State Provides New Way to Pay for Infrastructure

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A state law that took effect this year could provide a method to funnel money to Southside neighborhoods to finance such things as parks, transportation, affordable housing, childcare facilities, and libraries.  Senate Bill 628 allows local governments to create “enhanced infrastructure financing districts,” or EIFDs, and issue bonds if a super-majority of voters in the district approve the scheme. EIFDs capture a portion of the tax revenue created by increasing property values, and dedicates the funds to infrastructure projects.

The California legislature dissolved redevelopment agencies in the 2011. In response, the EIFD option was created to address the need for local economic development resources.  Before SB 628 was adopted, local governments could establish an infrastructure financing district, adopt a financing plan and issue bonds with approval from two-thirds of the voters in the district. The new law reduced the hurdle to 55 percent of voters, created greater voter accountability over district officials, as well as the opportunity to invest in a wider variety of projects.

“This bill is an innovative step toward ensuring California’s crumbling infrastructure is expanded or repaired in preparation for future generations,” the law’s author, Senator Jim Beall, D-Campbell, said in a statement. “Now with the option of creating Enhanced Infrastructure Financing Districts under SB 628, communities can create transit-oriented neighborhoods and business districts to cut traffic gridlock, reduce commutes and greenhouse gas emissions. These investments not only ensure the health and well-being of our communities but they will also serve to create jobs.”

Before forming an EIFD, a municipality must establish a governing body, known as a public financing authority, comprised of district lawmakers and community members. A resolution to form an EIFD must identify the district’s boundaries, indicate the types of development proposed and state the need for the district and its goals.     

Potrero Boosters president J.R. Eppler said EIFDs are a good idea, but he offered another solution to the neighborhood’s infrastructure needs, the “lockbox idea.” Lockboxes, Eppler said, are approved through the Board of Supervisors and pay for infrastructure and associated maintenance. EIFDs can’t be used to pay for maintenance.  “Either would be a good idea,” Eppler said, but the Boosters prefer the lockbox idea.

Individual EIFD can’t extend more than 45 years from the date on which voters approve the first bond issue. A city, county or special district could lend money to the EIFD to pay for items in the infrastructure financing plan; municipalities can also allocate funds to an EIFD.

EIFDs can finance projects in or that overlap an existing or former redevelopment project area, but the local government must “wind down” its former redevelopment agency before establishing an EIFD. San Francisco has multiple active redevelopment project areas, which are managed by a successor agency to San Francisco’s RDA, the Office of Community Investment and Infrastructure.

According to Eppler, Hill residents would be grateful for additional funds to create more or improve open space in the neighborhood. He said the Eastern Neighborhoods Plan identified opportunities for additional green space but didn’t ascertain where the money would come from to create it. Residents would like to renovate the Jackson Park clubhouse, for example, and the Potrero Gateway Loop project – a greening initiative located around and under U.S. Highway 101, between San Bruno, Vermont, 17th and 18th streets – needs funds.

According to District 10 Supervisor Malia Cohen’s office, the Supervisor has a long history of advocating for IFDs, but her office was unable to comment on EIFDs.