In September 2014, Governor Brown signed Senate Bill 628 (Beall), which authorized Enhanced Infrastructure Financing Districts (EIFDs) that re-established the ability to utilize tax increment financing as a way of fostering economic development. Dozens of cities and counties are now considering Enhanced Infrastructure Financing Districts (EIFDs) and a handful have completed the district formation process. The City of West Sacramento has been at a leader in adopting this financing tool and also promoting legislative changes to improve the EIFD Law.
First EIFD Formed in the State: On June 14, 2017, the West Sacramento City Council adopted Resolution 17-17 approving the Enhanced Infrastructure Financing Plan (the Plan) for Enhanced Infrastructure Financing District No. 1 (EIFD No. 1). On June 28, 2017, the Public Finance Authority (PFA) to EIFD No. 1 adopted Resolution 17-2 and Ordinance 17-2 forming the first EIFD in the State of California.
Description of EIFD No. 1: EIFD No.1 consists of fourteen (14) subareas, encompassing approximately 4,144 acres, or 25% of the entire City of West Sacramento. The subareas contain a diverse set of land uses from areas planned for riverfront mixed use development, to mostly built-out industrial and retail districts. Table 1 below, summarizes the existing conditions of the 14 subareas.
EIFD No. 1 Goals and Objectives EIFD No. 1 incorporates the following goals, including:
- Assisting with the infrastructure investment gap by allocating tax increment to provide a stable source of financing for the City’s Capital Improvement Plan (CIP), to strategic infrastructure projects, and to other eligible EIFD uses.
- Provide a stable source of revenue for capital investment.
- Leverage private investment.
- Support land assembly and environmental cleanup.
- Leverage outside funds, such as federal/state grants.
- Use in conjunction with other financing district revenues, such as the formation of Community Facility Districts and Benefit Assessment Districts.
- Support adaptive reuse and creative reuse of existing real estate assets.
- Induce private investment where it would otherwise not occur.
- Support projects with a community-wide or regional benefit.
Projects funded from EIFD No. 1 will be consistent with the City’s adopted General Plan 2035 (GP 2035) which provides a vision for how the City will grow and change in the future. The expenditure of EIFD No. 1 revenues would provide community-wide benefits by funding implementation actions consistent with the principles outlined in the Plan, including land use, urban structure and design, housing, economic development, mobility, public facilities and services, parks and recreation, natural and cultural resources, safety, and a healthy community. In order to implement the GP 2035, it is anticipated that EIFD No. 1 expenditures will be used on projects that have community-wide benefit in implementation of:
- Master Plans
- Specific Plans
- Capital projects (including the City’s 5-year Capital Improvement Plan budgets)
- Development Agreements
- Development projects
The Plan establishes a date when the District ceases to exist Pursuant to Government Code 53398.63 et. seq., the maximum duration of an EIFD is 45 years from the date on which the issuance of bonds is approved. In addition, the duration may be 45 years from when the City approves a loan to the EIFD (an action not anticipated).
The Plan identifies actions “not contemplated” but authorized by the EIFD Statutes In cases where the statues allow certain activities, but staff believes such an activity is not anticipated at this time, it will be noted in the Plan. Such activities that are not contemplated include the following:
- Removal of housing units
- Commitment of Vehicle License Fee revenue to the EIFD
- Commitment of the City’s “pass through” portion (10.2%) of each tax increment dollar which currently is deposited in the General Fund
- City loans to the EIFD
The Plan assumes subsequent voter approval (55% threshold) will be pursued to authorize the issuance of bond debt The Plan references the City Council’s intent to pursue this action in the future in order to allow establishment of long-term debt. The vote would require a 55% approval by qualified electors, which would be based on registered voters in the district.
The Plan anticipates Future Development in EIFD No.1 and Subareas The subareas vary with respect to: 1) the perceived capacity for new development; 2) future land uses; and 3) the anticipated time frame for new development. The opportunities are summarized in Table 2 below. As shown, the subareas have been grouped into three categories, reflecting the anticipated timing for the commencement of new development. The first group includes subareas with known, anticipated near term development projects, which are scheduled to commence within the next 5 years. There are five (5) subareas within the “near term” development category, four (4) subareas within the “longer term” development category in which new development is not anticipated to start for another 10+ years, and four additional project areas for which there are not any identified specific development projects. Development opportunities within the “longer term” category are typically constrained by the need for new infrastructure or the removal of heavy industrial uses. For example, much of the Pioneer Bluff subarea will not be able to redevelop until large petroleum tanks are removed. With respect to the subareas without any identified specific development projects, there are infill opportunities in these areas or the opportunity for significant conversion to new land uses over time.
Goals to be Achieved by EIFD No.1-funded Facilities In May 2012, the City Council adopted the Community Investment Action Plan which established goals for the strategic public investment in infrastructure and economic development designed to catalyze private investment to improve the local economy, create new revenue for the City, and to enhance residents’ quality of life. EIFD No. 1 will incorporate the following goals from that plan, including:
- Assisting with the infrastructure investment gap, by allocating tax increment to provide a stable source of financing for the City’s Capital Improvement Plan (CIP), to strategic infrastructure projects, and to other eligible EIFD uses
- Provide a stable source of revenue for capital investment
- Leverage private investment
- Support land assembly and environmental cleanup
- Leverage outside funds, such as federal/state grants
- Use in conjunction with other financing district revenues, such as the formation of Community Facility Districts and Benefit Assessment Districts
- Support adaptive reuse and creative reuse of existing real estate assets
- Induce private investment where it would otherwise not occur
- Support projects with a community-wide or regional benefit