CITY OF SAN JOSÉ · CITY COUNCIL STUDY SESSION
Infrastructure Financing Tools
for Economic Development
Community Facilities Districts and
Enhanced Infrastructure Financing Districts
October 2, 2026
Presenters:
Jen Baker - Director, City Manager’s Office of Economic Development and Cultural Affairs J. Guevara - Deputy Director, Public Works
James Fabian - Principal
Anna Sarabian - Principal
Fieldman, Rolapp & Associates -- Municipal Advisor to the City
OVERVIEW
What this study session is — and isn’t
City of San José · Infrastructure Financing Study Session · October 2, 2026 2 Informational
Builds a common understanding of how Community
Facilities Districts (CFDs) and Enhanced Infrastructure Financing Districts (EIFDs) mobilize capital, the
timing and scale of financing, eligible uses, required
approvals, and when each tool fits best.
No action today
Does not establish a CFD or EIFD, authorize debt,
commit City property-tax increment, or approve
funding for any specific development.
By the end, City Council should be able to answer:
1 Why activate an infrastructure financing tool?
2 How do CFDs and EIFDs differ at a high level?
3 How much capital can each tool mobilize?
4 How quickly can each tool lead to funded infrastructure? 5 When is a vote or protest process involved?
6 What infrastructure and costs are eligible?
7 What conditions make each tool effective?
8 When can the tools be combined by phase?
CONTEXT
Why activate an infrastructure financing tool?
City of San José · Infrastructure Financing Study Session · October 2, 2026 3 To unlock private investment that expands the future revenue base and spurs economic growth through public investment in public infrastructure.
Streets Transit Utility systems Public spaces Public facilities Traditional sources
General Fund · enterprise revenues · development impact fees · grants · general obligation or lease financing
The goal
Convert a share of future revenue into
upfront infrastructure that unlocks private
investment.
BACKGROUND
From redevelopment to today’s toolkit
City of San José · Infrastructure Financing Study Session · October 2, 2026 4 1945
Redevelopment agencies
authorized; tax-increment
financing becomes a core
local tool
1982
Mello-Roos Act creates
Community Facilities
Districts (special tax)
2012
RDAs dissolved under ABX1
26, effective Feb. 1;
obligations move to
successor agencies
2014
SB 628 creates EIFDs —
narrower tax increment
with no school-district share
2019
AB 116 removes the EIFD
bond vote in exchange for
enhanced transparency
Before dissolution, RDAs received more than $5 billion a year in property-tax revenue statewide.
AT A GLANCE
CFD vs. EIFD: two different engines
City of San José · Infrastructure Financing Study Session · October 2, 2026 5 Community Facilities District Enhanced Infrastructure Financing District Revenue source Special tax levied on property within the district Share of future property-tax growth (increment) from participating agencies
New tax? Yes No
Approval Two-thirds voter approval, or landowner vote if fewer than 12 registered voters No vote to form; public hearings and a protest process When capacity arrives Relatively early — bonds can be sold before full buildout
Grows as new value reaches the tax roll; lags
development
Eligible uses Broad public capital facilities, local agency-owned, operated, 5+ year useful life
Public capital facilities of communitywide significance, 15+ year useful life
Lead time Variable by type (bonded or services); ongoing annual administration
Public notice and hearing sequence; enhanced
transparency requirements
COMMUNITY FACILITIES DISTRICTS
CFDs create a new, dedicated revenue stream
City of San José · Infrastructure Financing Study Session · October 2, 2026 6 Tailored boundaries
Can include non-contiguous parcels, improvement areas, tax zones, or future annexation areas.
Fixed at formation
A maximum special-tax structure, eligible facilities, and maximum bonded indebtedness.
Reasonable allocation
Special taxes may vary by land use, product type, size, geography, or other factors.
San José’s CFDs have been primarily services districts; the Convention Center Facilities District, which secures bonds, is the exception.
APPROVAL
2/3
voter approval
or a landowner vote (one vote per
acre) when fewer than 12 registered
voters live in the district.
COMMUNITY FACILITIES DISTRICTS
What drives CFD capacity
City of San José · Infrastructure Financing Study Session · October 2, 2026 7 Bond capacity drivers
• Maximum annual special tax at buildout
• Value of land supporting the debt
• Debt-service coverage
• Interest rates
• Development status
• Bond-market conditions
Bonds can be sold relatively early; pricing depends on
project appeal, development momentum, and credit
quality.
