With our newsletter theme this month focused on economic development tools and assessment districts, we wanted to highlight the recently-formed City of Napa Enhanced Infrastructure Financing District (EIFD). We sat down with Neal Harrison, Napa’s Economic Development Director, to learn more.
What is an EIFD?
An EIFD is a new economic development tool that was formed at the state level a few years ago. It is not a new tax but rather uses what’s called “tax increment financing.” Basically, you draw a district boundary, which baselines property value. As the property value appreciates, the increment value (value over the baseline) is set aside into a fund that can be used to finance a whole slew of infrastructure-related projects. These range from typical hard infrastructure projects like sewage and roadwork to transit improvements, affordable housing and public beautification (like parks). Again, this is not a new tax. Property owners won’t have to pay anything additional into this assessment.
What is an example of a project that could be financed by Napa’s EIFD?
In Napa, there are many potential projects that could benefit from EIFD funding. Two projects noted in the Infrastructure Financing Plan that governs the EIFD could be funding parking supply and streetscaping key corridors. A parking garage costs about $45,000 per stall, so a 300 stall garage is around $13.5 million to build. Funds from the EIFD could be banked over time and, along with other funding sources, could finance a garage.
Streetscape beautification on Jefferson St. corridor is another example. This corridor has been called out in the new General Plan as an area to focus on, and the EIFD could fund new trees, changing the street to two lanes with a turn lane and wider sidewalks—all of which increases the property value of the businesses on Jefferson St. Ultimately, this kind of beautification spurs more development which drives up everyone’s property value and continues to fund the EIFD.
Give us some of the mechanics.
The EIFD we’ve created will last for 45 years. It covers about 7% of the City’s acreage with 50% of the tax increment property value for the City going into the EIFD. We selected areas of the City with high development potential such as Napa Pipe and Downtown. The EIFD is governed by a body made up of three Councilmembers and two Council-appointed members of the public. They make the decision on where monies are spent. The broad goal is to fund projects of community-wide significance which ultimately improve property values. Over the lifetime of the EIFD, we anticipate generating over $100M for EIFD projects. As these projects spur more value, it will have a net positive fiscal impact on the general fund as well.
Why is this a significant development?
We are proud that the City of Napa is one of the early adopters of this tool. The City Council voted unanimously for the EIFD formation, and we had support across the City Manager’s office and Finance Department. City leadership saw the benefits of moving half of City property tax revenue incremental value into the EIFD in favor of leveraging those funds for the betterment of our local economy. This is a great example of how assessment tools can spur economic growth.