SAN FRANCISCO—The San Francisco board of supervisors have passed seven resolutions and adopted one new ordinance clearing the way for the Rincon Hill area to become California’s first Infrastructure Financing District (IFD) program.
Board President David Chiu, who worked closely with the Mayor’s office on the pilot program, explained the need for the Rincon Hill IFD financing tool in an interview with The Epoch Times.
“We’ve had neighborhoods in our city such as the Rincon Hill area that have been sorely lacking basic infrastructure projects due to lack of financing. So the IFD that we are approving assists our city to make sure these neighborhoods get taken care of,” explained President Chiu.
Michael Yarne, the development advisor to San Francisco mayor Edwin Lee, explains the IFD as “tax increment financing without redevelopment and the new financing tool to build complete neighborhoods.” He continued, “These tools have never been used because redevelopment has always been available.”
Yarne adds that unfulfilled promises to the Rincon Hill area and budget shortfalls drove the new ordinance through city hall. “We have all these new area plans (rezoned areas) and lots of promises were made to those communities that they have parks, better street design, pedestrian improvements, transit improvements, greenery, bikeways… We don’t have the budget to provide that,” said Yarne to The Epoch Times outside the supervisors’ chamber.
President Chiu also recognizes the recent development projects completed in the Rincon Hill area including the towering One Rincon Hill building and wants to make these investments whole.
“Rincon is an example of a neighborhood that has had very significant recent development and growth that has not been balanced with a similar investment in local infrastructure,” said President Chiu.
How to fund the much needed local infrastructure is at the heart of the pilot IFD program. Yarne said that only “publicly owned and publically used facilities” such as streets, parks, sidewalks, and sewers can receive capital cost funding within the IFD.
Yarne presented a report to the board of supervisors titled “Citywide Policies & Rincon Hill Pilot IFD.” The report promises three new parks and the redesigning of streets to become “living streets and better streets” in the Rincon Hill area.
The budget for these infrastructure projects is estimated at $32 million, with $16.5 million funded by Rincon Hill impact fees (explained below) and $15.4 million funded by the proposed Rincon Hill pilot IFD. However the report states that $42 million in total will be needed throughout the 30-year IFD period.
The Rincon Hill pilot IFD is focused on 17 commercial parcels that make up 10 potential project sites. Nine of the ten potential project sites are already entitled and waiting for financing according to the Office of Economic and Workforce Development of San Francisco. This equates to 2,541 new housing units for the city to collect property tax from.
At the time when these potential project sites are developed and occupied, the city will project this new tax revenue over a 30-year period (also known as tax increment financing) to issue bonds and begin developing the new parks and street redesigns. Yarne emphasized in an email to The Epoch Times that the bonds are not paid back from the city’s General Fund, but rather are financed from a special fund formed by the IFD.
The total projected 30-year tax increment for these 10 potential project sites is roughly $256 million according to data presented by Keyser Marston Associates for the Office of Economic and Workforce Development.
“In no event are we suggesting that the increment be greater than 50 percent of the cumulative increment over the 30-year period; that’s a 50 percent cap on that net new property tax,” added Yarne.
In fact the Mayor’s office plans to use 16 percent of the 30-year tax increment revenue to fund the new public infrastructure developments according to the report. This leaves a projected $200 million in gains to the city’s general fund over the 30-year period.
This percentage of the projected tax increment will be pulled from the city’s general fund to build the public infrastructure projects within the Rincon Hill IFD. Each following year, the property tax revenue collected from 10 potential project sites will flow back into the city’s general fund until fully repaid.
“So this tool is in a way, the perfect mechanism because it says, hey, if this plan area, this rezoning area resulted in substantial growth and development… A piece of that, quite a small piece goes back to the neighborhood in the form of capital infrastructure,” said Yarne.
The controller’s office will be in charge of determining if each proposed IFD will result in a net fiscal benefit for the city’s general fund.
Supervisor Carmen Chu, who serves as Chair of the Budget & Finance Committee, stressed concern to the supervisors before public comment on the new ordinance.
“Many of the members of the committee did express some concern about that because for every dollar that we divert away from the general fund to pay for infrastructure projects elsewhere this represents fewer dollars that go to paying for the operations … we do, whether it’s rec[creation] and parks, police… everything else,” said Chu.
“We need to grow in our cities so people can walk to transit, live healthy lifestyles so we can preserve our parks and our farmland and our forests so it’s a beautiful place… This tool is one of the only tools left to allow us to do infrastructure in a substantial way to support growth,” concluded Yarne.
