To: Honorable Mayor and Members of City Council
From: Molly Rattigan, Deputy City Manager and Interim Community Development Director
Prepared By: Neal Harrison, Economic Development Manager
TITLE:
Title
Public Hearing on the Napa EIFD Annual Report Fiscal Year 2024-2025
LABEL
RECOMMENDED ACTION:
Recommendation
1. Conduct a Public Hearing on the Annual Report of the Napa Enhanced Infrastructure Financing District; and
2. Adopt a Resolution (1) Adopting the Annual Report for Fiscal Year 2024-2025; and (2) Approving Administrative Amendments to the Napa EIFD Infrastructure Financing Plan.
Body
DISCUSSION:
The City Council of the City of Napa established the Public Financing Authority (“PFA”) for the Napa Enhanced Infrastructure Financing District (“Napa EIFD”) at its regular meeting on July 20, 2021. The PFA is the governing board of the Napa EIFD, and the PFA established the Napa EIFD through its approval of the governing Infrastructure Finance Plan (“IFP”) on July 6, 2022, which was initially reviewed and approved by the City Council March 1, 2022.
The Napa EIFD (“District”) is a governmental entity that may use future incremental City property tax revenue from within the geographical boundaries of the Napa EIFD to fund public capital facilities and infrastructure, as well as other specified projects of communitywide significance that provide significant benefits to properties within the Napa EIFD as well as the surrounding community. EIFDs are funded by capturing all or a portion of the future property tax increment revenue (i.e., the difference in property taxes received by the City prior to and after establishment of the EIFD) generated within the boundaries of the District. Thus, there are no new taxes imposed on the public through the EIFD. The EIFD may finance projects through the issuance of bonds or other debt and/or under a “pay-go” model where money is spent as it is collected. The requirements for the City’s establishment of an EIFD are set forth in California Government Code Sections 53398.50 and following (referred to as the “EIFD Law”).
The Napa EIFD boundaries include areas of the City that are currently vacant, significantly underutilized, and/or proposed for extensive development or redevelopment, as these areas represent the greatest potential for property tax growth and where investment in infrastructure has the capacity to trigger substantial economic development benefits.
On an annual basis, the PFA is required to review the IFP and consider any amendments that are necessary and appropriate, require the preparation of an annual independent financial audit, and adopt an annual report documenting the status of specified elements of implementation of the IFP for the Napa EIFD. (See California Government Code Section 53398.66(j).)
CURRENT ACTION:
The Community Development Department’s Economic Development Division and Kosmont Companies, consultant, in conjunction with other supporting City of Napa departments, has prepared the District’s Fiscal Year 2024-2025 Annual Report (Attachment 1)
A draft report was made available to the public on the Napa EIFD’s website on May 2, 2025, which was more than 30 days before the public hearing. In addition, a written notice was mailed to all residents and landowners within the area covered by the District.
In order to comply with the established requirements, the District’s Fiscal Year 2024-2025 Annual Report includes the following sections:
Description of Projects in FY 2024-2025
There were no projects undertaken in Fiscal Year (“FY”) 2024-25, which is consistent with the progress expected to be made at this point.
a) A description of the projects undertaken in the fiscal year 2024-25.
There were no projects undertaken in Fiscal Year (“FY”) 2024-25, which is consistent with the progress expected to be made at this point.
b) A chart comparing the actual revenue and expenses, including administrative costs, of the public financing authority to the budgeted revenue and expenses.
Projected and actual revenues and expenditures are shown in Table 1.
