On April 25, 2023, the Santa Rosa City Council will consider a resolution of intention to form a Downtown Enhanced Infrastructure Financing District (EIFD), and to set up a Public Financing Authority (PFA) to act as the governing board of the proposed District.
Public Financing Authority Application
What is an EIFD?
An Enhanced Infrastructure Financing District, or EIFD, is a type of special financing district that uses a portion of property tax increment revenues generated by community growth from a specifically defined area to finance public infrastructure and economic development projects of community-wide significance. EIFDs impose no new taxes, nor does it result in any new taxes or fees to property owners. EIFD legislation was codified by the State of California in 2014 as an improved replacement to Redevelopment Agencies, which were disbanded in 2012.
Property tax increment revenues are derived by using a portion of the tax increment generated by the existing 1% ad valorem property tax. EIFDs are prohibited from using increments from educational agencies.
What is a Public Financing Authority?
The Public Financing Authority (PFA) authorizes, develops, and eventually implements the Infrastructure Finance Plan (IFP), which is the investment plan of the EIFD. In essence, the PFA oversees EIFD finances and activities.
As both the City and the County are anticipated to participate in the Downtown Santa Rosa EIFD, and thus are the affected taxing entities, the PFA’s membership must consist of a majority of members from the legislative bodies of the participating entities, and a minimum of 2 members of the public chosen by the legislative bodies. Boards typically consist of an odd number of representatives, so the PFA might consist of 2 Santa Rosa City Councilmembers, 1 or 2 members from the Sonoma County Board of Supervisors, and 2 or 3 members of the public.
How does an EIFD finance projects?
EIFDs do not create a new tax, nor do they result in any additional taxes or fees to the property owners. Once a District is formed, the EIFD allows for a reallocation of a portion of future property taxes (the tax increment) to a separate account to be used to pay for infrastructure improvements that benefit a designated area.
When an EIFD is established, the “baseline property value” for all properties within the District is set, or frozen, at that year’s appraised value. Tax increment revenue is generated from the “captured appraised value” (the difference between the baseline value and the annually updated appraised value). A pre-designated percentage of this revenue establishes the fund that is administered by the PFA to be used for public infrastructure and community benefiting projects. (See chart)
The PFA may decide to sell bonds when sufficient property tax increment has accrued to support the debt service. In this way, bonds are secured only by the tax increment generated within the District, NOT by the City’s or County’s General Funds. Bonds may not be sold until after some development has occurred and tax increment is generated, hence EIFDs are often used as a reimbursement mechanism. EIFDs have a lifespan of up to 45 years after the first bond is issued.
What types of projects are eligible for financing?
Infrastructure projects that provide community-wide benefit and have a useful life of at least 15 years. Examples of eligible projects include:
Approximate Downtown EIFD formation timeline
|April 25||Santa Rosa City Council (Council): Resolution of Intention + Resolution to form Public Financing Authority (PFA)|
|May 23||Council: PFA Appointments made|
|July 18||Sonoma County Board of Supervisors (BoS) Meeting|
|December||PFA Public Meeting #1|
Pre-public hearings adopt bylaws; address administrative needs; public discussions; direct staff to develop Infrastructure Finance Plan (IFP)
|January||PFA Public Meeting #2 - Pre-public hearings|
Intro of draft IFP, answer questions, consider comments
|March||PFA holds public hearing #1 |
No actions; will hear public comments
|April||PFA holds public hearing #2 |
Reject or modify IFP based on public comments
|April 30 or|
|Council + BoS meetings to approve Resolutions approving IFP|
|May||PFA holds public hearing #3 |
Meeting to approve the IFP and adopt Resolution of Formation or schedule vote pending outcome of protests
|No later than |
|Request for Jurisdictional Boundary Change with the California State Board of Equalization|