Oakland explores a new model for financing affordable housing development

Oakland is set to establish a new affordable housing funding model, called the Enhanced Infrastructure Funding District, but Tuesday’s city council vote does not guarantee it will be created.

The unanimous vote directs city staff to analyze the potential costs, benefits and structure of a West and East Oakland EIFD. This type of infrastructure district is the same tool the A’s of Oakland want to use to fund their Howard Terminal baseball stadium complex.

How it would work: While property tax rates would remain the same and continue to fund the same services, a portion of future increases in tax revenue in a designated district (increases due to new development projects or rising property values) would be set aside for new affordable housing. For example, the city could set aside 35% of all future West Oakland property tax revenue increases for new housing projects in the area.

The city could choose to issue bonds for projects and pay off the debt with the property tax set aside.

“This is one of the ways we are addressing the historic disinvestment from our communities,” said board member Carroll Fife, co-author of the article with council member Sheng Thao.

Fife represents West Oakland, where she said neighborhood conditions are a product of “the onlineization, segregation, and resource extraction of black communities during urban renewal.” An EIFD could allow the city to reinvest in the district, in particular by cleaning up toxic sites so they are ready for development, she said.

The EIFD would create a new governing body, including some board members and some public members.

During Tuesday’s city council, real estate advice Kosmont Enterprises presented its findings on the projected revenues of an Oakland EIFD. The company reviewed a model district that would include a significant portion of West Oakland and Deep East Oakland, totaling about 12% of the city, but did not explain how the particular boundaries were selected.

Depending on the percentage of future tax increases the city sets aside for this district – between 25 and 50 percent – the EIFD could rack up between $20 million and $60 million in its first five years and between $45 million and $119 million. dollars over 10 years, according to Kosmont. The money would better position Oakland to receive public and private grants that require matching funds, supporters say.

The EIFD model is similar to an older California funding mechanism called Redevelopment. Governor Jerry Brown dissolved redevelopment in 2012, diminishing a reliable source of housing funds for Oakland. A few years later, the state authorized the use of EIFDs by cities.

“This is a better version of the redevelopment,” Thao said Tuesday.

After offering a feasibility study about a year ago, Thao applied for funds from an affordable housing developer TODCO to fund Kosmont’s research. Developers like TODCO could benefit from creating an EIFD, although company management said they got involved because they were generally passionate about the model.

Thao, who is running for mayor, has made the EIFD concept a cornerstone of her platform, promoting the idea whenever she is asked about her plans to help Oakland achieve its far-reaching affordable housing goals. State and regional governments have asked the city to plan about 18,000 additional low- and middle-income units by 2031.

The other two council members running for mayor, Treva Reid and Loren Taylor, have said in interviews on Oaklandside that they favor pursuing exploration for an EIFD, although Taylor has expressed some skepticism that it would generate significant revenue. “I’m in favor of exploring that. I have questions,” he said.

On Tuesday, Taylor asked how much of EIFD’s projected revenue would come from already projected growth in property tax revenue – which would go to other city departments – and how much would be generated by development. allowed by the EIFD itself. For example, a proposal for Howard Terminal would use new tax revenue generated by the project itself to pay for construction costs.

Kosmont’s Joseph Dieguez said the company tries to predict what would happen naturally, and what would only happen with the neighborhood: “You’re facilitating growth, but you’re also…carving out part of the pie property tax and direct it away from the general fund,” he said.

Thao told The Oaklandside that his other mayoral housing plans generally include prioritizing affordable housing over market-rate development, especially in affluent areas like the hills of East Oakland.

Taylor said as mayor he would establish a “social impact fund” for residents to invest in affordable housing projects. It will also revamp the Department of Planning and Building to make it easier to get permits and approvals, especially from underrepresented local developers.

Reid would also target housing funds for black neighborhoods, including pushing for a program to boost homeownership in those communities. (Read more about all the mayoral candidates’ housing platforms.)

If Oakland established an EIFD, the infrastructure district board would propose a spending plan that would require final board-wide approval. While the proposal has so far focused on housing, district revenues could be earmarked to fund a range of infrastructure projects and programs. Some officials spoke on Tuesday of investing in cultural initiatives, such as the redevelopment of the once-thriving West Oakland neighborhood. 7th Street Corridorvictim of urban renewal.

There are currently 21 DTIs in California, funding everything from sewage systems to libraries, according to Kosmont.

“The goal is to personalize it for the local community,” Dieguez said.

The council directed city staff to present further analysis and proposals for separate EIFDs for East and West Oakland, as well as a combined EIFD, at a finance committee meeting. and management in December. A potential vote to establish a district would not take place until next year if the council decides to go ahead with the concept.

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