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HomeMy WebLinkAbout2021/11/03 - Special Mtg - Study SessionCITY OF RANCHO CUCAMONGA SPECIAL MEETING WORKSHOP CITY COUNCIL/FIRE PROTECTION DISTRICT AGENDA November 3, 2021 – 3:30 PM Tri­Communities Conference Room 10500 Civic Center Drive Rancho Cucamonga, CA 91730 A. CALL TO ORDER Pledge of Allegiance Roll Call:         Mayor Michael                           Mayor Pro Tem Kennedy                          Council Members Hutchison, Scott and Spagnolo B. PUBLIC COMMMUNICATIONS This is the time and place for the general public to address the City Council on any item listed on the agenda. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual or less, as deemed necessary by the Mayor, depending upon the number of individuals desiring to speak. C. ITEMS FOR DISCUSSION C1.Study Session ­ Enhanced Infrastructure Financing Districts (EIFD). (CITY) D. ADJOURNMENT CERTIFICATION I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least twenty­four (24) hours prior to the meeting per Government Code 54954.2 at City Hall: 10500 Civic Center Drive, Rancho Cucamonga, California; and on the City's website.   LINDA A. TROYAN, MMC CITY CLERK SERVICES DIRECTOR If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477­2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired.  CITY COUNCIL VISION STATEMENT “Our Vision is to build on our success as a world class community,to create an equitable,sustainable,and vibrant city,rich in opportunity for all to thrive.” Page 1 DATE:November 3, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Lori Sassoon, Deputy City Manager/Administrative Services SUBJECT:Study Session - Enhanced Infrastructure Financing Districts (EIFD). (CITY) RECOMMENDATION: Staff recommends that the City Council receive and discuss the presentation made at the study session, and provide direction to staff. BACKGROUND: Prior to the 2012 elimination of redevelopment agencies in California, Rancho Cucamonga and many other cities used tax increment financing to invest in infrastructure to support the development of their communities. With the dissolution of redevelopment agencies, that important tool was lost in our state. In 2014, SB 628 created a new tool called the Enhanced Infrastructure Financing District (EIFD). In a manner similar to how redevelopment worked, EIFD’s provide for the use of tax increment financing for certain types of infrastructure and other public investments. The original legislation has since been amended a number of times to further clarify how EIFD’s work and provide for additional uses of EIFD revenues. The attached white paper from Kosmont Companies provides for a brief overview of how EIFD’s function (Attachment 1). ANALYSIS: This year, the City retained Kosmont Companies to assist with an evaluation regarding how an EIFD might be used to make targeted infrastructure investments in support of the new General Plan and to capitalize on the coming investments at Cucamonga Station. At the study session, staff and the consultant will provide an overview of the analysis and the proposed projects for the Council’s consideration and direction. FISCAL IMPACT: None by this action. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: Conducting this public hearing is in keeping with the City Council’s mission to ensure and advance the quality of life for the community, and its core value of intentionally embracing and anticipating the future. ATTACHMENTS: Attachment 1 - EIFD Overview Page 2 Kosmont Companies Mailing Address: 1601 N. Sepulveda Blvd., #382 (424) 297-1070 Physical Address: 1230 Rosecrans Ave., #630 Manhattan Beach, CA 90266 www.kosmont.com Manhattan Beach, CA 90266 Enhanced Infrastructure Financing District (“EIFD”) Overview Enhanced Infrastructure Financing Districts (“EIFD”) are an economic development and public finance tool introduced by Senate Bill 628 in 2014. EIFDs are the predominant form of Tax Increment Financing (“TIF”) in California following the dissolution of Redevelopment Agencies in 2012. EIFD and TIF are a form of value-capture, where a lead agency (must be a city or a county) designates a boundary around parcels positioned for new development or rehabilitation. The assessed property value within the district is “frozen” at the time of formation as the “baseline” of assessed value for the district. Over time, as new development or rehabilitation occurs and new property value is added to properties within the district, participating taxing entities can dedicate all or a portion of the new incremental property tax from values above the baseline (“property tax increment”) to the EIFD with a dedicated purpose of funding infrastructure (and optionally affordable housing). Current law