BEYOND THE BASICS USING THE EIFD TOOL

Transcription

1 BEYOND THE BASICS USING THE EIFD TOOL CALED S 37 TH ANNUAL TRAINING CONFERENCE March 23, 2017 San Diego, California PRESENTED BY CONSTANTINE BARANOFF, JAMIE GOMES, RICHARD FRANCE, SHAREHOLDER MANAGING PRINCIPAL PRINCIPAL

2 THE FACTS Picture a two square mile section of an inner city neighborhood which has for years been bifurcated by a belowgrade major freeway. Civic leaders have wanted to reinvent this area with an eye toward increasing open space and civic amenities. Our presentation focuses on the funding mechanisms one may use in financing a freeway overlay project. 2

3 ENHANCED INFRASTRUCTURE FINANCING DISTRICT (EIFD) EIFD: The EIFD law provides for the creation of an independent authority called a public finance authority which implements an IFD plan. Mello-Roos CFD: The Mello Roos Community Facilities Act provides for the levy of special taxes on property. 3

4 WHAT IS ENVISIONED FOR THIS FREEWAY OVERLAY? Cities have, for the most part, utilized freeway overlays to create new green areas. As we will see in this discussion, freeway overlays make sense in areas where free land is scarce and is expensive enough that building an overlay makes financial sense. 4

5 FREEWAY OVERLAYS 5

6 INTRODUCTION TO THE FINANCIAL MODEL Creation of this freeway overlay results in the repurposing of former freeway ramps and perimeter property. CFD Discussion. EIFD Discussion. 6

7 FREEWAY OVERLAY AND RAMP/PERIMETER PROPERTY OWNERSHIP The involvement of the cities/counties provide the critical foundation which would drive the project. The overlay will be constructed and then owned by JPA. The ramp/perimeter property will initially be acquired by the same JPA. 7

8 Hypothetical Case Study Parameters Approximate 10 acre freeway cap. Approximately 5-7 acres in new development. New Development Summary. 775 residential units. 150,000 square feet of office. 60,000 square feet of retail. Assumed to absorb over 5 years. 8

9 Existing Conditions

10 Decking area: 13 acres

11 Decking area: 13 acres 10.5 acres 2.5 acres

12 Potential new street

13 Sites unlocked for development: Approximately 5 7 acres

14 Capital Funding Matrix Funding Source Planning + Design Deck Infrastructure Park + Street Improvements Local X X State X X X Federal X Private Value Capture CFD EIFD X X Other Donations X X X Grants X X X Comm. Dev. Block Grants X X X Cap and Trade X X

15 EIFD Revenue Assumptions Boundary approx. 1 mile radius. City property tax approx. 20 % post ERAF. County property tax approx. 30% post ERAF. Three categories of Assessed Value growth. Existing and redevelopment (within 0.5 miles of park). Existing and redevelopment (within next 0.5 mile ring). New development. 15

16 EIFD Boundary 1 mile

17 Park Proximity Premium 0.5 mile 1 mile

18 Components of EIFD Revenue EIFD Boundary Remaining (0.5 mile < X < 1.0 mile) Park Proximity Premium (0.5 mile) New Development

19 Net Present Value at 6% Discount Rate - $68.2 million $68.2 million NPV $15.6 m EIFD Boundary Remaining (0.5 mile < X < 1.0 mile) $22.1 m $30.5 m Park Proximity Premium mile New Development

20 New Mello-Roos CFD CFD formation supported by landowner (JPA). CFD boundary = park and new dev. parcels. Taxable parcels = New development parcels. Annual special taxes support CFD bond sale. Proceeds from CFD bonds used to construct park and backbone infrastructure. Maximum Annual Special Taxes paid by property owner. 20

21 CFD Boundary

22 New Mello-Roos CFD (continued) Maximum Annual Special Taxes Total of $3.8 Million annually in base year. Approximately $3.6 million on residential. Approximately $0.2 million on nonresidential. Typical versus Hybrid Incidence of taxes. 22

23 Estimated CFD Bonds and Bond Proceeds Estimated CFD Bonds = $49 million to $60 million. Estimated CFD Proceeds = $39 million to $49 million. 23

24 Estimated CFD Debt Service 30 Years

25 Estimated CFD Debt Service 30 Years Using 75% of Net Available EIFD Revenues CFD Tax on New Development EIFD Revenues NPV of Remaining EIFD Revenues ($30 - $35 million)

26 Advantages - CFD Plus EIFD CFD bond sale authorized by forming body (no subsequent votes after formation). CFD bond sale can occur early (secured by special taxes). EIFD revenues can offset portion of CFD special taxes. EIFD revenues could also be used on a pay-as-you-go basis. 26

27 Other Considerations CFD bonds versus EIFD bonds. Optimum combination of CFD financing and EIFD financing. Annual appropriation of EIFD revenues for CFD debt service. Alignment of funding sources to capital project needs (eligibility, timing, underwriting considerations, etc.) 27

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43 Thank You! For more information please visit us at PRESENTED BY CONSTANTINE BARANOFF, JAMIE GOMES, RICHARD FRANCE, SHAREHOLDER MANAGING PRINCIPAL PRINCIPAL

44 Thank You! CALED S 37 TH ANNUAL TRAINING CONFERENCE March 23, 2017 San Diego, California PRESENTED BY CONSTANTINE BARANOFF, JAMIE GOMES, RICHARD FRANCE, SHAREHOLDER MANAGING PRINCIPAL PRINCIPAL

45 Thank You! CALED S 37 TH ANNUAL TRAINING CONFERENCE March 23, 2017 San Diego, California PRESENTED BY CONSTANTINE BARANOFF, JAMIE GOMES, RICHARD FRANCE, SHAREHOLDER MANAGING PRINCIPAL PRINCIPAL