The City of Davis, a college town located only 15 miles west of Sacramento, is surrounded by farm fields, orchards and open space. Despite its proximity to the Central Valley’s second largest city, Davis has virtually none of the “rural sprawl” that surrounds so many other valley towns.

One of the reasons for Davis’s sharp urban edges is a nearly 20-year-old redevelopment agreement between the city and Yolo County. The pact gives the city veto power over nearly all proposed development in unincorporated areas near the city. In exchange, the county gets a chunk of the property tax-increment revenue generated by Davis’s redevelopment agency.

“For all intents and purposes, it’s a growth management tool,” said Mitch Sears, an open space planner for the city.

Yolo County has pass-through agreements with redevelopment agencies in all four of the county’s incorporated cities — Davis, Woodland, West Sacramento and Winters. All of the agreements acknowledge that the county wants to see development occur in the cities, said David Morrison, assist director of Yolo County’s Planning, Resources and Public Works Department. However, only the Davis-Yolo contract gives the city land use control over unincorporated areas.

The agreement, which bolsters a “smart growth” approach to development, could be a model for broader reform of the state-local fiscal system.

The story behind the Davis-Yolo agreement is a classic tale of California growth politics. During the mid-1980s, developer Frank Ramos approached the city with a proposal for an 800-unit housing project just beyond the city’s eastern boundary, as well as a new interchange on Interstate 80. The Davis City Council, which considered itself advocates of very slow growth at the time, opposed Ramos’s project. So the developer began talking with county officials. Although Ramos never filed an application with the county, word spread that the county was interested in the project and would approve it if given the chance.

After lining up support at the county level, Ramos returned to the city, where it became clear that the City Council would do almost anything to prevent such a project from going forward under the county’s authority. With this leverage in hand, the developer roughly doubled the size of his Mace Ranch project to 1,500 units and dropped the interchange. Finding itself backed into a corner, the City Council had little choice but to approve a project that was nearly twice as big as the rejected original plan — and a project with greater traffic impacts.

At about the same time the Mace Ranch politics were playing out, the city formed a redevelopment agency. The city was determined not to repeat the Mace Ranch saga, while the county was concerned about losing revenue to a new redevelopment agency. So the sides met and in 1987 signed the pass-through agreement.

The agreement, which was most recently renegotiated in 2001, essentially ensures the county does not lose out on the growth of property tax revenue in the city’s redevelopment project area. In exchange, the Davis City Council, which runs the redevelopment agency, has authority within the city’s sphere of influence to reject any development other than uses allowed by the county’s agricultural zoning. (The agreement does permit development in about half a dozen small areas that were subdivided prior to 1987.) The city’s sphere of influence extends out three to four miles beyond the city limits. The agricultural zoning permits one house per 20 acres and construction of various farm-related facilities — but no urban development.

If a landowner or developer does want to build in the sphere of influence, the application comes to the city, Sears explained. The City Council has the ultimate say and it has vetoed projects, but most proposals are sorted out at the staff level, he said. Generally, the city insists that development sites get annexed into the city. However, the city has approved only about three small annexations since the pass-through agreement went into effect, Sears said.

Thus, the city has been able to pursue redevelopment while simultaneously preventing sprawl.

And it’s not as if there is no interest in development. “There is strong growth pressure in the Davis area,” Sears said. “Every other month I’m talking to another developer about making their way through our process to get annexed.” Typically, those talks do not even reach the application stage, though, because of Davis’s insistence on an urban edge.

Jeff Loux, a former Davis planning director who now runs the University of California, Davis, Extension land use and natural resources program, said the pass-through agreement changed the local political equation.

“It took out of play dozens and dozens of subdivisions that developers would have come forward with,” said Loux, who became planning director shortly after the agreement was finalized. “We considered it, from a planning point of view, as part of our basic planning policy of a dense urban area surrounded by farmland.”

The county’s Morrison said the agreement preserves “very clear, distinct urban edges, unlike most of the rest of the state.” Morrison, however, sees the pass-through agreement as only one tool that reflects the “operating philosophy” of the county. “The county has been very clear: We are not interested in becoming Elk Grove or Folsom,” he said.

If the county wanted to get into the development business, it could cancel the pass-through agreement and start approving projects that would bring in more revenue. That has not happened, but, Morrison warned, the local economy has changed dramatically during the last five years. Real estate speculation has become intense at the same time the farm economy has suffered. Two large tomato processing plants have closed. One plant reopened, but it is smaller and struggling, he said. The value of the county’s total farm production has been flat for a decade.

The county, which is shifting into high gear on a general plan update, needs alternatives for dealing with market forces that threaten longstanding land use policies, Morrison said. The situation is further compounded by the fact that Yolo receives only nine cents of every property tax dollar. Only Orange County receives a smaller cut of property taxes. State legislation to give those two counties more property tax revenue has been vetoed several times.

“If the state’s really interested in smart growth, they need to put their money where their mouth is,” Morrison said.

Loux agrees and suggested that the Davis-Yolo County agreement could be a model for fiscal reform. Until the “haves” start paying the “have nots,” there is no incentive to halt development in inappropriate locations, he said.

Mitch Sears, City of Davis, (530) 757-5626.
David Morrison, Yolo County, (530) 666-8041.
Jeff Loux, UC Davis Extension, (530) 757-8577.