Agenda

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FINANCE COMMITTEE

Meeting Date:	02/07/2022
Subject: POLICY REGARDING EVALUATION OF ENHANCED INFRASTRUCTURE FINANCING DISTRICTS (EIFDs)
Submitted For:	Monica Nino, County Administrator
Department:	County Administrator
Referral No.:	N/A
Referral Name:	POLICY REGARDING EVALUATION OF ENHANCED INFRASTRUCTURE FINANCING DISTRICTS (EIFDs)
Presenter:	Timothy Ewell, Chief Assistant County Administrator	Contact:	Timothy Ewell, Chief Assistant County Administrator

Information

Referral History:

In 2015, Senate Bill 628 (Chapter 785, Statutes of 2014) created Enhanced Infrastructure Financing Districts (EIFDs) effectively modifying the structure of already existing Infrastructure Financing Districts (IFDs). Following the dissolution of redevelopment, EIFDs serve as a financing mechanism to use tax-increment financing, similar to former redevelopment projects, but with greater collaboration between cities and counties for economic development, housing and other large-scale projects throughout the State. Subsequent to the creation in 2015, statutes authorizing EIFDs have been modified on a regular basis, including broadening the listing of eligible project types and modifying the process for the EIFD to issue bonds to fund those projects.

Similar to financial impacts from former redevelopment agencies, the County's share of the ad valorem property tax is impacted by a redirection of those revenues from the County to an EIFD. The difference is that the County must opt-in to become a partner in the EIFD formation process and pre-negotiate the share of ad valorem property tax to be reallocated to the EIFD. Due to the size of the County and the number of cities within the County there is potential for significant requests of County participation in EIFD development at a commensurate financial cost to the County. As an example, the County Administrator's Office has been approached by the cities of Pittsburg and Brentwood to gauge interest in the participation of the County in EIFDs located within each city. Both cities are in the exploratory phase of EIFD development.

On September 7, 2021, the Board of Supervisors referred to the Finance Committee the development of a policy related to evaluation of EIFD proposals submitted for review from jurisdictions within the County. Recall that the County took a similar approach to evaluation of Compensation Agreements being requested by cities as part of the redevelopment dissolution process. Adopting and subsequently distributing a policy sets a minimum bar for cities to meet when submitting proposals to the County for review and evaluation. It also communicates what projects the County is interested in partnering on, consistent with stated Board of Supervisors policy goals, and acceptable rates of financial participation for such projects by the County.

At the September 13, 2021 Finance Committee meeting, the County Administrator's Office presented staff’s recommended policy on the evaluation of EIFDs. The Committee discussed the draft policy, recognized the lack of depth in the few existing EIFD policies around the State and believed that the draft Contra Costa policy was appropriately thorough. The Committee gave direction to add elements to the policy favoring certain types of jobs that would benefit residents and help address the County’s unfavorable jobs/housing balance. Staff was directed to announce the new draft to the Public Managers Association (PMA) and to distribute it to City Managers allowing for comments prior to returning to the Finance Committee on November 1, 2021, and the full Board of Supervisors on November 9, 2021.

At the November 1, 2021 Finance Committee meeting, staff reported that the County attended the September 16, 2021 meeting of the PMA to introduce the reasoning behind development of the EIFD policy and announce that the County would be circulating to cities for a four-week public comment period. The draft policy was distributed to the PMA on September 22, 2021 with a request for responses no later than October 22, 2021.

The County received public comments from three cities: Brentwood, Concord and Walnut Creek. Copies of each letter are included as attachments to this staff report. In addition, staff has assembled a crosswalk of City comments to the relevant sections of the draft policy and provided comments in response to each point raised by the cities. Staff presented these issues at the November 1, 2021 meeting and the Committee directed the Conservation and Development Department to reach out to the City of Concord regarding the policy and it's potential impact on the Concord Naval Weapons Station reuse project. In addition, the Committee requested the County Administrator's Office to provide information about composition of the governing board of future EIFD Districts.

Referral Update:

Today's action is to consider making additional edits to the draft EIFD policy based on comments from cities and follow up discussions with the City of Concord and receive an update on the governance structure of EIFDs. The Department of Conservation and Developement will provide a verbal update to the Committee and an analysis of governance structure is included below.

EIFD Governance Structure

Government Code section 53398.51 contemplates the membership of a public financing authority established as the governing board of an EIFD. There are three scenarios for governance, each of which are dependant on the number of affected taxing entities ("ATEs") that are members of the EIFD. ATEs are defined, for purposes of EIFDs, as any governmental taxing agency which levied or had levied on its behalf a property tax on property located in the EIFD boundaries in the fiscal year prior to the establishment of the District. However, schools districts, community college districts and offices of education are not considered ATEs for purposes of EIFDs. Each scenario is outlined below:

1. For EIFDs composed of one ATE (for example, an EIFD formed by the County or an individual City).

5 members; 3 from legislative body and 2 members of the public.

2. For EIFDs composed of two ATEs (for example, an EIFD formed by the County and a City jointly). At least 5 members; 3 from the County Board of Supervisors and the City Council and at least 2 members of the public.

3. For EIFDs composed of three or more ATEs (for example, an EIFD formed by the County, a City and a Sanitary District jointly). At least 5 members; at least 1 from each legislative body, upon mutual agreement by the participating ATEs, and at least 2 members of the public.

In each scenario, the appointment of the public members shall be subject to the provisions of Government code sections 54970 and 54972. These are the sections of statute that cover the "Local Appointments List", commonly referred to as the "Maddy Book".

The full text of Government Code section 53398.51.1 is attached for reference.

Recommendation(s)/Next Step(s):

REVIEW draft County Policy on evaluation of joint Enhanced Infrastructure Financing Districts with cities within the County; PROVIDE feedback to staff and markups to proposed policy; and DETERMINE whether to forward to the full Board of Supervisors for review and adoption.

Attachments
DRAFT Policy - County Participation in Enhanced Infrastructure Financing Districts (EIFDs) as of September 22, 2021
Summary, City Comments to EIFD Policy
EIFD Public Comment - City of Concord
EIFD Public Comment - City of Walnut Creek
EIFD Public Comment - City of Brentwood
Government Code section 53398.51.1, Governing Board Membership Composition of Enhanced Infrastructure Financing Districts