The four years the city and county of Fresno spent without an agreement on how to share property tax revenue led to contentious fights between the two bodies for each plot of land eyed for development.

But now, the two bodies appear to have an agreement.

In a last-minute special meeting, the city council approved a 10-year agreement with an automatic 5-year extension Friday on a 6-1 vote. The pact gives more favorable terms to the city than the previous one. Fresno County supervisors will discuss the document on Tuesday. Fresno City Councilmember Miguel Arias was the lone voice in opposition.

Council President Annalisa Perea called the agreement a game-changer in Fresno’s effort to generate more housing. She said even with $360 million to incentivize affordable housing, not having an agreement created uncertainty for builders. The document also outlines sales tax agreements.

“While we have made great progress when it comes to housing and providing additional homeless resources to our citizens, we are not building housing at the rate in which we need to properly serve our residents in our city at every income level,” Perea said.

Darren Rose, president of the Building Industry Association of Fresno, Madera Counties said it would help build new homes.

“My membership is thrilled that the city council demonstrated the leadership to move this memorandum of understanding forward and we’re looking forward to the Fresno County Board of Supervisors doing the same,” Rose said.

The council’s ad hoc committee of Perea, Mike Karbassi, and Tyler Maxwell worked with supervisors Brian Pacheco and Buddy Mendes on the proposal.

City to Get More Favorable Tax Terms

As developers built outward and in county islands, they turn to the city to provide roads, water, and electricity for new homes and businesses. To pay for those services, land needs to be annexed into city territory. In turn, the county provides jail services and social welfare services. Both sides have said they don’t get enough to pay for what they provide.

Going back to 2003, the county got 62% of every dollar while the city got 38%. Before that, it was a 50/50 split.

Now, the city will get 40% in its new areas and the county’s receives 60%. The agreement does carve out 70% for the county for land already developed, such as when the county brings county islands into the city.

Fresno Mayor Dyer said getting more favorable terms for the city is important as the share of revenue that comes from property taxes increases. Whereas the city relied on sales and property taxes equally — about a third for each and a third from other sources — the portion from property taxes has increased to about 40%.

“That is essential to providing the necessary level of service,” Dyer said.

Tax Sharing Agreement May Help Move Projects Forward

After the agreement between the city and county expired, that process turned into a fight between the jurisdictions.

When attorney Edward Fanucchi wanted to build nearly 500 homes on his land near Ashlan and Hayes avenues, the back-and-forth between the county and city significantly delayed that project.

The same went for infill development. With the push to build within the city’s interior, developer Lou Telesmanic thought it would be easier for the two bodies to sign off an agreement so he could build duplexes at Bullard Avenue near Maroa Avenue. It took a year for the city to agree on the tax sharing agreement, he said.

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City Manager Georgeanne White said other properties have been waiting on the sidelines because of the difficulty in getting approved.

SEDA Terms Help Pay for Services

For the large plot of land in the southeast part of town referred to as SEDA — Southeast Development Area — the agreement greatly improves tax revenue for the city. The city would get 51% to the county’s 49%.

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The city still needs to approve a specific plan, an environmental review, and financial analysis for the 9,000 acres of land largely east of Temperance Avenue.

While the agreement does not help pay for what could be hundreds of millions to billions of dollars for infrastructure, White said the plan would cover expenses to bring services such as police and fire to the area.

The city had at one point floated creating a special taxation area called a community facilities district to pay for police and fire in the city’s exterior. White said the deal means reevaluating if those property tax assessments for services would be necessary.

Arias said the deal incentivizes sprawl. The city received many letters opposing the tax sharing agreement, according to Arias. Those letters were not published on the agenda.

Some environmental groups have said growing outward comes at the cost of infill.

Tax Sharing Agreement a Last-Minute Deal

Arias questioned the need to hold a special meeting with only a day’s notice given the complexity and importance of the issue. White said several developments have been waiting for a tax-sharing agreement. Arias surmised that the election of councilmembers Garry Bredefeld and Luis Chavez to the board of supervisors played a role in hammering out an agreement.

Arias also expressed concern about an ask from county supervisors to have the city drop its litigation against the county’s General Plan. The city claimed the General Plan did not meet environmental requirements. Arias asked to have that language removed.

Karbassi said the item was only a promise to have it brought back up for discussion.

Business leaders and representatives praised the city and county for coming to an agreement.

The president of the Fresno County Economic Development Corp., Will Oliver, said the agreement reduces risk and uncertainty, incentivizing growth in the area.