Encinitas Municipal Code § 10.3 Financing Strategies

A detailed financing plan should be prepared in order to successfully implement the improvements and programs proposed by the North 101 Corridor Specific Plan. Along with establishing specific goals and policies, the financing plan should analyze a series of methods to finance infrastructure and other improvements, recommend preferred alternatives, and develop a process for enacting financing methods.

The following is a summary of possible methods for financing the specific plan improvements as identified above. Some of these financing methods may be impacted by the passage of Proposition 218 in November of 1996. However, the extent of impact will not be known until Proposition 218 is completely implemented.

California law provides procedures to levy assessments against benefiting properties and issue tax exempt bonds to finance public facilities and infrastructure improvements. Assessment districts, also known as improvement districts, are initiated by the legislative body (e.g. city), subject to majority protest of property owners or registered voters. Assessments are distributed in proportion to the benefits received by each property, and represent a lien against property. The assessments are fixed dollar amounts, and may be prepaid. Only improvements with property-specific benefits (e.g. roads, and sewer and water improvements) may be financed with assessments.

Area of benefit fees may be enacted by the legislative body (i.e. city) through adoption of an ordinance, without voter approval. The fee must be directly related to the benefit received. It does not create a lien against property, but must be paid in full as a condition of approval. Its principle use is for encumbering properties that do not voluntarily enter into an assessment of a Community Facilities District (CFD), so that they pay their fair share at the time they are ready to be developed. Proceeds may be used to reimburse property owners who pay up-front cost for facilities benefiting other properties. Benefiting properties may be given the option to finance the fees by entering into an assessment district (1913/1911 Act or Mello-Roos CFD).

The Mello-Roos Community Facilities Act of 1982 allows for the creation of special districts authorized to levy a special tax and issue tax exempt bonds to finance public facilities and services. A CFD may be initiated by the legislative body or by property owner petition, and must be approved by a 2/3 majority of either property owners or registered voters (if there are more than 12 registered voters living in the area).

Taxes are collected annually with property taxes, and may be prepaid if prepayment provisions are specified in the tax formula. The levy creates a tax lien against the property. There is no requirement that the tax be apportioned on the basis of benefit. Because there is no requirement to show special benefit, Mello-Roos levies may be used to fund improvements of general benefit, such as fire and police facilities, libraries and parks, as well as improvements that benefit specific properties. The provision also allows for the reallocation of cost burdens to alleviate untenable burdens on specific properties.

Landscaping and Lighting Districts (LLD) may be used for installation, maintenance and servicing of landscaping and lighting, through annual assessments on benefiting properties. LLD's also may provide for construction and maintenance of appurtenant features, including curbs, gutters, walls, sidewalks or paving, and irrigation or drainage facilities. They also may be used to fund and maintain parks above normal park standards maintained from general fund revenues.

This Act allows communities to utilize tax increment financing to carry out redevelopment activities, by applying tax increments obtained in the project area to finance planning, administrative, acquisition, and improvement activities. The Act permits a redevelopment agency to finance land acquisition for public purposes, construction of public facilities, such as roads, parks, and sewers, and administrative, legal, planning, and engineering costs related to the project.

The agency could issue bonds to finance project area improvements and administrative costs, and could apply the tax increments derived in the project area to pay the debt service on the bonds. Tax increments are those tax revenues produced in an area in excess of the revenues produced at the time the Redevelopment Agency is formed. The excess revenues thus produced can be used to pay off bonds used to finance the expenses of the redevelopment process such as administration, planning, acquisition, and construction of public facilities. Current and projected development could provide a substantial revenue base from which to finance major improvements.

Utility companies are required to budget funds each year for undergrounding. These budgets are approved by the Public Utilities Commission and assigned to specific projects in each area based on priorities developed by local government.

The passage of the Intermodal Surface Transportation Efficiency Act of 1991 provides funding to strengthen the national transportation system through "enhancement" projects. Transportation enhancement activities include: pedestrian and bicycle facilities, acquisition of scenic and historic sites, scenic and historic highway programs, landscaping, rehabilitation of historic transportation facilities, preservation of abandoned transportation corridors, archeological planning and research, control and removal of outdoor advertising, and mitigation of water quality impacts from roadway runoff. Funding can be obtained through San Diego Association of Governments (SANDAG) on a regional basis and also directly through the State.

These grants issued from the Federal Housing and Urban Development Department (HUD) are available to areas in which at least 50 percent of the households have a low-moderate income.

There may be other sources available to finance improvement projects such as special assessment districts, government grants, or various types of bonds not listed above, that may be used to fund improvements.

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