Agenda Item No. 7
CITY OF YUCAIPA
AGENDA REPORT
TO: Honorable Mayor and City Council
FROM: Fermin Preciado, Director of Development Services/City Engineer •� Benjamin J. Matlock, Planning Manager/City Planner
FOR: City Council Meeting of November 28, 2022
SUBJECT: Enhanced Infrastructure Finance District Resolution of Intention RECOMMENDATION:
That the City Council:
Adopt Resolution 2022-60, a Resolution declaring its intention to establish the Yucaipa Enhanced Infrastructure Financing District (EIFD) and establishing the Yucaipa EIFD Public Financing Authority (PFA); and
2. Approve the organization of the Public Financing Authority Board, which would consist of two Council Members, one additional Council Member that would serve as an alternate Board member, and one additional member of the public, direct staff to solicit candidates for the member at large and then return to Council for the formal appointments to the Board; and, Find that the adoption of the Resolution of Intention and establishment of the Public Financing Authority are exempt from the California Environmental Quality Act ("CEQA") as these actions do not constitute a "project" pursuant to CEQA Guidelines Sections 15378(b)(4) and 15378(b)(5), and that these actions are also exempt from the requirements of CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines.
BACKGROUND:
An Enhanced Infrastructure Finance District ("EIFD") is a governmental entity that may be established by a City, County, or through a partnership between the two, that uses future incremental revenue from existing tax rates to help fund and complete public capital facilities and infrastructure projects, as well as other specified projects of communitywide significance, that provide a significant benefit to the properties within the EIFD as well as the surrounding community. EIFDs are funded by capturing all or a portion of the future property tax increment revenue (i.e. the difference in property taxes owed prior to and post establishment of the EIFD) generated within the boundaries of the district. The EIFD may finance projects through the issuance of bonds or under a "pay -go" model where money is spent as it is collected. The requirements for the City's establishment of an EIFD are set forth in California Government Code Sections 53398.50, and following (referred to as the "EIFD -152-
Enhanced Infrastructure Financing District Resolution of Intent City Council Meeting of November 28, 2022
Law"). The following chart illustrates how tax increment financing (TIF) captures that new revenue from new development into the EIFD (note these dollars are for illustrative purposes only):
S700M
S600M
S500M
S400M Period of New
Incremental A/V from Increment
Assessed Value
Development
New Development Available to
P
(A/V) within
S300M
TIF District
TIF District
Boundaries
S200M
Incremental Growth
S100M ..,,
of Existing A/V
Baseline A/V
SOM ...
�...,.,
0 5 10
15 20 25 30 35 40 45
Years from District Formation
kos1110 Note: Illustrative. Conservative 2% growth of existing assessed value (A/V) shown; does not include mark -to -market increases associated with property sales.
On January 12, 2015, the City Council conducted a Study Session and considered various financing alternatives for the installation and/or construction of public facilities and certain infrastructure improvements and directed staff to return to Council with any costs associated with establishing one of the financing alternatives. Included in that Study Session was a comprehensive discussion regarding the use of EIFDs, among other financing alternatives, which had only recently been established following approval of Senate Bill (SB) 628 in 2014. SB 628 was to create this new type of public financing tool an appropriate successor tool to the former Redevelopment Agency (RDA) financing mechanisms after they were dissolved by the state in 2011. It provides local governments an intriguing new tool in economic development, although not at the same level of the former RDAs.
Following that study session, the City further explored the creation of an EIFD in 2015 to fund certain projects within the Freeway Corridor Specific Plan and the College Village Overlay. However, because this was a new tool, the County of San Bernardino (County) was reluctant to support the formation of a EIFD until successes with this tool were made elsewhere in the state. Since that time, EIFDs have been successfully formed throughout the state. Further, a recent EIFD was formed in Rancho Cucamonga with provisions that may allow for a future partnership with the County.
In 2021, SCAG awarded the City a grant to study the formation of an EIFD that would encompass specific project areas needing infrastructure and that would address the City's 2021-2029 RHNA requirements. These areas include the Crafton Hills College Overlay District and Freeway Corridor Specific Plan, among others. The EIFD has been included in the City's 6t' Cycle Housing Element as a potential tool that can fund necessary projects that would support the development of these areas.
