St. Helena officials are eyeing a new financing tool that could help fund infrastructure and housing.
An Enhanced Infrastructure Finance District (EIFD) allows local governments to leverage future revenue from increased property taxes in order to issue bonds and otherwise pay for infrastructure projects.
EIFDs don’t raise taxes. They merely allow governments to borrow against future property tax revenue from land that is being developed in a way that will increase its assessed value.
EIFDs can fund water and wastewater improvements, affordable housing, transportation projects, parks and open space or city buildings. With the construction of a new City Hall and other expensive projects on the horizon, St. Helena officials are considering whether an EIFD could be useful.
“It could be spent on housing, open space – virtually everything that’s sitting on our menu that we have to do,” City Councilmember Mary Koberstein said during an April 24 special meeting.
City staff, working with the economic consulting firm Kosmont Companies, have identified 13 non-contiguous properties around town that have development potential and could be included in the district. They include Vineland Station, the Castellucci properties along Pope Street, the Adams Street property, City Hall, the former St. Helena Catholic School, and the Toogood and Harold Smith properties along Sulphur Creek.
Together, those properties account for $300-$530 million in potential new project value. That would translate into as much as $5.3-$6.4 million in bonding capacity for the city over the next 10 years.
The California legislature authorized EIFDs in 2014, in part to compensate for the loss of Redevelopment Agencies, which were eliminated in 2012. Only three cities have created EIFDs, although dozens of others are looking into it, according to Ken Hira of Kosmont Companies.
Voter approval isn’t necessary to form an EIFD, although property owners within the district could mount a protest. However, EIFDs have no real impact on property owners because they will have to pay the additional property taxes anyway once their land is developed and reassessed, Hira said. An EIFD would just allow the city to leverage that additional revenue in advance.
An EIFD would be overseen by a five-member Public Financing Authority. Any bond issuance would require the approval of 55 percent of the affected landowners or registered voters, although pending legislation would eliminate that requirement.
“I’m open to looking at it more,” Mayor Geoff Ellsworth said. “We’ve got a lot of projects coming up, so keeping everything on the table (makes sense).”
Councilmember David Knudsen cautioned that EIFDs are still new and relatively untested, and a St. Helena EIFD would cede control of city money to a new agency. He also questioned whether St. Helenans would support the volume of development contemplated by an EIFD.
City staff will continue investigating EIFDs and report back to the council in a few weeks.