Enhanced Infrastructure Finance Districts and Your Community CALED’s 35 th Annual Training Conference April 21, 2015 Presented by Constantine Baranoff Jon Goetz Aaron Laurel Russ Powell

Formation of the EIFD Presented by Constantine C. Baranoff, Shareholder

3 INTRODUCTION SOURCES OF FUNDING  EIFDs are empowered to provide financing for a broad range of infrastructure work  Formation process patterned after Mello-Roos  Tax Increment

FORMATION PROCESS  Process initiated only by city/county although other tax entities may participate  Adopts a resolution of intention which defines the area, facilities 4

WHAT IS THE IFD PLAN?  The IFD Plan is the heart of the EIFD.  Specifies what type of facilities are funded, tax increment contributions and other revenue sources  Defines when the IFD will cease to exist 5

FACILITIES WHICH MAY BE FUNDED  Includes the purchase, construction, expansion, improvement, seismic retrofit of any real or tangible property with a useful life of 15 years or greater. 6

PUBLIC HEARING REQUIREMENT  Once the IFD plan is completed and circulated, it must be approved by the affected taxing entities  School districts may not participate  Resolution of formation is adopted after the hearing  Formation does not require vote of qualified electors 7

GOVERNANCE OF EIFD  EIFD means a legally constituted government entity separate and apart from the entities which established it. Governed by a public financing authority composed of elected tax entity officials and public 8

ISSUANCE OF BONDS - REVENUES  In order to issue bonds, a vote of the people is required. Voter approval rate is 55%  Circumstances dictate whether vote is by registered voters or landowners  Tax increment allocated to EIFD supports debt service  Bundling of other revenues 9

CERTAIN THINGS MUST BE DONE BEFORE THE EIFD PROCESS BEGINS  The EIFD law allows EIFD to overlap the boundaries of former redevelopment projects  Finding of completion from DOF  No redevelopment assets which are proposed to benefit the EIFD are subject to litigation involving the state  State controller completes review 10

Differences between RDA/EIFD 11  Tax increment only that which voluntarily contributed  No finding of blight  EIFD does not have eminent domain powers

HOUSING 12  An EIFD has no mandatory expenditure requirement for affordable housing. However, all housing financed by EIFD must be with a low/moderate affordable housing restriction

CONCLUSION 13  A fairly simple vehicle which may be utilized to fill a wide variety of infrastructure needs

Modeling Tax Increment Presented by Russ Powell, Senior Vice President 14

Determine Assessed Values for Project  Identify Project Land Uses  Develop Assumptions for Absorption of Land Uses  Develop Assumptions for Per Unit Values by Land Use Type  Identify EIFD Administrative and/or Project Management Costs  Identify Participating Public Agencies and Tax Increment Pledges 15

EIFD Project Example 16

EIFD Project Absorption 17

EIFD Tax Increment Assumptions 18  City Tax Increment = 16%  County Tax Increment = 19.5%  Total Tax Increment = 35.5%  Base Year EIFD Admin/Project Management Cost = $100K (Increasing 2% Annually)  Land Use Values per Unit Increase 4% Annually (Net Market Growth  2% Annual Growth in Assessed Value

EIFD Tax Assessed Value 19

EIFD Tax Increment by Year 20

EIFD Cumulative Tax Increment by Year 21

Use of Tax EIFD Tax Increment 22  Admin/Project Management Costs Exceed TI in Early Years  TI Used on a Pay-As-You-Go Basis Initially  May Take 7 – 10 Years For Efficient TI Bond Issuance  Other Considerations

Fiscal Impact Analysis 23  To be Prepared for EIFD Plan  Using TI for Projects Diverts Property Tax from Services/Other Uses  Prepare Fiscal Impact Analysis with TI Calculations  Alternative Service Funding Mechanisms  Other Considerations

EIFD Hypotheticals 36

URBAN INFILL PROJECT - HYPOTHETICAL  Case Study ---- a duo of cities and one county are interested in revitalizing a decaying inner core by making the street more livable - include streetscapes, bus transit lanes, redesign traffic patterns by narrowing the traffic lanes for cars, expand the size of the sidewalks, create stormwater filtration systems. 37

EIFD Hypotheticals 38

EIFD Hypotheticals 39