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CA Governor Signs Two Bills Clarifying EIFD Law

July 16, 2021

By Lynn Kelly-Lehner, Director

Redevelopment agencies’ dissolution in 2011 diminished the use of tax increment financing, the primary tool used by local governments to eliminate physical and economic blight, finance new construction, improve public infrastructure, rehabilitate existing buildings, and increase the supply of affordable housing.

Since that time, the State created several new vehicles for tax increment financing, among these are Enhanced Infrastructure Financing Districts (EIFDs). City or county officials can create an EIFD to finance public capital facilities that provide significant benefits to the surrounding community. An EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity’s legislative body and a minimum of two public members.

The Governor recently signed two bills that will strengthen the efficacy of EIFDs. Assembly Bill (AB) 464 was signed by the Governor on June 29, 2021. The bill expands the types of facilities and projects EIFDs may fund to include small business structures impacted by the COVID-19 pandemic and non-profit community organizations’ facilities.

AB 464 defines small business as “an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and together with affiliates, has 100 or fewer employees, and average annual gross receipts of $15 million or less over the previous three years, or is a manufacturer with 100 or fewer employees.” This bill specifies that an independently owned and operated business includes independently owned franchises.

AB 336, which was also signed on June 29th, will allow any member of the legislative body of a participating affected taxing entity who serves as a member of the PFA of an EIFD, to serve as a member of the governing body of a Joint Powers Authority (JPA) where the taxing entity is a member. This bill eliminates potential conflicts in current law against public officials holding incompatible offices. Incompatible office law generally prohibits a public officer, including an appointed or elected member of a governmental board, commission, committee, or other body, from simultaneously holding two public offices that are incompatible. AB 336 has the potential to lower transactional costs of an EIFD and may increase efficiency by clarifying the roles of board members.

If your jurisdiction wants to learn if an EIFD is feasible in your community, email Lynn Kelly-Lehner at [email protected].