14-E
TO: Honorable Mayor and Members of the City Council
ATTENTION: Jeffrey L. Stewart, City Manager
FROM: Jim DellaLonga, Director of Economic Development
SUBJECT: Consideration and possible action to authorize the City Manager to execute Task Order No. 1 for Amendment No. 3 to Agreement File No. 855, in a form approved by the City Attorney, with Harris & Associates, to conduct a feasibility study regarding the implementation of an Enhanced Infrastructure Financing District within the Transit Oriented Development Specific Plan area.
DATE: August 8, 2022
EXECUTIVE SUMMARY
Harris & Associates has performed a number of analyses for the City including assisting with the fiscal analysis of the cannabis ordinance, and various property valuations. This task order will authorize Harris & Associates to conduct a feasibility study regarding the implementation of an Enhanced Infrastructure Financing District (EIFD) within the Transit Oriented Development Specific Plan area.
RECOMMENDATION TO CITY COUNCIL
1) Authorize the City Manager to execute Task Order No. 1 for Amendment No. 3 to Agreement File No. 855, in a form approved by the City Attorney; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
The proposed cost of $45,970 for Task Order No. 1 for Amendment No. 3 for the EIFD feasibility study is within the remaining contract amount and will be charged to Economic Development Account No. 510-42054-4002.
DISCUSSION
Harris & Associates has provided on-call advisory services to the City since late 2019.
Amendment No. 3 to Agreement File No. 855 was approved by City Council in January 2022 in an amount of $146,575 for the formation of two tenant-based, business improvements districts along the Bellflower Boulevard commercial corridor. It also includes $50,000 for on-call general economic development and financial services that may include, but are not limited to, real estate analysis, financial analysis, and advisory services as well as cannabis revenue research and advisory services. Amendment No. 3 also extended the term for an additional year.
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Staff Report – Task Order No. 1 for Amendment 3 to AFN 855 with Harris & Associates
August 8, 2022
DISCUSSION – Continued
In 2015, EIFDs were created and approved by the state as a post-redevelopment tax increment financing tool for cities and counties. City or county officials can create an EIFD to finance public capital facilities that provide significant benefits to the surrounding community. Property taxing entities have the option to opt in to a city’s EIFD and schools, as property taxing entities cannot be included in an EIFD. An EIFD is governed by a public financing authority made up of members from the participating taxing entities and a minimum of two public members.
The largest hurdle to forming an effective EIFD is gaining the participation of the other taxing entities, specifically, the County, which is typically the largest taxing entity remaining after the education related taxing entities. Without participation by the County, EIFDs are not typically able to generate enough tax increment to justify the creation of the district.
Staff recently met with a Metro team (Metro, Community Connections, LLC., and Kosmont Companies) to discuss the potential formation of an EIFD around the future light rail station within the Transit Oriented Specific Plan area in an effort to utilize this tool to capture the anticipated increase in property tax revenue that is often seen around new light rail stations. At this meeting, the Metro team indicated that based on recent discussions, the County of Los Angeles may have more of a willingness to participate in EIFDs and would work with the City to analyze the area around the Bellflower Light Rail Station.
In order to get an objective, third-party EIFD feasibility study of the Bellflower Transit Oriented Development Specific Plan Area, staff requested a proposal from Harris & Associates. With staff input, the feasibility study will include: the identification of district boundaries; planned, proposed, and potential future development; infrastructure needs and estimated costs; valuation data for properties included within the boundaries, funding and financing analyses, fiscal impact analysis; implementation and governance plan; and the presentation of the findings to city staff and City Council.
ATTACHMENT
Task Order No. 1 for Amendment No. 3 to Agreement File No. 855 ............................... 2 - Page 2 of 8 -
TASK ORDER NO. 1
In accordance with Section 2 of the Agreement between the CITY OF BLLFLOWER, a municipal corporation (“CITY”) and Harris & Associates, a California Corporation (“CONSULTANT”) (the “Master Agreement”), CITY and CONSULTANT agree as follows:
1. Specific Project Data
A. Title: Enhanced Infrastructure Financing District (EIFD) Feasibility Study
B. Description: In performing an analysis of the use of an EIFD for the City, Harris will be able to provide the City with an assessment of how an EIFD might create financing for infrastructure investments in the Bellflower area that support the vision for current projects near the Pacific Electric Corridor, as well as projects to come.
2. Services of CONSULTANT
See attached Exhibit “A,” Proposal – Enhanced Infrastructure Financing District (EIFD) Feasibility Study.