COMMUNITY FACILITIES DISTRICTS
What a CFD can fund
City of San José · Infrastructure Financing Study Session · October 2, 2026 8 Eligible capital facilities
Roads Public parking
Street lighting and signals Streetscape
Parks Libraries and cultural facilities
Water and sewer Flood control
Environmental remediation Fire prevention facilities
Certain soft costs Developer impact fees
Also: incremental services such as
enhanced maintenance — but never
supplanting services that existed
before formation.
ILLUSTRATIVE MODEL
CFD scenario: 65 units on one acre
City of San José · Infrastructure Financing Study Session · October 2, 2026 9 Horizontal infrastructure Est. cost
Streets, curb, gutter and sidewalks $1,600,000
Water and sewer extensions $1,000,000
Storm drain & flood control $800,000
Street lighting and signalization $400,000
Landscaping and streetscape $700,000
Undergrounding / utilities $500,000
Total need $5,000,000
$5.0M
bond amount (30 years,
1.25x coverage)
$295K
annual debt service need,
incl. coverage
$4,540
special tax per unit per
year
≈ $378
special tax per unit per
month
Debt capacity check: ~$40M assessed value at buildout at up to 3:1 value-to-lien → ~$12M indicative maximum bond capacity, well above the $5M need.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
EIFDs capture growth — they are not a new tax
City of San José · Infrastructure Financing Study Session · October 2, 2026 10 1 Set the base year
Assessed value within the district is fixed when it is
created.
2 Increment grows
As infrastructure supports new development, the 1%
tax above the base — the increment — rises.
3 Allocate and leverage
Participating agencies dedicate all or part of their
share, used pay-as-you-go or to repay bonds.
Yr 0 Yr 2 Yr 4 Yr 6 Yr 8 Yr 10
Illustrative: tax base vs. increment over time
Base-year value Increment
Eligible uses: public capital facilities of communitywide significance with a useful life of 15+ years.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
What can an EIFD fund?
City of San José · Infrastructure Financing Study Session · October 2, 2026 11 Mobility
Roads and bridges
Transit and rail
Bike and pedestrian
Water
Water systems
Sewer and
stormwater
Flood control
Civic
Public safety
facilities
Civic and cultural
Parks and open
space
Development
Affordable housing
Site preparation
Development
infrastructure
Resilience
Climate adaptation
Environmental
cleanup
Rehabilitation and
maintenance
Facilities must be of communitywide significance with a useful life of 15+ years; the Infrastructure Financing Plan names the specific projects.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
Where the 1% property tax goes
City of San José · Infrastructure Financing Study Session · October 2, 2026 12
13.5%
18.0%
44.0%
24.5%
City of San José Santa Clara County
School districts Other taxing entities
13.5%
Maximum capture for a City-only EIFD committing 100% of its eligible increment (of the gross new 1% tax).
• School districts’ 44% share is never available to an EIFD. • The County and eligible special districts may opt in
voluntarily.
• Growth in property tax in lieu of VLF can also count — potentially raising City-only yield materially.
Staff illustration; actual shares vary by tax-rate area and VLF, ERAF, and specialdistrict thresholds (Santa Clara County Controller).
ILLUSTRATIVE EIFD MODEL
From a $10 billion mixed-use development
City of San José · Infrastructure Financing Study Session · October 2, 2026 13 $10.0B
net new assessed
value at buildout
$100M
gross 1% property tax
per year
$13.5M
City increment per
year (13.5% × 100%)
$9.0M
annual debt-service
capacity at 1.50x
~$138M
bond capacity (30
years, 5%)
The key point
$10B of new development does not produce $100M a year for the EIFD. The gross 1% tax is split among taxing entities, and a City-only district keeps only the City’s share.
Gross principal, before issuance costs, reserves,
and capitalized interest.
Federal TIFIA or RRIF loans could lower
borrowing costs for eligible infrastructure.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
How EIFD revenue funds projects
City of San José · Infrastructure Financing Study Session · October 2, 2026 14 Once increment is available, the Public Financing Authority can use it three ways:
1 Pay-as-you-go
Pay eligible costs as annual increment
is collected.
2 Reimbursement
Repay City or developer advances
over time.
3 Bonds
Borrow upfront and repay debt from
future increment.
WHY BONDS USUALLY COME LATER
EIFD formed Project builds Value grows Increment collected Bonds supported Formation does not create immediate bond capacity. Development must occur, value must reach the tax roll, and collections must establish a reliable revenue stream.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
Why EIFD yield varies across jurisdictions
City of San José · Infrastructure Financing Study Session · October 2, 2026 15 New assessed value
How much value is created inside the boundary, and when.
Tax-rate share
Each agency’s slice of the 1% in that tax-rate area.
Participation
Which eligible entities (City, County, special districts) opt in.
