Nearly a decade after the launch of the Stockton Economic Stimulus Program (SESP), city officials are grappling with its long-term impact and debating how and whether to extend it further.
The Stockton City Council received a long-anticipated update on the program on Aug. 12, which has waived more than $94 million in public facility fees (PFFs) since its inception in 2015.
Initially created to jump-start development and employment after the Great Recession, the program is now under scrutiny as the city faces mounting budget challenges and growing concern about infrastructure needs.
“The original program was created to help spur development and create local jobs,” Community Development Director Stephanie Ocasio told council members during the meeting. “The economy is hard to predict… but recent years, particularly post-2019, saw a sharp increase in housing development and waivers.”
Launched by then-Mayor Anthony Silva in partnership with the Building Industry Association (BIA) of the Greater Valley, SESP was designed to stimulate growth by waiving certain PFFs for qualifying residential, commercial and industrial projects.
Though originally intended to last three years, it has been extended multiple times and now has no set expiration date. It will remain in place until the city adopts a new PFF Nexus Study, expected in 2026.
According to city staff, the waived fees have helped facilitate the construction of 3,461 single-family homes, 548 multifamily units, and over 17 million square feet of industrial space. However, economic returns have fallen short of projections.
While the University of the Pacific study that helped justify the program projected 3,700 jobs from 1,000 single-family units, only 5,525 jobs were reported over nine years, less than expected. Of those, 2,883 jobs went to Stockton residents. “While the program supported job creation, it didn’t meet projected employment ratios,” staff noted.
Vice Mayor Jason Lee raised concerns about the program’s continued cost, especially in light of recent budget cuts. “It doesn’t make sense that we waived this amount of money when we just had to cut the budget by $15.2 million,” Lee said. “What’s been the benefit to the city?”
The total waived includes $76.9 million in residential fees and $17 million in non-residential fees, with the largest revenue losses occurring in street improvement and parkland categories, funds that directly affect public safety and infrastructure. “Those funds don’t just disappear, they must be replaced or the infrastructure doesn’t get built,” staff warned.
Public feedback during the Aug. 12 meeting reflected starkly divided views.
Mary Elizabeth, a longtime resident, criticized the program, calling it “a kickback to the wealthy” and urging its immediate termination. She pointed out that the city’s PFF schedule has not been updated since 1991 or adjusted for inflation since 2010.
John Beckman, representing developers, defended SESP as essential to investor confidence. “Every investor who has called me about Stockton asks about this program,” Beckman said, advocating for Option 2, a phased reduction with protections for already-approved projects. “It provides certainty.”
Councilmembers considered four options: maintaining the program as-is, eliminating it entirely, or phasing it out over 18 to 24 months. Most leaned toward the gradual phase-out model.
“I don’t think it makes sense to just eliminate it outright,” said District 3 Councilmember Michael Blower. “People made investment decisions based on this program.”
Others expressed concern about the program’s uneven benefits across the city. “Nobody’s calling me about building in District 6,” Lee said. “If we’re going to continue waiving fees, it must benefit the entire city.”
Mayor Christina Fugazi acknowledged the value of the original plan but questioned its open-ended continuation. “When I was on council, I didn’t think it would continue in perpetuity,” Fugazi said.
The council ultimately voted to continue the item to its Aug. 26 meeting in a 6-1 vote, allowing more time to evaluate fiscal impacts and prepare for the eventual adoption of a new fee schedule.
Council also directed staff to return with more detailed fiscal analysis, including data on property tax gains generated by development under SESP.
As city staff continue meetings with stakeholders, the future of the program remains uncertain.
Whether SESP will be phased out, revised, or replaced, city officials agree on one thing: a new strategy is needed to balance growth and sustainability.