Prepared by:
Kosmont Companies
City of Salinas Ag-Industrial Specific Plan
Enhanced Infrastructure Financing District (EIFD) Overview October 24, 2023
Executive Summary(Presentation Notes)
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2 In 2010, the Salinas City Council adopted the Salinas Ag-Industrial Center Specific Plan (SAIC), establishing opportunity sites for new and relocating ag-related industries and promoting associated job creation and retention The SAIC provides 257 acres for agricultural industry expansion and cluster development with focus on food storage, warehousing, food processing, packaging suppliers and other ag support uses Almost 13 years later, the SAIC remains undeveloped largely due to costs associated with building necessary backbone infrastructure. Recent estimates calculate the cost of infrastructure required to support both Phase 1 and Phase 2 SAIC development to be over ~$70M, making any future development of the SAIC financially infeasible An Enhanced Infrastructure Financing District (EIFD) feasibility study was conducted in 2016 and updated in 2023 supports EIFD as a potential infrastructure funding source – the City has initiated conversations with the County about potential participation in March 2023 Subject to feedback from City Council (and potentially County BOS), immediate next steps could consideration of a non-binding Resolution of Intention (ROI) to form an EIFD
Outline
3 TIF / EIFD Overview
Salinas Ag-Industrial Center (SAIC) Overview
Previous Financing Analysis
Public Agency “Return on Investment”
Potential Next Steps
4 Baseline Property Value
Property taxes continue to flow to City / County / Schools / Other Taxing Entities as normal New Property Value from
New Development / Rehabilitation
Available to TIF District
Years from District Formation
Assessed Property Value (A/V) within TIF District Boundaries New Total Value After TIF District
Benefits all Taxing Entities
Period of New Development
Note: Illustrative. Conservative 2% growth of existing assessed value (A/V) shown; does not include mark-to-market increases associated with property sales.
What is Tax Increment Financing (TIF) – Not a New Tax
EIFD Fundamentals
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5 Types of Projects EIFD Can FundPartial List
6 Roadway / Parking / Transit
Brownfield Remediation
Storm / Flood / Public Facilities
Parks / Open Space / Recreation
Libraries & Childcare Facilities
Affordable Housing
Broadband
Small Business /
Nonprofit Facilities
Wildfire Prevention / Other Climate Change Response
Kosmont TIF Districts in Progress Statewide(Partial List) Fully Formed
In Formation Process
Under Evaluation
Jurisdiction
Purpose
Azusa
Housing and transit-supportive infrastructure
Banning
Housing and industrial infrastructure
Barstow
Housing and commercial infrastructure
Brentwood
Housing and transit-supportive infrastructure
Buena Park
Mall reimagination, housing-supportive infrastructure
Carson + L.A. County
Remediation, housing infrastructure, recreation
Coachella Valley Association of Govts (CVAG) Cities
Housing and transit-supportive infrastructure
Covina
Housing and transit-supportive infrastructure
El Cajon
Housing and transit-supportive infrastructure
El Segundo + L.A. County
Various infrastructure, regional connectivity
Fairfield
Housing and transit-supportive infrastructure
Fontana
Housing, mixed-use and industrial infrastructure
Fresno
Housing and transit-supportive infrastructure
Fresno County
Industrial and commercial supportive infrastructure
Humboldt County
Coastal mixed-use & energy supportive infrastructure
Indian Wells
Housing and tourism-supportive infrastructure
Imperial County
Housing and greenfield infrastructure
La Verne + L.A. County
Housing and transit-supportive infrastructure
Los Angeles (Downtown, San Pedro, LACUSC Med Center)
Housing and transit-supportive infrastructure
Los Angeles County Uninc. West Carson
Housing / bio-science / tech infrastructure
Madera County (3 Districts)
Greenfield infrastructure (water / sewer)
Modesto + Stanislaus County
Housing, transit, recreation-supportive infrastructure
Mount Shasta + Siskiyou County
Rural Brownfield site mixed-use infrastructure
Napa
Housing and transit-supportive infrastructure
Oakland
Affordable housing and housing-supportive infrastructure Ontario
Housing and transit-supportive infrastructure
Palmdale + L.A. County
Housing and transit-supportive infrastructure
Pittsburg
Roadways, utilities, broadband, parks and open space
Placentia + Orange County
Housing and transit-supportive infrastructure
Rancho Cucamonga
Housing and transit-supportive infrastructure
Redlands
Housing and mixed-use supportive infrastructure
Redondo Beach + L.A. County
Parks / open space, recreation infrastructure
Riverside
Housing and transit-supportive infrastructure
Sacramento County (Unincorporated)
Industrial / commercial supportive infrastructure
San Bernardino County (Unincorporated)
Transit-supportive infrastructure
San Jose
Housing and transit-supportive infrastructure
Sanger
Housing and commercial supportive infrastructure
Santa Ana
Housing and transit-supportive infrastructure
South Gate
Housing and transit-supportive infrastructure
Vacaville
Housing and transit-supportive infrastructure
Yucaipa
Housing and transit-supportive infrastructure
Example Case Studies
8 City of La Verne +
County of L.A. EIFD:
TOD Infrastructure
County of Sacramento
Metro Air Park EIFD:
Roadway, Water, Sewer
City of San Diego
Otay Mesa EIFD:
Roadway and Parks
