Staff Report
City Council
Item No. 5.B
Meeting Date: July 22, 2026
From: Anne V. Ambrose, Assistant City Manager
Title: A Resolution Of The City Council Of The City Of Cathedral City Authorizing The City Manager To Conduct A Feasibility Study For Tax Increment Financing (TIF) Districts
RECOMMENDATION:
Staff recommends City Council adopt a Resolution authorizing the City Manager to conduct a feasibility study for Tax Increment Financing (TIF) Districts.
BACKGROUND:
In June 2026, staff met with Kosmont Companies representatives to discuss potential financing strategies for the future community center. During that discussion but separate from the topic of the community center, Kosmont informed staff of the benefit of Cathedral City evaluating and exploring TIF Districts that may include and overlap with Opportunity Zone (OZ) 2.0 Districts in the City. Coupled together, TIF and OZ 2.0 Districts create a powerful incentive for various types of economic development. The importance of this information was a need to file a resolution authorizing the City to explore TIF districts in the Opportunity Zones, prior to the period for filing for new districts on July 25, 2026.
DISCUSSION:
TIFs are authorized by California state law and begin with the designation of a geographic area as a TIF District. TIF is a value capture revenue tool that uses taxes on future gains in real estate values to pay for new infrastructure improvements. It is important to note that TIFs do not increase property taxes. TIFs create funding for public or private projects by borrowing against the future increase in property-tax revenues. The intent is for the improvement to enhance the value of existing properties and encourage new development in the district. TIFs induce private investment and create value for prospective developers. There are different types of TIFs, such as Enhanced Infrastructure Financing Districts (EIFD) or Community Revitalization Investment Authorities (CRIAs).
Opportunity Zones are economically distressed communities, defined at the individual census tract level, that are nominated by the Governor of California and certified by the U.S.
Secretary of the Treasury. Under certain conditions, new investments in Opportunity Zones may be eligible for preferential tax incentives. Opportunity Zones can be a powerful tool for driving private investment into underserved communities. Originally created as a temporary initiative in 2017, the incentive was later enhanced and made permanent under Public Law 119-21, which was signed into law on July 4, 2025; OZ 2.0 refers to the permanent renewal and enhancement of the Opportunity Zones program.
TIF and OZ 2.0 Districts, when utilized in tandem, can be beneficial both for the City of Cathedral City and private investors. For the City, it reduces public cost by using tax increment financing to cover off-site infrastructure and site readiness before private capital is deployed. For private investors, OZ 2.0 is attractive because it provides a federal tax incentive that is further motivated by local TIF resources. Ultimately, layering OZ equity with TIF means more development can be catalyzed with less financial contribution and risk by the City.
The Resolution before the Council will not establish any TIF. Rather, its purpose is to authorize the City Manager or their designee to conduct a study exploring the feasibility of establishing one or more TIFs within the City.
FISCAL IMPACT:
The cost of preparing a feasibility study has not been budgeted and would be a budget amendment for an increase in General Fund expenditures. The cost of preparing a feasibility study would be determined through a procurement process and any budget amendment would be presented to the City Council as part of a future presentation.
FIVE-YEAR STRATEGIC PLAN:
Goal F-16: Develop and implement initiatives to proactively monitor the City's commercial corridors to address visual blight and nuisance issues associated with vacant and underutilized properties and non-compliant commercial strips and centers.
ATTACHMENTS:
Resolution 2026-XXXX