A Study Session was then held on the City Council Meeting of August 22, 2022, to provide City Council and interested parties an opportunity to discuss EIFDs, and for Council to provide direction -153-
Enhanced Infrastructure Financing District Resolution of Intent City Council Meeting of November 28, 2022
to staff as may be deemed appropriate. The City Council provided direction to further explore EIFDs as another tool for the City. In addition, additional outreach was completed on September 22, 2022, which included engaging property owners that may be within a future EIFD, and a public workshop was held at the November 3, 2022, Economic Development Advisory Committee (EDAC) meeting.
The EIFD was well received by the property owners, who also noted that roadway/freeway infrastructure were key elements of value for potential EIFD projects. The EDAC meeting also included favorable comments, though they ultimately voted to continue the item to allow additional time to review the materials and further discuss the topic. Staff will return to EDAC for any further input.
DISCUSSION:
As part of the next steps of the EIFD process, a Resolution of Intention (ROI) will need to be adopted for allow for the formation steps to occur, which will include additional opportunities for the public to comment. The adoption of the City Council's ROI, which is provided as an attachment, will provide for the following:
Preliminary boundaries of the EIFD. The proposed EIFD boundaries are noted in color in Exhibit A of the Resolution of Intention. Though the exact boundaries of the EIFD are subject to further review and refinement as the formation process continues, the current boundary is focused on the Freeway Corridor Specific Plan area and the College Village opportunity site area (properties with potential for new development or rehabilitation). The land included in these boundaries totals approximately 1,334 acres (approximately 7% of citywide acreage) and approximately $25 million in existing assessed property value (which currently only represents approximately 1 % of citywide assessed value).
2. The public facilities and development proposed to be financed by the EIFD. The activities listed under the Resolution of Intention include all eligible activities under the EIFD legislation and are listed in Exhibit B to the Resolution of Intention (more specific projects will be delineated in the required Infrastructure Financing Plan prior to the district formation).
3. Use of Incremental Tax Revenue. The ROI anticipates that portion of the City property tax increment revenue generated within the EIFD will be allocated to the EIFD. In general, the City receives approximately 24 cents of every property tax dollar, plus the equivalent of approximately 11 cents in property tax in lieu of motor vehicle license fees (MVLF). A portion of the incremental growth of these revenue streams would be directed into the EIFD, with the exact amounts to be determined in future resolutions adopted by the City Council.
4. In the future, should another taxing entity such as the County of San Bernardino participate in the EIFD, a portion of that taxing entity's property tax increment revenue will also be contributed to the EIFD. The exact percentage of tax increment recommended to be contributed by the City is still being analyzed, and that final decision will be made by the City Council at hearings toward the end of the formation process. -154-
Enhanced Infrastructure Financing District Resolution of Intent City Council Meeting of November 28, 2022
Establishes a Public Financing Authority to serve as the governing board of the EIFD. The PFA membership is comprised initially of three members of the City Council and two public members. Alternate Board members will also be appointed to represent the City Council in the absence of a regular member.
6. If another taxing entity wishes to participate in the EIFD after the initial formation (such as the County of San Bernardino), the PFA membership will be revised to include members from that new entity in accordance with the resolution.
7. Sets a time and place for the first public hearing on the EIFD to be conducted by the Public Financing Authority. The first public hearing is scheduled for April 24, 2023, at 5:00 p.m. in the City Hall Council Chambers.
Approval of the Resolution of Intention and subsequent appointment to the PFA will begin a series of activities that will take place over the next several months, primarily by the PFA Board. The following schedule outlines the various key tasks and milestones in the formation process. As the schedule indicates, the final City Council approvals follow later in Spring and Summer of 2023:
Task
Target Date
Notes
Study Session with Council
August 2022
Held already
Study Session with EDAC
November 2022
Held already
Initial meeting of PFA
PFA will review the EIFD, adopt
February 2023
bylaws, direct the preparation of the
draft Infrastructure Financing Plan
IFP
PFA meets to review draft IFP
March 2023
Presentation to Planning Commission
Statute requires that the Planning
on EIFD and draft Infrastructure
March/April 2023
Commission be informed about the IFP
Financing Plan (IFP)
and review the CEQA documentation
PFA holds Public Hearing #1
April 2023
Written and oral comments taken on
IFP; no action taken
Consideration by the City Council to
adopt the resolution approving the IFP
April/May 2023
and allocation of property tax increment
The Infrastructure Financing Plan (IFP) referenced in the timeline above becomes the roadmap for the work to be accomplished by the EIFD. The IFP will analyze the tax increment anticipated to be generated by the properties in the EIFD boundary, consider the cost of various infrastructure options to be considered for investment, evaluate the bonding capacity created by the tax increment generated, and provide a plan for how the EIFD will capture tax increment to fund infrastructure investments.
