To: Sonoma County Board of Supervisors
Department or Agency Name(s): County Administrator’s Office
Staff Name and Phone Number: Christel Querijero, (707) 565-2431
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Enhanced Infrastructure Financing District (EIFD) Policy
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Recommended Action:
Recommended action
Consider options for a County Enhanced Infrastructure Financing District (EIFD) policy and provide direction to staff.
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Executive Summary:
This item provides a brief overview of Enhanced Infrastructure Financing Districts (EIFD), a type of special tax increment financing (TIF) district that uses a portion of ad-valorem property tax increment revenues from within the boundaries of the proposed district to finance public infrastructure projects for community-wide benefit. In accordance with Section 53398.68(a) of the California Government Code, County participation in any EIFD is voluntary. Given the County’s current participation on the Public Financing Authority established to explore a City of Santa Rosa Downtown Business Corridor EIFD, and the anticipated interest from other jurisdictions, the Board directed staff to develop an EIFD policy to guide the County of Sonoma’s decisions regarding participation as e as a taxing entity.
Discussion:
Senate Bill 628 (2014) authorized the formation of Enhanced Infrastructure Financing Districts, better known as EIFDs, as an improved replacement to Redevelopment Agencies, which were disbanded in 2012. EIFD legislation is codified in California Government Code sections 53398.50-53398.88 (Enhanced Infrastructure Financing District (EIFD) Law).
An EIFD is a type of special tax increment financing (TIF) district that uses a portion of property tax increment revenues generated by the existing 1% ad valorem property taxes levied by counties under Section 1 of Article XIIIA of the California Constitution (Prop 13). Tax increment can also be generated by community growth from within the boundaries of the proposed EIFD and can be used to finance public infrastructure and economic development projects of community-wide significance. Eligible projects typically have a useful life of at least 15 years and include but are not limited to, roads, highways, streets/streetscapes, parking facilities, and transit facilities; affordable housing; internet access services; childcare facilities; libraries; parks and recreational facilities; brownfield restoration and other climate mitigation; sewer and water facilities; solid waste and flood control facilities.
Since SB 628, EIFD requirements have been modified to allow EIFDs to fund climate change adaptation projects, including projects that address conditions that impact public health and extreme weather events (AB 733, 2017); to fund infrastructure maintenance costs on public capital facilities financed in whole or in part by the EIFD (SB 1145, 2018); and to issue bonds without public vote but with increased public engagement requirements (AB 116, 2019). Most recently, there is pending legislation (AB 1819, 2024) that would allow EIFDs to fund wildfire mitigation under certain circumstances, although this proposed amendment is in the very early stages of the legislative process. Tax increment financing works by freezing the ad-valorem property tax revenues within the boundaries of the EIFD that flow to the participating taxing entities, whether a city, county, and/or special district, at the base year, which is the fiscal year the EIFD was created. Additional tax revenue in future years, known as the tax increment, is set aside in a special fund to be used by the EIFD to either pay for infrastructure improvements directly or to pay back bonds issued against the anticipated TIF revenue. Because participation in an EIFD is voluntary, affected taxing entities, such as the County, must consent to participate. School districts are exempt from participation in an EIFD and continue to receive all ongoing tax growth and increment if an EIFD is established in their boundary areas.
Additional tax revenue growth is typically experienced when the assessed value of properties in the defined area increases and/or with new development in the area. EIFDs impose no new taxes and do not result in any new taxes or fees to property owners. Because County participation in any such district is voluntary, any contribution of property taxes to the proposed EIFD requires an approved resolution by the Board of Supervisors.
The City of Santa Rosa approved a resolution of intent to establish an EIFD in the Downtown Santa Rosa area in April 2023. On July 18, 2023, Supervisor Rabbitt and Supervisor Coursey were appointed by the Board to represent the County as members of the Downtown Santa Rosa EIFD Public Financing Authority, the required governing body formed to explore the opportunity. (Board item summary can be found here <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6286187&GUID=1CD93D94-5D4F-4E30-AA12-2CB5A6559F24>.) Since the County would be a principal contributor of property tax revenue to the Downtown Santa Rosa EIFD and other cities may request the Board’s participation in EIFDs, staff recommends that the Board consider adopting an EIFD policy. A policy will guide this Board’s and future Board’s decisions when other jurisdictions request the county to participate in multi-jurisdiction EIFDs.
While many EIFDs are currently active in California, only Los Angeles County has an EIFD policy. Los Angeles County’s EIFD policy is attached for reference (Attachment A). Attachment B is list of options which the Board may consider for a County policy. A County policy would apply to only affected taxing entities, i.e., only those agencies and special districts that agree to participate in the EIFD. Attachment C provides information regarding EIFDs in other jurisdictions, including jurisdiction allocations, and investment projects and goals. Attachment D outlines the EIFD formation process.
Staff seeks the Board’s input on EIFD policy options and direction to work with County Counsel and other County staff to develop a draft EIFD policy. If directed, staff will return to the Board with the draft policy that includes majority direction provided for consideration.
Strategic Plan:
N/A.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
Yes
Due to time constraints, a racial equity analysis was not completed for today’s workshop. A comprehensive analysis would require developing a plan and approach for understanding and analyzing available relevant data and conducting community engagement to determine impacts to affected communities. Should the Board direct staff to draft an EIFD policy, staff will work to develop and implement a plan for further analysis.
Prior Board Actions:
7/18/2023 - Supervisor Coursey and Supervisor Rabbitt appointed to the City of Santa Rosa Downtown Business Corridor EIFD Public Financing Authority
Fiscal Summary
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Narrative Explanation of Fiscal Impacts:
There are no fiscal impacts associated with this policy discussion.
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Narrative Explanation of Staffing Impacts (If Required):
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Attachments:
Attachment A - Los Angeles County Enhanced Infrastructure Financing District Policy
Attachment B - Policy Options for a County Enhanced Infrastructure Financing District Policy
Attachment C - Other Jurisdiction Enhanced Infrastructure Financing Districts
Attachment D - Enhanced Infrastructure Financing District Formation Process
Attachment E - Presentation
Related Items “On File” with the Clerk of the Board:
N/A