In the deal, approved during a special meeting, The Surland Cos. agreed to give the city $10 million and 16 acres to build a swim center. In exchange, the city will give the Tracy-based developer priority rights to build between 1,000 and 2,250 homes during a 25-year span at Ellis, a tract of 321 acres outside city limits on the northwest corner of Corral Hollow and Linne roads.
Surland will be exempt from about $8.1 million in fees related to water supply and sewage conveyance and treatment.
Les Serpa, president of Surland and a Tracy native, called it the “most lucrative” developer agreement the city has approved. While his company will reap the deal’s financial benefits over 10 or 15 years, Serpa said Tracy will get the money for the swim center much sooner.
According to the agreement, $2 million is due to the city within 60 days of when the Local Agency Formation Commission annexes Ellis into Tracy’s city limits. The remainder is due within three years of the first payment.
The accord also stipulates that the city must designate a 16-acre site for the swim center within Ellis or forfeit the rights to the land.
The accord was modeled on an agreement passed by the City Council in 2008 but found illegal by Superior Court Judge Lesley Holland in 2011. That ruling is under appeal, though the city and Serpa hope the agreement approved Tuesday addresses Holland’s objections to the original deal.
City Development and Engineering Services Director Andrew Malik said the exchange of infrastructure money for upfront funds was a way to “leverage” a city asset into a desired amenity — namely, the swim center.
Since the 2008 developer agreement was approved, land values plummeted and a Tracy requirement to include recycled water in future development changed the bottom line for the project, Malik and Serpa said separately after the meeting.
Serpa said cost of the recycled water requirement alone was “equal to 100 percent of the reimbursements we’re getting.” That, he said, made the balance “very important.”
Malik said the deal gives Surland free rights to existing infrastructure only. The cost of any future infrastructure required by Ellis would be paid fully by the developer, Malik said.
During public comment, a stream of people — including children — urged the council to pass the agreement and secure what they said is a much-needed swim center.
Seven-year-old Logan Edwards was first to speak. The two-year veteran of the Ellis Aquatics swim club — which is not affiliated with the development — said a competitive swimming pool would help him reach his dream.
“I hope to one day earn a college swimming scholarship,” Logan read from a piece of paper. “That is why it is important to me, my fellow teammates and rest of Tracy that Ellis swim center can be approved.”
He and many others were met with cheers and applause from a council chambers packed with parents and children, many of whom wore swim club apparel. At least one child waved a sign that read, “Build us a swim center.”
But the support was not unanimous.
Several people questioned the wisdom of pursuing the developer agreement, including Mark Connolly, attorney for Tracy Alliance for a Quality Community, the group that challenged the 2008 accord.
Connolly successfully argued before Judge Holland that the 2008 agreement violated several aspects of development law. He said Tuesday that the agreement before the council was a “terrible deal” that was “worse than the original development agreement proposed.”
Celeste Garamendi, Connolly’s wife, said the deal continued the types of decisions that starved the city of recreation resources and led to a swim center drive in the first place.
“We’re in the situation that we are tonight … because of the failed policy and the failed decision around residential development that’s occurred over the last 15 years,” she said.
Serpa stood by the project.
“It’s a very good plan, and if there’s technical issues that need to be addressed, we will do that,” he said following the meeting.
Councilwoman Nancy Young, after casting her first votes regarding the development, said she approved the developer agreement for more than just the swim center.
“I think the whole design is just really innovative and progressive,” she said. “It’s part of the future.”
The future could begin as early as 2014 if there are no legal challenges to the developer agreement.
Serpa said that annexation should be finalized this year and that construction will begin in 2014. In three years, he said, the swim center should be open to Tracy residents.
• Contact Jon Mendelson at 830-4231 or firstname.lastname@example.org.
At a glance
WHAT: Tracy City Council special meeting
WHEN: 6 p.m. Tuesday, Jan. 22
WHERE: City Hall, 333 Civic Center Plaza
DETAILS: Mayor Brent Ives, Mayor Pro Tem Michael Maciel, and council members Charles Manne, Robert Rickman and Nancy Young were present.