Enhanced Infrastructure Financing District
TAX INCREMENT COMMITMENT
November 19, 2024
City Council
1 2
• Financing tool for public infrastructure
and private property improvements
• Source of tax increment:
Cites, counties and special districts
may allocate all or a portion of tax
increment generated by existing 1% ad
valorem property tax and increases in
assessed property value (AV) in the
EIFD above the base year AV.
• NO NEW TAXES.
• NO additional property taxes imposed
EIFD: Enhanced Infrastructure Financing District
EIFD: Formation Process
3 City Council Meeting – April 25, 2023:
• Resolution of Intention (ROI) - Adopted
• Approved EIFD boundaries
• Identified types of public facilities and other projects of community wide significance to be financed
• Identified goals of EIFD – address shortfalls in funding for public capital facilities and other projects that promote economic development in EIFD • Public Financing Authority (PFA) – Established
• 2 City Council members, 2 County Supervisors, 3 members of the public • Oversees development of Infrastructure Financing Plan (IFP); process includes decision points for City and County
• Implements Infrastructure Financing Plan (IFP) after approval by City and County
4 Downtown Station
Area Specific Plan
Downtown
Community
Benefit District
Railroad Square
Community
Benefit District
EIFD Boundary
EIFD: Boundary
5 EIFD: Boundary
6 EIFD: Sonoma County EIFD Policy
1. The City’s contribution of property tax increment as a percentage must be greater than or equal to the County’s property tax increment contribution.
2. The County will not contribute 100 percent of its property tax increment.
3. A fiscal analysis must be conducted by the City and must demonstrate a positive net impact to the County General Fund that is attributable to the tax revenue generated from the proposed EIFD and should account for avoided costs resulting from EIFD- funded projects.
7 EIFD: Sonoma County EIFD Policy
4. In addition to supporting economic development, projects in the proposed EIFD must align with established Board strategic priorities in one or more of the following areas: a) affordable housing, b) climate adaptation and resilience, c) transit-oriented development, d) active transportation, or e) advancing racial and social equity.
5. An EIFD proposal must be consistent with Division 2 of Title 5 of the California Government Code (Section 53398.5 - 53398.88), which authorizes the formation of EIFDs.
8 IFP Elements
EIFD: Infrastructure Financing Plan (IFP)
a. A map and legal description of the proposed EIFD.
b. A description of the public facilities and other forms of development or public assistance to be undertaken within the EIFD.
c. A finding that the improvements to be funded are of communitywide significance and provide significant benefits to an area larger than the EIFD. d. A financing section containing a series of elements, including projected EIFD tax revenues and construction revenues, a limit on revenues collected, and the period of time the EIFD will be in existence (not to exceed 45 years after the approval of a bond measure by the PFA), and an analysis of the fiscal impacts of the EIFD on the local public agencies participating in the EIFD.
e. The EIFD's goals for each public improvement financed by the EIFD. 9 IFP Status
• Draft document created
• Review of 25%/50%/75% tax increment commitment placeholders utilized for City and County to develop cash flow projections • August 20, 2024 – Board of Supervisors committed 25% of County increment to district
• Staff seeking commitment on the City tax increment to include in the draft IFP that will be presented through a series of public meetings and hearings.
EIFD: Infrastructure Financing Plan (IFP)
10 EIFD: IFP Adoption Timeline
1. City/County identify projects to be funded by EIFD and percentage of tax increment allocated to EIFD
• Board of Supervisors provided feedback on August 20th • City Council - November 2024
2. Introduction of draft Infrastructure Financing Plan (IFP) at Public Financing Authority (PFA) public meeting
• January 2025
3. PFA Public Hearings (receive comments and modify, reject or accept IFP) • First quarter of 2025
4. City Council and Board of Supervisors (accept or reject IFP) • April/May of 2025
5. PFA approves IFP and adopts Resolution of Formation
• June of 2025
11 EIFD: Project List – Code Allowances
• Roads, highways,
streets/streetscapes, parking
facilities, and transit facilities
• Affordable housing
• Internet access services
• Childcare facilities
• Libraries
• Parks, open space, and
recreational facilities
• Improvements related to fighting
climate change
• Brownfield restoration and other
environmental mitigation
• Transit priority facilities
• Sewer, reclamation, and water
facilities
• Solid waste facilities
• Flood control facilities, retention
bases, and drainage channels
The district shall finance only public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community, including, but not limited to, the following:
12 Project Type Amount
City
Property
County
Property
Private
Property
Railroad Square/Downtown Connectivity 45%
Reprogramming and Activation of Comstock Mall 17.5%
Activation and Beautification of Existing Right of Way 17.5% Affordable Housing 20%
Total 100%
Redevelopment of Fairgrounds (multiple uses) TBD
Conference, Performing Arts or Entertainment Ctr. TBD
EIFD: Potential Project List Discussed with PFA
13 Project Type
Percentage of Funds
Collected
Streetscaping * 40%
Placemaking * 40%
Affordable Housing ** 20%
Total 100%
Commercial Private Development Project
(Conference, Performing Arts or Entertainment Center) TBD EIFD: Potential Project Categories
*Projects that support connectivity between Downtown and Railroad Square **Units must be deed restricted at specific affordability levels 14 EIFD: Revenue Assumptions
Percentage of Increment Directed To District
• 25% of increment committed by the County
• 50% City commitment used as placeholder
• 50% of City increment directed to the General Fund
Growth Assumptions within the District
• 4% increase in assessed value of residential land uses • 3% increase in assessed value of Non-residential land uses Cumulative EIFD Revenue
• $78 mil (2025-2070)
• 5% to administrative costs
15 EIFD: Benefits
Productivity of Investments in High Density/High Revenue Areas • Investments in densely populated commercial zones typically produce higher return per acre
• Improving urban environment can encourage growth of small business • Collectively small businesses can generate more economic value than large single use development
• Enhancements to smaller high-density areas are adaptable and can accommodate shifts in community
16 EIFD: Benefits
Economic Multiplier Effect and Value Generation
• Public investment are known to boost economic activity • Each dollar spent generates economic activity
• Multiplier difficult to determine until projects materialize Qualitative Socio-Economic and Cultural Benefits
• Investments in streetscaping and placemaking elevate the area’s aesthetics • Enhances visitor experience and community pride
17 EIFD: General Fund Fiscal Impact
• Property tax and VLF comprise 26.9% of ongoing operational revenue • Growth of revenue is included in City’s long range financial forecast • Immediate impacts from the diversion of revenue to the General Fund is difficult to predict
• Effected by timing of development and property tax growth • At 50% of the increment, the long-term contribution from the General Fund is anticipated to be $44,559,000 through 2070
• Projects will require long lead time to deliver due to revenue slowly building over time
• We could expect a $4,536,000 project in 2034
18 EIFD: Recommendation
It is recommended by the Departments of Planning and Economic Development and Finance that the Council, by resolution, set forth the maximum portion of the City’s property tax increment to be included in the Downtown Enhanced Infrastructure Financing District’s draft Infrastructure Financing Plan to fifty percent (50%) of the total property tax increment collected within the district’s boundaries. 19 EIFD: Recommendation
Questions and Comments
Gabe Osburn
Planning and Economic Development Director
[email protected]