SB 961, a bill authored by Senator Ben Allen and sponsored by Move LA, is on its way to the Governor’s desk! The bill would allow local governments to create specialized enhanced tax increment financing districts (EIFDs) near high-frequency bus and rail corridors—with 40% of the tax increment going to affordable housing and 10% to urban greening and active transportation. The remainder of the funds can be used for transit capital projects including stations and programs supporting transit ridership
The bill, called the “Second Neighborhood Infill Finance and Transit Improvements Act” or NIFTI-2, got off the Assembly floor with a 53-25 vote last week, and the Senate concurred 38-1 on amendments made in the Assembly. The bill language and more information on votes and its history is HERE and HERE.
We believe NIFTI-2 has the potential to become a bookend to the state Affordable Housing and Sustainable Communities program—allowing cities to leverage even more funding from the state’s Greenhouse Gas Reduction Fund and helping to overcome the current barriers to implementation encountered by EIFDs.
Why EIFDs are important but so few have been created: Click to read more!
EIFDs are a local financing tool created by the Legislature after Governor Brown eliminated the state’s 400 community redevelopment agencies in 2012—which he did to help solve the state’s fiscal crisis in the aftermath of the Great Recession and to address other program concerns.
Redevelopment agencies had invested in improvements in so-called “blighted” neighborhoods using the property tax increment—the amount that property taxes increased after investments had been made to improve neighborhoods. But the elimination of redevelopment agencies robbed cities and counties of an important local revenue source for economic development and affordable housing, and EIFDs were created to provide new opportunities for cities to capture and use tax increment tools—but this time only with agreement from counties.
While EIFDs, like redevelopment agencies, used only the property tax increment as revenue, another bill—the Neighborhood Infill Finance and Transit Improvement Act or NIFTI —was created in 2017 to allow local governments to use the sales tax increment within a district as well as the property tax increment for improvements.
Senator Allen’s NIFTI-2 builds off NIFTI-1 but specifies that 40% of tax increment investments must be used for affordable housing near transit.
Four types of EIFDs have been created since the end of redevelopment, but all have proven difficult to implement for various reasons—primarily the requirement that concurrence of the county is needed to create these districts as well as the fact that voter approval for bonding against the increment has been required (by the governor).
As a result there has been increasing interest among local governments and legislators in finding solutions to these barriers and recreating an effective redevelopment-style program especially given the need for funding for economic development, local infrastructure, affordable housing, and transit.
Recreating redevelopment at the local level
Move LA is keenly interested in working with the legislature next year on bills that will address the challenges in EIFD implementation. We are interested in program modifications that encourage cities and counties to use NIFTI-2 to leverage additional funding for affordable housing near transit and active transportation from the AHSC program or other affordable housing funds. This could provide counties with a particularly compelling reason to partner with cities to create NIFTI-2 districts and would promote the creation of new affordable neighborhoods near transit.
It’s important that housing near transit be made affordable to the low-income people who are likely to ride transit the most both as a matter of equity as well as to rebuild our transit ridership—and perhaps ease the homelessness crisis as well.
NIFTI-2 districts can highlight an under-appreciated land resource for housing development. Some underdeveloped and often less expensive land is available along the state’s many underutilized commercial corridors, which are often served by high-frequency transit. These corridors could with the right investments—in urban greening and active transportation, for example—become mixed-use mixed-income neighborhoods that are leafy and green, sustainable, and desirable to people looking for housing and to the developers who will want to build in these locations.
We believe that SB 961 or NIFTI-2 could become a key tool in this toolbox and that the AHSC program would be a powerful complement. So please stay tuned and give us your feedback and join us!