City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00110 3/7/2023 Consent Item 25.
Railyards Enhanced Infrastructure Financing District - Consultant Funding File ID: 2023-00110
Location: District 4, Represented by Mayor Steinberg
Recommendation: Adopt a Resolution that authorizes the City Manager or City Manager’s designee to a) establish the Enhanced Infrastructure Financing District (EIFD) Project (I02000520) including the revenue and expenditure budget in the amount of $465,000, b) transfer $465,000 from the available fund balance of the Innovation & Growth Fund (Fund 2031) to the Enhanced Infrastructure Financing District (EIFD) Project (I02000520) for expenses associated with development of a Railyards Enhanced Infrastructure Financing District, c) enter into or amend agreements related to development of the Sacramento Railyards Enhanced Infrastructure Financing District and Railyards development expenses; and d) execute Contract Amendment #5 to City Contract Number PRC000644 with Dangberg Consulting Services LLC for an amount not to exceed $90,000 for a new total not-to-exceed amount of $522,375.
Contact: Marco Gonzalez, Senior Development Project Manager, 916 808-5757, [email protected], Leslie Fritzsche, Economic Investment Manager, 916 808-5450, [email protected]; Office of Innovation and Economic Development.
None
Attachments:
1-Description/Analysis
2-Sacramento Railyards Enhanced Infrastructure Financing District Map 3-Resolution
4-Dangberg Consulting Services LLC Contract Amendment
Additional Description/Analysis
Issue Detail: In 2019, the Sacramento Stadium Area Enhanced Infrastructure Financing District (EIFD) was formed in the eastern portion of the Railyards to catalyze development in a focused area, however, there are significant infrastructure needs throughout the entire 244- acre Railyards. To assist with financing the necessary infrastructure, the city is currently contemplating the expansion of
File ID: 2023-00110 3/7/2023 Consent Item 25.
that EIFD which would encompass the entire 244-acres within the Railyards.
The proposed expanded EIFD, to be known as the Sacramento Railyards Enhanced Infrastructure Financing District (map included as Attachment 2) will use incremental property tax revenue to finance infrastructure facilities and costs authorized by law. The primary goal in financing public facilities is to catalyze significant private investment and development of the Railyards and the surrounding area. Infrastructure investment will catalyze the rehabilitation of the Railyards and support the development of housing (both market-rate and affordable), office, retail, hotels, and entertainment venues consistent within the 2016 Railyards Specific Plan.
The City Council will have the opportunity to review and approve the Infrastructure Financing Plan (IFP) and the proposed use of incremental property tax revenue prior to the formation of the expanded EIFD. The EIFD will use incremental property tax revenue that is generated by parcels within the boundaries of the EIFD to (1) finance the direct funding of facilities and the reimbursement of developers within the Railyards for their cost of construction of facilities, (2) pay costs of issuance of bonds or other debt of the EIFD or of any other public agency for authorized facilities and payment of debt service thereon, and (3) finance other facilities and costs authorized to be financed through the EIFD.
To form and implement the EIFD, it is important for the City to be well represented in the negotiations, in the preparation of agreements, as well as in project coordination and delivery. Professional and technical advisory services required include, outside legal counsel, bond counsel, economic consultants, financial advisory services, and project management services. This includes legal resources to serve as legal counsel for the separate legal entity, the Public Finance Authority (PFA), which will govern the EIFD and Bond Counsel to review the documents to ensure the district is formed in a way that will allow for future bond issuances and to protect the tax-exempt status. The PFA will also have annual expenses for administration and annual reporting. Since the PFA will not have sufficient revenue to pay for these services immediately after its formation, the City will need to provide funding to cover the costs. The estimated cost for all of the services is $465,000.
These resources are needed to do the necessary work to form the expanded EIFD by fall 2023.
Policy Considerations: Establishment of the Sacramento Railyards Enhanced Infrastructure Financing District is an important step towards supporting the development of the Railyards as envisioned in the city’s Sacramento Railyards Specific Plan. Implementation of the Sacramento Railyards EIFD will provide greater flexibility for infrastructure financing and catalyze the project by lowering the overall infrastructure burden in an environment of rapid construction-cost escalation.
Development of infrastructure to support housing (both market-rate and affordable), office, retail, hotels, and entertainment venues on the 244-acre Railyards infill development site is consistent within the 2016 Railyards Specific Plan and the City’s 2035 General Plan.
Economic Impacts: The EIFD’s Funding for the infrastructure, utilizing new incremental property tax revenue that is directly derived from development within the proposed EIFD boundaries, will enable the City to support the continued redevelopment of the Railyards consistent with the 2016 Railyards Specific Plan & 2035 General Plan goals of expanding the Central City as Sacramento’s regional destination for employment; commerce; sports and entertainment; shopping; housing; culture; and tourism.
File ID: 2023-00110 3/7/2023 Consent Item 25.
Environmental Considerations:
California Environmental Quality Act (CEQA) : The City certified a Supplemental EIR (SEIR) for the Railyards Specific Plan Update, KP Medical Center, MLS Stadium and Stormwater Outfall on November 10, 2016 (SCH No. 2006032058; Resolution No. 2016-0379). The SEIR evaluated the environmental effects of the Major League Soccer Stadium project and related public infrastructure. The physical changes that would be facilitated by the funding activities proposed have been evaluated in the SEIR.
Sustainability: Not Applicable.
Commission/Committee Action: None.