The IFP contents are currently under development and will be provided in draft format to the public, PFA, City Council, and Planning Commission in accordance with the schedule above. -155-
Enhanced Infrastructure Financing District Resolution of Intent City Council Meeting of November 28, 2022
Public information and outreach are also an important part of the EIFD formation process. Work has already begun on various public information materials and an information page on the City Website's Economic Development Section that will serve as a resource to interested stakeholders. Landowners and residents within the EIFD boundaries will also receive mailed notification of the process, and public hearings will be advertised as well. In the event of a majority protest by property owners or residents within the boundaries, the formation proceedings would be discontinued.
Key projects that have been discussed include the following:
• Wildwood Interchange
• Drainage Improvements
• Uptown Parking Structure
• Community Library (local match)
• Other transportation improvements
ENVIRONMENTAL REVIEW:
The City Council's adoption of the Resolution of Intention and establishment of the Public Financing Authority are exempt from the California Environmental Quality Act ("CEQA") as actions solely related to the creation of a government funding mechanism and the administrative or organizational activities of the City. Therefore, these actions do not constitute a "project" pursuant to CEQA Guidelines Sections 15378(b)(4) and 15378(b)(5). Neither of these actions could result in a physical change in the environment because the City has not committed itself to any specific project(s) that could be funded by the EIFD. Further, these actions are also exempt from the requirements of CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines as it can be seen with certainty that there is no possibility that they will have a significant effect on the environment. However, future actions (such as the approval of infrastructure improvements using funding from the EIFD) will be subject to environmental review in accordance with CEQA.
FISCAL IMPACT:
There is no immediate fiscal impact for establishing the Yucaipa EIFD or PFA. If ultimately established, the EIFD would create the opportunity to use tax increment financing to fund targeted infrastructure investments in the City. Further information regarding fiscal impact will be analyzed as part of the development of the Infrastructure Financing Plan (IFP), which will be presented to the PFA and City Council as noted in the timeline above
Approved by:
Attachments: Resolution 2022-60
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RESOLUTION NO. 2022-60
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF YUCAIPA
DECLARING ITS INTENTION TO ESTABLISH THE YUCAIPA
ENHANCED INFRASTRUCTURE FINANCING DISTRICT TO FINANCE
THE CONSTRUCTION, REPAIR, ACQUISITION, AND/OR
MAINTENANCE OF CAPITAL IMPROVEMENTS AND FACILITIES,
INCLUDING THE ACQUISITION AND/OR REMEDIATION OF LAND
FOR SUCH IMPROVEMENTS AND FACILITIES; ESTABLISHING A
PUBLIC FINANCING AUTHORITY; AND AUTHORIZING CERTAIN
OTHER ACTIONS RELATED THERETO
WHEREAS, SB 628, effective as of January 1, 2015, allows a city or county to create a separate government entity known as an "Enhanced Infrastructure Financing District" (EIFD) within a defined area to finance certain infrastructure projects with community -wide benefits; and WHEREAS, pursuant to Chapter 2.99 of Part 1 of Division 2 of Title 5 of the California Government Code (commencing with Section 53398.50) (the "EIFD Law"), the City Council of the City of Yucaipa ("Council") is authorized to initiate the process to establish an EIFD; and, WHEREAS, EIFDs are financed through tax increment generated from the growth in property taxes collected from within a designated district boundary. There are no new taxes or impacts to the property owner within an established EIFD; and, WHEREAS, EIFD tax increment may be used to pay for a variety of public facilities and other projects authorized by the EIFD Law within the established EIFD boundaries or outside of the established EIFD boundaries if there is a tangible connection to the work of the EIFD, including but not limited to infrastructure such as roads, utilities, streetscapes, parks and public recreation, or other community facilities. Funding may also be used to facilitate public -private activities by enticing development with infrastructure development and expansion, including new industrial - manufacturing facility construction and repair, and brownfields remediation. Affordable housing, including affordable senior housing, is also an eligible activity; and, WHEREAS, the City was awarded a grant from the Southern California Association of Governments (SCAG) through its Regional Early Action Plan (REAP) technical advisory program for Tax Increment Financing Advisory Services. SCAG then retained Kosmont & Associates, Inc.
