Lodi staff says city must use CFDs, service districts to avoid annexation drain; council weighs tradeoffs

Staff told the council that annexation areas currently return only 40% of property‑tax growth to the city under a tax‑sharing agreement approved in 2023 and that the county receives the remaining 60%. James said that structure "hinders" the city’s ability to finance necessary infrastructure and recommended creating a service Community Facilities District (CFD) or Mello‑Roos financing approach for annexation areas so new development is not a drain on the general fund.

He explained that CFDs allow new development to carry an extra tax assessment (with inflation adjustments) that funds the capital and ongoing service costs for those areas and that sensitivity analysis and stakeholder consultation would be essential to avoid pricing housing out of the market, particularly rental projects. Council members asked staff to identify taxable and budgetary tradeoffs and to return options that can be implemented through the CIP and budget process.

Council also reviewed specific infrastructure items tied to growth: a proposed bond approach for electric infrastructure extensions, capacity work on sewer and water trunk lines, the Harney Lane interchange and roadway improvements, and the need to consider city service CFDs when pursuing annexations. Staff said some annexation parcels are already in the city’s sphere of influence and that a 10‑acre East Side annexation application (Maverick project) is underway, with a separate potential ~100‑acre West Side annexation under review.