Enhanced Infrastructure Financing Districts are creative ways to promote redevelopment in California without citywide tax increases or raids on municipal budgets. These special districts are popular in Sacramento.
From Aggie Square on Stockton Boulevard to the Downtown railyards and soccer stadium and a potential Capitol Mall campus for Sac State, the city has embraced special district financing schemes that were once the domain of redevelopment agencies.
Challenges with these plans can get messy. It will be years before their overall efficacy is known. But the idea is straight forward.
The City Council votes to create a special financing district, which lets the district borrow money based on higher property values expected to come from new development. Instead of those returns flowing into the city treasury, they pay off debt.
The latest effort comes with a twist proposed by City Council Member Roger Dickinson.
Rather than create one of these special taxing districts for a specific project, Dickinson is pushing one for North Sacramento, which he represents. He thinks the special district will help North Sac build something beneficial in neighborhoods long overlooked.
“This is going at it the other way around,” he says. “We are going to lead as the city and make it clear we are investing in the area. And we have to tie it very aggressively to our outreach and economic development and recruitment efforts to make it clear this is an area we want to see private investment and are willing to make that public investment to help lead that effort.”
Dickinson’s council boundaries include Del Paso Heights, Hagginwood, Old North Sac and Woodlake. It takes a year or longer to complete the planning and public engagement required for a special financing district.
City projections show a North Sac special district could bring in more than $300 million over the next five decades. The money would go toward infrastructure improvements, including roads, water, sewer, utilities, lighting and other amenities developers would rather someone else fund.
“If we can take the cost of the public infrastructure off the balance sheet of the private investor,” Dickinson says, “some of these private-sector investments that won’t otherwise pencil out start making economic sense. My hope is this is a way to attract private investment by showing that the city itself is investing in North Sacramento.”
I asked Dickinson if the city can afford more special districts without causing other problems by diverting so much money from the general fund, which has a structural deficit.
“We can’t create them everywhere,” he says, “but we can do more if we’re smart about how and where we do them. My premise for the city in general is that we’re not going to solve the budget shortfalls and squeezes we face by raising fees or cutting services or laying people off. Ultimately, that’s not a solution and can easily turn into a downward spiral.
“We are going to have to grow our way out of our budget challenges by stimulating economic growth in the city, to the extent that we can. That then creates jobs and generates economic activity that produces more tax revenue.”
With the financial leverage a special district can provide, Dickinson believes his neighborhoods have advantages for new development: proximity to Downtown but cheaper land costs; good transportation, including light rail; and sizable parcels that reverted to city ownership after California redevelopment agencies were closed by the state Legislature in 2012.
We should know soon if this latest special financing district has City Council support. It already stacks up as one of the more intriguing economic development schemes North Sac has seen in decades.
Gary Delsohn can be reached at gdelsohn@gmail.com. Follow us on Facebook, X and Instagram: @insidesacramento.
