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 EIFDs). 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 list 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 along with other terms of participation. 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.  
  
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. The most significant comments received related to the proposed inclusion of a 50% affordable housing requirement for County participation in the policy. Specifically, Section 3(b)(ii)(4) of the Policy contemplates residential projects within an EIFD project area should be composed of 50% affordable housing; however, a lower percentage would be acceptable in cases where housing for 50% of Area Median Income (AMI) residents were to be developed. In no case would the affordable housing component of the EIFD project area be lower than 20%.  
  
The policy logic for this approach had been that cities are most likely to be the agencies initiating development of EIFD projects with the County. In return for the public investment of County general purpose ad valorem revenue to a City's proposed project, an aggressive approach to affordable housing creation would be required. Not only is this consistent with the County's desire to prioritize affordable housing development for residents, but also helps to achieve regional goals outlined in the Regional Housing Needs Allocation (RHNA) process facilitated by the Association of Bay Area Governments (ABAG).  
  
Cities had suggested an alternative approach, which allowed for a portion of the EIFD ad valorem property tax revenue to be deposited into a housing trust fund annually. Over time, the balance in the trust would increase and allow for eventual development of affordable housing development. The difficulty with this approach is twofold: 1) affordable housing construction is most economical when it is a portion of a larger subdivision or neighborhood development project where planning and materials costs can be leveraged to achieve cost efficiencies; and 2) modern affordable housing development uses an inclusionary approach where units are planned alongside with market rate housing achieving socially diverse neighborhood development. Funding an affordable housing trust fund to construct one-off projects does not allow for cost efficiencies, which could lead to construction of more housing units, or the appropriate neighborhood balance sought in contemporary land use and housing development projects.  
  
Staff presented issues raised by the cities at the November 1, 2021 Committee meeting and the Conservation and Development Department was directed to reach out to the City of Concord regarding the policy and its 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.  
  
On February 7, 2022, staff provided a follow up report to the Committee. The Committee ultimately approved the EIFD policy as proposed with no modifications and directed staff to list on the February 22, 2022 consent calendar for consideration by the full Board. Today's action would formally adopt the EIFD policy for future administration by the Department of Conservation and Development.

The County will not have an adopted policy in place to evaluate submissions requesting County participation in Enhanced Infrastructure Financing Districts, which could delay participation and lead to inconsistent implementation.