Los Angeles River

Enhanced Infrastructure Financing Districts

Revenue Yield Analysis
Arts, Parks and River Committee Presentation
December 5, 2016

EIFDs are independent, place-based entities which can finance

infrastructure that benefits a community.
Enhanced Infrastructure Financing Districts
(EIFDs) are a new public financing mechanism
established by SB 628 and AB 313, but have
not yet been tested.

EIFDs can draw from a range of funding

sources, including property tax increment net
of education agency shares, as well as fees,
grants or private investments.
EIFDs can issue bonds with terms of up to 45
years, upon approval of 55% of voters (with
exceptions) within the EIFD boundaries.
Property tax increment has most revenue
potential, thus this is what HR&A is estimating.
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 2

Property tax increment has most revenue potential for an EIFD, thus
this is the focus of HR&As analysis.
An EIFD can capture property tax
growth above a baseline year due to
increases in assessed value (AV).
Assessed value growth is limited to
2% annually per Prop 13 (i.e., less
than inflation, does not generate tax
increment until resold).
Tax increment is generated from
Turnover of existing properties
New construction
Each requires a separate set of
calculation assumptions

HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 3

HR&A developed and refined initial estimates of tax increment revenue

yield within 1 mile of the LA River within the City of Los Angeles.
Kick-off/Assumptions Workshop
Initial EIFD Revenue Yield Analysis
Boundary Definitions Workshop
Stakeholder Interviews
Refined EIFD Revenue Yield Analysis &
Recommendations
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 4

HR&As Revenue Yield Analysis

Methodology & Key Assumptions
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 5

HR&A estimated property tax increment from both existing

property and new development and resulting bonding capacity.
Existing Assessed Value
Key components
- CRA Recognized
Obligations
- - Proposition 13
AV Growth Limit
- Turnover

HR&A Advisors, Inc.

New Development Value

Bonding Capacity
Key components
- Vacant Parcels
Key components
($/Current Land Use)
- Baseline AV
- Devt potential
- Tax increment from
(Zoning/Ownership)
turnover
- Capacity (FAR/DUs)
- Tax increment from
- Build-out timeline
new construction
(SCAG Projections)
- Debt coverage &
- Turnover
bond assumptions
Los Angeles River EIFD Revenue Yield Analysis | 6

Revenue Yield Results

and Key Sensitivities
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 7

HR&As analysis evaluated EIFD revenue yield within 1 mile of the

LA River, using 13 sub-districts to understand concentration of yield.

Griffith Park

HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 8

The maximum City of LA EIFD revenue yield within 1 mile of the LA River
could reach $1.3b; the Countys tax increment could yield another $1.2b.
Projected 100% of Tax Increment Property Tax Revenue Yield (30 Year Bond, $M)
Sub-Area
Warner Center
Reseda-Tarzana-Encino
Sherman Oaks
North Hollywood
Griffith Park
Northeast LA
Los Feliz-Silverlake-Echo Park
Lincoln Heights-Boyle Heights
Chinatown-Arts District
Total Within the City of LA
Universal City
Burbank
Glendale
Vernon
HR&A Advisors, Inc.

City Gen. Fund

(26.3% of 1%)

County Gen. Fund

(24.5% of 1%)

County Flood
(0.9% of 1%)

$115
$150
$340
$195
$5
$105
$100
$40
$215
$1,265
$0
$90
$50
$5

$105
$140
$315
$185
$5
$95
$95
$35
$200
$1,175
$15
$175
$145
$55

$5
$7
$16
$9
$0
$5
$4
$1
$10
$57
$1
$5
$5
$1

Los Angeles River EIFD Revenue Yield Analysis | 9

An LA River EIFD would likely include a portion of both City and County
TI; a 75% contribution could yield up to $1.9b from a 30 year bond.
Projected City and County of LA (75% of TI) Property Tax Revenue Yield ($M)
Sub-Area
Warner Center
Reseda-Tarzana-Encino
Sherman Oaks
North Hollywood
Griffith Park
Northeast LA
Los Feliz-Silverlake-Echo Park
Lincoln Heights-Boyle Heights
Chinatown-Arts District
Total City/County Share

30-Year Bond

Year 5 TI

Year 10 TI

$170
$225
$505
$295
$10
$155
$150
$60
$320
$1,895

$6
$6
$14
$7
$0
$4
$4
$2
$11
$53

$10
$13
$30
$16
$1
$8
$8
$4
$22
$112

Per CAO direction, it is assumed that the City and County would contribute less
than 100% of tax increment
This baseline analysis assumes 75% from City and County General Fund tax
increment and 75% of County Flood Control District tax increment.
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 10

If the City and County of LA, as well as nearby cities were to contribute
75% of their tax increment, a 30-year bond yield could reach $2.3b.
Projected Cities and County of LA (75% of TI) Property Tax Revenue Yield ($M)
Sub-Area
Warner Center
Reseda-Tarzana-Encino
Sherman Oaks
North Hollywood
Griffith Park
Northeast LA
Los Feliz-Silverlake-Echo Park
Lincoln Heights-Boyle Heights
Chinatown-Arts District
Universal City
Burbank
Glendale
Vernon
Total 1-Mile Cities/County
HR&A Advisors, Inc.