includes a lengthy definition of infrastructure eligible to be funded by EIFDs, including roadway, utility, open space, and transit improvements, remediation activities, government facilities, parking, broadband infrastructure, affordable housing, and numerous other categories, preceded by the phrase “including, but not limited to”, demonstrating the legislative intent for the tool to be flexible. EIFDs can also fund improvements outside of the district boundary, so long as the improvements benefit the properties within the district boundary. EIFDs can also fund maintenance costs, so long as the assets being maintained were initially installed at least partially utilizing EIFD funding. EIFDs do not create a new tax, nor do they encumber any existing agency revenues or resources. EIFDs allow taxing entities like cities, counties, and special district to set aside, similar to a retirement account, a portion of future property tax revenues for special purposes, such as infrastructure. When EIFDs are delineated and utilized appropriately, the argument is that the new assessed property value growth from new development and rehabilitation would not have otherwise occurred but for the creation of the EIFD and the dedication of revenues to solve for critical infrastructure needs. This argument has historically been well-received by private sector development and investment entities as well as third- party grant sources, which rely on the property tax increment dedication as complementary and local match funding, respectively. EIFD property tax increment may be used on a pay-as-you-go basis or leveraged in the form of EIFD bond issuances. There is no public vote required to form an EIFD or to issue EIFD debt; however, the formation process includes a series of public meetings and hearings that allows the community to comment on the proposed Infrastructure Financing Plan (“IFP”) that would govern EIFD activities. The final public hearing includes an opportunity for landowners and residents within the district boundary to protest formation of the district. If more than 50% of the combined number of landowners and residents within the EIFD protest formation, the process must halt for at least one year. If no protest occurs, the EIFD is authorized for both formation and future debt issuance. The EIFD is governed by an entity called the Public Financing Authority (“PFA”). The composition of the PFA varies, depending on which taxing entities are committing property tax increment to the EIFD. In a scenario where the lead agency (such as the City of Rancho Cucamonga) is the only entity contributing property tax increment, the PFA is comprised of five members, including three members of the city council and two members of the public appointed by the city council. If two or more taxing entities are contributing property tax increment, such as the City of Rancho Cucamonga and the County of San ATTACHMENT 1 Page 3 City of Rancho Cucamonga EIFD Overview October 26, 2021 Kosmont Companies 2 | Page (424) 297-1070 www.kosmont.com Bernardino, the PFA is comprised of at least five members (could be more), where the majority (e.g., three out of five) are either members of the city council or members of the county board of supervisors, and at least two public members appointed by elected officials of the participating taxing entities. For the EIFDs established so far in California where a city and a county are both contributing property tax increment, the “template” for PFA composition has been two members of the city council, one member of the county board of supervisors, one member of the public appointed by the city council, and one member of the public appointed by the county board of supervisors, for a total of five members. There are approximately ten EIFDs established in California as of the time of this report, and there are more than ten additional EIFDs currently in the formation process. Page 4 Prepared by: Kosmont Companies Enhanced Infrastructure Financing District (EIFD) Preliminary Feasibility Analysis November 2021 Executive Summary Communicating in a Digital World 2 •The City of Rancho Cucamonga significant potential for new private sector investment and development potential (~$5.5+ billion) of regional significance over the next 5-20 years across multiple opportunity site areas in the City (downtown/TOD area, eastern industrial area, other) •Investments in critical infrastructure are needed to support new development, such as station area transit-supportive infrastructure, roadways, parks and open space, and other public improvements •A public/private financing strategy that includes Tax Increment Financing (“TIF”)financing and other complementary sources has been evaluated by Kosmont to be