The 5,157 homes plus 11 million square feet of business parks and retail space Manteca hopes to build in the 200-year floodplain will have the municipal general fund awash in money.

At least that’s what the conclusion of the consultant analyzing diverting future property tax revenue from the city’s general fund to help defray the cost of bonds to build $230 million in flood protection upgrades to protect against a flooding event that has a 1-in-200 chance of happening in any given year.

The analysis — conducted on behalf of the San Joaquin Area Flood Control Agency — is part of the vetting of one of three financing avenues needed to get the state-mandated protection in place by 2028.

It involves diverting up to 20 percent of all incremental property tax increases that would go to the city in the impacted area to help retire bonds over a 30-year period.

Manteca — just like other California cities — only receives a sliver of every dollar that homeowners and others pay in property taxes. The rest goes to 10 other agencies including schools at 51 percent followed in diminishing slices by San Joaquin County, and Delta College among others.

The sliver Manteca receives varies from 7 to 14 percent depending upon the year property was — or is — annexed to the city. The drop in the percentage cities receive in property taxes have been imposed by counties throughout the state that allow land to be annexed to municipalities.

In the case of Manteca, SJAFCA’s financial consultant ran models that be characterized as “conservative”.

The consultant determined when every home and square foot of commercial and business parks the city can squeeze in along much of the Airport Way corridor and a large swath of southwest Manteca:

*Up to 20 percent of the city’s share of property tax could be diverted to pay off bonds needed for flood protection work.

*At the same time, Manteca could maintain the current level of municipal staffing such as the number of workers including police to population ratio as well as the current conditions of streets, parks, and other general fund expenditures.

*End up with $14.2 million “extra” annually in the general fund from property taxes from the impacted area after money is siphoned off to retire bonds and spent to maintain the current level of services.

The property tax that would be diverted would be up to 20 percent of the annual incremental basis.

If 2023 becomes the base year, the cities involved — Lathrop, Stockton and Manteca — as well as San Joaquin City — would keep 100 percent of their pre-2023 cut of the property tax.

After that 20 percent of increases whether it is from new construction, the maximum 2 percent annual rise in property assessment allowed under Proposition 13 for homes and such that have not sold, and the readjustment to market value when homes do sell would go to the flood agency to retire bonds.

The biggest gain in property assessment over the long-haul would come from homes reselling. Typically, Americans sell their homes on an average of every eight years according to the National Association of Realtors. In California, the churn is closer to five years.

South Manteca is now seeing examples of some homes that sold new for $450,000 15 years ago being purchased for $1.1 million or more. As such, the property assessment that property taxes are based on are readjusted upward to reflect the new market value.

The enhanced infrastructure financing district (EIFD) the property tax diversion will fund is one of three funding mechanisms needed for what may end up being a 100 percent locally financed flood control project.
A development fee is already in place for new construction. In the areas in Manteca within the 200-year flood zone that fee comes to:

*$3,148 per single family home.

*$904 per unit for  multiple family construction such as apartment complexes.

*$1,417 per 1,000 feet of commercial.

*$1,096 per 1,000 feet of industrial (business parks).

At built out new construction the affected area in Manteca is projected to generate $26.9 million toward funding the flood control project.

A third financing tool is a proposed financial overlay district that would be a new tax on all property within the Mossdale Tract.

Besides southwest Manteca and parts of the Airport Way corridor north of the 120 Bypass in Manteca, that includes all of Lathrop except River Islands that already has 200-year flood protection in place, French Camp, the Weston Ranch neighborhood of Stockton, and various rural areas.

The areas outside of the Mossdale Tract in all three cities will not be impacted by flood-related development fees, the diversion of incremental  property tax increases or the new tax an overlay assessment district would impose.

Monday’s presentation during a special Manteca City Council meeting was the first of four workshops.

The actual EIFD formation vote won’t be before the Manteca City Council until June 21.

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com