title
ADOPT A RESOLUTION APPROVING A PROPERTY TAX ALLOCATION AGREEMENT BETWEEN THE CITY OF STOCKTON AND THE COUNTY OF SAN JOAQUIN FOR THE LEBARON RANCH RESIDENTIAL DEVELOPMENT PROJECT ANNEXATION; AND THE [THORNTON ROAD] DRIVE-THROUGH QUICK-SERVE RESTAURANT DEVELOPMENT ANNEXATION
recommended action
RECOMMENDATION
It is recommended that City Council adopt a resolution:
1. Approving a Property Tax Allocation Agreement (Exhibit 1 to the Resolution) between the City of Stockton (City), the County of San Joaquin (County), and the Lincoln Rural County Fire Protection District establishing the exchange of property tax revenues associated with the:
a. LeBaron Ranch Residential Development Project at 900 & 1300 East Eight Mile Road, and 10550 and 10600 North Lower Sacramento Road; and
b. Drive- Through Quick-Serve Restaurant Development Project at 9324 Thornton Road.
2. Authorizing the City Manager, or designee, to take appropriate and necessary actions to carry out the purpose and intent of the Resolution.
body
Summary
The proposed agreements establish the allocation of property tax revenues generated from the LeBaron Ranch residential development and [Thornton Road] Drive-Through Quick-Serve Restaurant development project annexations:
LeBaron Ranch Residential Development Project
Located at 900 and 1300 East Eight Mile Road, and 10550 and 10600 North Lower Sacramento Road, the Project site is adjacent to the City of Stockton’s northern city limits, consisting of approximately 306.03 acres currently located in the County’s unincorporated area. Development of LeBaron Ranch includes 1,411 residential units, two (2) public parks, a future Lodi Unified School District school site, and public infrastructure.
[Thornton Road] Drive-Through Quick-Serve Restaurant Development Project
Located at 9324 Thornton Road, the project site is a currently vacant 0.68-acre parcel located in unincorporated San Joaquin County (in a County island) at the southeast corner of the intersection of Thornton and Wagner Heights Roads. Proposed development consists of a 2,440 square-foot drive-through quick service restaurant and associated improvements.
The agreement provides that property tax revenue from the annexed areas will be a tax sharing structure that would include a base property tax split of 90 percent to the County and 10 percent to the City, and an incremental growth tax split of 60 percent to the County and 40% to the City. This agreement will also require detachment from the Lincoln Rural County Fire Protection District, which is a party and signatory to said agreement.
Approval of a property tax sharing agreement is required under State law before annexation proceedings may be completed through the San Joaquin Local Agency Formation Commission (LAFCo). Adoption of this agreement allows the annexation process to move forward.
DISCUSSION
Background
The LeBaron Ranch Project involves the proposed annexation and future residential development of 12 contiguous parcels totaling approximately 236.30-acres located in the County’s unincorporated area.
On November 18, 2025, the City Council approved:
• A resolution to certify the Environmental Impact Report, Statement of Overriding Consideration, and Mitigation Monitoring and Reporting Program for the Project (Attachment A - Resolution 2025-11-18-1501-01); and
• A resolution approving a General Plan Amendment (Attachment B - Resolution 2025-11-18-1501-02); and
• A resolution to approve prezoning of twelve (12) parcel numbers at East Eight Mile Road. and North Lower Sacramento Road (Attachment C - Resolution 2025-11-18-1501-03); and
• A resolution authorizing the filing of an application with LAFCo for the annexation of aforementioned twelve parcels with related City Services Plan (Attachment D - Resolution 2025-11-18-1501-04).
The [Thornton Road] Drive-Through Quick-Serve Restaurant Project involves the proposed annexation and future commercial development of a 0.68-acre parcel in the jurisdiction of unincorporated San Joaquin County (in a County island).
On November 4, 2025, the City Council approved:
• Motion 2025-11-04-1501 overturning the Planning Commission’s recommendation to deny the Design Review, prezoning, and annexation of the parcel into the City of Stockton; and
• A resolution approving Design Review for a Drive-Through Quick-Serve Restaurant at 9324 Thornton Road (Attachment E - Resolution 2025-11-04-1501); and
• An ordinance amending Title 16 of the Stockton Municipal Code related to the Zoning Map, in Section 16.16.030 of the SMC, to prezone property to Commercial, General (CG) (Attachment F - Ordinance 2025-11-04-1501).
State law requires that affected local agencies adopt an agreement specifying the exchange of property tax revenues prior to LAFCo issuing a certificate of filing for annexation. The proposed agreement satisfies this requirement.
