STAFF REPORT - CITY COUNCIL/SUCCESSOR AGENCY/PUBLIC FINANCE AUTHORITY

This was a future agenda item by the Council for staff to review a possible opportunity to develop the City’s property at the Southwest corner of Alpine/SR33 and Jayne Ave/SR33 and bring back a possible solution for developing the land for future commercial cannabis cultivation. Staff does not have a formal recommendation, however, based on the information provided in this report, it does not seem likely that the property could be used for cannabis cultivation. 

The City of Coalinga currently owns 477 acres at the Corner of Jayne /SR33 and Alpine/SR33 and originally purchased by the sewer fund it in or around 2002/2003 in order facilitate the relocation of the City’s wastewater treatment plant. The land lies adjacent to Jacalitos Creek and is in the floodplain limiting development on the full 477 acres. In 2005, There were plans drawn, an environmental impact report prepared and certified, and subsequent annexation completed as part of the development process in accordance with Gov't Code Section 56742. Since the annexation, development has slowed and the need to the relocate the plant and unnecessarily increase rates on existing rate payers to pay for a new plant.

The property is currently laying vacant and occasionally farmed through a lease with Lovelace Farms who have been managing the land for the City. The City, at this current time has no plans for the future use of the property, however, the Council has expressed interest in developing the property to accommodate future cannabis operations.  Staff was tasked with looking into the possibility of developing the land for something other than Public Facilities which was the original intention of the annexation.

The property in question is a non-contiguous piece of land 6 miles from the City. It currently has a land use designation and zoning classification of (PF) Public Facilities and open/space conservation (land adjacent and within the creek) which, according to the land use element, typically provides areas for needed public and institutional facilities, including, but not limited to City, County and other government agency properties including post offices, the Civic Center, public schools, public playgrounds and fire stations. Public utility rights-of-way are also included. The previous EIR from the relocation plan identified the property as subject to the Williamson Act requiring a cancellation of the contract prior to development activities for any future use that is not agriculture. At this time, it is unknown if the Williamson act recognizes cannabis as consistent with Williamson act land.

The City Attorney’s office has been working with staff to ensure that selling the property would be allowable.  In a normal circumstance, a city is able to sell its property “for the benefit of the city.” (Government Code Section 37351.)  However, the subject property was initially annexed to the City pursuant to Gov't Code Section 56742.  This means that selling the property comes with certain restrictions. 

 Government Code section 56742 allows for a city to annex a certain noncontiguous property if the property is in the same county as the city, is owned by the city, is used for municipal purposes, and is less than 300 acres.  Under Government Code Section 54742(e), if a property annexed to a city is sold, the property is no longer a part of that city, and therefore, the land would revert back to the county jurisdiction.

If the City moves forward with selling the property, it must go through a detachment process.  (Government Code Section 56742(e).)  This means that the property will no longer be part of the City and be reverted back to the County of Fresno.  The County would then have control over the use and taxes generated from the property.  The City would not be able to retain any city taxes generated by cannabis cultivation.

An alternate option for the City would be able to lease the property pursuant to Government Code section 56742(f).  There are some restrictions to leasing the property since it was annexed which are listed in Government Code section 37380, et seq.  Pertinent terms for annexed properties include that the lease agreement cannot be over twenty-five (25) years, must be used for agricultural purposes “upon which sewage or waste water is discharged”.  This means that the City could enter into a long term lease for agricultural purposes but not more than twenty-five (25) years, and the City must be be discharging water on the subject property which at this time is not expected to occur.

Possible revenue from development could range from, lease payments and possible cannabis revenue if the City is able to lease it to a cannabis company.