What's at stake:
The first phase of SEDA will cost $672 million.
The city is asking for voter approval this November to potentially bond out to help pay for it.
There’s an old adage in politics: never waste a good crisis. This week, Fresno’s financial rulebook is trying to be rewritten for its $4 billion mega-development plan, known as SEDA.
The City Council will vote on Thursday on whether to put the “No Debt on Development” initiative on the November ballot. If approved, the initiative would open up financial pipelines connecting taxes collected in other parts of the city to infrastructure costs of the first phase of SEDA, which a city report concluded last year may not be financially feasible.
Council President Nelson Esparza’s ballot initiative says later phases would not be eligible to receive tax revenue that goes to City Hall – thus “No Debt on Development.” But those guardrails touted by Esparza are already in place, another city councilmember says.
The net effect of the new measure, said Councilmember Nick Richardson, is to exempt the first phase, known as South SEDA, from restrictions the city has spent three years insisting on. It is a step back for ensuring the financial health of the city, he said.
“He hasn’t put guardrails on it,” Richardson said. “This policy proposal removes guardrails.”
Since 2023, Mayor Jerry Dyer has insisted that no phase of SEDA would receive public subsidies. City planning documents call for SEDA’s plan to “self-finance” – a huge impasse for the mayor after a city-commissioned report last year showed existing developer fees would not cover more than $2.7 billion in infrastructure costs.
Esparza’s measure takes that promise of no subsidies and writes it into the city charter, where a future council can’t undo it with a simple vote. But he exempted the first phase of SEDA from some of these guardrails – potentially providing jumpstart cash for SEDA’s first phase.
The proposal, according to Esparza, was borne out of the political crisis that has emerged from the Board of Supervisors’ rejection earlier this month of an updated plan for Measure C, the county’s transportation sales tax. City leaders are scrambling to put forward a new general tax to backfill the $54 million in lost transportation revenues – and are using the chaos to start a festival of new legislation on unrelated issues.
Earlier this week, the city council announced a raft of proposals to put on the ballot this November. One included lifting term limits on the mayor so that Dyer can run for a third term. A second created a new advisory body on redistricting – weaker than the genuinely independent commissions in San Diego and Long Beach, which have final decision making authority rather than Fresno’s proposal of being advisory to the city council.
If that weren’t enough for one week, Esparza piled on SEDA’s multi-billion-dollar financial hurdles – the thorniest political problem in the city.
He says nobody should be surprised.
“This should not be a surprise to anybody that I ended up bringing it forward,” Esparza said, citing the conditions he attached last December to the city’s SEDA planning efforts.
“I always thought [a prohibition on public financing] was very important.”
Esparza said he did not know which consultants crafted the language for the new ballot initiative, saying City Attorney Andrew Janz knew. Janz could not be reached for comment.
What does Esparza’s proposal do?
SEDA is 9,000 acres of mostly farmland on Fresno’s southeastern edge, and it comes in two pieces.
The bigger piece, North SEDA, runs up toward the Clovis Unified line. This is the primary area which the city’s real estate developers want the environmental greenlight to build tens of thousands of homes on. The other piece is known as South SEDA and is roughly 1,500 acres South of Jensen Avenue. Lying in one of the most polluted parts of the city, this is the industrial phase the mayor has staked the approval of the rest of SEDA on.
Both pieces are already required to pay for themselves. The city’s plan for SEDA says so.
Esparza’s proposal is an attempt to have voters approve what that means in practice.
Three kinds of money would be off-limits: the general fund, meaning the property, sales and other tax sources that pay for police, parks and street repair; anything the city borrows against using that money, including bonds; and the side doors – general fund cash routed into a financing district, used to match a federal grant, used to cover a developer’s waived fees, or lent from one city account to another.
But then the last line of Esparza’s proposal lifts the borrowing ban for the start of SEDA: the first phase, South of Jensen Avenue.
What Esparza’s proposal allows for, for example, is that the city could issue bonds to start building South SEDA – debt secured by, and repaid out of, residents in other parts of the city via the General Fund.
Such a debt could total hundreds of millions of dollars, documents show.
A report commissioned by the city last year showed that the infrastructure for the first phase of SEDA targeted by Esparza will cost $672 million, of which existing developer fees will only provide $233 million.
To make up for that gap, the city assumes a hypothetical “SEDA Special Financing District” will come up with another $440 million.
The city did not disclose where that money will come from, although they raised the possibility of a $205 million bond. For example, this is twice as expensive as Dyer’s $100 million Pave More, Pay Later bond, his marquee proposal to repair the city’s aging roads and sidewalks.
Since that report was released last May, no concrete details have emerged on how the “SEDA Special Financing District” will come up with $440 million for the first phase of the project.
Given the unknown financial variables and the carve-out, the “No Debt on Development” measure is deceptive, said Dillon Savory, the head of the Central Labor Council.
“The reality is the amendment is full of loopholes,” said Savory. “It will allow future city leaders, most of them unelected, coming out of the bureaucratic class, to continue giving billions of dollars of taxpayers’ money away to developers.”
Savory said both Esparza and Councilmember Tyler Maxwell had approached labor over the past four years asking how they could help stop SEDA outright — and that both have since shifted toward the city manager’s office and the mayor. Maxwell backed away as his mayoral ambitions became clear, Savory said. Esparza, he said, was more willing to oppose SEDA when he had Senate aspirations that ran through statewide labor support.
“This couldn’t be further from a net win,” he said. “This is a net loss for the city for the foreseeable future.”
Letter outlines loopholes
A letter sent to the council Tuesday by attorney Patience Milrod, on behalf of Savory’s Fresno, Madera, Tulare and Kings Counties Central Labor Council and Fresno-based nonprofit Regenerate California Innovation, asks the council to redraft or reject the amendment.
“It appears the measure does not live up to its hype,” writes Milrod.
Milrod’s central argument is that the measure restricts the narrowest possible category of spending while leaving the expensive categories untouched.
For example, Esparza’s limits on subsidies for the later phases of SEDA only covers facilities inside SEDA or built “exclusively to serve” it.
That means Fresno taxpayers could still pay, Milrod writes, for the sewer and water trunk lines that sit outside SEDA’s boundaries but must be expanded to serve it — items she puts in the hundreds of millions, potentially billions.
The subsidies to developers survive as well, she argues. The measure prohibits outright impact fee waivers, but not fee deferrals, fee credits, reimbursement agreements, or simply setting impact fees below cost recovery — mechanisms she describes as financially identical to waivers. The city report last year showed the city’s existing developer fees are 67% below full cost recovery of SEDA’s infrastructure costs.
Esparza’s proposal is “pretty much a contradictory and confusing mess,” Milrod writes. That no one has had time to find its flaws, she wrote, is “a VERY good reason for not voting on it yet.”
Esparza’s proposal dropped onto Thursday’s agenda Monday morning, nine minutes before the state’s 72 hour deadline for public notification, with no accompanying staff report.
“I feel it’s a Trojan horse,” said Brett Thompson, a farmer inside the SEDA footprint. “I feel once they pass South SEDA — who’s gonna hold them responsible?”
Thompson said members of his group, Southeast Property Owners, plan to show up on Thursday. Councilmember Richardson said he intends to pull items for debate Thursday. Esparza said he is looking forward to the discussion.
“I just want to be able to give them the opportunity to decide,” he said.
