The City of Fresno has a big problem: outward expansion is at a standstill due to lack of a tax revenue sharing agreement with Fresno County in place.
Further, developers looking to build within already annexed property are balking at what they assert are unfairly high taxes on construction to cover public safety expenses.
The backstory: In 2003, the city and Fresno County agreed to a tax sharing agreement over developments annexed into the city. Under that deal, the city received $0.38 of every property tax dollar while the county received the rest.
- Three years ago the agreement expired, and the two sides have yet to come to a deal. At the time City officials argued that it provided 62 percent of the services for the annexed properties, requiring a bump if a new agreement would ever be reached.
The big picture: Last Thursday, the issue once again came to the forefront of the Fresno City Council over a complicated deal that would add much-needed housing to the city on property that was annexed in 2007.
- Granville Homes, led by developer Darius Assemi, is seeking a tax break on a planned development in southeast Fresno that is part of Community Facilities District 18 and would levy an extra $164 per year in property taxes onto each home built. Taxes for rental properties would be $112 per unit.
- That money would be used to pay for public safety services, such as police and fire.
- Granville’s position is that keeping the new development in CFD 18 would make it more difficult to finance and build housing and discourage increasing badly-needed rental housing production.
What they’re saying: The two-hour discussion illustrated the city’s precarious situation as it has very little room to move forward with new housing developments at its fringes.
- The councilmembers themselves roving all over the place on the issue, ranging from Councilman Mike Karbassi pressing to dissolve CFD 18 to Councilman Miguel Arias not wanting older neighborhoods to subsidize new developments.
- City Manager Georgeanne White labelled any talk of issuing a tax rate each parcel would pay for public safety services was a “dangerous place to be.”
- “If we’re going to go through and we’re going to evaluate each tract based on the revenue that it generates, you can only imagine that the areas of town that have higher property values are going to generate higher revenue and be able to offset their expenses more so than the areas of town that have a lower property tax base,” White said. “So we could find ourselves in a situation where a map in Copper River is paying zero and a map in Councilmember Esparza’s district or Councilmember Perea’s district, maybe it could be $500 a house.”
What we’re watching: The council punted on making a decision last Thursday as the discussion ultimately brought forth more questions than answers.
- Assemi will return to the council on Thursday to once again plead his case that his development should not be included in the CFD.
- Arias directed City Attorney Andrew Janz to prepare a memo on the defensibility of giving the Granville development a tax break.
- Karbassi noted that an ad hoc committee of three councilmembers could meet before Thursday’s meeting to try to hammer out a solution.