Present Situation
For the purposes of this agreement, property tax revenues are categorized as base and increment. The base property tax is the ad valorem tax on the Base Year Valuation allocated to Districts and County within the area being annexed. The tax increment (or incremental growth) is the total increase or decrease in the ad valorem tax resulting from the change in assessed value from the Base Year Valuation within the annexed area (increases typically caused by development of the annexation area).
The agreement provides that property tax revenue from the annexed areas will have a tax-sharing structure that would include a base property tax split of 90 percent to the County and 10 percent to the City for the annexation. This agreement requires that the County agree to the incremental growth adjusted to 60 percent to the County and 40 percent to the City. The previous agreement dictated an 80/20 split, with the County receiving 80 percent of both base and increment.
Applied to the projects, this proposed tax sharing structure differs from the former (expired July 31, 2025) master tax-sharing agreement as follows:
Table 1 - Tax Sharing Structure Comparison
|
|
County |
City |
|
|
Base |
Increment |
Base |
Increment |
|
Former Master Tax Sharing Agreement* |
80% |
80% |
20% |
20% |
|
Proposed Tax Sharing Agreement |
90% |
60% |
10% |
40% |
*NOTE: The former agreement did not include separate allocations between base & increment.
Table 2 - LeBaron Tax Share Analysis Comparison†
|
|
County |
City |
|
Former Master Tax Sharing Agreement Fiscal Impact |
$3,124,009 |
$(757,942) |
|
|
|
|
|
Proposed Tax Sharing Agreement Fiscal Impact |
$2,635,940 |
$(266,902) |
†NBS. (2025). City of Stockton Tax Sharing Analysis (Draft).
Table 3 - 9324 Thornton Rd. Tax Share Analysis Comparison†
|
|
County |
City |
|
Former Master Tax Sharing Agreement Fiscal Impact |
$11,688 |
$(5,375) |
|
|
|
|
|
Proposed Tax Sharing Agreement Fiscal Impact |
$6,641 |
$(4,767) |
† SJ Co. ACO. (04/08/2026). 2025-26 Tax Increment Distribution Report. & CDD. (2026). Development Construction Calculation.
Term and Implementation
• Following approval at the Stockton City Council meeting, the agreement becomes effective upon the Fire District’s and County Board of Supervisors’ approval and only applies to the LeBaron Ranch and [Thornton Road] Drive-Through Quick-Serve annexation areas.
• Property tax allocation will take effect in accordance with State filing deadlines and statutory requirements.
Regional Cooperation Provisions
The agreement also includes provisions addressing:
• Joint review of tax records to ensure accurate distribution.
• Cooperation between the City and County regarding regional services and infrastructure.
• City participation in the County’s Capital Facilities Fee program supporting regional facilities.
• Coordination on land use planning and infrastructure within the City’s Sphere of Influence.
• Planning for community service facilities or development impact fees.
Termination
Any party may terminate the agreement with six months’ written notice; however, termination does not affect annexations already certified by LAFCo.
FINANCIAL SUMMARY
The agreement establishes a revenue-sharing framework for property tax generated within the annexation areas. The agreement provides that property tax revenue from the annexed areas be allocated via a tax-sharing structure that would include:
• A base property tax split of 90 percent to the County and 10 percent to the City; and
• Incremental property tax growth (excess of base) adjusted to 60 percent to the County and 40 percent to the City
Per the County, this agreement will require detachment from Lincoln Fire District and will require said district to be a signatory to the agreement.
While the allocation provides the County with a larger share of property tax revenues, the proposed ratio is more equitable toward the City compared to previous agreements (see Tables above). Further, the annexations allow the City to continue its efforts in:
• Facilitating planned residential and commercial development within the Sphere of Influence;
• Expanding the City’s tax base over time; and
• Coordinating service delivery and infrastructure planning.
The detachment of Lincoln Rural County Fire Protection District will slightly decrease the amount of money that the City receives from its contract with that district. However, that loss of revenue will be more than offset by the additional revenues that the City will receive from property taxes, sales taxes and the Citywide maintenance Community Facilities District.
Attachment A - Resolution 2025-11-18-1501-01
Attachment B - Resolution 2025-11-18-1501-02
Attachment C - Resolution 2025-11-18-1501-03
Attachment D - Resolution 2025-11-18-1501-04
Attachment E - Resolution 2025-11-04-1501
Attachment F - Ordinance 2025-11-04-1501