So how did Manteca manage to stay afloat while it was spending more to run day-to-day government operations from roughly 2001 to today?

Two words: Bonus bucks.

The stage for bonus bucks - shorthand for cooperative sewer development agreement fees that assured sewer allocation certainty for new homes - was set back in the mid-1980s when Manteca teetered on the edge of bankruptcy due to uncontrolled growth.

The city had built the Louise Avenue fire station but was too broke to staff it. Police were forced to replace aging and undependable patrol units with surplus CHP cars that arrived in Manteca with 96,000 miles already on them. The city’s general fund reserve - which is today at $2.8 million - was down to $1,800.

The financial crisis gave birth to the first growth cap in the Northern San Joaquin Valley. The 3.9 percent cap on residential sewer connections passed in 1988 is based on the number of homes that exist in Manteca the previous year. So if there were 15,000 living units in Manteca in 1992, only 585 building permits could be issued in 1993.

That set the stage in 1999 when the building boom that led to the housing bubble started for a cantankerous gathering of developers. There were 13 developers with projects that proposed building seven times the amount of homes than permits allocated. The developers didn’t want to build all of the homes in one year. Banks, though, needed assurance that if they invested big money in infrastructure up front that the developers would be able to build homes eventually in a timely manner on all the lots. There were no guarantees under Manteca’s first come, first served growth cap rules awarding of sewer allocations.

Builders were threatening to sue each other.

It was under the specter of legal Armageddon that the concept of bonus bucks arose. In exchange for cash the city would assure developers they had building permits over the multiple years a project required for build-out. And unlike growth fees that had to by law be restricted for a specific purpose, the city was free to spend bonus bucks as they saw fit.

The architect of bonus bucks - depending upon who you talk to - is either former City Manager Bob Adams or developer Mike Atherton. Ron Cheek, a former Manteca public works director who has a long history as a private consultant for development projects, played an instrumental role in the process.

The council at the time ballyhooed bonus bucks as funding for one-time projects that would demonstrate growth was benefitting all of Manteca. Bonus bucks helped build the Union Road fire station, the skate park, install traffic signals for the Tidewater Bikeway, and picked up the tab for soccer field lighting at Woodward Park.

But when push came to shove, the majority of the $44 million in bonus bucks went to essentially keep police, firefighters, park workers, city hall staff and others vital for the delivery of municipal services paid. Some years the infusion into the general fund was as low as $600,000. In other years it reached $6 million.

The bottom line is that growth essentially paid its way but not in the way that everyone was led to believe. Without the bonus bucks that represented a $7,000 to $12,000 cost added onto the price of a home, Manteca’s housing boom would have blown a hole in the city’s financial ship and sunk it.

Bonus bucks essentially helped buy Manteca time to sober up and get its financial house in order when the housing bubble burst. Without it, the concessions made by police, firefighters and other city employees that account for roughly a 22 percent cut in their compensation would not have been enough to keep the city afloat.

Manteca essentially weathered the storm by creating a scarce market for sewer allocations through the growth cap that prompted developers to essentially give the city money with no strings attached.

Of course, the folks really paying the bill were the new home buyers to whom the cost of bonus bucks were passed on to by builders.

Bonus bucks in the end helped prop up Manteca municipal services in the days of double digit gains in property and sales tax receipts as well as eased the city through The Great Recession.

They are the lifesaver that has kept Manteca afloat.



This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.