Cost Accounting in Local Government

Use EIFDs to Improve your Infrastructure

We have written much in the past about the need to identify and cost out your infrastructure, partly to insure that the adequate maintenance of this infrastructure does not get lost in the budget shuffle.  But when looking at ways to fund that on-going infrastructure maintenance the cupboard has been pretty bare, especially with the removal of the Redevelopment tool.

But now there is something new for local agencies to draw upon.  Last year the legislature passed, and the governor signed, SB 628 to establish Enhanced Infrastructure Financing Districts, or EIFDs, which went into effect January 1st.  EIFDs are financing tools that let local agencies keep the non-school property tax increases within a district to fund the enhanced infrastructure within that district.  The idea is that with improved infrastructure, a “tipping point” is reached and property values increase, which then pays for the enhanced infrastructure.  In other words, this is a win-win.

Now, of course, there are rules in place to determine what is allowable and what is feasible, and an Infrastructure Financing Plan needs to be completed.  But as long as you establish a direct connection between the needed infrastructure and the users, EIFDs can be used for improvements for transportation, utilities, flood control, parks, recreational facilities, open space, libraries, brownfield restoration, transit, mixed-income housing, and more.

The funding mechanisms are flexible also. You can set up benefit assessments (with majority vote of the properties), user fees, or various debt mechanisms. Depending on which method you choose, it can be approved by as little as a majority vote of your governing body.

The end result is that you can leverage not only future property tax revenues but the non-school tax increment over and above that.

There is a lot of good information out there on EIFDs, starting with this report by Holland & Knight at www.hklaw.com/Publications/Enhanced-Infrastructure-Financing-Districts-SB-628-Beall-11-12-2014/.

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