Merced leaders say no progress in tax-share agreement with county

Long-standing efforts to reach a revenue-sharing agreement between Merced County and its largest city may require a mediator to strike a deal after years of failed talks, officials said Monday.

The city of Merced on Friday formally ended talks with Merced County representatives, citing a lack of progress over the perpetual dispute that affects the ability to annex land along borders, according to the city manager.

The last agreement ended in 2014, but city and county representatives have been discussing a new deal for a decade, City Manager Steve Carrigan said. The city’s top administrator said he’s going to recommend that the City Council call for a mediator to hash out the deal, or pick another route to get the work done.

Carrigan said the city and county can’t come to an agreement. “We just want different things. It’s not personal,” he said. “I think it’s time to make a decision and move on.”

During a recent meeting to set the city’s priorities for the new fiscal year, City Council noted the agreement as one of its top goals because it affects future economic development. The agreement would lay out how the county and city share tax revenue. Without such an agreement, the city cannot win authorization to annex land and begin providing services such as sewer and water to new developments.

With the aid of a mediator, the county and city can present their arguments and get a recommendation or ruling from the third party.

The county and city had been meeting regularly since 2014, according to county spokesman Mike North. He said Merced makes up 40 percent of the county’s load for social services and for the judicial system, which comes into consideration for how to split revenue.

“We want to make sure we reach a fair and equitable agreement,” he said.

County CEO Jim Brown is supposed to speak more in-depth about the agreement during a meeting of the Board of Supervisors at 10 a.m. Tuesday, at Merced County Administration Building, 2222 M St.

Merced leaders have said 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.

Leaders have said a developer is looking to build a 1,000-unit apartment complex across from UC Merced, but 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.

Carrigan said the land for the apartments is worth about $1 million. After development, it would be worth about $76 million, according to city estimates, and considerably more tax revenue.

Revenue-sharing discussions could also soon be on the table in Atwater.

Mayor Jim Price said that city will needs to move on a new agreement soon especially as it relates to its plans for Ferrari Ranch, a 3 million-square-foot development that would include retail stores, restaurants, a movie theater, hotel and medical center.

He said Atwater is going to need a larger cut of tax revenue as the new development will draw more services from the city’s police, fire, public works and other city employees.

“They’re not getting any cheaper,” he said.

This story was originally published April 11, 2016 at 6:36 PM with the headline "Merced leaders say no progress in tax-share agreement with county."