Enhanced Infrastructure Finance Districts and Your

Community

CALED’s 35th Annual Training ConferenceApril 21, 2015

Presented by

Constantine BaranoffJon Goetz

Aaron Laurel Russ Powell

Formation of the EIFD

Presented byConstantine C. Baranoff, Shareholder

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INTRODUCTION SOURCES OF FUNDING

EIFDs are empowered to provide financing for a broad range of infrastructure work

Formation process patterned after Mello-Roos Tax Increment

FORMATION PROCESS

Process initiated only by city/county although other tax entities may participate

Adopts a resolution of intention which defines the area, facilities

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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

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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.

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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

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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

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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

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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

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Differences between RDA/EIFD

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Tax increment only that which voluntarily contributed No finding of blight EIFD does not have eminent domain powers

HOUSING

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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

CONCLUSION

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

Modeling Tax Increment

Presented by

Russ Powell,Senior Vice President

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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

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EIFD Project Example

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Table 1EIFD Project Assumptions

Rooms/Sq.Ft./ Assessed Value

Land Use Units per Room, Sq.Ft., Unit Assesed Value

Resort Hotel (100 Rooms) 100 $350,000 $35,000,000Extended Stay Hotel (200 Rooms) 200 $260,000 $52,000,000

Retail 25,000 $200 $5,000,000

Single Family1/2 Acre Lots 300 $750,000 $225,000,000Estate Lots 200 $1,000,000 $200,000,000

Multifamily 100 $250,000 $25,000,000

Total $542,000,000

Source: EPS

EIFD Project Absorption

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Table 2Estimated Project Absorption

Extended ResortYear 1/2 Acre Estate Multifamily Stay Hotel Retail

Year 1 50 - - - - - Year 2 50 - - - - - Year 3 50 - 100 200 - 25,000 Year 4 50 20 - - - - Year 5 50 30 - - - - Year 6 50 30 - - 100 - Year 7 - 30 - - - - Year 8 - 30 - - - - Year 9 - 30 - - - -

Year 10 - 30 - - - -

Totals 300 200 100 200 100 25,000

Land Uses

EIFD Tax Increment Assumptions

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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

EIFD Tax Assessed Value

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EIFD Tax Increment by Year

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EIFD Cumulative Tax Increment by Year

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Use of Tax EIFD Tax Increment

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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

Fiscal Impact Analysis

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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

EIFD Hypotheticals

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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.

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EIFD Hypotheticals

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EIFD Hypotheticals

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