30-Year Bond

Year 5 TI

Year 10 TI

$170
$225
$505
$295
$10
$155
$150
$60
$320
$15
$205
$150
$45
$2,310

$6
$6
$14
$7
$0
$4
$4
$2
$11
$0
$6
$4
$1
$64

$10
$13
$30
$16
$1
$8
$8
$4
$22
$1
$12
$9
$3
$136

Los Angeles River EIFD Revenue Yield Analysis | 11

Areas within 1 mile of the River in the City of LA could generate $60m/
year by the 5th year following EIFD formation and $115m by the 10th.

Millions

Draft Projected
Annual
Increment
(2016 Tax
$) Yield (2016 $)
Projected Cities
and County
of LAProperty
(75% of Tax
TI) Annual
Property
Year 30
$350
$305m
Year 25
$300
$260m
Year 20
$250
$210m
Year 15
$250m
$200
$160m
Year 10
$210m
$150
$115m
$170m
Year 5
$100
$60m
$130m

$95m

$50

$50m

$0

11 13 15 17 19 21 23 25 27 29
Year

Total City and County of LA

HR&A Advisors, Inc.

Total Cities and County of LA

Los Angeles River EIFD Revenue Yield Analysis | 12

Revenue Yield versus LARRMP

and Alternative 20 Costs
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 13

LARRMP costs and EIFD Revenues were evaluated for the LA River
within the City of LA, as well as within two North/South sub-districts.

North

South

Northern & Southern

Sub-Areas
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 14

A River EIFD could fund a small portion of the LARRMP after the
Citys Alternative 20 Local Match and for affordable housing.
Projected EIFD Revenue Yield ($M) & Project Cost (2016 $)
Total 1-Mile Radius

North Sub-Area

South Sub-Area

30-Year Bond Revenue

Yield (City/County of
LA, 75% of TI)

$1,895

$1,190

$705

Less: 20% Affordable

Housing Set-Aside

$380

$240

$140

Less: Alternative
20 Cost**

$980

$0

$980

Remaining Revenue
Yield

$535

$950

($415)

$5,020

$1,620

$3,400

LARRMP Cost*

*Average of LARRMP high and low cost estimates

**City of LA Alternative 20 local match; some land acquisition costs may be included in the LARRMP.

HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 15

Conclusions and Recommendations

HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 16

EIFD can contribute a significant amount of revenue to LA River

improvements, but a comprehensive financing strategy is needed.
A City and County of LA River EIFD within 1-mile
of the LA River within the City of LA could
generate up to $1.9 billion in revenue, but
estimated costs associated with LARRMP total
as much $6.0 billion.
County participation in an EIFD will be critical
and the share of increment contributed could
substantially affect total EIFD revenue yield.

The EIFD Financing Plan will need to include

additional revenue sources to fully fund
proposed LA River infrastructure projects.
Even if the EIFD does not bond, the areas within
1 mile of the LA River could still generate a
significant amount of annual revenue.
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 17

Implementing the LA River EIFD requires a number of critical next

steps.
Implementing an EIFD will require identifying champions
within the City who can rally both political and community
support.
Part of this will include effectively communicating the
potential economic and social value of LA River investments.
Furthermore, the City should work to develop a compelling
vision for and understanding of revenue potential along the
full 52 miles of the LA River, with participation of County and
other jurisdictions.
There are also a number of additional analytical tasks, which
include:
A thorough review of other potential revenue sources; and
Prioritization of infrastructure projects to align with yield.
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 18

Enhanced Infrastructure Financing Districts

HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 19

The political and procedural steps for implementing an EIFD include the
following.
Finalize EIFD Strategy and Generate Political
and Community Buy-in
Negotiate Participation with County and Other
Cities
City Council and Board of Supervisors
Resolutions to Form EIFD

Refine Revenue Yield Estimates and Identify

Other Funding Sources
Develop and Approve Infrastructure Financing
Plan and Establish Public Financing Authority
Seek Voter Approval for Bonding Authority
and Issue Bonds
HR&A Advisors, Inc.

Los Angeles River EIFD Revenue Yield Analysis | 20

Los Angeles River

Enhanced Infrastructure Financing Districts
Revenue Yield Analysis
Arts, Parks and River Committee Presentation
December 5, 2016