TIF TALK! UPDATES

Everybody's Talking About

the New TIFs in Town!

Potential TIF Partnerships on the Way!

Scotts Valley TIF on the move…

From Santa Fe Springs and Artesia in Los Angeles County to Scotts Valley in Santa Cruz County, there are more potential TIF partnerships on the way.

Earlier in April, the City of Scotts Valley, Scotts Valley Fire Protection District, and County of Santa Cruz each adopted Resolutions of Intention to partner in the Scotts Valley EIFD. There are still many steps remaining in the district formation process, with completion targeted by the end of the calendar year.

Climate Resilience Districts

The Newest TIF in Town is Starting to Sprout…Sustainably!

Climate Resilience Districts became the newest form of TIF with the passage of SB 852 (Dodd) in 2022. These districts enable cities, counties, and special districts to work together to fund and implement projects that help communities withstand climate impacts and fund, install and manage infrastructure. The Sonoma County Regional Climate Protection Authority was the first designated in California.

MORE TIF TALK!

Disaster Recovery Districts -- Climate Districts for Disaster Recovery

Kosmont is in the process of forming three Disaster Recovery Districts (a form of CRD) in the Sunset Mountains area of LA County, City of Malibu, and Pacific Palisades. More updates to come as these districts take shape.

What’s New in TIF Legislation

There are currently two proposed bills making their way through the California Legislature that are being watched for their potential impact on TIF districts:

👉 SB 1003 – Pro-housing EIFDS. Local agencies with an HCD Prohousing designation would receive bonus points on state housing fund applications if they commit to affordable housing production targets, while participating EIFDs would be prohibited from spending on highway improvements. The bill also grants HCD new authority to administer a dedicated grant and loan program for housing applicants.

👉 AB 2210 – Workforce Housing Districts would authorize the creation of new tax increment financing districts specifically dedicated to building, rehabilitating, and upgrading workforce housing for public safety, education, healthcare, and manufacturing employees. District formation would require approval from all affected taxing entities, public hearings, and if opposition emerges, a voter election, with bonds requiring two-thirds voter approval.

TIF BITS

What's Happening in the World of TIF?

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Expanding the TIF Toolbox:

OPPORTUNITY ZONES 2.0 coming soon!

Under the One Big Beautiful Bill Act, the Opportunity Zone 2.0 program is now permanent and operating on a 10-year redesignation cycle.

Beginning July 1, 2026, California's governor will have 90 days to nominate up to 25% of eligible census tracts for the next round of designations — taking effect January 1, 2027.

The redesigned program comes with meaningful new incentives, particularly for rural investment. While the core benefit of tax-free growth on investments held at least 10 years is preserved, the new program triples the basis step-up from 10% to 30% for rural investments.

Eligibility criteria have also tightened: the income threshold for qualifying tracts drops from 80% to 70% of area median income, and tracts contiguous to eligible areas are no longer eligible for the program.

The IRS has already published guidance identifying which tracts will be eligible. Information regarding the formal process for cities and counties to submit their recommendations is coming soon.

THE BIG VALUE CAPTURE IDEA…Pairing OZ 2.0 with TIF

For entities already working with Tax Increment Financing, the more immediate opportunity may be in how these two tools work together. TIF captures incremental property tax growth to fund local infrastructure and induce private investment, while OZ equity draws in private capital through federal tax incentives. They serve different parts of the financing equation — making them a powerful combination.

Where OZ-designated tracts and existing or planned TIF districts overlap, the two tools can work in tandem — TIF handling the public infrastructure layer while OZ equity fills the private investment side. How well they complement each other ultimately depends on local conditions and what financing gaps a public or private project is trying to address.

For jurisdictions where both tools are in play, the overall financing picture looks meaningfully different than it would with either tool alone. OZ equity can absorb private investment risk that TIF cannot, while TIF can provide the infrastructure foundation that makes an OZ-eligible site more attractive to investors.

Opportunity Zones: A Pathway to RHNA Compliance?

Many of the census tracts likely to qualify for OZ designation overlap with sites cities have already flagged in their housing elements. It's not a silver bullet, but for RHNA sites struggling to pencil out, an OZ designation is a meaningful tool to have in the compliance arsenal.

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FOVC! - Friends of Value Capture

Reach out to Kosmont to discuss these complementary strategies.

Watch the recent OZ 2.0 webinar by the California Association for Local Economic Development (CALED): https://caled.org/opportunity-zones-2-0/