To: Board of Supervisors
Department or Agency Name(s): County Administrator | Christina Rivera & Christel Querijero
Staff Name and Phone Number: 707-565-2431
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
City of Santa Rosa Enhanced Infrastructure Financing District (Downtown Business Corridor)
End
Recommended Action:
Recommended action
Appoint Chair Chris Coursey and Vice-chair David Rabbitt to the Public Financing Authority (PFA) established by the City of Santa Rosa for the purpose of developing the Infrastructure Financing Plan (IFP) associated with the City’s intention to form an Enhanced Infrastructure Financing District - Downtown Business Corridor (EIFD).
end
Executive Summary:
An Enhanced Infrastructure Financing District (EIFD) allows for a separate government entity to be created by a city or county within a defined area to finance infrastructure projects with community-wide benefits. EIFDs are financed through tax increment generated from the growth in property taxes collected from within the designated district boundary.
On April 25, 2023, the City of Santa Rosa Council adopted a Resolution of Intention to establish the City of Santa Rosa Enhanced Infrastructure Financing District (Downtown Business Corridor) (EIFD). EIFD law requires the establishment of a Public Financing Authority (PFA) to serve as the governing body of the EIFD. The majority of the PFA’s governing board must consist of members from the legislative bodies of the participating entities, with a minimum of 2 members of the public chosen by the legislative bodies. The City and the County are the primary eligible taxing entities within the boundary of the proposed area of the EIFD and the City has requested the County to join and serve on the governing board.
Staff recommends the Board appoint the Chair and Vice-Chair to fill two of the seven seats of the PFA for the City of Santa Rosa Enhanced Infrastructure Financing District (Downtown Business Corridor). This will allow the County to participate in the PFA and give input into future decision-making. This action does not constitute agreement to forgo future property tax growth, should an EIFD be officially established. The PFA must, through a series of public hearings, develop an Infrastructure Financing Plan (IFP) that outlines the EIFD’s investment program including the fiscal impacts to participating jurisdictions.
The IFP will be subject to the review and approval by resolution of the City Council, review, and approval by resolution of the Board of Supervisors, and adoption and implementation by the Public Financing Authority.
Discussion:
An Enhanced Infrastructure Financing District (EIFD) is a financing tool that supports public infrastructure and development. The California Legislature authorized the formation of EIFDs through Senate Bill 628 in 2014, which has since been amended and is codified in Chapter 2.99 of Part 1 of Division 2 of Title 5 of the California Government Code (53398.50).
The City of Santa Rosa has been exploring the opportunity to establish a Downtown Santa Rosa EIFD since 2016 during the development of the City’s Housing Action Plan. Interest was raised again after the 2017 Tubbs Fire event as a viable option to bolster and help economic recovery. In February 2022, the City engaged a consultant to evaluate the opportunity in more detail. The consultant’s report is included as Attachment 1.
City staff presented information on EIFDs to the City’s Economic Development Council Subcommittee on February 14, 2023, and to the Renewal Enterprise District Board on April 3, 2023. On April 25, 2023, the City of Santa Rosa Council adopted a Resolution of Intention to form the City of Santa Rosa Enhanced Infrastructure Financing District (Downtown Business Corridor) to finance the purchase, construction, expansion, improvement, seismic retrofit, or rehabilitation of real property that are projects of communitywide significance and that provide significant benefits to the EIFD or the surrounding community. (Attachment 2 - City Resolution of Intention to Establish City of Santa Rosa (Downtown Business Corridor)).
As noted, the EIFD would be a government entity separate and distinct from the City Council and the Board of Supervisors for the sole purpose of financing public capital facilities and projects of communitywide significance. Section 53398.51.1(b) of the EIFD Law requires that a public financing authority (PFA) be established to serve as the governing body of the EIFD. The City Council established by resolution the Public Financing Authority (PFA) for the Santa Rosa Enhanced Infrastructure Financing District (Downtown Business Corridor) on April 25, 2023.