well-suited to capture value from new development to fund targeted critical infrastructure •While a City-only special district strategy would likely achieve favorable “return on investment” for the City, a partnership between the City and County of S.B. with emphasis on funding regionally beneficial infrastructure would further improve financial feasibility and long-term positive fiscal impacts for both the City and County general funds •Subject to feedback from City staff and Council, immediate next steps could include initial County outreach to determine viability for partnership Outline Communicating in a Digital World 3 1.Overview of TIF / EIFD 2.District Boundary and Strategic Considerations 3.Targeted Infrastructure 4.Potential Financing and Funding Plan 5.Next Steps 4 $0M $100M $200M $300M $400M $500M $600M $700M 0 5 10 15 20 25 30 35 40 45 Baseline A/V Incremental Growth of Existing A/V Incremental A/V from New Development Years from District Formation Assessed Value (A/V) within TIF District Boundaries Increment Available to TIF District Period of New Development Note: Illustrative. Conservative 2% growth of existing assessed value (A/V) shown; does not include mark-to-market increases associated with property sales. Tax Increment Mechanics Illustrative EIFD Fundamentals Communicating in a Digital World 5 45 years from first bond issuance; long-term committed revenues; districts can be formed in 12-18 months Long Term Districts Public Financing Authority (PFA) led by city or county implements Infrastructure Financing Plan (IFP) –IFP is the investment plan of the EIFD, managed by the PFAGovernance Mandatory public hearings for formation (includes protest opportunity); no public vote to issue debtApprovals EIFD project areas do not have to be contiguous,allowing them to target specific sites / areas and making them compatible with other zoning / entitlement strategies Non-contiguous Areas Any property with useful life of 15+ years & of communitywide significance; purchase, construction, expansion, improvement, seismic retrofit, rehabilitation, and maintenance Eligible Projects Does NOT increase property taxes Types of Projects EIFD Can Fund Partial List –Amended 6/28/2021 via AB 464 6 Roadway / Parking / Transit Brownfield Remediation Water / Sewer / Storm / Flood Parks / Open Space / Recreation Childcare Facilities & Libraries Affordable Housing Broadband Small Business / Nonprofit Facilities Wildfire Prevention / Other Climate Change Response Why are Public Agencies Authorizing TIF Districts? Communicating in a Digital World 7 1.Return on Investment: Private sector investment induced by district commitment accelerates growth of net fiscal revenues, job creation, housing production, essential infrastructure improvements 2.Ability to attract additional funds (“OPM”)–tax increment from other entities (county, special districts), federal / state grants / loans (e.g. for TOD, water, housing, parks, remediation) 3.No new taxes EIFDs as a Component of the R.C. Economic Development and Public Financing Toolkit Communicating in a Digital World 8 •There are advantages / disadvantages to EIFD compared to other mechanisms, such as general obligation (GO) bonds, lease revenue bonds / COPs, Mello-Roos Community Facilities District (CFD) financing, assessment districts, and other tools •Advantages of EIFD include no encumbrance of existing city/county resources, can attract tax increment contributions from other taxing entities, increased priority for grant funding, ability to demonstrate commitment to multiple infrastructure (and/or affordable housing) projects to catalyze private sector development, capacity to fund maintenance, no additional taxes to property owners / residents / businesses, and ease of voter approval •Disadvantages of EIFD include lack of comparable financings thus far, statutory vs. constitutional authority to issue debt, and subordination to redevelopment successor agency obligations, •Advantages of EIFD vs. Other CA TIF Tools (e.g. CRIA, IFD, IRFD, AHA, SIFD) include flexibility in delineating project areas, capacity to dedicate property tax in lieu of MVLF, district duration, and governing board composition and corresponding implications for taxing entity partnership •Complementary Tool: EIFD should not be considered a replacement for other useful financing mechanisms, but rather a complementary tool; other jurisdictions have been successful in utilizing EIFD as well as other tools for different projects within the same community Comparison of TIF/EIFD and Other Tools Communicating in a Digital World 9 District Type Description Revenue Source Approval Structure Use of Funds TIF (e.g. EIFD, CRIA, IFD, IRFD) Incremental property tax revenues from new development