DBA Kosmont Companies as the consultant to provide the necessary technical analysis and advisory; and,
WHEREAS, on August 22, 2022, City Council expressed preliminary interest and direction for City staff during a City Council Meeting to move forward with initial EIFD formation activities; and,
WHEREAS, the prerequisites set forth in Government Code Section 53398.54 have been complied with prior to the City initiating the creation of or participating in the governance of the EIFD, and the City will provide the required certification to the California Department of Finance ("DOF") in accordance with the EIFD Law; and,
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WHEREAS, the proposed boundaries of the Yucaipa EIFD are identified on Exhibit A entitled "Proposed Yucaipa EIFD Boundary", a copy which is on file in the office of the City Clerk; and,
WHEREAS, the EIFD will be governed by a Public Financing Authority ("PFA") board which will be responsible for implementing the Infrastructure Financing Plan for the EIFD ("IFP"), and the PFA is required to be established by the City Council at the same time that the Council adopts its intention to form the proposed EIFD; and,
WHEREAS, this action is exempt from the California Environmental Quality Act ("CEQA") as an action solely related to financing and is not in -and -of itself a "project" (pursuant to CEQA Guidelines Section 15378) since it does not result in a physical change in the environment because the City has not committed itself to fund any specific projects through the EIFD. However, future actions (such as the funding and/or approval of infrastructure improvements using funding from the EIFD) will be subject to environmental review in accordance with CEQA.
NOW, THEREFORE, the Yucaipa City Council does hereby find, determine, conclude, and resolve as follows:
Section 1. The City Council of the City of Yucaipa proposes and intends to cause the establishment of an EIFD under the provisions of the EIFD Law.
Section 2. The name proposed for the EIFD shall be the "Yucaipa Enhanced Infrastructure Financing District."
Section 3. The proposed boundaries of the EIFD are as shown on Exhibit A attached hereto, which are preliminarily approved and on file in the office of the City Clerk and incorporated herein by reference.
Section 4. The types of public facilities and development proposed to be financed or assisted by the EIFD pursuant to the EIFD Law are those listed on Exhibit B, attached hereto and incorporated herein by reference.
Section 5. The City Council hereby finds that the EIFD is necessary for the area within the boundaries of the EIFD and the City. The City Council's stated goals for the EIFD are to create a means by which to assist in the provision of public facilities or other specified projects of communitywide significance that provide significant benefits to, promote economic development of, and enhance quality of life within, the boundaries of the EIFD or the surrounding community.
Section 6. The City Council hereby declares that, pursuant to the EIFD Law and if approved by resolution pursuant to Government Code Section 53398.68, incremental property tax revenue from the City of Yucaipa and some or all other affected taxing entities within the EIFD may be used to finance the activities described in Section 4 and listed on Exhibit B. The incremental property tax financing will be described in an IFP to be prepared for approval by the PFA, the City Council, and the legislative bodies of all participating taxing entities under EIFD Law.
Section 7. The City or County of San Bernardino may allocate tax revenues derived -158-
from local sales and use taxes imposed pursuant to the Bradley -Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) or transactions and use taxes imposed in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code) to the EIFD pursuant to Government Code Section 53398.75.5, if applicable. The City Council does not intend to contribute sales and use taxes or transactions and use taxes to the EIFD.
Section 8. The City Council hereby establishes the "Public Financing Authority of the Yucaipa Enhanced Infrastructure Financing District" to serve as the governing board of the EIFD:
A. The PFA membership shall be comprised initially of three members of the City Council appointed by the City Council and two public members selected by the City Council. Members shall serve at the pleasure of the City Council, as the case may be, and shall serve until their successor assumes office.
