Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill would establish the California Capital City Downtown Revitalization Act, and would authorize the City or County of Sacramento to create an enhanced infrastructure financing district within the downtown Sacramento geographic area. The bill would authorize an affected taxing entity located entirely, or in part, in the County of Sacramento to opt in to the district.

Existing law specifies that an enhanced infrastructure financing district is not prohibited from utilizing revenues from additional sources to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved.

This bill would additionally specify that a district is not prohibited from utilizing state funds to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved. The bill would also specify that the California Capital City Downtown Revitalization District may accept state funds, as provided.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

This bill would incorporate additional changes to Section 53398.75 of the Government Code proposed by SB 5 to be operative only if this bill and SB 5 are enacted and this bill is enacted last.

Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill would establish the California Capital City Downtown Revitalization Act, and would authorize the City or County of Sacramento to create an enhanced infrastructure financing district within the downtown Sacramento geographic area. The bill would authorize an affected taxing entity located entirely, or in part, in the County of Sacramento to opt in to the district.

Existing law specifies that an enhanced infrastructure financing district is not prohibited from utilizing revenues from additional sources to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved.

This bill would additionally specify that a district is not prohibited from utilizing state funds to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved. The bill would also specify that the California Capital City Downtown Revitalization District may accept state funds, as provided.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

This bill would incorporate additional changes to Section 53398.75 of the Government Code proposed by SB 5 to be operative only if this bill and SB 5 are enacted and this bill is enacted last.

Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill would establish the California Capital City Downtown Revitalization Act, and would authorize the City or County of Sacramento to create an enhanced infrastructure financing district within the downtown Sacramento geographic area. The bill would authorize an affected taxing entity located entirely, or in part, in the County of Sacramento to opt in to the district.

Existing law specifies that an enhanced infrastructure financing district is not prohibited from utilizing revenues from additional sources to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved.

This bill would additionally specify that a district is not prohibited from utilizing state funds to support its activities if the district obtains voter approval, as applicable, and the infrastructure financing plan is approved. The bill would also specify that the California Capital City Downtown Revitalization District may accept state funds, as provided.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill, bill would establish the California Capital City Downtown Revitalization Act, and would authorize the City or County of Sacramento to create an enhanced infrastructure financing district within the downtown Sacramento geographic area. The bill would authorize an affected taxing entity located entirely, or in part, in the County of Sacramento to opt in to the district, and would authorize the district to accept state funds. district.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill, the California Capital City Downtown Revitalization Act, would authorize a city or county the City or County of Sacramento to create an enhanced infrastructure financing district within the downtown Sacramento geographic area to adopt a resolution, at any time before or after the adoption of the infrastructure financing plan, to allocate tax revenues of that entity to the district. The bill would specify that the allocated tax revenues could include local sales and use taxes or transactions and use taxes, if specified conditions are met. area. The bill would authorize an affected taxing entity located entirely, or in part, in the County of Sacramento to opt in to the district, and would authorize the district to accept state funds.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

Existing law authorizes the legislative body of a city or a county, defined to include a city and county, to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, as provided. Existing law provides for the preparation of a proposed infrastructure financing plan, as provided, which takes effect upon adoption by the public financing authority of the district following a specified public hearing and protest procedure. Existing law authorizes the infrastructure financing plan to provide for the division of taxes levied on taxable property in the area included within the district, as specified, and authorizes the public financing authority to issue bonds by adopting a resolution containing specified provisions, including a determination of the amount of tax revenue available or estimated to be available for the payment of the principal of, and interest on, the bonds.

This bill, the California Capital City Downtown Revitalization Act, would authorize a city or county within the downtown Sacramento geographic area to adopt a resolution, at any time before or after the adoption of the infrastructure financing plan, to allocate tax revenues of that entity to the district. The bill would specify that the allocated tax revenues could include local sales and use taxes or transactions and use taxes, if specified conditions are met.

This bill would make legislative findings and declarations as to the necessity of a special statute for the downtown Sacramento geographic area.