Rationale for Recommendation:
The allocation of these resources is recommended to provide the necessary professional and technical expertise to expand the current district to a sitewide EIFD. This will provide the funding mechanism to continue the implementation of infrastructure throughout the district. The proposed Infrastructure Financing Plan includes an estimated $90 million in remaining infrastructure needed for the district. These proceeds from the EIFD will be used solely to design and construct public infrastructure that will catalyze rehabilitation of the project and support development of housing (both market rate and affordable), office, retail, hotels, and entertainment (consistent with the 2016 Railyards Specific Plan). The City will own and benefit from the completed infrastructure which supports further Railyards development and economic benefits to the City.
Financial Considerations:
The cost to secure professional and technical advisory services for the project is estimated at approximately $465,000. Staff recommends establishing the Enhanced Infrastructure Financing District (EIFD) Project (I02000520), including the revenue and expenditure budgets in the amount of $465,000, as well as transferring $465,000 of the available fund balance from the Innovation & Growth Fund (Fund 2031) to the Enhanced Infrastructure Financing District (EIFD) Project (I02000520) for expenses associated with development of the Sacramento Railyards Enhanced Infrastructure Financing District.
Local Business Enterprise (LBE): Not Applicable
RESOLUTION NO.
Adopted by the Sacramento City Council
ESTABLISH THE ENHANCED INFRASTRUCTURE FINANCING DISTRICT (EIFD) PROJECT (I02000520) AND AUTHORIZE EXECUTION OF CONSULTANT
CONTRACTS
BACKGROUND
A. The Sacramento Railyards is a large urban infill project just immediately north of the downtown Central Business District area that will provide new residents, employment opportunities, and services in an area that is substantially surrounded by urban development.
B. The Sacramento Railyards Specific Plan (Specific Plan) was adopted in 2016 to establish goals and policies that are specific to the Railyards, while advancing the vision of the General Plan.
C. In 2019, the Sacramento Stadium Area Enhanced Infrastructure Financing District was formed to provide resource for infrastructure for the development of the eastern portion of the Railyards.
D. The proposed Sacramento Railyards Enhanced Infrastructure Financing District (EIFD) will be an expansion of the existing district to include 244 acres and will use the area’s incremental property tax revenue to finance infrastructure facilities and costs authorized by law to be financed through the EIFD.
E. The primary goal in financing public facilities is to catalyze significant private investment, additional infrastructure, development of the Railyards project site, and surrounding area development construction.
F. Professional and technical advisory services are necessary to support City staff in the progression of this project. Services include financial advisory services, legal counsel, project implementation services, and project management services.
G. Funding for the payment of consulting fees has been identified in the Innovation & Growth Fund (Fund 2031).
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The Enhanced Infrastructure Financing District (EIFD) Project (I02000520) is established as a new Multi-Year Operating Project, with a revenue and expenditure budget of $465,000.
Section 2. The City Manager or City Manager’s designee is authorized to transfer $465,000 from the available fund balance of the Innovation & Growth Fund (Fund 2031) to the Enhanced Infrastructure Financing District (EIFD) Project (I02000520) for current and future expenses associated with development of a Sacramento Railyards Enhanced Infrastructure Financing District
Section 3. The City Manager or City Manager’s designee is authorized to negotiate and enter into contracts and agreements for consulting services and expenses to form the Sacramento Enhanced Infrastructure Financing District and to implement projects within the Railyards area funded by the Enhanced Infrastructure Financing District (EIFD) Project (I02000520).
Section 4. The City Manager or City Manager’s designee is authorized to negotiate and execute a contract amendment (Exhibit A) for $90,000 for Dangberg Consulting Services, LLC funded by the Sacramento Railyards Development Project (I02000520).
Exhibit A: Contract Amendment for Dangberg Consulting Services, Inc. 1 CONTRACT #: PRC000644-5CONTRACT EFFECTIVE DATE: January 1, 2023CONTRACT NAME: Major League Soccer (MLS) Economic Development ConsultingCONTRACT PROJECT #: 02001411 & I80020500DEPARTMENT: CMODIVISION: Economic DevelopmentThe City of Sacramento ("City") and Dangberg Consulting Services, LLC ("Contractor"), as parties to that certain Contract designated as City Contract Number PRC000644, including any prior Contract Amendments modifying the Contract (the Contract and Contract Amendments are hereafter collectively referred to as the "Contract"), hereby amend and modify the Contract as follows:1 SCOPEThe Services specified in the Scope of Services Exhibit of the Contract are not changed.2 TIME OF PERFORMANCEThe term of the Contract is extended through and including December 31st, 2023, to provide additional time for completion of the Contract.3 CONTRACT AMOUNTThe maximum not-to-exceed amount that is specified in the Contract is INCREASED by $90,000, and the Contract's maximum not-to-exceed amount is $522,375.The original Contract sum was: $99,000The net change by previous Contract Amendments was: $333,375The Contract sum prior to this Contract Amendment was: $432,375The Contract sum will be INCREASED by this Contract Amendment: $90,000The new Contract sum including all Contract Amendments: $522,375 2 4 FULL COMPENSATIONContractor agrees that the amount of increase or decrease in the not-to-exceed amount specified in section, above, shall constitute full compensation for the additional and/or revised Services specified in section, above, and shall fully compensate Contractor for any and all direct and indirect costs that may be incurred by Contractor in connection with such additional and/or revised Services, including costs associated with any changes and/or delays in work schedules or in the performance of other Services or work by Contractor.5 AUTHORIZED SIGNATUREContractor warrants and represents that the person or persons executing this amendment on behalf of Contractor has or have been duly authorized by the Contractor to sign this amendment and bind Contractor to the terms hereof.6 FULL FORCE AND EFFECTExcept as specifically revised herein, all terms and conditions of the Contract shall remain in full force and effect, and Contractor shall perform all of the services, duties, obligations, and conditions required under the Contract, as supplemented and modified by this amendment to the original agreement.