B. The City Council further declares that, pursuant to Government Code Section 53398.51.1, should another taxing entity agree to participate as a taxing entity, then the PFA membership shall be modified in accordance with Government Code Section 53398.51.1. For example, if the County of San Bernardino ("County") agrees to participate as a taxing entity and the participating taxing entities consist of the City and the County, then the PFA membership shall be modified to be two members of the City Council, one member of the County Board of Supervisors ("Board of Supervisors"), and two public members jointly selected by the City Council and the Board of Supervisors. Members shall serve at the pleasure of their respective appointing legislative bodies and shall serve until their successor assumes office.
C. The legislative body of each participating taxing entity may appoint one of its members to be an alternate member of the PFA board who may serve and vote in place of a member who is absent or disqualifies themselves from participating in a meeting of the PFA.
D. The members are subject to compliance with the EIFD Law and all applicable ethics laws, including Article 2.4 (commencing with Section 53234) of Chapter 2 of the Government Code.
E. The City Council, and the governing bodies of any other participating entities shall comply with Government Code Section 54974.
Section 8. The City Council hereby sets the time and place for a public hearing of the PFA, the proposed EIFD and IFP, to be held on April 24, 2023, at 5:00 p.m., or as soon thereafter as the matter may be heard, at City Hall Council Chambers, 34272 Yucaipa Boulevard, Yucaipa, CA 92399.
Section 9. Pursuant to Government Code Section 53398.60, the City Clerk is hereby -159-
directed to mail a copy of this Resolution to the PFA and each owner of land (as defined in the EIFD Law), or alternatively with respect to the owners of land may mail a single -page notice of intention identified in Government Code Section 53398.60(b), within the EIFD and to each affected taxing entity (as defined in the EIFD Law). In addition, the City Clerk is hereby directed to cause notice of the public hearing to be published not less than once a week for four successive weeks in a newspaper of general circulation published in the City. The notice shall state that the EIFD will be used to finance public works, briefly describe the facilities, briefly describe the proposed financial arrangements, including the proposed commitment of incremental tax revenue, describe the boundaries of the proposed EIFD and state the day, hour, and place, when and where any persons having any objections to the proposed IFP, or the regularity of any of the prior proceedings, may appear before the PFA and object to the adoption of the proposed IFP.
Section 10. The Successor Agency to the Redevelopment Agency of the City of Yucaipa (Successor Agency) has received a finding of completion, as specified in California Health and Safety Code Section 34179.7.
Section 11. In accordance with Government Code Section 53398.54, the City certifies to the DOF and to the PFA that no former Redevelopment Agency of the City of Yucaipa (Former RDA) assets that are the subject of litigation involving the State of California, where the City or the Successor Agency are a named plaintiff, have been or will be used to benefit any efforts of the EIFD unless the litigation and all possible appeals have been resolved in a court of law. The City Clerk is authorized and directed on behalf of the City to provide or make this certification to the DOF within 10 days after the City Council's action to participate in the EIFD pursuant to Government Code Section 53398.68 or the City Council's action to form the EIFD pursuant to Government Code Section 53398.69, by delivery of a copy of the appropriate Resolution or signing a separate certification, if and as required by the DOF.
Section 12. The State Controller has completed its review as specified in California Health and Safety Code Section 34167.5 of asset transfers between the Former RDA, the City or any other public agency. The Successor Agency and the City have complied with all of the State Controller's findings and orders stemming from such review.
Section 13. This Resolution in no way obligates the PFA to establish any EIFD.
Section 14. If any section, subsection, phrase or clause of this Resolution is for any reason found to be invalid, such section, subsection, phrase or clause shall be severed from, and shall not affect the validity of, all remaining portions of this Resolution that can be given effect without the severed portion.
Section 15. This Resolution shall take effect immediately upon its adoption.
Section 16. The City Manager, or designee, are hereby authorized and directed to take all actions necessary or advisable to give effect to the transactions contemplated by this Resolution.
Section 17. The City Clerk of the City of Yucaipa shall certify as to the adoption of this Resolution.