3. CITY’s Responsibilities
Determination of potential EIFD boundaries and fulfillment of a data request for planned, proposed, and potential future development as well as any infrastructure needs and the estimated costs of that infrastructure.
4. Times for Rendering Services
Phase Completion Date
All Tasks November 1, 2022
5. Payments to CONSULTANT
City will pay CONSULTANT for services within each phase as follows:
Category/Phase Compensation Method
(Hourly/Lump Sum) Amount
Task 1 – Data Gathering Hourly $6,270
Task 2.1 - Preliminary
Funding and Financing
Analysis
Hourly $13,310
Task 2.2 – Fiscal
Analysis Hourly $3,590
Task 2.3 – Governance
and Implementation
Roadmap
Hourly $9,320
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Task 2.4 – City
staff/Council Meetings Hourly $5,145
Overall Coordination Hourly $8,335
Total $45,970
6. CONSULTANT’s subconsultants
None.
7. Attachments:
Exhibit “A” - Proposal – Enhanced Infrastructure Financing District (EIFD) Feasibility Study
Execution of this Task Order by CITY and CONSULTANT will make it subject to terms and conditions of the Master Agreement. CONSULTANT is authorized to begin performance of services contained in this Task Order upon its receipt of a copy of this executed Task Order, which will be deemed to be the Notice of Proceed.
The Effective Date of this Task Order is _______________, 2022.
CITY CONSULTANT
Jeffrey L. Stewart, City Manager Hitta Mosesman, VP, Development and Housing Consulting
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Exhibit A
Proposal
Enhanced Infrastructure Financing District (EIFD) Feasibility Study - Page 5 of 8 -
22 Executive Park, Suite 200, Irvine, CA 92614 (949) 655-3900 www.WeAreHarris.com July 13, 2022
Mr. Jim Dellalonga
Director of Economic Development
City of Bellflower
16600 Civic Center Drive
Bellflower, CA 90706
PROPOSAL - ENHANCED INFRASTRUCTURE FINANCING
DISTRICT (EIFD) FEASIBILITY STUDY
Dear Mr. DellaLonga
Harris & Associates (Harris) is pleased to present this proposal to the City of Bellflower (“City”) for an Enhanced Infrastructure Financing District (“EIFD”) Feasibility Study.
As a recognized authority on the statutory procedures and requirements for district formation, Harris works with each client to determine the most cost-effective solutions for special financing districts, whether to form, reform, or closeout. We provide customized services to meet the specific needs of each client in their formation process. Harris is adept at conducting a preliminary analysis of the financial, legal and political implications of an EIFD before staff time and resources are devoted to the effort to ensure appropriate public investment of time and funds.
In addition to our expertise in district formation services, the proposed project team has direct experience in working with the City on prior projects, providing our team with valuable context and in depth understanding of the City’s needs. The following outlines our understanding of the project, proposed scope of services, and estimated fee to provide these services.
PROJECT UNDERSTANDING
An EIFD is a tool used to fund economic development projects within a geographic boundary utilizing tax increment financing.
As one of the more popular tools for economic development at the local level, EIFDs can offer the resources to encourage new infrastructure, attract new capital deployment, and align public funding resources in a geographic area to support businesses and residents. Since the elimination of redevelopment in 2011, municipalities have faced increased hurdles in their efforts to bring infrastructure improvements, economic development, and affordable housing to fruition. As is the case with many municipalities, these remain top priorities for the City and its residents.
Harris understands that the City wishes to procure a consultant to perform an EIFD Study. In performing an analysis of the use of an EIFD for the City, Harris will be able to provide the City with an assessment of how an EIFD might create financing for infrastructure investments in the Bellflower area that support the vision for current projects near the Pacific Electric Corridor, as well as projects to come.
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Harris & Associates, Inc. enhanced infrastructure financing district (EIFD) – city of bellflower 3 of 3
SCOPE OF SERVICES
Task 1: Identification of Boundaries and Data Request for Initial Screening Criteria Harris will hold a kickoff meeting with City staff to discuss possible opportunity sites for evaluation and what public infrastructure and other projects the City would like to consider through the EIFD. In coordination with City staff, Harris will then evaluate key implementation considerations, including:
• Properties to include in EIFD (boundaries)
• Any intersection with former Redevelopment Agency Project Area boundaries and the status of redevelopment dissolution for those identified.
• Potential public and private sector partners including, but not limited to, the City, Los Angeles County, any other impacted taxing entities, and developers/ property owners.
Harris will submit a data request for information following this meeting which will include, but not be limited to, the following:
• Planned / proposed / potential future development.
• Infrastructure needs and estimated costs.