used to fund local infrastructure. Max term is 45 years from approval to issue debt. Incremental (new development) property tax revenues (incl. VLF) –does not increase taxes District formation –No vote, but majority protest opportunity by landowners and registered voters Bond issuance –None •Infrastructure of regional or communitywide significance •Maintenance •Affordable housing Mello-Roos Community Facilities District (CFD) and/or Assessment District Additional assessment or “special tax” used to fund infrastructure / services that benefit property. Max term is 40 years from date of debt issuance. New property assessment or tax –appears as separate line item on tax bill District formation –2/3 vote of landowners or registered voters in district* Bond issuance –vote of elected body (City) •Infrastructure capital expenditures of benefit to landowners •Maintenance •Public services (e.g. safety, programs) General Obligation Voter-approved debt that is repaid with “override” to 1% tax levy; City-wide Direct property tax levied on all properties at same millage rate 2/3 vote of registered voters in entire City •In accordance with bond plebiscite Lease Revenue / COPs General Fund-supported borrowing, generally utilizing City-owned assets to be leased and leased back General Fund (or other legally available revenues as determined by City) Vote of elected body (City)•In accordance with bond authorization Potential funding strategy for R.C. can utilize MULTIPLE mechanisms * For CFD formation, a vote of registered voters within the district boundary is required if 12 or more registered voters live therein (otherwise a vote of landowners prorated by acreage). Districts in Progress Statewide Partial List 10Source: Kosmont EIFD/CRIA website (https://www.kosmont.com/services/eifd-cria/)Fully Formed In Formation Process Under Evaluation Jurisdiction Purpose Azusa Housing and transit-supportive infrastructure Brentwood Housing and transit-supportive infrastructure Buena Park Mall reimagination, housing-supportive infrastructure Carson + L.A. County Remediation, housing infrastructure, recreation El Cajon Housing and transit-supportive infrastructure El Segundo + L.A. County Various infrastructure, regional connectivity Fairfield Housing and transit-supportive infrastructure Fresno Housing and transit-supportive infrastructure Fresno County Industrial Supportive Infrastructure Humboldt County Mixed-use & energy supportive infrastructure Indian Wells Housing and tourism-supportive infrastructure Imperial County Housing and greenfield infrastructure La Verne + L.A. County Housing and transit-supportive infrastructure Long Beach (Multiple Districts)Housing and transit-supportive infrastructure Los Angeles (Downtown, San Pedro)Housing and transit-supportive infrastructure Los Angeles County West Carson Housing / bio-science / tech infrastructure Los Angeles County –Uninc. East L.A.Housing-supportive infrastructure, public amenities Madera County (Two Districts)Greenfield infrastructure (water / sewer) Mount Shasta + Siskoyou County Rural Brownfield site mixed-use infrastructure Napa Housing and transit-supportive infrastructure Ontario Housing and transit-supportive infrastructure Palmdale + L.A. County Housing and transit-supportive infrastructure Pittsburg Housing and transit-supportive infrastructure Placentia + Orange County Housing and transit-supportive infrastructure Redondo Beach + L.A. County Parks / open space, recreation infrastructure Riverside Housing and transit-supportive infrastructure Sacramento County Industrial / commercial supportive infrastructure San Jose Housing and transit-supportive infrastructure Sanger Commercial / mixed-use supportive infrastructure Santa Ana Housing and transit-supportive infrastructure South Gate Housing and transit-supportive infrastructure 11 Boundary and Strategic Considerations Feasibility Analysis Approach for Rancho Cucamonga 1.Define district boundary alternatives based on areas where infrastructure investment will catalyze and support new/accelerated investment and development (two scenarios evaluated) 2.Estimate future development within each boundary scenario in terms of magnitude (# units, square footage, hotel rooms), timing, and assessed value 3.Identify eligible public agencies that receive property tax increment within the district (e.g. City, County), as well as their corresponding shares of future property tax increment (different levels of contribution evaluated) 4.Determine EIFD revenue potential based on boundary and development assumptions (#1 and #2 above) and portion of increment available to an EIFD based on EIFD-eligible taxing entities (#3 above) 5.Identify additional complementary funding sources, such as Community Facilities Districts (CFD) and grants on a project-specific basis Map of EIFD Study Area 12 Source:City of Rancho Cucamonga, San Bernardino County Auditor- Controller (2021) •Approx.1500 acres (11.5% of Citywide acreage) •Approx.