How To Create An Oakland Coliseum JPA EIFD

Oakland (Special to ZennieReport.com) – This presentation before the Oakland-Alameda County Coliseum Joint Powers Authority is written to expand on the October 15^th, 2023 Oakland Coliseum JPA EIFD (Enhanced Infrastructure Financing District) Discussion. It presents a step-by-step process drawn primarily from EIFD documents for San Jose, Santa Rosa, Sacramento, as well as California EIFD legislation SB628 Bealle (2015), SB293 Skinner (2019), AB464 Mullen (2021), and AB336 Villapudua (2021).

This presentation is also the first document of its kind to present a step-by-step process and takes AB 464 Mullin (2021) into account.

AB 464 Mullin allows the use of tax increment financing revenue to finance programs to help small businesses in the EIFD to recover from the COVID-19 Pandemic, non-profit community facilities,and projects deemed of community-wide significance (depending on how the Infrastructure Financing Plan is written),

Regarding tax increment financing, or “TIF”, this presentation was also based on a calculation process that mates TIF revenue with municipal bond sizing: the TIF revenue stream and debt coverage ratio determine the size of the bond to be issued. The Public Financing Authority can then determine what projects can “fit” in that revenue envelope as a prelude to the creation of the Infrastructure Financing Plan or “IFP” and the bond issue, or bond issues.

California EIFD Law Established In 2014

The Enhanced Infrastructure Financing District or EIFD was established in 2014 by California Senator Jim Bealle and signed into law by California Governor Jerry Brown. It is designed to reintroduce tax increment financing to California municipalities to be used as a tool to catalyze the creation of various types of development.

This ZennieReport.com post points to a special law AB 336 from 2021, which allows members of a joint powers authority to sit on the Public Financing Authority of an Enhanced Infrastructure Financing District. In other words, for the organization to be both JPA and EIFD. It’s also based on Section 53398.51 of the California Code, and in the following way: If a JPA decides to establish an EIFD, then Section 53398.51 of the California Code says it must first create a Public Finance Authority containing its own governing board.

California State law is more specific about the Public Finance Authority’s board structure than that for a JPA. Assuming that two or more of the public agencies making up the JPA wishing to create the EIFD themselves have taxation power, then the PFA’s board must be composed of a majority of the governing legislative bodies (city council, county boards of supervisors, etc.) of every participating government.

That is, a majority of the members of the legislative bodies of the cities, counties, and special districts comprising the board must also serve on the PFA (and it is uncompensated service, though reimbursement is allowed)

This document, this post here at ZennieReport.com, lays the ground work for the creation of the Oakland Alameda County Coliseum JPA / EIFD. Basically, the PFA is the governing body of the EIFD within the JPA.

Steps Toward An Oakland Coliseum JPA EIFD

Step One: Formation Team:

1. Economic Development Representative

2. Legal Counsel

3. Financial Advisor

4. TIF Consultant

5. Oakland Coliseum JPA Exec Dir, Manager, City, County, Business Rep

6. Business Task Force (Advocacy Group).

Step Two: Formation Team Work:

1. Define/Refine Boundaries

2. Develop Preliminary Priority Project Funding Cost Estimate

3. Determine Bond Size Requirement For Project

4. Calculate Tax Increment Revenue from EIFD Boundary

5. Determine Size of Bond Issue, Bond Issue Debt Service Based on TIF Revenue & Debt Cov Ratio, Bond Interest Rates

6. Size Preliminary Priority Project Funding Cost Estimate with respect to TIF Revenue

7. Identify Funding Sources in Addition to Tax Increment

Step Three: Conduct Outreach:

1. Electeds

2. Other Taxing Entities

3. Affected Residents and Property Owners

4. Explore potential projects to be funded by the EIFD that would entice participation of the County or other taxing agencies

5. Educate stakeholders about EIFDs – not a new tax, not a lien on property

6. Identify property owners who will advocate for formation (Here’s where the Business Advocacy Group helps).

Step Four: Start Public Financing Authority

1. Determine who sits on Public Financing Authority, (Merge Coliseum JPA Members with New Seats) – for City Council vote as part of PFA Resolution.

