What's at stake:
Thursday's vote on $4 billion project will have impacts for generations of Fresno's schools, parks, and finances.
There’s an old tactic in Fresno politics that city mayors have long enjoyed: Save your most unpopular votes until after the election. With the city council filled with outgoing politicians, Fresno Mayor Jerry Dyer is wasting no time in putting this lame-duck gambit to work after a slate of anti-SEDA candidates held early leads in three council races.
On Thursday, his controversial plan to build a new Clovis from scratch in southeast Fresno is heading to a final vote. At stake are the final planning documents for his signature mega-project known as the Southeast Development Area (SEDA).
The $4 billion project, which has a $3 billion funding shortfall, has been seen as a liability on the campaign trail for the last year. There wasn’t a single council candidate this fall who told voters they supported SEDA. Billboards have been plastered around town with “Stop SEDA” alongside “End City Hall Corruption” by council candidate Naindeep Singh, who currently holds a 16-vote lead over challenger Rob Fuentes.
In the weeks leading up to the election, even the council’s most full-throated endorser of sprawl shied away from the mayor’s proposal.
“We’ve explored the heck out of it [SEDA], and I don’t think it pencils out,” said councilmember Mike Karbassi at a campaign forum hosted in West Fresno in late September. “If I had to guess, I’m pretty sure it’s going to fail.”
But now, with all the ballots cast, Dyer may have just enough safe harbor from political backlash to punch SEDA through. In a city hall backroom filled with big-name developers last May, Dyer told them he wouldn’t bring the 45,000-home proposal to the council until he knew he had the votes.
“My timing is going to be dictated…by whether we can get this thing passed,” Dyer told Darius Assemi, John Bonadelle, and others. “I don’t want to fail. It’s too important.”
SEDA Councilmember says he is already a ‘No’ on Dyer’s mega-project
One advantage of holding key votes until the holidays and after the election is that your political opposition is momentarily at its weakest: either burnt out from election mobilizations or simply spending time with loved ones during the holidays.
It’s during these times that the Dyer administration has decided this year to hold its key policy votes: not only on SEDA, but also your utility rates.
Nearly every school district in the Fresno area opposes SEDA. The Superintendent of Sanger Unified, where the homes of SEDA’s first phase will be placed, has publicly voiced his opposition to the mayor’s project.
And Fresno Unified and Central Unified have also taken the unprecedented measure of taking a formal vote to oppose SEDA, for fear of a repeat of Fresno’s peak white flight era. Back in the 70s and 80s, after the St. Agnes Hospital area was approved by the city council for new homes in Clovis Unified, enrollment in Fresno Unified dropped 20%.
Many on the council have framed their vote on SEDA as the most important vote they will take during their tenure. The council member who represents the southern part of SEDA, Brandon Vang, said he is against the proposal. A yes vote on Thursday will likely run through council members from other parts of town going against Vang’s constituents.
“Based on my recollection of the people who sent me here to represent them, they were loud and clear that they are against SEDA,” said Vang earlier this year.
Developers who have a stake in SEDA’s approval have tried to throw their weight around as much as the law will allow. For example, Councilmember Nick Richardson, a crucial swing vote for SEDA, received a $500 donation from a shell company owned by Ed Kashian, a SEDA backer whose Fancher Creek regional mall needs SEDA’s rooftops. That amount is the maximum allowed under the state’s pay-to-play laws.
So what does SEDA have going for it? Well, for the first phase, assuming the city can plug the $440 million funding shortfall without relying on subsidies from the rest of town, a problem the mayor has yet to solve despite trying to solve it for the last three years, net revenues to the city’s general fund could go up 2.2%.
SEDA could add $12 million to the General Fund, according to a city-commissioned report — against a $535 million existing General Fund.
Much of that money could be eaten up by paying for water and sewer connections for existing residents in the SEDA area, however. As SEDA land is annexed, many residents in existing rural houses will be required to replace their septic tanks with hook-ups to the city sewer system. These upgrades cost over $100,000 per house, according to Dyer officials at city planning meetings, and there are thousands of already existing homes in the SEDA area. Dyer has yet to tally up what the cost of his promise to pay for all those hook-ups will be, but even a rough tally shows the costs will be hundreds of millions of dollars.
Developer groups, however, have tried to layer as many silver linings as possible on these hard costs.
A report commissioned last year by the Building Industry Association of Fresno and Madera Counties, only revealed by local media this week, estimated that economic activity surrounding SEDA could tally up to $2.5 billion.
SEDA could generate a “total of $2.5 billion of revenue in excess of costs for local governments in the Fresno Metro area,” the report said.
However, the long-known effects of sprawl hallowing out Fresno’s existing neighborhoods is not in the BIA’s cost-benefit calculations.
Take, for example, the biggest employer in the city: Fresno Unified.
The district has estimated SEDA could shut down 11 schools — including two middle schools and a high school, resulting in mass lay-offs and budget loss of $200 million a year. Over the same 15-year period that the BIA analyzed, that’s a $3 billion loss to FUSD alone. And to homeowners in Fresno Unified: the last time Fresno Unified enrollment cratered like this, property values did not grow in the district for 20 straight years. The result is that today, while Clovis Unified’s tax base has exploded, Fresno Unified’s is short over $50 billion vs. its pre-1985 trend.
And even those best-case projections for SEDA have problems, according to a 40-page letter filed last week by local attorney Patience Milrod.
The risk-reward profile of SEDA is not fully understood by the city council, Milrod argues.
For example, to boost property revenues to the max, the city’s financial analysis assumed a density of housing that is illegal under SEDA’s specific plan.
Also, the city’s financial analysis did not stress-test how fast those homes in SEDA will actually sell. The city just assumed a best-case scenario, and did not include a worst-case. Those uncertainties could mean, if homes sell more slowly than anticipated, or at lower prices, other parts of the city will have to fork in bigger subsidies to cover the infrastructure debt Dyer is proposing, the letter says.
“If South SEDA [the first phase of SEDA] develops more slowly…the city incurs steeply climbing and significant additional expense,” Milrod wrote.
“Before you adopt the plan, your council must understand, in dollars, the magnitude of the risk that subsidies will extend and that reimbursement will not materialize.”
The hearing for SEDA will be at 4 p.m. at Fresno City Hall.
