After winning a 38-0 vote on the Senate floor last week (with 1 member not voting), Sen. Ben Allen's SB 961 is on its way to the Assembly. The bill, which Move LA is sponsoring, would allow local governments to create "Neighborhood Infill Finance and Transit Improvements (NIFTI-2)" districts within a half mile of rail transit stations and major transit stops. Any increase in local sales and property taxes within the districts could be used for affordable housing, transit infrastructure, neighborhood greening and other improvements. It's sort of like creating, to quote one person, "mini community redevelopment districts around transit stops.”

The tax increment revenue stream that is created under NIFTI-2—and this provision is key—could be bonded against without voter approval to provide early up-front money for investments as long as 40% of the revenues are spent on affordable housing (half for those making less than 60% of AMI and half for those making less than 30% of AMI or who are homeless) and the remaining 60% is spent on improvements including:

• Additional multifamily affordable housing projects or mixed-use projects with affordable housing and ground floor commercial uses that support infill and compact development;
• Transit capital projects, including stations and programs supporting transit ridership;
• Active transportation capital projects, including pedestrian and bicycle facilities and supportive infrastructure such as first-last-mile connections to stations;
• Capital projects that implement local complete streets programs;
• Capital costs of parks, urban forestry, and permanent urban greening improvements along boulevards, streets, and other public areas;
• Detached and/or decoupled parking structures in lieu of onsite parking for proposed developments and with less than one space per residential unit and with space on the ground floor for pedestrian-oriented commercial or public uses. Parking revenues can be used to implement transportation demand management programs to reduce automobile trips to and from the district;
• Other projects or programs to reduce GHG emissions and criteria air pollutants by reducing VMT in the community.

The bill language is HERE. But we are working with advocates and Sen. Allen to add language that would help prevent the displacement of people who live in these neighborhoods and the loss of existing housing, as well as to mitigate the impact on local businesses.

Counties, cities and schools currently share property and sales taxes, though the sharing arrangements vary from city to city. Because the NIFTI-2 infrastructure finance districts would require the approval of counties, it is vital that they are made attractive to counties.

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A little history: The theory behind community redevelopment, which was abolished in California in 2011, was that cities could create redevelopment areas and have the authority to use the increase in property taxes (the “tax increment”)—including the county's share—in ways that would create even more property tax revenues for local investment, creating a virtuous cycle of investments and enhanced revenues.

NIFTI-2 districts—like the several other "enhanced infrastructure finance districts" or EIFDs created by the Legislature since community redevelopment was ended—require the county to be a partner and agree to the formation of the district and the use of the tax increment. In NIFTI-2—and it’s predecessor NIFTI—this tax revenue includes both property and sales tax increments. This has made it difficult to create EIFDs since the counties must now agree to give up their share of the increment.

Cities need to figure out how to make NIFTI-2 districts an attractive proposition for counties by more vigorously addressing the priorities they share with counties. For example, the dedication of more funding for transit capital projects and for affordable housing—especially housing for the homeless—could make these agreements easier to achieve, especially if cities bring local matching funds to the table.

In LA County, for example, cities could use other local housing funds or their Local Return funding from transportation Measures R and M (which are providing $160 billion for transit capital projects over 40 years) to enhance commitments to transit projects, affordable housing near transit, or permanent supportive housing for people who are homeless—all priorities of LA County—thereby making it more likely the county would support the creation of these districts.  

We will keep you updated.