Fresno City Council approves 10-year tax-sharing MOU with Fresno County, 6-1

The Fresno City Council on Dec. 13 approved a 10-year memorandum of understanding with the County of Fresno on how property and sales tax will be shared for future annexations and development, voting 6-1 at a special meeting to send the agreement to the county for consideration next week.

Council President Perea said the agreement will provide “surety and the continuity that our city needs to responsibly move forward,” while stressing the MOU itself does not approve any specific development project or annexation. The council approved the measure as File ID 24-1699.

The agreement revises tax splits that would apply to future annexations and defines different splits by area. Under the negotiated terms the city’s share of property tax in the Southeast Development Area would increase from 38% to 51%; the city’s share outside that area would rise in many cases from 38% to 40%. The MOU also includes a negotiated sales-tax adjustment from 5.35% to 5.0% that city staff estimated would retain about $500,000 annually for Fresno.

Why it matters: City leaders said the MOU ends years of uncertainty on tax sharing that they said has delayed development and deprived the city of predictable revenue for services such as police and fire. Mayor Dyer and other supporters said the agreement creates a framework for future annexations and economic development and reduces the need for one-off tax-sharing deals.

Public comment at the special meeting was dominated by development and business representatives who urged approval. Darren Rose, president and CEO of the Building Industry Association, told the council, “On behalf of the 80-plus members of the BIA, we fully support this MOU and hope to see it passed and moved on to the county next week.” Will Oliver of the Fresno County Economic Development Corporation and Ethan Smith of Invest Fresno likewise urged support, saying a standing tax-sharing agreement reduces uncertainty for projects.

Opposition and concerns: Council Member Arias and others pressed staff on the short notice for the special meeting, the length and complexity of the MOU, and the lack of a comprehensive fiscal analysis for large buildouts such as the Southeast Development Area. Arias said he had not had time to meet with staff and worried the public and council were being asked to act too quickly; he asked whether any urgent legal or financial deadline required action at a special meeting. City staff said some projects have not been submitted to the county because a valid tax-sharing agreement was not in place and cited a specific development — a 199-lot subdivision at Willow and California — that has been pending since May 2023.

A legal and process explanation: Council and staff discussed statutory and procedural constraints. City legal staff and others said the Brown Act notice and the CEQA exemption shown on the agenda were believed to be in compliance for a special meeting. Staff also explained that annexations and transitions of special-district services are governed by state law (commonly referred to as the Cortese-Knox-Hertzberg provisions) and that LAFCO (the Local Agency Formation Commission) remains part of annexation processes where required.

Fire transition fees and infrastructure: City staff explained the mechanics of the fire transition payment that typically is collected when property in the Fresno County Fire Protection District is annexed into the city: the current practice multiplies the property’s fire-district share and collects, typically up front, a lump sum equivalent to 10 years of that amount to remit to the county fire district. Staff said the MOU does not itself fund infrastructure like water or sewer; those capital costs would remain separate and may require recalibration of financing tools such as CFDs (community facilities districts).

Other provisions and limits: The MOU contains a definition for “substantially developed” property (a benchmark tied to assessor-record ratios of improvement value to land value) and preserves different alternate standards for large regional commercial or industrial annexations. It also contains language the county requested about joint legislative efforts and a clause noting potential future discussion about pending litigation involving the city’s general plan; Council Member Arias and others said the litigation language should not be part of a tax-sharing agreement and urged removing it.

Next steps and vote: The council voted to approve File ID 24-1699, sending the MOU to the Fresno County Board of Supervisors for consideration next Tuesday. The final vote on the item at the meeting was recorded as 6 in favor, 1 opposed; the motion was made by Council President Perea and seconded by Council Vice President Carvassi. The council president closed the special session after the vote.

The agreement will not by itself annex land or approve projects; any future annexation, development approvals, or environmental review remain separate decisions that would proceed through the city’s and county’s normal permitting and CEQA processes.