2. Assemble Resolution of Intention and PFA Formation documents (based on Santa Rosa EIFD Model – source here):

A. Staff Report On EIFD Formation To City Council

B. Resolution of Intention (Approved Boundaries and list of improvements and projects) for City Council Vote

C. Public Financing Authority Resolution including Infrastructure Financing Plan for City Council Vote.

D. City Council votes on B and C which establishes PFA

Board of Supervisors & City Council:

– Each adopt Resolutions approving the Infrastructure Financing Plan

Statement of Boundary Change

– Filed by Public Financing Authority with CA State Board of Equalization

No election is required unless 25% of property owners protest at third PFA public hearing.

– An EIFD is abandoned if over 50% of property owners protest the formation.

– JPA approves the IFP by resolution

– The PFA adopts the IFP and approves the Resolution of Formation establishing EIFD at the third public hearing.

• PFA files “Statement of Boundary Change” with California Board of Equalization

NOTE: Unlike old redevelopment districts that utilized tax increment financing, there is no blighted area requirement to establish an EIFD

Step Seven: EIFD Bonds

– WHO: Public Financing Authority makes the decision to sell bonds

– WHEN: Public Financing Authority may decide to sell bonds based on tax increment revenue versus project cost need as expressed in IFP

– Minimum debt service coverage is 125%

– Bonds cannot be sold until predetermined level of tax increment is generated that’s sufficient to meet annual bond debt service. But tax increment revenue can be collected from the start of establishment of the EIFD and the PFA. Tax increment revenue can also be collected on a pay-as-you-go basis.

A Follow-Up ON EIDFs and Pay-Go TIF Revenue Collection

A follow-up is important here. Prior to 2017, EIFDs were not able to collect tax increment revenue on a a pay-as-you-go basis, but after 2017 and the amendment to Infrastructure Financing Plan legislation, TIF revenue could be collected on a “pay-go” basis as long as it was described in the Infrastructure Financing Plan. For example, The Infrastructure Financing Plan for the Samoa Peninsula Enhanced Infrastructure Financing District, released in 2022, says the following:

A plan for financing the public facilities to be assisted by the district, including a detailed description of any intention to incur debt. Section 5.3 of this IFP includes a plan for financing the public facilities to be assisted by the District. The PFA governing the District intends to incur debt only when it is financially prudent to do so. It is estimated at this time that 53.5 million (in present value dollars) will be contributed by the EIFD to public improvements through a combination of tax increment bond or loan proceeds (multiple issuances may be necessary) and pay-as-you-go tax increment funding over the District lifetime

https://humboldtgov.org/DocumentCenter/View/105672/Resolution-Adopting-the-Infrastructure-Financincing-Plan-for-the-Samoa-Peninsula-Enhanced-Infrastructure-Financing-District

A related note regards the elimination of voter approval before an EIFD can issue bonds: EIFD Requirement Removed for Voter Approval Before Issuing Bonds – On Wednesday, October 9, 2019 Governor Newsom signed AB 116, Authored by Assemblymember Phil Ting, AB 116 removes the requirement for Enhanced Infrastructure Financing Districts (EIFDs) to receive voter approval prior to issuing bonds. CALED championed this under SB 128 (Beall), and we were glad to see it picked up in this budget trailer bill.

https://caled.org/legislative-matters/

So, if you see the document called “RESOURCE GUIDE TO EIFDs by the California Community Economic Development Association” and dated February 2016, don’t use it, because it has the old information regarding pay-go.

– HOW: Bonds are secured only by tax increment generated within the EIFD, NOT by the City’s General Fund.

NOTE: Proceeds may be utilized to fund any public improvement with a useful life of 15 years or more that provide community benefit

Step Eight: EIFD Eligible Public Improvements

• Roads, highways, streets/streetscapes, parking facilities, and transit facilities

• Affordable housing

• Small businesses impacted by COVID-19 Pandemic

• Internet access services

• Childcare facilities

• Libraries

• Parks, open space, and recreational facilities

• Improvements related to fighting climate change

• Brownfield restoration and other environmental mitigation

• Transit priority facilities

• Sewer, reclamation, and water facilities

• Solid waste facilities

• Flood control facilities, retention bases, and drainage channels

Following those steps will result in an Oakland-Alameda County Coliseum JPA / EIFD. It will be an exciting procedural first step toward the eventual reinvestment wave it will create in Oakland, starting with the Coliseum Area and East Oakland.