Report details money side of Salida annexation

kcarlson@modbee.comJanuary 31, 2013 

— Economic consultants are not showing an extraordinary fiscal benefit to Modesto or Stanislaus County if the city annexes Salida, according to a draft study obtained Thursday by The Bee.

Modesto would net about $9 million a year after business parks and shopping areas are developed in the sprawling Salida Now plan, the study suggests. The town and growth area would generate about $28.6 million in annual tax revenues and $19.7 million in expenses related to law enforcement and other municipal services.

The study was commissioned by the city and county to show an objective analysis of Salida remaining an unincorporated town or becoming part of Modesto, as Mayor Garrad Marsh has suggested.

Marsh's proposal has generated emotional opposition from Salida residents, many of whom turned out to voice their displeasure at a town hall meeting Tuesday. Salida, on Modesto's northwest flank, is the county's largest unincorporated community with nearly 14,000 residents.

Earlier this month, city and county staff decided that Goodwin Consulting of Sacramento needed to keep working on assumptions in the study, which could be completed within days. The city and county agreed last year to split the $60,000 cost.

The draft report says the Stanislaus County budget would save about $2.3 million if the county no longer provided deputy patrols and urban services in Salida and Modesto took over those responsibilities.

As the Salida Now plan is developed, tax revenue to the county from planned business parks would "increase at a rate that exceeds expenses and eventually result in a significant annual surplus to the county," the draft report says.

At full development, the bottom line for the county would be a $11.4 million surplus, not a huge boost for a county with close to a $1 billion annual budget. The Salida area would generate $19.7 million in annual tax revenues; the county would have $8.3 million in annual expenses, the draft suggests.

County Supervisor Terry Withrow said Thursday that he does not believe the bottom-line figures will change much, although some numbers in the study could be revised.

The draft report doesn't measure the social and economic benefits for Stanislaus County residents if thousands of jobs are created in Salida's business parks. The revenue projections for local government are based on assumptions the economy would support development and that funds are available to pay for basic urban improvements.

Building the roads and other infrastructure for business parks and shopping areas in the 3,300-acre Salida Now plan would require substantial investment from capital fee revenue or private developers.

"There is definitely an opportunity to do that in Salida, but when that happens is up in the air," Withrow said.

The need for job creation was a top issue in the Modesto mayoral election in November 2011 and subsequent runoff. Marsh is conceivably under pressure to deliver on expectations.

Marsh said Thursday evening he disagreed with making preliminary results of the study public before the report is completed. He said he believes the broad analysis shows that annexing and developing the Salida area is "a win for the citizens of Salida, a win for citizens of Stanislaus County and a win for citizens of Modesto."

As the process moves forward, Marsh said, he believes Salidans should have a voice in making any revisions to the Salida Now plan, which was developed before the recession and approved by the county in 2007. Marsh said he believes it would be better for Salida if thousands of homes were cut from the plan.

Once the report is final, Withrow said, officials will pull numbers from the study to lay out options for Salida, such as whether the town should incorporate as a city, stay under county jurisdiction or annex to Modesto.

Marsh promised at a contentious meeting in Salida this week the city would drop any annexation plans if Salidans reject the proposal in an election. Withrow also said he will leave it up to Salida residents.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or (209) 578-2321.

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