HEART OF HOLLYWOOD TAX INCREMENT FINANCING (TIF) STUDY

Welcome to The Heart of Hollywood Tax Increment Financing Study (the “Study”) webpage. This Study is assessing how the Hollywood Community could use tax increment financing (TIF) to help fund infrastructure projects and affordable housing outlined in the Walk of Fame Master Plan and the proposed Hollywood Community Plan Update.

 

WHAT IS TAX INCREMENT FINANCING (TIF)?

Tax Increment Financing, referred to as "TIF," is not a new tax. Instead, TIF is a set of public financing tools that allocate a portion of future property tax revenue, within an established district boundary, to be used to fund capital and operating costs related to infrastructure developments. TIF works by freezing property tax revenues from the district at a base level ("baseline revenue") and diverting a portion of additional tax revenue in future years above the baseline revenue (the "increment") to pay for projects directly or to pay back bonds serviced by the increment. TIF mechanisms only redirect property taxes and do not create any additional tax burden for property owners.

A Growing Increment can Fund Public Projects

A Growing TIF

Source: HR&A Advisors

WHAT IS AN EIFD?

The Study evaluated several TIF tools available in California and determined that an Enhanced Infrastructure Financing District ("EIFD") would be most suitable for Hollywood given its flexibility as a funding source and public agency familiarity with the tool and adoption process.

EIFDs are a type of TIF district that cities and counties can form to help fund economic development projects. EIFDs can finance capital costs or operations associated with public infrastructure projects, such as parks, improved transit, enhanced water and sewer systems, as well as affordable housing. EIFDs do not increase property taxes and cannot pull property taxes from school districts.

HoH EIFD Website Icons Types of Projects

HOW WILL AN EIFD AFFECT OUR COMMUNITY?

An EIFD will make growth work for Hollywood. Without imposing an additional tax burden on property owners, an EIFD promises new and accelerated funding for priority projects within Hollywood, addressing long-standing community priorities and needs. Participation of other taxing jurisdictions in the EIFD, such as Los Angeles County, will earmark TIF funds for investment in Hollywood. Moreover, EIFD-funded projects will catalyze new development that would otherwise not occur, growing the overall tax base.

Heart of Hollywood #3

WHO IS LEADING THIS ASSESSMENT?

This project is funded by Southern California Association of Governments (SCAG) Regional Early Action Plan grant program with the goal of providing planning assistance to help jurisdictions implement and adopt Housing Supportive Tax Increment Financing Districts.

This project also has the support and oversight of City of Los Angeles Council District 13 and the City of Los Angeles Economic & Workforce Development Department.

 

HOW CAN I LEARN MORE?

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PROPOSED PROJECT BOUNDARIES:

The area being analyzed for this project is shown below. The proposed boundary was identified to maximize revenue potential, capture priority redevelopment projects, and align with growth areas in the proposed Hollywood Community Plan Update, including the Regional Center and Vine St commercial corridor. The boundary will be finalized based on community feedback.

 

EIFD Boundary

Heart of Hollywood #4

PROJECT MILESTONES

  • June 2022 - Evaluation of Tax Increment Financing Mechanisms
  • Early July 2022 – Study Session #1
  • Late July 2022 – Public Workshop #1
  • Late October 2022 – Public Workshop #2
  • Early November 2022 – Study Session #2
  • January 2023 – Public Financing Authority Board Recommendations
  • February 2023 – Council Study Session
  • April 2023 – Final Deliverables on District Formation Materials
  • May 2023 – Council Meeting (to consider EIFD adoption)

PROJECT RESOURCES


FREQUENTLY ASKED QUESTIONS

TIF/EIFD Overview

Q: What is TIF? 
A: TIF stands for tax increment financing. It is a general term covering all public financing tools that allow cities and counties to allocate a portion of future property tax revenue within a defined district toward economic development projects.

Q: What is an EIFD? 
A: EIFD stands for Enhanced Infrastructure Financing District. It is a special public financing tool and a type of TIF district cities and counties can form to help fund affordable housing. Construction, acquisition, and maintenance costs associated with public infrastructure projects, such as parks, improved transit, stormwater and sewage treatment, and climate adaptation projects can also be funded by an EIFD.

Q: Who administers the TIF? 
A: LA County Assessor’s Office administers TIF and ensures that all tax revenues are properly allocated to a TIF district based on a City or County’s allocation percentage.  