 UNFINISHED BUSINESS  

Bill No: SB 516

Author: Ashby (D)

Amended: 9/4/25 in Assembly

Vote: 21

SENATE LOCAL GOVERNMENT COMMITTEE: 6-0, 5/7/25

AYES: Durazo, Choi, Arreguín, Cabaldon, Laird, Wiener

NO VOTE RECORDED: Seyarto

SENATE FLOOR: 38-0, 6/3/25

AYES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Cortese, Reyes

ASSEMBLY FLOOR: 79-0, 9/8/25 - See last page for vote

SUBJECT: Enhanced infrastructure financing districts: California Capital City Downtown Revitalization Act

SOURCE: Author

DIGEST:

This bill enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district (EIFD) specific to Downtown Sacramento.

Assembly Amendments

allow all EIFDs statewide to accept state funds and address chaptering issues with SB 5 (Cabaldon).

ANALYSIS:

Existing law:

1. Creates EIFDs and allows them to finance public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community with an estimated useful life of 15 years or more, including projects that enable communities to adapt to the impacts of climate change.
2. Allows, in addition to construction costs, EIFDs to finance planning and design work, displacement of affordable housing residents, defending the district against protests over their formation, and the ongoing or capitalized costs to maintain the projects the district finances.
3. Provides that an EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity’s legislative body and a minimum of two public members. Member agencies can also appoint an alternate member from their legislative body. If at least three taxing entities participate in the district, upon agreement of all taxing entities participating, the district’s governing board can be reduced to one member and one alternate member of each legislative body and a minimum of two public members.
4. Requires the PFA to hold public meetings and meet notice requirements to consider an EIFD’s formation, as specified.

This bill:

1. Enacts the California Capital City Downtown Revitalization Act, which creates a new type of EIFD specific to Downtown Sacramento.
2. Allows the City of Sacramento or the County of Sacramento to create a California Capital City Downtown Revitalization District (downtown district).
3. Provides that a downtown district is an EIFD, but must be within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard.
4. Allows affected taxing entities with at least a part in Sacramento County to join a downtown district.
5. Allows downtown districts to accept state funds.

Comments

Purpose of this bill. According to the author, “As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento’s office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services. SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an EIFD, to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization.”

Necessary? The City and County of Sacramento can already create an EIFD. The only difference between a downtown district and a normal district is that downtown districts include an explicit authorization to receive state funds. However, there is no explicit prohibition against any EIFD receiving state funds. SB 516 could have the unintended consequence of implying that downtown districts are the only EIFDs that can receive state funds. Additionally, many downtowns, and other parts of cities and counties, are in dire need of economic development opportunities. While downtown Sacramento serves a particular purpose in California as the seat of state government, other areas, including those affected by recent wildfires, could also benefit from clear authority to receive state funds. Should the Legislature allow all EIFDs to explicitly receive state funds?

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 9/8/25)

Cal Asian Chamber of Commerce

California Apartment Association

California State University, Sacramento

City of Sacramento

Downtown Sacramento Partnership

Sacramento Metro Chamber of Commerce

Visit Sacramento

OPPOSITION: (Verified 9/8/25)

None received

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Johnson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NOES:

NO VOTE RECORDED: Nguyen

Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119

9/8/25 19:32:04

**** END ****

SENATE THIRD READING

STR Bill Id:SB 516

Author:(Ashby)

As Amended Ver:September 4, 2025

Majority vote

SUMMARY

Enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district (EIFD) specific to Downtown Sacramento and specifies that EIFDs are allowed to utilize any state funds to support its activities.

Major Provisions

1. Enacts the California Capital City Downtown Revitalization Act within EIFD Law.
2. Specifies that the City of Sacramento or the County of Sacramento may create a California Capital City Downtown Revitalization District (downtown district). Unless explicitly specified otherwise in this bill, a district is an EIFD subject to the provisions of EIFD Law.
3. Provides that the area to be financed with funds received pursuant to this bill is within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard.
4. Authorizes an affected taxing entity, as defined, located entirely, or in part, in the County of Sacramento to opt in to a downtown district, as specified.
5. Provides that upon its creation, a downtown district may accept any state funds, as specified.
6. Provides that an EIFD is not prohibited from utilizing any state funds to support its activities, as specified.
7. Contains chaptering language to avoid conflicts with SB 5 (Cabaldon).

COMMENTS

1. Redevelopment. Article XVI, Section 16 of the California Constitution authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.

To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is "frozen" at the amount it received from property within a project area prior to the project area's formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax "increment" revenues — flow to the tax increment financing district instead of other local governments. After the bonds have been fully repaid using the incremental property tax revenues, the district is dissolved, ending the diversion of tax increment revenues from participating local governments.

Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. Eventually, RDAs were required to set aside 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas. At the time RDAs were dissolved, the Controller estimated that statewide, RDAs were obligated to spend $1 billion on affordable housing. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.

1. Attempts to Replace RDAs. After the Supreme Court's 2011 Matosantos decision dissolved all RDAs, legislators enacted several measures creating new tax increment financing tools to pay for local economic development. The Legislature authorized the creation of EIFDs [SB 628 (Beall), Chapter 785, Statutes of 2014] quickly followed by CRIAs [AB 2 (Alejo), Chapter 319, Statutes of 2015]. Similar to EIFDs, CRIAs use tax increment financing to fund infrastructure projects. CRIAs may currently only be formed in economically depressed areas.

The Legislature has also authorized the formation of affordable housing authorities (AHAs), which may use tax increment financing exclusively for rehabilitating and constructing affordable housing and also do not require voter approval to issue bonds [AB 1598 (Mullin), Chapter 764, Statutes of 2017]. SB 961 (Allen), Chapter 559, Statutes of 2018, removed the vote requirement for a subset of EIFDs to issue bonds and required these EIFDs to instead solicit public input, and AB 116 (Ting), Chapter 656, Statutes of 2019, removed the voter requirement for any EIFD to issues bonds in favor of a formal protest process. SB 852 (Dodd), Chapter 266, Statutes of 2022, created climate resilience districts (CRDs), which can also utilize tax-increment financing. CRDs were also given the authority to issue general obligation bonds and impose special taxes. While these entities share fundamental similarities with RDAs in terms of using various forms of tax-increment financing, they differ in two significant aspects, 1) not having access to the school's share of property tax increment, and 2) not automatically including the tax increment of other taxing entities.

1. EIFD Governance. To create an EIFD, the legislative body of a city or county must adopt a resolution of intention to establish the EIFD. The resolution must state a time and place for a hearing on the proposal, the proposed district's boundaries, the types of facilities and development to be financed, the need for the district, the goals the district proposes to achieve, and that incremental property tax revenues may be used to finance the EIFD's activities.

An EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity's legislative body and a minimum of two public members. Member agencies can also appoint an alternate member from their legislative body. If at least three taxing entities participate in the district, they can agree to reduce the district's governing board to one member and one alternate member of each legislative body and a minimum of two public members.

1. EIFD Formation and Plan Adoption. The city or county must create the PFA at the same time it adopts the resolution of intention. The PFA then provides public notice and directs an official to prepare an infrastructure financing plan (IFP). This process requires the PFA to make the draft infrastructure financing plan available to the public and to each landowner within the area at least 30 days before noticing the first public meeting. SB 1140 (Caballero), Chapter 599, Statutes of 2024, made a number of changes to EIFD law, including reducing the number of meetings a PFA must hold to consider an EIFD's formation from four to three as follows:
   1. One meeting to present the IFP to the public and answer questions.
   2. One public hearing to consider any written and oral comments and take action to modify or reject the IFP.
   3. If the IFP is not rejected at the first hearing, the PFA must hold a second public hearing where it must hold a protest proceeding to consider IFP adoption.

These meetings must be at least 30 days apart and noticed in an easily identifiable and accessible location on the EIFD's website. The PFA must mail a written notice, within the propose EIFD, of the meeting or public hearing to each landowner, each resident, and each taxing entity at least 10 days before the meeting or public hearing. Before the PFA holds each public meeting or hearing, it must meet certain noticing requirements. All notices must describe the:

• 1. EIFD's boundaries.
  2. Purpose of the IFP.
  3. Time, place, and location where people can provide written and oral comments.

To reduce mailing costs, SB 780 (Cortese), Chapter 391, Statutes of 2021, allowed the PFA to consolidate some of the mailing and meeting notice requirements. Under this alternative process, the official responsible mails each landowner, resident, and affected taxing entity a notice at least 40 days prior to the first meeting with: (1) a plan summary, (2) a website where the documents are available, (3) a contact person to receive requests for mailed materials, and, (4) the location and time for the first two public meetings. SB 1140 revised the alternative mailing and noticing process to include all EIFD formation meetings, annual reports, and potential amendments, and required specified information to be included in the notice, as applicable. The PFA must also review the IFP annually and adopt an annual report by June 30 each year, make any amendments to the IFP that are necessary, and prepare an annual independent financial audit.

1. Sacramento EIFDs. According to the City and the County of Sacramento, at least three EIFDs have been created in recent years including:
   1. The Stadium Area EIFD was established by the City of Sacramento on December 10, 2019 to finance certain public infrastructure improvements in support of a new Major League Soccer stadium, including roadway and sewer improvements, a new Regional Transit station, and a paseo for bike and pedestrian access located in or around the Downtown Sacramento Railyards.
   2. The Aggie Square EIFD was established by the City of Sacramento on April 13, 2021 and was formed to finance certain public infrastructure improvements in support of the Aggie Square Innovation and Research Center. The infrastructure improvements include roadway, storm water, water, and sewer improvements within and surrounding the Project, and affordable housing investments.
   3. The Metro Air Park EIFD was established near the Sacramento International Airport by the County of Sacramento on April 5, 2022. The public facilities proposed to be financed by the Metro Air Park EIFD are generally described as roadway, freeway, fire station, water system, storm drainage, pump station, light rail, and sewer facilities.

According to the Author

"As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento's office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services.

"SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an Enhanced Infrastructure Financing District (EIFD), to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization."

Arguments in Support

According to the sponsor, the Downtown Sacramento Partnership, "In 2022, Sacramento became the first municipality in the state of California to be designated as a pro-housing jurisdiction, yet despite pro-housing policies, the city achieved only 42% of the annual housing production identified by the Regional Housing Needs Allocation (RHNA) in 2024. This legislation will help deliver mid-to-high density housing projects at all levels of affordability at our most location-efficient, transit-oriented locations in the neighborhoods surrounding the State Capitol and will serve as a model for a sustainable livability strategy which may be scaled in urban centers throughout the state.

"Without swift action and multi-jurisdictional participation at state and local levels, downtown Sacramento will miss the moment to lean into significant housing production, economic and educational diversification in its urban core, which must be the future for the capital city's central neighborhood if we are going to create a more sustainable future."

Arguments in Opposition

None on file.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Cortese, Reyes

ASM LOCAL GOVERNMENT: 10-0-0

YES: Carrillo, Ta, Hoover, Pacheco, Ramos, Ransom, Blanca Rubio, Stefani, Ward, Wilson

UPDATED

VERSION: September 4, 2025

CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0001734

SENATE THIRD READING

STR Bill Id:SB 516

Author:(Ashby)

As Amended Ver:July 17, 2025

Majority vote

SUMMARY

Enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district (EIFD) specific to Downtown Sacramento.

Major Provisions

1. Enacts the California Capital City Downtown Revitalization Act within EIFD Law.
2. Specifies that the City of Sacramento or the County of Sacramento may create a California Capital City Downtown Revitalization District (downtown district). Unless explicitly specified otherwise in this bill, a district is an EIFD subject to the provisions of EIFD Law.
3. Provides that the area to be financed with funds received pursuant to this bill is within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard.
4. Authorizes an affected taxing entity, as defined, located entirely, or in part, in the County of Sacramento to opt in to a downtown district, as specified.
5. Provides that upon its creation, a downtown district may accept any state funds, as specified.
6. Provides that an EIFD is not prohibited from utilizing any state funds to support its activities, as specified.

COMMENTS

1. Redevelopment. Article XVI, Section 16 of the California Constitution authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.

To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is "frozen" at the amount it received from property within a project area prior to the project area's formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax "increment" revenues — flow to the tax increment financing district instead of other local governments. After the bonds have been fully repaid using the incremental property tax revenues, the district is dissolved, ending the diversion of tax increment revenues from participating local governments.

Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. Eventually, RDAs were required to set aside 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas. At the time RDAs were dissolved, the Controller estimated that statewide, RDAs were obligated to spend $1 billion on affordable housing. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.

1. Attempts to Replace RDAs. After the Supreme Court's 2011 Matosantos decision dissolved all RDAs, legislators enacted several measures creating new tax increment financing tools to pay for local economic development. The Legislature authorized the creation of EIFDs [SB 628 (Beall), Chapter 785, Statutes of 2014] quickly followed by CRIAs [AB 2 (Alejo), Chapter 319, Statutes of 2015]. Similar to EIFDs, CRIAs use tax increment financing to fund infrastructure projects. CRIAs may currently only be formed in economically depressed areas.

