EIFDs-Infrastructure Improvements? Yes!
Fiscal Crisis Prompting Creative Solutions: The Sebastopol City Council is investigating various avenues to address the dire fiscal crisis ($1.7M deficit in a $12.5M expense budget, and similar deficits projected into the future).
EIFD Concept Generally: One of those options is the establishment of an EIFD (Enhanced Infrastructure Financing District). An EIFD is a separate legal district with its own defined boundaries, funded by existing property taxes. It does not have taxing authority and its existence does not add new taxes for property owners. Instead it is funded by existing taxes already being paid by property owners within its boundaries. The idea is for the taxing entities receiving those taxes to redirect a portion of the funds they collect to the EIFD in order to complete infrastructure projects that benefit the community.
The Incremental Tax Increases Idea: EIFD contributions focus on "incremental tax increases." The taxing entity (generally a City or County) commits a portion of its future incremental tax increases to the EIFD. Projections tend to assume a minimum 2% annual increase in property taxes collected. If, for example, the County commited 25% of its incremental tax increases to an EIFD, it would be promising each year to direct 25% of that year's increase in property taxes to the EIFD.
Santa Rosa Example: The only Sonoma County example is an EIFD initiated by the City of Santa Rosa. That EIFD includes a portion of downtown Santa Rosa. The taxing entities participating are the City of Santa Rosa and the Sonoma County. The City and the County currently receive a portion of the property taxes paid by property owners within the proposed downtown EIFD boundaries. The Santa Rosa EIFD process has not been completed, but ultimately the City and the County will commit to a project list and to having a portion of the taxes they currently receive redirected to fund the EIFD.
City Council Progress: The City Council is fully aware of the many infrastructure needs within the City of Sebastopol. An EIFD is one potential way to address those needs. On December 5, 2023, the Sebastopol City Council created an Ad Hoc EIFD Committee to gather answers to a series of questions, and to bring the information back to the Council for consideration and direction. The questions were focused on EIFD boundary options, potential revenue return to the City, costs, timeline and next steps, and the potential for County support and interest. The EIFD provided a preliminary report on December 19, and is poised to provide full details at the January 16, 2024 City Council meeting.
The Good News So Far: Much is still to be decided about the merits of an EIFD. However, there are already a few excellent developments. First, Supervisor Lynda Hopkins (District 5) is in support of an EIFD to include all of West Sonoma County, and has committed to requesting $50,000 from the Board of Supervisors for the City of Sebastopol to cover the consultant fees for the initial phases of the EIFD process. Second, to the extent a West County EIFD is approved, the potential contribution from even 25% of the County's incremental tax increases is estimated by County Counsel at over $207 million over a 45 year period (the maximum time an EIFD can be in place).
Much Still to Consider and Big Decisions to be Made: The EIFD process is complicated and there are many questions that are raised. The Ad Hoc Commitee will be providing a report at the January 16 Sebastopol City Council meeting, and it is hoped that sufficient information will be available for the Council to provide direction about next steps. As to the Board of Supervisors, the $50,000 funding request from Supervisor Hopkins is scheduled to be considered at the the Supervisors January 23, 2024 regular meeting.
What You Can Do to Learn More: Tune in to the January 16, 2024 City Council meeting to learn more and to weigh in on this idea! See the Sebastopol City Council meeting page for the January 16 Agenda, Documents, and Zoom link. All will be posted by no later than Thursday January 11, 2024. If you'd like to be alerted via email when agendas etc are posted, you can sign up at the City's subscription link.
- Click here for an in-depth article about the City of Sebastopol's fiscal crisis. Note that on November 21, 2023, the City Council made a formal declaration of a fiscal crisis (November 21, 2023 minutes here - item 4).
- For City Council reports on the EIFD Idea:
- November 7 2023 Draft Minutes, Council support for further inquiry into EIFDs (page 27 of 33).
- December 5, 2023 Request for Creation of the Ad Hoc EIFD Committee.
- December 19, 2023 EIFD Ad Hoc Report Out.
- For information about the Santa Rosa EIFD:
- For Budget Committee Reports on various revenue enhancing options being considered: