Scotts Valley council approves intent to form EIFD, appoints members to new financing authority

Scotts Valley's City Council on a unanimous voice vote adopted a resolution declaring its intention to form an Enhanced Infrastructure Financing District (EIFD) and to establish a Public Financing Authority to govern it. The move signals the city’s interest in pursuing a tax‑increment tool to help fund infrastructure and attract additional public and private investment.

The council's action authorizes staff to prepare the EIFD financing plan and bylaws and to conduct the statutorily required public hearings and notices. Consultant Joe Dieguez of Cosmot Companies told the council the tool is “not a new tax” but a value‑capture mechanism that can set aside a portion of future assessed property tax growth within a defined boundary for infrastructure such as water, sewer, streetscape, broadband, wildfire prevention and gap financing for affordable housing. Dieguez presented order‑of‑magnitude scenarios showing that a city‑only allocation would produce only modest five‑year revenues (a bit under $2 million in one illustrative scenario), while partner participation from the county and fire district could raise five‑year spendable amounts into the $3M–$5.7M range depending on who joins.

Why it matters: the EIFD could help fund projects that catalyze development in Scotts Valley’s town‑center opportunity sites while increasing competitiveness for state grants, the consultant said. Dieguez emphasized the city's ability to limit exposure — the analysis suggested the city should generally not encumber more than 50% of its share, while the county and fire district have lower practical participation ceilings (roughly 25% and 30% respectively) to preserve their general‑fund capacity.

Council members pressed the consultant on projections, bond mechanics and administration. Dieguez said projections are illustrative and that any bond issuance would be underwritten against realized revenue in the target year (for example, a year‑5 bond would be based on actual year‑5 revenue), and that early small receipts are typically held in a separate district fund that can earn interest or be used for planning and design. The consultant also cited examples of other jurisdictions that used similar tools (Carson, Palmdale, La Verne and portions of Riverside County) and noted that meaningful near‑term bond capacity usually requires partner participation.

Public reaction was mixed. Fire Chief Mark Herrera told the council the Scotts Valley Fire District's board has discussed the EIFD and sees it as a potential tool to help fund station needs and wildfire risk‑reduction efforts; he said the board had asked staff to return a similar nonbinding resolution for their consideration. A member of the public criticized reliance on bond financing after voters twice rejected fire station measures and warned of burdening taxpayers; another resident urged the county to partner to help fund road repairs.

The council adopted Resolution 2080 declaring its intention to establish the Scotts Valley EIFD and the Public Financing Authority and then appointed two councilmembers and an alternate to serve on the authority’s board, with annual mayoral appointment authority preserved. Staff said the next steps include preparing an infrastructure financing plan, publishing notices, holding the required sequence of public hearings (including a final hearing with a protest opportunity for landowners and residents within the proposed district), and continuing outreach to potential partners. The council will revisit specifics as the plan is developed; formation itself is nonbinding and any partner participation must be voluntary.

The council's vote moves the process forward, but the financing plan and subsequent hearings will determine whether the district proceeds to formation and whether partners choose to opt in.