The Legislature has also authorized the formation of affordable housing authorities (AHAs), which may use tax increment financing exclusively for rehabilitating and constructing affordable housing and also do not require voter approval to issue bonds [AB 1598 (Mullin), Chapter 764, Statutes of 2017]. SB 961 (Allen), Chapter 559, Statutes of 2018, removed the vote requirement for a subset of EIFDs to issue bonds and required these EIFDs to instead solicit public input, and AB 116 (Ting), Chapter 656, Statutes of 2019, removed the voter requirement for any EIFD to issues bonds in favor of a formal protest process. SB 852 (Dodd), Chapter 266, Statutes of 2022, created climate resilience districts (CRDs), which can also utilize tax-increment financing. CRDs were also given the authority to issue general obligation bonds and impose special taxes. While these entities share fundamental similarities with RDAs in terms of using various forms of tax-increment financing, they differ in two significant aspects, 1) not having access to the school's share of property tax increment, and 2) not automatically including the tax increment of other taxing entities.

1. EIFD Governance. To create an EIFD, the legislative body of a city or county must adopt a resolution of intention to establish the EIFD. The resolution must state a time and place for a hearing on the proposal, the proposed district's boundaries, the types of facilities and development to be financed, the need for the district, the goals the district proposes to achieve, and that incremental property tax revenues may be used to finance the EIFD's activities.
2. An EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity's legislative body and a minimum of two public members. Member agencies can also appoint an alternate member from their legislative body. If at least three taxing entities participate in the district, they can agree to reduce the district's governing board to one member and one alternate member of each legislative body and a minimum of two public members.
3. EIFD Formation and Plan Adoption. The city or county must create the PFA at the same time it adopts the resolution of intention. The PFA then provides public notice and directs an official to prepare an infrastructure financing plan (IFP). This process requires the PFA to make the draft infrastructure financing plan available to the public and to each landowner within the area at least 30 days before noticing the first public meeting. SB 1140 (Caballero), Chapter 599, Statutes of 2024, made a number of changes to EIFD law, including reducing the number of meetings a PFA must hold to consider an EIFD's formation from four to three as follows:
   1. One meeting to present the IFP to the public and answer questions.
   2. One public hearing to consider any written and oral comments and take action to modify or reject the IFP.
   3. If the IFP is not rejected at the first hearing, the PFA must hold a second public hearing where it must hold a protest proceeding to consider IFP adoption.

These meetings must be at least 30 days apart and noticed in an easily identifiable and accessible location on the EIFD's website. The PFA must mail a written notice, within the propose EIFD, of the meeting or public hearing to each landowner, each resident, and each taxing entity at least 10 days before the meeting or public hearing. Before the PFA holds each public meeting or hearing, it must meet certain noticing requirements. All notices must describe the:

• 1. EIFD's boundaries.
  2. Purpose of the IFP.
  3. Time, place, and location where people can provide written and oral comments.

To reduce mailing costs, SB 780 (Cortese), Chapter 391, Statutes of 2021, allowed the PFA to consolidate some of the mailing and meeting notice requirements. Under this alternative process, the official responsible mails each landowner, resident, and affected taxing entity a notice at least 40 days prior to the first meeting with: (1) a plan summary, (2) a website where the documents are available, (3) a contact person to receive requests for mailed materials, and, (4) the location and time for the first two public meetings. SB 1140 revised the alternative mailing and noticing process to include all EIFD formation meetings, annual reports, and potential amendments, and required specified information to be included in the notice, as applicable. The PFA must also review the IFP annually and adopt an annual report by June 30 each year, make any amendments to the IFP that are necessary, and prepare an annual independent financial audit.

