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City Council Considers New Financing Tool for L.A. River Revitalization

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"This is not an increase in taxes," says Councilmember Mitch O'Farrell, as we spoke about his motion for the city to explore the creation of an Enhanced Infrastructure Financing District (EIFD) geared toward improvement of the Los Angeles River and its adjacent communities. "Property in the city generally increases in value. As we pay property taxes, the increases are split in a set proportion. This would keep a percentage of that increase to be invested locally."

O'Farrell's motion passed in today's City Council meeting by a unanimous vote of 12 to 0. The motion directed the Economic Workforce Development Department (EWDD) to draft a policy regarding creation of EIFDs. It authorized $75,000 for a consultant and noticing services to be hired to look into different financial models for a possible River Revitalization EIFD. It also instructed city departments to start working on specifics for what a Los Angeles River-specific EIFD would entail.

If the city agrees on the many parameters within a timely manner, this could be the state's first-ever EIFD. An EIFD is a new tool that was created by virtue of Senate Bill 628, which Governor Brown signed in to law September 29 last year and came to effect January 1 this year.

An EIFD allows cities to finance large projects easier. It lets cities get a portion of a tax property increase (which usually results from increased values of real estate) and allocate projects within a pre-identified district, instead of the money going to state or county. In effect, it's a recalibration of the percentage that each government entity takes into their coffers.

Right now of every $1 property tax that is contributed, a majority goes toward support for schools, 30 or 40 cents goes to the county, 20 to 30 cents goes to the city, and the rest goes toward smaller tax assessments such as mosquito abatement or flood control, estimates Jenny Scanlin, Assistant General Manager for EWDD. Should a River Revitalization EIFD and an increase in property taxes take effect, that increment would go toward river revitalization.

O'Farrell also cites that an EIFD's flexibility makes it ideal for a city with specific priorities. "The flexibility is very good," says O'Farrell. "It's also very different from how the former Community Redevelopment Agencies worked. It doesn't have a lot of poison pills such as eminent domain powers, or that you had to establish an area is blighted before you can start a CRA."

"An EIFD is really focused on public facilities like infrastructure -- streets, roads, sewers, flood control channels. It also expands to affordable housing, commercial development, and industrial development. You can look at using funds to move forward transit-oriented projects. It really expands the platform in which we could fund specific projects in a community," says Scanlin.

Applied to the Los Angeles River, this could mean money for more affordable housing, cleaning up polluted industrial land along the rivers, and more park space by the waterways. One possible application for funds would be that a portion of the city's share for the $1-billion dollar plan for river revitalization could be financed by a River Revitalization EIFD, "but it's completely separate from that project," says O'Farrell.

"This is a creative way for property owners to contribute right into their own neighborhoods," says O'Farrell.

With the approval outlining a way forward for creation of an EIFD, the city still has to undergo major steps before one is created. O'Farrell estimates that it would take up to two years for approval of all the details: where along the river this would be applicable to, what participation would be like for different entities, what projects this would go toward. A River Revitalization EIFD could encompass one of several options: all 51 miles of the river, only the 32-mile portion under the city of Los Angeles, or even a narrower area. It would depend on what the outcome of this research process indicates and what the city can agree to.

An EIFD is a major undertaking, reports Scalin. "The life of an EIFD district could be at least 45 years." It means that today's decision could possibly affect not just this generation, but the next generation of Angelenos as well.

Read more about EIFDs and the L.A. River here.

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