Manteca would have just over $300,000 less to spend in the fiscal year starting July 1 if all new home construction had ended at the start of 2008 when housing prices started their freefall.
The 921 homes built represent a combined value of $253.2 million and generates straight property tax of $2.5 million of which the city receives about 12 percent or around $300,000 annually.
Manteca leaders two years ago opted to suspend collection of “bonus bucks” that developers had agreed to in a bid to secure sewer allocation certainty. There were 954 finished lots that were ready to build but developers couldn’t make it pencil out between costs and what buyers could afford to pay.
It was a quandary. Builders had an estimated $22 million literally buried in the ground they couldn’t retrieve unless they built and sold homes. City leaders by then had built up a dependence on bonus bucks to help balance the general fund.
But city leadership was also worried about rising unemployment and sluggish retail. The rationale to suspend the bonus bucks was that an addition of consumers to Manteca that weren’t distressed would circulate more money in the local economy and - if not create private sector jobs - help save jobs.
It was also determined that the 954 lots were for all practical purposes “infill” as they were part of existing developments which meant they could be served without an increase in municipal staffing.
The $300,000 that the homes will generate in taxes for the fiscal year starting July 1 has helped whittle down the deficit that had originally in 2009 for the 2011-12 fiscal year had been projected at $14.7 million.
Decision meant the possible “loss” of $36M in bonus bucks
Forgoing the bonus bucks through 2015 means the city could never see the bulk of $36 million developers contractually agreed upon. At the time, though, several developers were almost at the default point in their agreements as they had not made payments as required in deals they signed with the city.
The city agreed with developers that the likelihood of them collecting any bonus bucks was virtually nil since the fee of $7,350 to $13,340 per home were making it impossible for builders to pencil out homes so that they wouldn’t lose money by building and selling them. But the city conditioned the suspension of bonus bucks that builders had to allow the city to recover 100 percent of the cost of processing development maps and such. New fee schedules were put in that reflected the true cost of city development services.
The bonus bucks were originally touted as a way of having growth help pay for amenities that it wouldn’t otherwise be responsible legally for funding. Improvements ran the gamut from picking up the tab for part of the Union Road fire station, Library Park improvements, soccer field lights, traffic signals on the Tidewater Bikeway crossing, the skate park, BMX park and more.
But the biggest expenditure of bonus bucks was to balance city budgets.
Since 2002, city leaders used $12.2 million in bonus bucks to cover gaps in the general reserve.
It started in 2002 as a $512,000 infusion to help ease the pain of dropping the $2.35 monthly household tax on garbage, water, and sewer service that generated $690,000 annually to help cover part of the tab of operating Manteca’ s municipal storm drain system.
Another $429,500 in bonus bucks was used to cover a revenue shortage in 2003. The city used $780,000 in bonus bucks in 2004 to assist with storm system expenses. Then in 2005 they used $2.4 million in development agreement fees for general fund operations and personnel. The city used $2.1 million in 2006 to also cover a general fund shortfall.
Last fiscal year, the City Council tapped $6 million in bonus bucks to balance the budget.
Manteca home sales up significantly but values down
Manteca’s general fund’s health essentially mirrors that of the Manteca housing market.
Back in 2007 when the housing market was just about to go over the cliff, there were 553 new homes and 402 existing homes sold for a combined $365.3 million in residential transactions. Municipal property taxes - which includes that collected on commercial industrial and homes that did not exchange hands in 2008 reflected the surge in value as the city received $11.1 million in property taxes.
In 2010 there were 310 new and 1,193 existing homes sold for a combined $305.9 million in housing deals. Some 450 more homes were sold in 2010 than in 207 but the overall value was just under $60 million less. That - in connection with existing property - produced $9.9 million in municipal property taxes that made their way into city coffers.
The drop in property taxes would have been greater if more than $100 million in retail - primarily The Promenade Shops at Orchard Valley - and business parks hadn’t been built in Manteca after the mortgage meltdown sent the housing market downward.
Roughly two thirds of the 954 finished lots in the city’s inventory in March of 2009 have been built on or are in the process of having a home constructed.