Board President David Chiu, who worked closely with the Mayor’s office on the pilot program, explained the need for the Rincon Hill IFD financing tool in an interview with The Epoch Times.
“We’ve had neighborhoods in our city such as the Rincon Hill area that have been sorely lacking basic infrastructure projects due to lack of financing. So the IFD that we are approving assists our city to make sure these neighborhoods get taken care of,” explained President Chiu.
Michael Yarne, the development advisor to San Francisco mayor Edwin Lee, explains the IFD as “tax increment financing without redevelopment and the new financing tool to build complete neighborhoods.” He continued, “These tools have never been used because redevelopment has always been available.”
Yarne adds that unfulfilled promises to the Rincon Hill area and budget shortfalls drove the new ordinance through city hall. “We have all these new area plans (rezoned areas) and lots of promises were made to those communities that they have parks, better street design, pedestrian improvements, transit improvements, greenery, bikeways… We don’t have the budget to provide that,” said Yarne to The Epoch Times outside the supervisors’ chamber.
President Chiu also recognizes the recent development projects completed in the Rincon Hill area including the towering One Rincon Hill building and wants to make these investments whole.
“Rincon is an example of a neighborhood that has had very significant recent development and growth that has not been balanced with a similar investment in local infrastructure,” said President Chiu.
How to fund the much needed local infrastructure is at the heart of the pilot IFD program. Yarne said that only “publicly owned and publically used facilities” such as streets, parks, sidewalks, and sewers can receive capital cost funding within the IFD.
Yarne presented a report to the board of supervisors titled “Citywide Policies & Rincon Hill Pilot IFD.” The report promises three new parks and the redesigning of streets to become “living streets and better streets” in the Rincon Hill area.
The budget for these infrastructure projects is estimated at $32 million, with $16.5 million funded by Rincon Hill impact fees (explained below) and $15.4 million funded by the proposed Rincon Hill pilot IFD. However the report states that $42 million in total will be needed throughout the 30-year IFD period.
The Rincon Hill pilot IFD is focused on 17 commercial parcels that make up 10 potential project sites. Nine of the ten potential project sites are already entitled and waiting for financing according to the Office of Economic and Workforce Development of San Francisco. This equates to 2,541 new housing units for the city to collect property tax from.
At the time when these potential project sites are developed and occupied, the city will project this new tax revenue over a 30-year period (also known as tax increment financing) to issue bonds and begin developing the new parks and street redesigns. Yarne emphasized in an email to The Epoch Times that the bonds are not paid back from the city’s General Fund, but rather are financed from a special fund formed by the IFD.
The total projected 30-year tax increment for these 10 potential project sites is roughly $256 million according to data presented by Keyser Marston Associates for the Office of Economic and Workforce Development.
“In no event are we suggesting that the increment be greater than 50 percent of the cumulative increment over the 30-year period; that’s a 50 percent cap on that net new property tax,” added Yarne.
In fact the Mayor’s office plans to use 16 percent of the 30-year tax increment revenue to fund the new public infrastructure developments according to the report. This leaves a projected $200 million in gains to the city’s general fund over the 30-year period.
This percentage of the projected tax increment will be pulled from the city’s general fund to build the public infrastructure projects within the Rincon Hill IFD. Each following year, the property tax revenue collected from 10 potential project sites will flow back into the city’s general fund until fully repaid.
“So this tool is in a way, the perfect mechanism because it says, hey, if this plan area, this rezoning area resulted in substantial growth and development… A piece of that, quite a small piece goes back to the neighborhood in the form of capital infrastructure,” said Yarne.
The controller’s office will be in charge of determining if each proposed IFD will result in a net fiscal benefit for the city’s general fund.
Supervisor Carmen Chu, who serves as Chair of the Budget & Finance Committee, stressed concern to the supervisors before public comment on the new ordinance.
“Many of the members of the committee did express some concern about that because for every dollar that we divert away from the general fund to pay for infrastructure projects elsewhere this represents fewer dollars that go to paying for the operations … we do, whether it’s rec[creation] and parks, police… everything else,” said Chu.
“We need to grow in our cities so people can walk to transit, live healthy lifestyles so we can preserve our parks and our farmland and our forests so it’s a beautiful place… This tool is one of the only tools left to allow us to do infrastructure in a substantial way to support growth,” concluded Yarne.