Harris staff will also download County assessment roll data to determine ownership and assessed value information for all properties within the EIFD boundaries.
Deliverables: one (1) data request
Meeting: one (1) kick off meeting
Task 2: EIFD Feasibility Study
Harris will prepare a feasibility study to determine if an EIFD is a financially viable tool for the City. This study will include the information detailed below.
TASK 2.1: PRELIMINARY FUNDING AND FINANCING ANALYSIS
Based on the boundaries, infrastructure needs, and future planned/projected development identified under Task 1, Harris will conduct an analysis of preliminary funding and financing, identifying potential future development and possible public and private sector partners. This analysis will include review of:
• Assessed value that may possibly be generated from future development in the district. • Potential capacity for tax increment financing funding looking at specific annual benchmarks and collectively over the projected lifetime(s) of the district. This analysis will include several different scenarios at different levels of County involvement.
• Preliminary evaluation of prospective bonding capacity as prepared by Harris (also a registered Municipal Advisor).
• Corresponding financing tools and funding resources including, but not limited to, Community facilities district [CFO] financing, grants, the leveraging of real estate assets owned by the City, and other resources. • Prospective revenue generation comparison to infrastructure types and cost required to aid potential development.
• Analysis of remaining permitted obligations and implications on existing revenues as it relates to any potential intersection with former redevelopment agency district boundaries and project areas.
TASK 2.2: FISCAL IMPACT ANALYSIS
Harris will assess the City’s revenues (property tax, sales tax, etc.) and expenditures (police, fire, community service costs, etc.) and the ensuing fiscal impact that remains over time resulting from a district implementation in the City. EIFD legislation requires this fiscal impact analysis as part of a district formation. Harris recently completed a fiscal impact analysis for the City related to the Regional Housing Needs Assessment and that model will be utilized for this Task to provide cost savings to the City.
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Harris & Associates, Inc. enhanced infrastructure financing district (EIFD) – city of bellflower 3 of 3 TASK 2.3: IMPLEMENTATION AND GOVERNANCE PLAN
Considering any prior communications from the City regarding tool(s) of preference when it comes to governance and implementation, Harris will assess and provide a summation of practicable options including, but not limited to, district governing board composition, voting / approval procedures, district formation milestones, proposed debt issuance guidelines, and estimated timing.
TASK 2.4: CITY STAFF/COUNCIL MEETING
Harris will coordinate a meeting with City staff and present the findings of the EIFD feasibility study. Harris will also prepare a power point presentation and present the study findings during a City Council meeting to obtain direction.
Deliverables: (2) draft reports and (1) final report
Meetings: (1) meeting to present findings to City Staff and (1) City Council meeting
PROJECT TEAM
Hitta Mosesman, Vice President, will serve as the Principal-in-Charge for the work. Hitta has 20 years of experience in providing real estate, financial, housing other municipal consulting services to cities and special districts throughout southern California. Hitta will be assisted by Dima Galkin, Senior Project Manager, Joe Yew, Certified Municipal Advisor, Kyle Westra, Senior Analyst, and Nathan Cayabyab, Analyst, with additional staff to be assigned as needed.
PROPOSED FEES
Harris will provide services on a time-and-materials basis based on an initial not-to-exceed budget of $45,970, including meetings and coordination. A detailed table with staff hours and tasks is provided below. We anticipate the project to commence over an 8–12-week period. This Fee estimate is valid for 90 days from the date of the proposal.
We appreciate the opportunity to continue to work with the City of Bellflower. Please feel free to contact us if you have any questions.
Sincerely,
Harris & Associates, Inc.
Hitta Mosesman
VP, Development and Housing Consulting
(949) 264-8572 [email protected]
EIFD Feasibility Study Fee Schedule
Principal
in Charge
Senior
Project
Manager
Municipal
Advisor
Senior
Analyst Analyst
Task $275 $210 $195 $145 $135
1. ID Boundaries & Data Request for Initial Screening Criteria 3 8 12 15 $6,270
2. EIFD Feasibility Study
2.1 Preliminary Funding and Financing Analysis 12 20 8 20 10 $13,310
2.2 Fiscal Analysis 2 5 10 4 $3,590
2.3 Governance and Implementation Roadmap 12 18 8 8 $9,320
2.4 City Staff/Council Meetings (2 virtual - includes prep)8 12 2 1 $5,145 Coordination time (internal and with City staff)12 12 2 10 5 $8,335 Estimated Total Professional Services (Hourly) Fees $13,475 $15,750 $1,950 $8,990 $5,805 $45,970 Total
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