9 9
Map of EIFD Study Area
~257 Acres
Source: City of Salinas Ag-Industrial Specific Plan
10 10
Aerial Overview
Source: City of Salinas Economic Development Staff (2023)
11 Potential Targeted Infrastructure Improvements
Phasing and Costs Preliminary / Illustrative
Targeted Infrastructure
Estimated Cost
Phase 1
Roads & Utilities
$27.1M
Cal Water
$16.0M
PG&E
$2.3M
Subtotal Phase 1
$45.4M
Phase 2
Roads & Utilities
$16.8M
Cal Water
$7.1M
Subtotal Phase 2
$23.9M
Estimated Total
$69.4M
Source: Scanell Properties, City of Salinas, PG&E, Cal Water, Granite Rock, DeSilva Gates, Economic & Planning Systems (EPS) – 2022$
12 Potential Future Development – Currently Entitled
Absorption Assumed over ~10 Years
Agricultural Processing Center
957,529 SF
Ag. Cooling, Distribution, & General Light Industrial
2,608,596 SF
Sales, Contractor Yards
768,095 SF
Estimated Total
4,334,220 SF
Source: EPS, Ag-Industrial Specific Plan (2023)
13 Estimated Job Creation Potential
Permanent Employment
2,889 jobs
Temporary Construction-Related Employment
10,726 job-years*
* One job-year defined as one year of employment for one employee Source: Kosmont Companies (2023)
14 Property Tax Distribution
City additionally receives equivalent of approx. 10.6% of property tax in lieu of MVLF, also available to EIFD (not proposed to be included) County additionally receives equivalent of approx. 8.1% of property tax in lieu of MVLF, (not proposed to be included) Other entities include Salinas City School District, Salinas Union High School, Hartnell College, Spreckels Memorial District, Monterey County Office of Education School-related entities cannot participate; other entities receive small allocations, not likely to participate Pre-ERAF (Education Revenue Augmentation Fund) distribution (City ERAF adjustment is ~19.0% and County ERAF adjustment is ~40.4%) Source: EPS, Monterey County Auditor Controller (2023)
Taxing
Entity
Tax Rate Area
005-012
Tax Rate Area
005-048
City of Salinas
18.0%
26.5%
County of Monterey
23.1%
18.6%
Other Entities
58.9%
54.9%
Total
100.00%
100.00%
15 EIFD Revenue
Allocation Scenario
Total
City
Allocation
(Present-Value
@ 5%)
Total
County
Allocation
(Present-Value
@ 5%)
Total
City + County Allocation
(Present-Value
@ 5%)
Estimated
Present Value
of EIFD Bond Proceeds + PAYGO Revenues
A) City 100%
$67,034,124
N/A
$67,034,124
$46,800,000
B) City 100% + County 50%
$67,034,124
$25,336,151
$92,370,275
$64,500,000
C) City 100% + County 100%
$67,034,124
$50,672,303
$117,706,427
$82,300,000
City and County allocation do not include allocation from property tax in-lieu of MVLF in-lieu.
Source: EPS (2023)
EIFD Revenue and Bonding Capacity Scenarios
16 CFD Special Tax Scenario
Present Value of CFD Bond Proceeds
Present Value of CFD PAYGO Revenues
Present Value of Total CFD Funding
$2,000 per acre (2% escalation)
$3,100,000
$4,600,000
$7,700,000
Source: EPS (2023)
CFD Revenue and Bonding Capacity Scenarios
17 Potential Funding Component
Low
EIFD
Scenario
High
EIFD
Scenario
EIFD
$56.8M
$82.3M
CFD
$7.7M
$7.7M
Developer Advanced Funding
$48.2M
$48.2M
Summary of Estimated Funding and Financing Sources
Source: EPS (2023)
18 EIFDs Attract Other Funding
(Not Guaranteed)
Other Public Sources
Cap-and-Trade / HCD grant & loan programs (AHSC, IIG, TCC,CERF) Prop 68 parks & open space grants
Prop 1 water/sewer funds
Caltrans ATP / HSIP grants
Federal EDA / DOT / EPA funding
Federal ARPA, Invest Act, IIJ Act
Other Private Sources
Development agreement / impact fees
CFD / benefit assessments
Private investment
Why Pursue EIFD?
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19 Return on Investment: Private sector investment induced by district commitment accelerates growth of net fiscal revenues, job creation, essential infrastructure improvements + Ability to attract additional funds (“OPM”) – tax increment from other entities, federal / state grants / loans Property Tax
Sales Tax
Utility Users Tax
Franchise Fees
Business License Tax
2,889 permanent jobs
10,726 temporary construction-related job-years
Critical infrastructure for ag-industrial investment
20 Potential EIFD Formation Schedule
Tax increment allocation begins fiscal year following district formation Debt issuance, if desired, would occur after a stabilized level of tax increment has been established (~3-5 years) Target Date
Task
Nov / Dec 2023
a) Conduct outreach / discussion among City staff and Council, County staff and Board of Supervisors, private sector stakeholders (e.g., landowners, developers) b) Additional Kosmont analysis, final determination of EIFD boundaries, targeted projects, governing Public Financing Authority (PFA) Board composition Jan / Feb 2024
c) City Council (and potentially County BOS) consider Resolutions of Intention (ROI) to form EIFD and formally establish PFA Board Mar 2024 –
Feb 2025
d) Preparation of guiding Infrastructure Financing Plan (IFP), required public noticing, public meetings and hearings to present the IFP and receive comment, required independent approvals from the PFA, City Council, and County BOS, majority protest opportunity
21 Actions for Consideration
Receive presentation, provide comments and questions
Direct staff to work with Consultant to prepare a Resolution of Intention (ROI) for future Council consideration Consider authorization of Agreement with Kosmont for Financing District Formation Advisory
THANK YOUQuestions?
Kosmont Companies
1601 N. Sepulveda Blvd. #382 Manhattan Beach, CA 90266
Ph: (424) 297-1070 | Fax: (424) 286-4632
www.kosmont.com