Commitment
The percentage of each agency’s increment dedicated.
Compare tax allocation,
participation, development
assumptions, and contribution
rates — not headline bond
amounts.
COMPARISON
City share of increment varies widely
City of San José · Infrastructure Financing Study Session · October 2, 2026 16
12.0%
13.5%
16.0%
22.6%
23.4%
64.0%
Santa Rosa (2025)
San José (study assumption)
Santa Cruz (2024)
Sacramento (2019)
Fresno (2020)
San Francisco* (2023)
City share of property-tax increment
What it means
The same development yields
more where the city holds a larger
share of the 1%, or where the
county and other districts also
contribute.
*San Francisco’s 64% is a combined citycounty share and doesn’t compare directly to city-only shares.
Reference data: BAE Urban Economics.
ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
What makes a strong EIFD candidate?
City of San José · Infrastructure Financing Study Session · October 2, 2026 17 Start with the project
1 Defined area Clear boundaries and a development program 2 Assessed value growth A credible source of future increment 3 Eligible improvements Specific facilities, locations, and costs 4 Project timing Infrastructure schedule lined up with development 5 Communitywide benefit A public purpose beyond a single private parcel
APPROVALS & TIMING
EIFD formation: from feasibility to district
City of San José · Infrastructure Financing Study Session · October 2, 2026 18 1 Evaluate feasibility
and conduct outreach
2 Council establishes
the PFA
Select members; adopt
resolution of intention
3 Prepare the IFP
Infrastructure
Financing Plan
4 Notice and info
meeting
10-day pre-adoption
notice; meeting 30+
days before Hearing 1
5 Hearings and
protest
Two hearings 30+ days
apart; Hearing 2 is the
protest; taxing entities
approve IFP
PROTEST OUTCOME AT HEARING 2
Less than 25%
PFA may adopt the IFP and form the
EIFD
25–50%
Election within 90 days; if a majority
does not vote against, the PFA may
form the EIFD
Over 50%
Proceedings terminate
APPROVALS & TIMING
The Infrastructure Financing Plan (IFP)
City of San José · Infrastructure Financing Study Session · October 2, 2026 19 The IFP is the district’s governing financing document. It sets out:
District and project-area boundaries
Facilities and financial assistance
Location, timing, and estimated costs
Agency tax-increment commitments
Revenue projections and financing strategy
Fiscal impacts and termination provisions
ANNUAL SHARE
Maximum portion each agency may
contribute
TOTAL CAP
Maximum tax dollars allocated to the
district
END DATE
When tax allocation and repayment
authority stop
APPROVALS & TIMING
Votes, protests, and time to capacity
City of San José · Infrastructure Financing Study Session · October 2, 2026 20
CFD EIFD
APPROVAL
Two-thirds voter approval, or a landowner vote (one vote per acre) with fewer than 12 registered voters.
TIME TO FORM IS VARIABLE
Bonded CFD: prepare, form, and administer
Services CFD, plus annual administration
Capacity: available relatively early — bonds can be issued before full buildout.
APPROVAL
No vote to form: public notice and a sequence of hearings, subject to a protest process.
PROTEST THRESHOLDS (SINCE AB 116)
<25%
Insufficient to
challenge
25–50%
Triggers an
election
>50%
Halts proceedings
Capacity: grows only as new value reaches the tax roll — increment lags development.
CHOOSING A TOOL
When does each tool work better?
City of San José · Infrastructure Financing Study Session · October 2, 2026 21 Consideration CFD works better when… EIFD works better when… Timing Infrastructure funding is needed sooner Funding can develop over a longer period Revenue A predictable special tax can be established Significant assessed value growth is expected Fiscal impact Does not redirect future property-tax increment Commits participating agencies’ future increment Ownership Supportive landowner or developer group Broader area or multiple owners Project type Improvements support defined new development Broad, long-term, or regional benefits Scale Defined project can support the special tax Area is large enough to create meaningful increment Partnerships Other taxing entities are not required County or other participation can strengthen capacity Use both when a CFD is needed now and EIFD revenues will develop later.
USING THE TOOLS TOGETHER
Sequencing to build momentum
City of San José · Infrastructure Financing Study Session · October 2, 2026 22 CFD: special-tax bonds available early EIFD: increment grows over time 1 Early infrastructure
investment
2 Unlocks private
development
3 Creates new
assessed value
4 Generates
property-tax
increment
5 Funds later phases
or reimburses
A CFD can provide special-tax-backed financing early in the development cycle; the EIFD becomes increasingly meaningful as new assessed value is placed on the tax roll.
