Modesto eyes annexing North McHenry and its auto dealers

The City Council on Tuesday is expected to decide whether Modesto should move forward with trying to annex roughly 300 acres along north McHenry Avenue, home to auto dealerships and other businesses, as well as two mobile home parks.

The proposed annexation is one of the recommendations of Mayor Ted Brandvold’s 100-day budget review committee, which looked at ways in which the city could increase revenues and decrease expenses. But city officials have talked over the years about annexing this area.

The committee recommended the city conduct a cost-benefit analysis to determine whether annexation makes sense. The analysis states Modesto could expect to receive nearly $500,000 annually if this area were annexed. The analysis estimates the annexation would bring in about $1.2 million in revenue against about $714,000 in expenses, netting the city the nearly $500,000.

The revenue would come from Modesto receiving a larger share of the taxes it now shares with Stanislaus County through a 1998 tax sharing agreement and from new taxes. About $700,000 is estimated to come from the larger share and about $500,000 from utility users and business taxes.

Most of the city’s expenses would come from the general fund, which primarily pays for police and fire services.

Modesto Senior Planner Paul Liu said the city has not yet determined how many acres are in the potential annexation area, but he estimated it could be about 300. The area includes the McHenry Mobile Manor and Modesto Mobile Home parks.

He said the rough boundaries of the area are the east and west sides of McHenry from the city limits to Kiernan Avenue-Claribel Road. And it includes the area from the city limits north to Bangs Avenue and bordered on the west by the former Tidewater Southern railroad line.

If the council decides to move forward, Liu said city staff would meet with registered voters and property and business owners in the annexation area to gauge their interest. If support is low, the council could decide to stop pursuing annexation. Liu said city staff also will talk about the benefits of annexation, including receiving city services.

The annexation process is long and public and includes the proposal going before the city’s Planning Commission and City Council. If the council approves the annexation, then the Local Agency Formation Commission, which rules on annexation requests, would weigh in. Property owners and registered voters in the annexation area can file protest votes with LAFCo.

The council is not approving the annexation Tuesday, but deciding whether to accept the cost-benefit analysis and start the process.

Liu said the city has spoken with county planners, who he said did not raise objections, and the 1998 tax sharing agreement states the city and county would support annexations in this area.

The agreement ended a feud between the city and county over the tax money the city lost after the county allowed auto dealers to locate along north McHenry just outside the city.

A city report states Modesto provides water service to most of the annexation area and “sufficient water service can be provided to the entire area with some system improvements.” But the city does not provide sewer service, though it plans to extend sewer service to the area. The area now is served by septic tanks.

Acting Utilities Director Will Wong said if the area is annexed, he believes Modesto cannot force people using wells to connect to city water, but believes septic users may eventually have to connect to sewer service once it’s available. Modesto would charge a fee to connect to city water and sewer.

Wong said in general property owners want to connect to city water and sewer because of the reliability of the services, and he said the city would work with property owners in the annexation area.

The council meets at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St.

This story was originally published February 5, 2018 at 7:23 PM with the headline "Modesto eyes annexing North McHenry and its auto dealers."