$730M in existing assessed value (2.6% of Citywide A/V) Potential EIFD Parcels City Limits 13 Source:City of Rancho Cucamonga (2021) Potential Targeted Infrastructure Improvements •Additional projects were identified by staff as potential longer-term / secondary priorities for EIFD funding, subject to additional funding being available, such as: a)Tunnel from Metrolink to Victoria Gardens b)Slip lanes, bicycle, pedestrian, signal, fiber improvements c)Potential additional parking structure improvements d)Metrolink grade separation e)New roadways, linear park improvements Priority Projects Estimated Cost Estimated Timing 1) Tunnel from Metrolink to Civic Center $73,925,100 2026-27 Start 2) 5-story Parking Structure around Civic Center / County Courthouse $23,112,200 2026 Start Estimated Total Priority Projects $97,037,300 Civic Center Focus Area Civic Center Focus Area: Parking Structure •Supports General Plan goals for this focus area by facilitating mixed use development •Supports Tunnel Station connection •Promotes more efficient, more beneficial use of existing publicly- owned land •Current estimate: $23.1 million Tunnel Connection: Civic Center to Cucamonga Station •Provides transit connection to the Civic Center Focus Area •Supports development in this area of Foothill/Haven •Current estimate: $73.9 million, plus station cost 17 Future Development Assumptions Absorption Assumed over 5-20 Years Note: AV at buildout values in current 2021 dollars.. Source:City of Rancho Cucamonga , CoStar (2021) Area # SF or Units Estimated AV Factor Estimated Total AV at Buildout For -sale Residential 1,514 units $618,000 per unit $936 million Rental Residential 10,253 units $317,000 per unit $3.255 billion Hotel 171 rooms $162,000 per room $28 million Commercial / Retail 922,000 SF $274 PSF $253 million Office 222,000 SF $211 PSF $47 million Industrial 6,272,400 SF $172 PSF $1.079 billion Total New Development Assumed within EIFD Study Area $5.597 billion 18 Potential Partner Agencies Property Tax Distribution Primary non-school recipients and potential contributors of property tax are City of R.C. and County of S.B. City receives approx. 17.6%of every $1 collected in property taxes within the EIFD Study Area, between the City and City Fire City additionally receives equivalent of approx. 7.3%of property tax in lieu of MVLF, also available to EIFD County receives approx. 14.5% County additionally receives equivalent of approx. 12.1%of property tax in lieu of MVLF, also available to EIFD, but not incorporated into this analysis to be conservative School-related entities cannot participate As counties tend to rely more heavily on property tax revenue sources generated by new development within incorporated jurisdictions, it is Kosmont’s experience that it is not reasonable to assume contribution of property tax in lieu of MVLF by the County. As cities benefit from additional non-property tax revenue sources (e.g., sales tax, transient occupancy tax) from new development, it is Kosmont’s experience that it is reasonable for cities to consider contributing property tax in lieu of MVLF. Tax Rate Area (TRA) weighted average distributions for EIFD Study Area shown. Post-ERAF (Education Revenue Augmentation Fund) distribution. Parcels within former Redevelopment Agency Project Areas are subject to RPTTF revenue flow until expiration of ROPS obligations of ~$375M anticipated in 2034. Source: San Bernardino County Auditor Controller (2021) City 5%City Fire 12% County 15% Other / School Entities (not eligible) 68% Weighted Average Property Tax Distribution within EIFD Study Area 19 Scenario Analysis Summary Matrix EIFD Revenue Contribution Scenario Year 5 Bonding Capacity* Year 10 Bonding Capacity* 50-Year Present Value @ 3% A) City 25%$31,773,000 $43,532,000 $134,696,000 B) City 50%$64,209,000 $87,725,000 $269,392,000 C) City 25% + County 25%$50,714,000 $69,339,000 $213,352,000 D) City 50% + County 50%$102,090,000 $139,339,000 $426,703,000 City contribution includes contribution from both General Fund (AB8 + MVLF) and City Fire funds * Bonding capacity assumes Year 5 is first bond issuance for EIFD. “Year 5 means fifth year of revenue following district formation. Net proceeds shown. Bondable revenue assumes $25,000 admin charge, 125% debt service coverage. 6.0% interest rate; 30-year term. Proceeds net of 2% underwriter's discount, estimated reserve fund (maximum annual debt service), costs of issuance estimated at $350,000. Source: Kosmont Transactions Services (KTS), registered municipal advisor. 