CASE STUDY · CFD + EIFD
Sacramento: Aggie Square
City of San José · Infrastructure Financing Study Session · October 2, 2026 23 $1.1B
project
11 ac
innovation
district
$50M+
community
benefits
PROJECT
Formed 2021; Phase 1 opened May 2025. Anchored by UC Davis and UC Davis Health, developed by Wexford Science & Technology, with the City providing public financing and Oak Park and neighboring communities shaping a $50M+ community benefits agreement.
STRUCTURE
• CFD bonds secured by special taxes to access proceeds sooner • EIFD revenue split: 80% public facilities, 20% affordable housing • FY 2024-25 actual tax increment: $928,793
Lesson: Layering let the project borrow upfront while increment was still developing. Demand, City financing, private-sector expertise, and community support were all critical.
CASE STUDY · EIFD BONDS
West Sacramento: California’s first EIFD bonds
City of San José · Infrastructure Financing Study Session · October 2, 2026 24 2017
EIFD formed
8 yrs
for increment to
grow
2025
$57.225M bonds
PROJECT
14 subareas covering 4,144 acres (25% of the City), supporting mixed-use waterfront development and public infrastructure.
STRUCTURE
City tax increment supports debt service; proceeds programmed for streets, parks, and a new police station.
Lesson: The EIFD had scale, a diverse tax base, and eight years for increment to grow. Formation and bond issuance did not happen at the same time.
CASE STUDIES · EARLY - STAGE EIFDS
Placentia and Eastern Coachella Valley
City of San José · Infrastructure Financing Study Session · October 2, 2026 25
PLACENTIA
Formed 2019. Old Town and future Metrolink-area streetscape, pedestrian, landscaping, and lighting improvements.
City and County both pledge tax increment
$233,999 FY 2024-2025 actual increment
Lesson: County participation helps, but low early increment, construction costs, and interest rates can still delay bonds.
EASTERN COACHELLA VALLEY (RIVERSIDE COUNTY)
Formed 2023. 91,000+ acre district targeting water, wastewater, transportation, broadband, Salton Sea, housing, and community facilities.
Receives 20% of County increment, capped at $90M
$0 FY 2025-2026 actual increment
Lesson: A large boundary creates potential, not cash flow.
Bonds still need value growth and projects ready to move.
CASE STUDY · RELATED TOOL
San Francisco: Treasure Island IRFD
City of San José · Infrastructure Financing Study Session · October 2, 2026 26 Infrastructure and Revitalization Financing District
Project: Formed 2017 to redevelop the former Naval Station into a mixed-use community with 8,000 homes and 300 acres of parks and open space.
Structure: Five project areas, each starting its own tax-increment clock as it develops.
Feature IRFD EIFD
Governance City/County legislative body Separate Public Financing Authority Flexibility Multiple project areas with separate
timelines; can annex No comparable provision
Bond approval 2/3 voter approval No bond vote since AB 116 (2019) Best fit Large, phased redevelopment or
military base reuse
Fixed-boundary infrastructure and
economic development
Lesson: For large, phased
redevelopment, financing can grow
with the project instead of starting
one fixed clock for the whole district.
EVALUATION CRITERIA
Questions to ask of any future proposal
City of San José · Infrastructure Financing Study Session · October 2, 2026 27 Necessity
Does the investment enable or
accelerate development that wouldn’t
otherwise happen?
Public benefit
Do the benefits justify dedicating future
revenue or imposing a special tax?
Timing
Do resources arrive when infrastructure
funding is actually needed?
Alignment
Do boundaries, tax structures, and uses
match costs to those who benefit?
Partnership
Does other agencies’ participation
improve feasibility on fair terms?
Resilience
Does the plan hold under slower
growth, lower values, or higher rates?
FOR SAN JOSÉ
Questions to answer before choosing a tool
City of San José · Infrastructure Financing Study Session · October 2, 2026 28 1 What infrastructure must be funded, and
when is the money needed? 2 Who benefits from the improvements, and who should bear the cost? 3 How much property-tax increment would San
José actually receive? 4 What future General Fund revenue would be redirected? 5 Would the County or another taxing entity
participate? 6 Is development certain enough to support bonds, or only pay-as-you-go? The answer may be a CFD, an EIFD — or a layered financing strategy.
Discussion
Council questions and direction
Jen Baker
Director, Office of Economic Development and Cultural Affairs J. Guevara
Deputy Director, Public Works
James Fabian, Principal
Anna Sarabian, Principal
Fieldman, Rolapp & Associates -- Municipal Advisor to the City CFD
A new special tax; capacity early
EIFD
Captured growth; capacity builds over
time
Together
Financing matched to project phases