A developer who plans to build apartments for thousands of people near UC Merced said he was close to pulling out before the city and county recently announced they’d reached a deal on tax-sharing terms.

The city of Merced has been working with Agoura Hills-based AMCAL Housing, which has plans for about $240 million in projects on three parcels of land across Lake Road from UC Merced. The apartments are to be built in four phases and the first part could be ready by fall 2018, according to CEO Percy Vaz.

“We were, in fact, getting ready to drop out,” he said. “So it was music to our ears when we heard that this revenue-sharing agreement was reached by the city and the county.”

The apartments should have been under construction a year ago, according to Vaz, but the developer was unable to do any work while Merced and Merced County leaders played tug-of-war over tax dollars that potentially could be generated in the area. The leaders agreed to tentative terms last week.

The city and county have been without a tax-sharing agreement since 2014, and city leaders said negotiations have been on and off for a decade. Without the agreement, the city cannot annex land and provide services such as sewer and water to the development.

AMCAL has experience in building housing for college students, Vaz said, and has complete or ongoing projects in Chico, Monterey, Turlock and Sacramento. But one thing he says the company has never seen is development held up by lack of a tax-sharing agreement.

“We never had this situation before, so we weren’t quite sure how to deal with it,” Vaz said. “There was a great deal of frustration because this deal was not getting concluded and was holding up just about everything.”

Other cities leaders, like those in Livingston, have complained that development is weighed down by long negotiations with the county. Los Banos was also waiting on an agreement, which it got this week.

Back in Merced, other developers have plans for retail, research and other space near the university. Vaz said the university’s needs and the interest from other developers gives the company confidence that the apartments will be successful.

The Merced projects would offer space for about 2,400 beds, aimed at students. While tenants would have private bedroom and bathroom areas, the apartments have common living, dining and study spaces.

UC Merced has about 2,100 beds on campus, according to spokeswoman Brenda Ortiz. The 2020 Project, which will double the size of the campus, is expected to add enough space to bring the number of students living on campus to about 4,060.

Leaders have said they do not expect to have room for all students, which means they could spill over into the new apartments.

City Manager Steve Carrigan has expressed a sense of relief that the negotiations seem to be a thing of the past. “We’re very fortunate to have a top 10 builder in the country here building their product in Merced County,” he said. “AMCAL’s a first-class organization. We’re not going to hold them up.”

Not all of the kinks have been worked out, but the city and county have tentatively agreed on terms. The Merced County Board of Supervisors directed staff on Tuesday to move forward in drafting the tax-sharing agreement with the city, but are also including a backup plan.