Merced council members say city-county deal key to spurring economic growth

The growth of Merced’s economy is being limited by its inability to annex land on its borders, including property near UC Merced, according to members of the City Council who are pressing for an agreement with the county that is needed to move forward.

During a meeting Thursday to set the city’s priorities for the new fiscal year, Councilman Michael Belluomini said a top goal needs to be negotiating an agreement to share tax revenue between the county and city. Without such an agreement, the city cannot win authorization to annex land and begin providing services such as sewer and water to new developments.

“I think this lack of a revenue-sharing agreement ... for many years is becoming a deterrent from economic development within the city,” Belluomini said. “We’re having trouble annexing land that we’ve planned for development.”

The issue is especially important for north Merced, which is expected to grow as UC Merced continues to expand its footprint and student population.

The 10-year-old campus is planning to have enough classrooms, laboratories, dormitories and other spaces to accommodate up to 10,000 students by 2020, up from its current enrollment of 6,685 undergraduate and graduate students.

Belluomini said a developer is looking to build a 1,000-unit apartment complex across from UC Merced, but he cannot move forward because the property is in the county’s domain and the county does not provide sewer and water services.

Merced city could provide such services, but it first would have to annex the land. Such annexation, however, cannot be approved by the Local Agency Formation Commission unless the county and city governments have agreed on how to share tax revenue. The two bodies have been without such an agreement for at least the last decade.

That apartment complex project, which could generate tax revenue, has no chance of moving forward without a revenue-sharing agreement, City Manager Steve Carrigan said during the meeting.

“There’s also projects along that Bellevue Corridor that can’t do much or anything without a revenue-sharing between the city and the county,” he said.

The two entities have been meeting lately to negotiate an agreement, according to city staffers. Whether or not progress is made, an item related to the deal is scheduled to go before the City Council on April 18.

The agreement is a complicated one and will take an analysis of county services, according to county spokesman Mike North. “We’re currently working with the city for a new revenue-sharing agreement, one that will be fair to all parties involved,” he said Friday.

Economic development is high on the council’s list of priorities, Councilman Mike Murphy said. “Everything that we want to do as a community, as a city council, is based on how well we’re doing economically,” he said.

For the last year, the council has talked about bolstering the police force, which has six open positions. At the same time, members of the community have called for a greater investment in youth services, which would include recreation, cultural and job-training programs.

Brad Grant, the city’s chief financial officer, said the numbers for the city’s budget are set to be made public in May. Late last year, at a budget forecast meeting, Grant said the city is looking at about $300,000 in revenue surplus in the next fiscal year.

To bolster the city’s economic outlook, Councilman Josh Pedrozo said the city needs to be able to ramp up development on Campus Parkway, a four-lane expressway billed as vital to UC Merced’s success, as well as a boon for business in town.

It’s important to set clear priorities, he said. “We need to make sure we understand, you can’t have your cake and eat it too,” he said. “There are things that we’re going to have to pull off. There are things we’re not going to be able to fund.”

This story was originally published April 1, 2016 at 10:57 AM with the headline "Merced council members say city-county deal key to spurring economic growth."