20 Scenario Analysis Summary Matrix No City MVLF in-lieu EIFD Revenue Contribution Scenario Year 5 Bonding Capacity* Year 10 Bonding Capacity* 50-Year Present Value @ 3% A) City 25%$22,240,000 $30,542,000 $95,106,000 B) City 50%$45,142,000 $61,747,000 $190,213,000 C) City 25% + County 25%$41,180,000 $56,349,000 $173,762,000 D) City 50% + County 50%$83,023,000 $113,361,000 $347,524,000 City contribution includes contribution from both General Fund (AB8, no MVLF) and City Fire funds * Bonding capacity assumes Year 5 is first bond issuance for EIFD. “Year 5 means fifth year of revenue following district formation. Net proceeds shown. Bondable revenue assumes $25,000 admin charge, 125% debt service coverage. 6.0% interest rate; 30-year term. Proceeds net of 2% underwriter's discount, estimated reserve fund (maximum annual debt service), costs of issuance estimated at $350,000. Source: Kosmont Transactions Services (KTS), registered municipal advisor. 21 25% Scenario Nominal 2021 Dollars Present Value Dollars (3% Discount Rate) City of R.C.$310M $135M County of S.B.$181M $79M Total EIFD Contributions $492M $213M Total Potential EIFD Contribution by Entity Over ~50-Year Potential District Lifetime Note: Totals may not sum due to rounding 50% Scenario Nominal 2021 Dollars Present Value Dollars (3% Discount Rate) City of R.C.$621M $269M County of S.B.$362M $157M Total EIFD Contributions $983M $427M 22 25% Scenario Nominal 2021 Dollars Present Value Dollars (3% Discount Rate) City of R.C.$219M $95M County of S.B.$181M $79M Total EIFD Contributions $400M $174M Total Potential EIFD Contribution by Entity Over ~50-Year Potential District Lifetime –No MVLF in-lieu Note: Totals may not sum due to rounding 50% Scenario Nominal 2021 Dollars Present Value Dollars (3% Discount Rate) City of R.C.$438M $190M County of S.B.$362M $157M Total EIFD Contributions $801M $348M 23 EIFD with a City/County Partnership Federal & State Sources Cap-and-Trade / HCD grant & loan programs (AHSC, IIG, TCC) Prop 1 bond funds / Prop 68 SB 1 Road funds SB 2 Transfer Tax funds Federal DOT / EPA / EDA funding Other Potential Funding Sources Property tax revenue including RPTTF Vehicle license fee (VLF) prop. tax backfill increment Development Agreement / impact fees Benefit assessments (e.g. contribution from CFD) Private investment •Ideal strategy includes a County contribution •EIFDs which involve a City / County joint effort are more likely to win state grant funding sources •EIFDs explicitly increase scoring for CA state housing grants (e.g., IIG, AHSC, TCC) Report Card on City/County EIFD Partnerships 24 A growing number of cities are partnering with counties to fund infrastructure through EIFDs: •Placentia (fully formed) ‒First City/County EIFD partnership approved in the State to fund infrastructure around future Metrolink station for the 91 line. ‒Improvements to the area will include transit-supportive infrastructure, parking/roadway/circulation, open space, water/sewer capacity improvements. •La Verne (formed by City in October 2017; L.A. County joined January 14, 2020) ‒City/County contributions will fund infrastructure around future Gold Line station ‒Improvements to area will include mixed-use housing, station area infrastructure, and sustainable projects •Redondo Beach (L.A. County Resolution of Intent November 5, 2019 –PFA Appointments Completed Jan. 14th, 2020) ‒City/County contributions will fund infrastructure for 50.1-acre AES Redondo Beach Power Plant site ‒Improvements to area will include regional coastal park with restored wetlands, streets/circulation/coastal access, parking, and site clean-up/remediation efforts. •Carson (City and L.A. County Adopted Resolutions of Intent, Currently in Public Hearing Process) ‒City/County contributions will fund remediation and supporting infrastructure for regional recreational improvements on County-owned former golf course City of R.C. “Return on Investment” 25 •Implementation of essential infrastructure improvements of communitywide and regional benefit •Social impacts: Quality of life improvement, environmental sustainability •Housing: 11,700+ units •Economic benefits: 7,440+permanent, direct jobs from operation; additional 2,500+ indirect and induced permanent jobs, supporting $445M+in ongoing annual wages in the County 53,000+temporary construction-related jobs*, supporting $4.4B in temporary wages in the County •Acceleration of development and related fiscal revenues: Positive City general fund net fiscal impact of $122M over district lifetime versus “no-EIFD” scenario (assuming 25% contribution scenario), further improving drastically after district termination (net of City service costs and net of City contribution to EIFD)* * 53,000+ construction