Demystifying EIFDs: How Cities Build the Future Without Raising Taxes
In our last few RBC Reports, we’ve explored the immense value of "site readiness"—the work of preparing a property with the right zoning, utilities, and access to attract major investment. But even when a site is perfectly positioned and the vision is clear, there is often one massive hurdle standing in the way of a shovel in the ground: the price tag.
Who pays for the new roads, the upgraded sewer lines, and the expanded power grids required to support new housing or a downtown revitalization?
For many cities, the answer lies in a powerful, yet often misunderstood tool: the Enhanced Infrastructure Financing District (EIFD).
The "Implementation Gap"
We see it often: a city adopts a bold Specific Plan (like a downtown revitalization or a new innovation park). The renderings are beautiful, and the community excitement is high. But the plan sits on the shelf. Why? Because the cost of the backbone infrastructure needed to support that density is too high for a developer to bear alone, and the city’s general fund is already stretched thin.
This is the "Implementation Gap." An EIFD is the bridge across it.
What is an EIFD?
At its simplest, an EIFD is a tool that allows local agencies to capture the future value of growth to pay for the infrastructure needed to create it today.
Unlike traditional assessments, an EIFD does not increase property taxes. Instead, it uses a mechanism called "tax increment financing." Here is how it works in plain English:
Freeze the Base: The City establishes a baseline for property tax revenue in a specific district.
Capture the Growth: As new development occurs and property values rise (the "increment"), a portion of that new revenue is dedicated specifically to the EIFD.
Reinvest: That dedicated revenue stream is used to bond for or directly fund the roads, pipes, parks, and affordable housing needed to support the district.
Why Strategy Matters
Forming an EIFD isn't just a math problem; it's a strategic one. It requires defining the right boundaries (to ensure you capture the growth areas) and conducting rigorous fiscal assessments (to ensure the revenue projections are real).
When done correctly, it creates a "virtuous cycle": the infrastructure investment attracts development, the development increases property values, and those values fund further improvements.
Moving from Plan to Action
At Rachael Brown Consulting, we believe that a vision without a funding strategy is just a wish. That is why we are currently partnering with forward-thinking clients to move beyond the planning phase and into implementation.
By utilizing tools like EIFDs, cities can stop asking "how can we afford this?" and start asking "how fast can we build this?"