Since the County receives the largest property tax share of eligible taxing agencies (school districts, which constitute the other major recipient of property tax in the area, are not eligible to participate in EIFDs under state law), the City has requested Board of Supervisors representation in the PFA that will discuss and develop the Infrastructure Finance Plan (IFP).
The IFP will outline the EIFD’s investment program, the fiscal impacts to participating jurisdictions, the details of the projects to be developed, and the assumed growth revenue.
Additional information on EIFDs is available on the City of Santa Rosa website at https://www.srcity.org/3833/Enhanced-Infrastructure-Financing-Distri#WhatIsEIFD <https://www.srcity.org/3833/Enhanced-Infrastructure-Financing-Distri>. The approximate timeline for the Downtown EIFD formation process is as follows:
|
Resolution of Intention and Resolution to form Public Financing Authority (PFA) (City) |
4/25/2023 |
|
PFA Appointments (City) |
5/23/2023 |
|
PFA Appointments (County) |
7/17/2023 |
|
Public meeting to present draft Infrastructure Financing Plan (IFP); public comment |
|
|
PFA holds 1st public hearing |
TBD |
|
PFA holds 2nd public hearing |
TBD |
|
County and City meetings to approve Resolutions approving the IFP |
TBD |
|
PFA holds 3rd public hearing to approve the IFP and adopt Resolution of EIFD Formation |
TBD |
|
Request for Jurisdictional Boundary Change with the State Board of Equalization |
By 12/1/2023 |
Staff Recommendation
The City has indicated an interest to consider EIFD funding for affordable housing projects, among other eligible projects. This interest directly aligns with the County’s Strategic Plan Healthy and Safe Communities goal to collaborate with cities to “…increase affordable housing development near public transportation and easy access to services.” Appointing members to the PFA will allow the County to have input into the Infrastructure Finance Plan that will define the work of a potential EIFD. Participation at this stage does not commit the county to giving up tax increment to a future EIFD. As such, staff recommend appointing members to the PFA to be involved in the process and fully understand the implications of an EIFD.
Using FY 2022-2023 as the EIFD base year, Auditor-Controller-Treasurer-Tax Collector staff prepared EIFD tax increment estimates for 30-year and 45-year terms assuming annual property tax growth rates at 2%, 3%, and 5%. (Attachment 3) The County’s current fiscal projections assume a property tax revenue growth of approximately 4% as a normal annual baseline, although specific expectations fluctuate from year to year and are expected to be lower in FY 2024-25 due to slow property sales. (See November 2022 Fiscal Update <https://sonoma-county.legistar.com/View.ashx?M=F&ID=11416047&GUID=B71F55B2-DACF-4DA9-92B1-E50779986ADD>.) The County significantly relies on property tax revenue to finance the delivery of public services. Given the assumption for fiscal projections at this time, the County may only be able to support an Infrastructure Finance Plan that contributes a portion of future growth to the EIFD, such as 75% of growth above 4% to ensure that County services are not adversely impacted by redirecting future revenue.
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Healthy and Safe Communities
Goal: Goal 3: In collaboration with cities, increase affordable housing development near public transportation and easy access to services.
Objective: Objective 3: Create incentives for developers to promote affordable housing development in the County.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
This item was added after the list of the Board’s Significant Items of Interest calendar was created.
Prior Board Actions:
None
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
There are no fiscal impacts associated with these appointments. The Board will have the opportunity to review and approve the Infrastructure Financing Plan (IFP), which will include the proposed use of the County’s taxing authority future incremental property tax to be dedicated.
Narrative Explanation of Staffing Impacts (If Required):
None
Attachments:
Attachment 1: City of Santa Rosa EIFD Consultant Report
Attachment 2: City of Santa Rosa Resolution of Intention
Attachment 3: ACTTC Tax Increment Calculations
Presentation
Related Items “On File” with the Clerk of the Board:
None