job-years, where a construction job-year is defined as one-year of employment for one construction-related worker ** “No-EIFD scenario” assumes slower, less intense development due to lack of supportive infrastructure; present value benefit at 3% discount rate ($267M benefit in nominal dollars) 26 Summary of Potential Net Fiscal Impacts Net of Potential 25% Increment Contribution to EIFD Note: Assumes installation of necessary public infrastructure. $2021 City of Rancho Cucamonga Fiscal Revenues and Expenditure Within EIFD Study Area Stabilized Annual Revenues Year 0 -50 Nominal Total Year 0 -50 Present Value @ 3.0% Primary Fiscal Revenues $38,194,000 $2,242,272,400 $929,851,200 Potential EIFD contribution (25% Contribution Scenario)($5,267,875)($293,782,100)($124,761,100) Primary Fiscal Expenditures ($25,503,300)($1,586,414,700)($637,304,600) Estimated Net Fiscal Impact $7,422,825 $362,075,600 $167,785,500 Fiscal Return on Investment for City of R.C. Net Fiscal Impact –EIFD (25% Scenario) vs. “Do-Nothing” Scenario 27 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 w/ EIFD enabled investment Annual NET New Fiscal Revenue to City General Fund (EIFD Parcels) w/o EIFD –delayed, muted revitalization •$122M in cumulative net fiscal benefit to City over 50 years (present-value discounted at 3%), further improves drastically after year 50 EIFD terminates in Year 50 and 100% property tax flows to General Fund 28 Illustrative EIFD Formation Schedule Tax increment allocation begins fiscal year following district formation Debt issuance, if desired, would occur after a stabilized level of tax increment has been established Target Date Task Q4 2021 a)Conduct outreach /discussion with City staff and Council,County staff and Board of Supervisors Q1 2022 b)Final determination of PFA composition,tax increment contributions and EIFD boundaries Q1 2022 c)Participating taxing agencies adopt Resolution(s)of Intent (ROI)to form EIFD and establish PFA Q1 2022 d)PFA drafts Infrastructure Financing Plan (IFP) August 2022 e)Distribute draft IFP to property owners,affected taxing entities,PFA,City Council,and planning commission with corresponding project-related CEQA documentation Aug / Sept 2022 f)PFA holds an initial public meeting to present the draft IFP to the public and property owners Sept / Oct 2022 g)PFA holds first “official”public hearing to hear written and oral comments but take no action (noticing must occur at least 30 days after “f”) Oct / Nov 2022 h)PFA holds second public hearing to hear additional comments and take action to modify or reject IFP (at least 30 days after “g”) Oct / Nov 2022 i)City Council /legislative bodies of other affected taxing entity contributing increment adopt resolution(s) approving IFP Nov / Dec 2022 j)PFA holds third public hearing to consider oral and written protests and take action to terminate proceedings or adopt IFP by ordinance (at least 30 days after “h”–target completion before August 9th prior to roll equalization) by March 2023 k)Election via mail-in ballot if between 25%and 50%of landowners and residents protest*(within 90 days of “j”,if applicable) Dec 2022 l)Filings with BOE per guidelines from Board for Change of Jurisdictional Boundaries (deadline is Dec.1,2021) 29 Next Steps •Receive and incorporate feedback from City Council •Discuss with potential partners (e.g., County) to determine feasibility for cooperation •Refine analysis assumptions (e.g., boundary, development projections, levels of contribution, targeted infrastructure costs) based on continued outreach and feedback •Pursue district formation to establish base year for incremental value growth as soon as feasible (first action would be City/County adoption of a Resolution of Intent) •Continue to pursue opportunities for external funding sources (e.g. IIG and AHSC grants), ideally under joint City/County EIFD platform for greater priority 30 THANK YOU Questions? Kosmont Companies 1601 N. Sepulveda Blvd. #382 Manhattan Beach, CA 90266 Ph: (424) 297-1070 | Fax: (424) 286-4632 www.kosmont.com Disclaimer 31 The analyses,projections,assumptions,rates of return,and any examples presented herein are for illustrative purposes and are not a guarantee of actual and/or future results .Project pro forma and tax analyses are projections only.Actual results may differ from those expressed in this analysis. Discussions or descriptions of potential financial tools that may be available to the City are included for informational purposes only and are not intended to be to be “advice”within the context of this Analysis. Municipal Advisory activities are conducted through Kosmont Companies’affiliate,Kosmont Transaction Services,which is Registered as a Municipal Advisor with the SEC and MSRB.