Table 1: Projected and Actual Revenue and Expenses
|
|
PROJECTED Revenues |
PROJECTED Expenditures (incl. Admin) |
PROJECTED Net Revenue |
|
ACTUAL Revenues |
ACTUAL Expenditures (incl. Admin) |
ACTUAL Net Revenue |
|
FY 2021-22 |
$0.00 |
$0.00 |
$0.00 |
|
$0.00 |
$0.00 |
$0.00 |
|
FY 2022-23 |
$189,163.00 |
($25,000.00) |
$164,163.00 |
|
$52,546.77 |
$0.00 |
$52,546.77 |
|
FY 2023-24 |
$384,633.00 |
($25,000.00) |
$359,633.00 |
|
$169,893.54 |
$0.00 |
$169,893.54 |
|
FY 2024-25 |
$787,648.00 |
($25,000.00) |
$762,648.00 |
|
$296,901.06 |
$0.00 |
$296,901.06 |
City staff and Kosmont attribute the difference between actual and projected revenues to the delay in the development of some real estate projects originally forecasted at the time of IFP preparation (e.g., delays due to higher interest rates, increased construction costs).
c) The amount of tax increment revenue received.
Annual and cumulative EIFD tax increment revenues are outlined in Table 2 below.
Table 2: EIFD Tax Increment Revenue Received
|
Year |
Annual EIFD Revenues |
Cumulative EIFD Revenues |
|
FY 2021-22 |
$0.00 |
$0.00 |
|
FY 2022-23 |
$52,546.77 |
$52,546.77 |
|
FY 2023-24 |
$169,893.54 |
$222,440.31 |
|
FY 2024-25 |
$296,901.06 |
$519,341.37 |
d) An assessment of the status regarding completion of the enhanced infrastructure financing district’s projects.
The EIFD is in the early phase of building a stabilized revenue stream that could be leveraged for future projects and potential debt issuance(s) accordingly. No EIFD projects have been funded, which is consistent with City and the PFA expectations at this time.
e) The amount of revenue expended to assist private businesses.
As of the date of this Annual Report, no revenue have been expended to assist private businesses. This is consistent with City and the PFA expectations at this time.
Additionally, as noted above, EIFD law (Government Code Section 53398.66(j)) requires that the PFA review the IFP at least annually to consider potential amendments to the IFP. Staff and consultants are suggesting only administrative changes to the IFP, focused on adjusting revenue projections to align with the three years of revenue history thus far.
Lastly, the annual independent financial audit is in progress and will be complete at the same time as the City’s annual audit.
FINANCIAL IMPACTS:
There is no fiscal impact associated with the public hearing.
For the Napa EIFD, a portion of future property tax revenue increases from properties within the Napa EIFD that would otherwise be received in the City’s general fund are allocated to the Napa EIFD for the purpose of funding infrastructure and other public improvements, subject to compliance by the Napa EIFD and the PFA with the IFP for the Napa EIFD. As set forth in the IFP, the City’s allocation of tax increment is contingent upon the PFA’s use of such increment for authorized purposes, and the City Council reserved the right to approve any bonds, notes, agreements or contractual obligations of the Napa EIFD that are payable from such tax increment.
CEQA:
The Community Development Director has determined that the Recommended Action described in this Staff Report is not subject to the California Environmental Quality Act (“CEQA”) since it is not in-and-of itself a “project” (pursuant to CEQA Guidelines Section 15378), and since it involves the creation of a government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment per CEQA Guidelines Section 15378(b)(4). Additionally, the Recommended Action is exempt from CEQA since it can be determined with certainty that there is no possibility it will result in a significant effect on the environment. However, future actions (such as the funding of infrastructure improvements using funding from the Napa EIFD) will be subject to environmental review in accordance with CEQA at the “earliest feasible time” prior to “approval” consistent with CEQA Guidelines Sections 15004 and 15352.
DOCUMENTS ATTACHED:
ATCH 1 - Resolution
EX A - Napa EIFD Annual Report FY 2024-2025
EX B - Amended Napa EIFD Infrastructure Financing Plan
EX C - Amended IFP Appendix C Tax Increment Analysis
NOTIFICATION:
A draft report was made available to the public on the Napa EIFD’s website on May 2, 2025, which was more than 30 days before the public hearing. In addition, a written notice was mailed to all residents and landowners within the area covered by the District