Sheng Thao, who’s running for Mayor, has a new idea for solving homelessness: creating an Enhanced Infrastructure Funding District, or EIFD. “That is not a new tax,” she declared at a campaign event. “It’s not a new tax on businesses or property owners. It’s paid back through tax increments. It’s kind of like redevelopment, but better.”
Did you understand any of that? I didn’t either, the first time I read it. So I did a little research into EIFDs. Here’s what I found.
Cities are perpetually in need of money. But there’s a limit to how they can get it. Taxes are always fair game, but in a near-recession, with taxpayers in open revolt, politicians like Thao are hesitant to talk about new taxes, especially property taxes. These same pols also are reluctant to suggest raising business taxes; businesses already are reluctant to move to Oakland, for obvious reasons, and jacking up taxes would make them even more dubious. So where’s the money supposed to come from?
Basically, the idea behind an EIFD is that cities can “capture” property tax increases that would otherwise default to general revenue budgets; these monies would then be used for specific infrastructure, including housing. EIFDs were authorized in 2015 in a new law, SB 628, signed by then Gov. Jerry Brown. Since investing in, or “enhancing,” infrastructure often is beneficial to property owners who live nearby, the concept is that the city that so invests is entitled to the higher property taxes that result from the enhancements. EIFDs (or “value captures,” as they’re also known) have been used for everything from cleaning up the Los Angeles River to funding transit. There’s even talk of creating a Bay Area-wide EIFD to build the fabled “Southern Crossing,” a second Bay Bridge south of the present one.
Thao wasn’t explicit in her suggestion of using an EIFD for homelessness; it would be nice to hear more of her idea. What are the geographic boundaries of the district? What adjacent properties would be exploited? How would the funds be invested? Is the city to become a real estate developer? The legality of taking property taxes, which generally flow into General Revenue funds, and applying them for specific purposes, such as affordable housing, is debatable. For every dollar spent on housing, something else—schools, employee salaries and benefits, parks—loses a dollar. In a city as contentious as Oakland, there would be an outcry if, say, Thao decided to make the area around Wood Street an EIFD, which would then benefit only the area around Wood Street rather than the city as a whole.
For all the weaknesses of Thao’s “plan” (which isn’t really a “plan” so much as it is a talking point), it does indicate how keenly she’s running for Mayor. Everyone expects each candidate to have a “plan” for homelessness, not matter how vague or sketchy. Now, Thao has one—and it is indeed vague to the point of nebulous. I’d be interested in hearing her flesh out her vision of what exactly it is and how she proposes to bring it about…and also, what kind of dent she thinks it will make in our homeless count, which stands at 5,000 and rising.
Steve Heimoff