Q: Will an EIFD Increase my property taxes?
A: No, an EIFD will not increase property taxes. Instead, it will capture a portion of property tax revenue growth, within the current property tax rate, for infrastructure and other improvements within the district. Over time, as property values grow, the EIFD will capture more and more revenue without increasing the tax rate for property owners.

Q: How does an EIFD increase revenues without imposing higher taxes onto property owners?
A: EIFDs do not increase the property tax rate. As time passes, total property tax revenue naturally increases from new developments, enhancements, or upgrades in an area. EIFDs can be used to capture a portion of this new revenue for infrastructure and other improvements in the district.

Q: What is the percentage of the tax increment you anticipate the County and City will allocate to the EIFD? 
A: There is no set percentage at this time. This study will first understand the total property tax increment potentially available to the district. The size of this increment, the number of projects suitable for funding, and the priorities of both the City and County will inform the allocation percentages. Notably, the City and County each have established EIFD policies to guide decision-making on this matter.  

Q: What is the adoption process for an EIFD?
A: For an EIFD to gain approval, Economic and Workforce Development (EWDD) staff must evaluate the proposed district for alignment with their goals and financial feasibility. The City of Los Angeles will then hold a council meeting to approve a motion to conduct a comprehensive feasibility study on the EIFD and develop an Infrastructure Financing Plan, which will include a list of projects to fund within the district. Next, the City will hold at least 2 public hearings to answer questions and consider comments from landowners and residents.  If more than 50% of landowners and residents protest the EIFD, proceedings will be abandoned. If between 25% and 50% of landowners and residents protest the EIFD, an election will be called. If less than 25% of landowners and residents protest the EIFD, it will be adopted.

 

TIF Project Constraints/Limitations

Q: What kinds of projects that can be funded?
A: EIFDs have broad flexibility in the types of projects they can fund. One is affordable housing through a dedicated affordable housing fund, which is a fund that could be used in conjunction with other financing sources; another, are capital costs for infrastructure projects; additional EIFD funds can also be used for ongoing maintenance and operations, funding the upkeep of district enhancements. Notably, an EIFD is limited to projects listed in the Infrastructure Financing Plan. This Infrastructure Financing Plan can provide broad definitions of those projects, but the project does need to be listed in the plan.

Q: How are projects being selected for inclusion into the EIFD? 
A: When looking at the projects for a Hollywood EIFD, we are exploring what opportunities the community wants to see and what available opportunities there are. We are looking at the Heart of Hollywood Walk of Fame and Hollywood Community Plan Update that currently have more defined projects, however, this does not limit consideration of other projects. A final list of projects will need to be included in the Infrastructure Financing Plan required for EIFD adoption.  

Q: Are you limited to only those projects that are listed at the time the EIFD is approved? 
A: There are opportunities to update the Infrastructure Financing Plan, so the list of work/projects can be updated through a process.

 

PROJECT GLOSSARY

  • TIF (Tax Increment Financing) – A general term covering all public financing tools that allow cities and counties to allocate a portion of future property tax revenue within a defined district toward economic development projects.
  • EIFD (Enhanced Infrastructure Financing District) – A special public financing tool and a type of TIF district cities and counties can form to help fund both capital and maintenance costs of economic development projects; EIFDs are currently able to fund affordable housing, infrastructure maintenance, transportation infrastructure, stormwater and sewage treatment, and climate adaptation projects.
  • Base Year – Year in which the EIFD is created.
  • Tax Increment Baseline – The total appraised value of all taxable real property within the district for the base year.
  • Tax Increment Value – The increase in property taxes tied to the increase in property value after the base year from appreciation in assessed value or property redevelopment.
  • City/County Increment – The property taxes levied and collected by the City/County for that year on the captured appraised value of real property.
  • Allocation Percentage – The portion of the City/County increment that the City/County designates for allocation to the TIF district.
  • Bond Financing – The most common form of TIF, in which a local government issues bonds backed by a percentage of projected tax increment value within the designated district.
  • Affordable Housing – Housing which is deemed affordable to those with a household income at or below the median household income as defined by the national government, or a local government by a recognized housing affordability index.
  • Infrastructure – Physical infrastructure projects pertaining to public works, including streetscape and stormwater improvements, flood control measures, transit and transit facilities, and new parks and open space.

 

STAY CONNECTED

HeartofHollywoodTIF@arellanoassociates.com

or

Councilmember Mitch O’Farrell, 13th District
councilmember.ofarrell@lacity.org