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Enhanced Infrastructure Finance Districts and Your Community

Learn about the formation, funding, and governance of Enhanced Infrastructure Finance Districts (EIFDs) and how they can be utilized to meet a wide range of infrastructure needs. This presentation includes case studies and examples of successful EIFD projects.

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Enhanced Infrastructure Finance Districts and Your Community

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  1. Enhanced Infrastructure Finance Districts and Your Community CALED’s 35th Annual Training Conference April 21, 2015 Presented by Constantine Baranoff Jon Goetz Russ Powell Aaron Laurel

  2. Formation of the EIFD Presented byConstantine C. Baranoff, Shareholder

  3. EIFDs are empowered to provide financing for a broad range of infrastructure work Formation process patterned after Mello-Roos Tax Increment INTRODUCTION SOURCES OF FUNDING

  4. FORMATION PROCESS • Process initiated only by city/county although other tax entities may participate • Adopts a resolution of intention which defines the area, facilities

  5. WHAT IS THE IFD PLAN? • The IFD Plan is the heart of the EIFD. • Specifies what type of facilities are funded, tax increment contributions and other revenue sources • Defines when the IFD will cease to exist

  6. FACILITIES WHICH MAY BE FUNDED • Includes the purchase, construction, expansion, improvement, seismic retrofit of any real or tangible property with a useful life of 15 years or greater.

  7. PUBLIC HEARING REQUIREMENT • Once the IFD plan is completed and circulated, it must be approved by the affected taxing entities • School districts may not participate • Resolution of formation is adopted after the hearing • Formation does not require vote of qualified electors

  8. GOVERNANCE OF EIFD • EIFD means a legally constituted government entity separate and apart from the entities which established it. Governed by a public financing authority composed of elected tax entity officials and public

  9. ISSUANCE OF BONDS - REVENUES • In order to issue bonds, a vote of the people is required. Voter approval rate is 55% • Circumstances dictate whether vote is by registered voters or landowners • Tax increment allocated to EIFD supports debt service • Bundling of other revenues

  10. CERTAIN THINGS MUST BE DONE BEFORE THE EIFD PROCESS BEGINS • The EIFD law allows EIFD to overlap the boundaries of former redevelopment projects • Finding of completion from DOF • No redevelopment assets which are proposed to benefit the EIFD are subject to litigation involving the state • State controller completes review

  11. Differences between RDA/EIFD • Tax increment only that which voluntarily contributed • No finding of blight • EIFD does not have eminent domain powers

  12. HOUSING • An EIFD has no mandatory expenditure requirement for affordable housing. However, all housing financed by EIFD must be with a low/moderate affordable housing restriction

  13. CONCLUSION • A fairly simple vehicle which may be utilized to fill a wide variety of infrastructure needs

  14. Modeling Tax Increment Presented by Russ Powell, Senior Vice President

  15. Determine Assessed Values for Project • Identify Project Land Uses • Develop Assumptions for Absorption of Land Uses • Develop Assumptions for Per Unit Values by Land Use Type • Identify EIFD Administrative and/or Project Management Costs • Identify Participating Public Agencies and Tax Increment Pledges

  16. EIFD Project Example

  17. EIFD Project Absorption

  18. EIFD Tax Increment Assumptions • City Tax Increment = 16% • County Tax Increment = 19.5% • Total Tax Increment = 35.5% • Base Year EIFD Admin/Project Management Cost = $100K (Increasing 2% Annually) • Land Use Values per Unit Increase 4% Annually (Net Market Growth • 2% Annual Growth in Assessed Value

  19. EIFD Tax Assessed Value

  20. EIFD Tax Increment by Year

  21. EIFD Cumulative Tax Increment by Year

  22. Use of Tax EIFD Tax Increment • Admin/Project Management Costs Exceed TI in Early Years • TI Used on a Pay-As-You-Go Basis Initially • May Take 7 – 10 Years For Efficient TI Bond Issuance • Other Considerations

  23. Fiscal Impact Analysis • To be Prepared for EIFD Plan • Using TI for Projects Diverts Property Tax from Services/Other Uses • Prepare Fiscal Impact Analysis with TI Calculations • Alternative Service Funding Mechanisms • Other Considerations

  24. WEST SACRAMENTO IFD/EIFD CASE STUDY Aaron Laurel, Economic Development Manager

  25. WEST SACRAMENTO BACKGROUND • City incorporated in 1987 • Redevelopment covered 45% of city • Over its final 10 years, RDA contributed over $60M in TI funds to riverfront area infrastructure • RDA TI investment was doubled by infrastructure grants

  26. WEST SACRAMENTO BRIDGE DISTRICT, 2004

  27. WEST SACRAMENTO BRIDGE DISTRICT, 2014

  28. BRIDGE DISTRICT REDEVELOPMENT PROJECT • Over $60 million project—rail removal, demolition, new roads, streetscape, utilities, parks, & water storage tank. • CFDs formed by property owners, $15 million of redevelopment TIF, & over $30 million in grants.

  29. RESULTS • Over 700 housing units completed or under construction. • Riverfront entertainment venue under construction. • Streetcar construction planned for 2016.

  30. RESPONSE TO RDA ELIMINATION • Mayor formed committee to study post-RDA options • Staff produced Community Investment Action Plan • GOAL: • Replicate RDA’s level of infrastructure investment

  31. RESULTS • Measure G passed by 87%: • $3.5 million/year for projects • Identified IFDs as long-term tax increment solution • Pursued IFD/EIFD legislation: • AB 417 & SB 628

  32. BRIDGE DISTRICT IFD • Development Agreements pledged tax increment for future infrastructure • Unsuccessful litigation vs. State • AB 471 enacted • IFD formed in about 8 months, about $100K in startup costs • Property owner vote with simultaneous bond vote

  33. BRIDGE DISTRICT IFD • IFD projected to out-produce RDA 2:1 • RDA expires in 2037 ($150 million in TI) • IFD expires in 2044 ($325 million in TI) • IFD can pay for same infrastructure items committed to RDA TI • Maintenance CFD formed simultaneously • City now in process of analyzing & forming community-wide EIFD

  34. RECOMMENDATIONS • EIFDs can work on a project-level or area-wide basis—be strategic about district boundaries & potential EIFD projects • Where applicable, form a maintenance/services CFD or PBID as a companion to the EIFD • Consider holding back a portion of district tax increment for EIFD administration • City-county partnerships will be necessary for most EIFDs • (or for any other post-RDA tax increment tool)

  35. OTHER CONSIDERATIONS • EIFDs provide greater incentive for city-county partnerships than under redevelopment • Cities and counties share the upside • The return of traditional redevelopment tax increment financing is unlikely • Focus on making the most of EIFDs & improvements through follow-up legislation

  36. EIFD Hypotheticals

  37. URBAN INFILL PROJECT - HYPOTHETICAL • Case Study ---- a duo of cities and one county are interested in revitalizing a decaying inner core by making the street more livable - include streetscapes, bus transit lanes, redesign traffic patterns by narrowing the traffic lanes for cars, expand the size of the sidewalks, create stormwater filtration systems.

  38. EIFD Hypotheticals

  39. EIFD Hypotheticals

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