January 2024
Review of Kosmont
Enhanced Infrastructure Financing District
Proposal
Background
• The City of Oakland is considering EIFDs for funding affordable housing Factors for Successful EIFD
• Strong real estate market with high assessed valuation (AV) growth potential • Significant private development plans
• Involvement of multiple contributing taxing entities
• Supportive land use policies/zoning
• Community support for private development
• Specific infrastructure plan and additional funding sources enhance EIFD viability Consultant Team’s Evaluation
• A Citywide EIFD may pose an unnecessary fiscal risk to the City’s General Fund • EIFDs are a more powerful tool with multiple taxing entities • The Consultant Team strongly recommends that an EIFD policy be created which may assist the City in evaluating future EIFDs
2 Overview
EIFD Evaluation Criteria
Will infrastructure
investments trigger
property value increases
that will produce tax
increment revenue?
Will the creation and
implementation of the
EIFD provide a net fiscal
benefit to the City?
Will the timing of those
revenues and their
amounts match the
funding needs?
3 Review of Kosmont’s Analysis
4 EIFD Proposal Analysis
• Different scenarios where the City contributes 25%, 33%, and 50% of its share of tax increment over a 50-year district lifetime
• Accumulated revenue and bonding capacity by year 10 ranged between $33 and $85 million in East Oakland, $13 and $34 million in West Oakland, and $46 and $119 million for West plus East Oakland boundaries
West Oakland Analysis
• Assessed future development program costs at $829 million over 50 years • Projected general fund revenues estimated at $847 million, leaving a surplus of $19 million or 2.3% of the estimated program costs
East Oakland Analysis
• No fiscal impact analysis conducted for East Oakland, impact of diverting tax increments to a citywide EIFD is not currently available Assessment of Kosmont’s EIFD Proposal
5 Projections of AV growth are based on historic rates which do not incorporate the potential public infrastructure improvements which could affect the value creation potential in the EIFD boundaries The fiscal impact of an EIFD in East Oakland was not assessed even though East Oakland constitutes 70% of the City’s taxable base The extent of capital expenses required for the infrastructure efforts targeted in the proposal is unknown
EIFD will likely not yield short term revenues to fulfill Oakland’s affordable housing goals
EIFD proposal would pose a high risk to the City’s General Fund due to Gann limit
Recommendations and Key Considerations
6 The configuration of the proposed
boundaries may pose an
unnecessary fiscal risk to the City
Conducting a series of assessments
over the alternative boundaries may
inform the City of areas with high
potential real estate demand, projects
that may trigger increased private
development demand, and the fiscal
impact of new development within
EIFD boundaries
EIFD(s) tend to be a more powerful
infrastructure funding/financing tool
when more than one taxing entity
contributes tax increment, and as
such the City should work to secure a
contribution from Alameda County
Recommendations and Key Considerations
7 Consider setting a certain share of
proceeds for affordable housing
Consider further defining/specifying
the types and costs of targeted
infrastructure projects
EIFD policy should be created which
may assist the City in evaluating EIFD
proposals and further define the types
and costs of targeted infrastructure
projects that may be best suited for an
EIFD funding/financing.