tenant last October – roughly 15 years after Kashian originally hoped to open up Fancher Creek.
“Yeah, I guarantee it did,” Kennedy said about whether retailers factored in SEDA into the decision to rent a Fancher Creek storefront. “It’s definitely important. I’m sure the retailers that have made the decision to go there have factored that in.”
This story has been updated to clarify information around whether the state’s housing agency, HCD, is requiring the city to adopt the SEDA plan or otherwise return a grant received from the state to prepare the planning documents. The state did not explicitly answer Fresnoland’s question to clarify the matter post-publication.
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