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PASSED, APPROVED AND ADOPTED by the City Council of the City of Yucaipa at a regular meeting held on the day of 2022 by the following vote:
ATTEST:
Jennifer Crawford, City Clerk
APPROVED AS TO FORM:
David M. Snow, City Attorney
David Avila, Mayor
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EXHIBIT A
Proposed Yucaipa EIFD Boundary
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The parcels within the blue boundary on the map are included in the preliminary EIFD boundaries. A complete list of the Assessor's Parcel Numbers (APN's) included in the EIFD
boundaries is on file in the City Clerk's Office and is incorporated herein by reference. -162-
EXHIBIT B
CITY OF YUCAIPA
ENHANCED INFRASTRUCTURE FINANCING DISTRICT
LIST OF AUTHORIZED PUBLIC FACILITIES
The Yucaipa EIFD may finance the purchase, construction, expansion, improvement, seismic retrofit, or rehabilitation of any real tangible property with an estimated useful life of 15 years or longer which are public capital facilities or other projects of community -wide significance that provide significant benefits to the EIFD or the surrounding community. The EIFD may also finance the ongoing or capitalized costs to maintain public capital facilities financed in whole or in part by the EIFD. Facilities funded may be located outside the boundaries of the EIFD, as long as they have a tangible connection to the work of the EIFD as detailed in the infrastructure financing plan.
The EIFD may also finance the planning and design work that is directly related to the purchase, construction, expansion, or rehabilitation of property. The EIFD may finance costs described in Government Code Sections [53398.52 [list of eligible improvements]] 53398.56 [replacement housing and relocation obligations if required by actions of EIFD] and 53398.57. Projects financed by the EIFD may include, but not be limited to, all of the following:
• Highways, interchanges, and ramps;
• Bridges;
• Arterial streets;
• Parking facilities;
• Transit facilities;
• Parks, recreational facilities, and open space;
• Sewage treatment and water reclamation plants and interceptor pipes; • Facilities for the collection and treatment of water for urban uses; • Facilities for the transfer and disposal of solid waste, including transfer stations and vehicles;
• Storm water conveyance and collection facilities;
• Flood control levees and dams, retention basins, and drainage channels; • Child care facilities;
• Libraries;
• Broadband and telecommunications infrastructure;
• Sidewalks and streetscape improvements;
• Bicycle lanes and paths;
• Public art;
• Corporation yards;
• Police facilities;
• Brownfield restoration and other environmental mitigation; • Affordable housing as authorized under the EIFD Law;
• Projects that implement a sustainable communities strategy and transit priority projects; • Acquisition, construction, or repair of industrial structures for private use; • Acquisition, construction, or repair of commercial structures by the small business occupant of such structures, if such acquisition, construction, or repair is for purposes of fostering economic recovery from the COVID-19 pandemic and of ensuring the long-term economic sustainability of small businesses;
• Projects that enable communities to adapt to the impacts of climate change, including, but not limited to, higher average temperatures, decreased air and water quality, the spread of infectious and vector -borne diseases, other public health impacts, extreme weather events, sea level rise, flooding, heat waves, wildfires, and drought; -163-
EXHIBIT B
CITY OF YUCAIPA
ENHANCED INFRASTRUCTURE FINANCING DISTRICT
LIST OF AUTHORIZED PUBLIC FACILITIES
• Facilities in which nonprofit community organizations provide health, youth, homeless, and social services.
Other Expenses
In addition to the direct costs of the above facilities, other incidental expenses as authorized by the EIFD Law, including, but not limited to, the cost of environmental evaluation and environmental remediation; engineering and surveying; construction staking; utility relocation and demolition costs incidental to the construction of the facilities; costs of project/construction management; costs (including the costs of legal services) associated with the creation of the EIFD; costs of issuance of bonds or other debt of the EIFD, of a community facilities district of the City, or of any other public agency for authorized facilities and payment of debt service thereon; financing costs of improvements incurred by developers until reimbursement from the EIFD; costs incurred by the County or the EIFD in connection with the division of taxes pursuant to Government Code Section 53398.75; or costs otherwise incurred in order to carry out the authorized purposes of the EIFD; reimbursements to other areas for facilities serving the EIFD; and any other expenses incidental to the formation and implementation of the EIFD and to the construction, completion, inspection and acquisition of the authorized facilities. -164-