1. Sacramento EIFDs. According to the City and the County of Sacramento, at least three EIFDs have been created in recent years including:
   1. The Stadium Area EIFD was established by the City of Sacramento on December 10, 2019 to finance certain public infrastructure improvements in support of a new Major League Soccer stadium, including roadway and sewer improvements, a new Regional Transit station, and a paseo for bike and pedestrian access located in or around the Downtown Sacramento Railyards.
   2. The Aggie Square EIFD was established by the City of Sacramento on April 13, 2021 and was formed to finance certain public infrastructure improvements in support of the Aggie Square Innovation and Research Center. The infrastructure improvements include roadway, storm water, water, and sewer improvements within and surrounding the Project, and affordable housing investments.
   3. The Metro Air Park EIFD was established near the Sacramento International Airport by the County of Sacramento on April 5, 2022. The public facilities proposed to be financed by the Metro Air Park EIFD are generally described as roadway, freeway, fire station, water system, storm drainage, pump station, light rail, and sewer facilities.

According to the Author

"As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento's office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services.

"SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an Enhanced Infrastructure Financing District (EIFD), to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization."

Arguments in Support

According to the sponsor, the Downtown Sacramento Partnership, "In 2022, Sacramento became the first municipality in the state of California to be designated as a pro-housing jurisdiction, yet despite pro-housing policies, the city achieved only 42% of the annual housing production identified by the Regional Housing Needs Allocation (RHNA) in 2024. This legislation will help deliver mid-to-high density housing projects at all levels of affordability at our most location-efficient, transit-oriented locations in the neighborhoods surrounding the State Capitol and will serve as a model for a sustainable livability strategy which may be scaled in urban centers throughout the state.

"Without swift action and multi-jurisdictional participation at state and local levels, downtown Sacramento will miss the moment to lean into significant housing production, economic and educational diversification in its urban core, which must be the future for the capital city's central neighborhood if we are going to create a more sustainable future."

Arguments in Opposition

None on file.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Cortese, Reyes

ASM LOCAL GOVERNMENT: 10-0-0

YES: Carrillo, Ta, Hoover, Pacheco, Ramos, Ransom, Blanca Rubio, Stefani, Ward, Wilson

UPDATED

VERSION: July 17, 2025

CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0001149

Date of Hearing: July 16, 2025

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Juan Carrillo, Chair

SBPCA Bill Id:SB 516

Author:(Ashby) – As Amended Ver:April 30, 2025

SENATE VOTE: 38-0

SUBJECT: California Capital City Downtown Revitalization Act.

SUMMARY: Enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district (EIFD) specific to Downtown Sacramento. Specifically, this bill:

1. Enacts the California Capital City Downtown Revitalization Act within EIFD Law.
2. Specifies that the City of Sacramento or the County of Sacramento may create a California Capital City Downtown Revitalization District (downtown district). Unless explicitly specified otherwise in this bill, a district is an EIFD subject to the provisions of EIFD Law.
3. Provides that the area to be financed with funds received pursuant to this bill is within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard.
4. Authorizes an affected taxing entity, as defined, located entirely, or in part, in the County of Sacramento to opt in to a downtown district, as specified.
5. Specifies that upon its creation, a downtown district may accept any state funds.
6. Finds and declares that a special statute is necessary and that a general statute cannot be made applicable because of the unique needs of the City and County of Sacramento and the downtown Sacramento geographic area.

FISCAL EFFECT: None.

COMMENTS:

1. Bill Summary and Author’s Statement. This bill allows the city or county of Sacramento to create a downtown district and specifies that a downtown district is an EIFD subject to EIFD law unless otherwise specified in this bill. This bill also requires the area of a downtown district to be financed with funds received pursuant to the bill to be within the downtown Sacramento geographic area and allows a downtown district to accept any state funds. The Downtown Sacramento Partnership is the sponsor of this bill.

According to the Author, “As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento’s office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services.

“SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an Enhanced Infrastructure Financing District (EIFD), to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization.”

1. Redevelopment. Article XVI, Section 16 of the California Constitution authorizes the Legislature to provide for the formation of redevelopment agencies (RDAs) to eliminate blight in an area by means of a self-financing schedule that pays for the redevelopment project with tax increment derived from any increase in the assessed value of property within the redevelopment project area (or tax increment). Generally, property tax increment financing involves a local government forming a tax increment financing district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area.

To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local government participating in the district is “frozen” at the amount it received from property within a project area prior to the project area’s formation. In future years, as the project area's assessed valuation grows above the frozen base, the resulting additional property tax revenues — the so-called property tax “increment” revenues — flow to the tax increment financing district instead of other local governments. After the bonds have been fully repaid using the incremental property tax revenues, the district is dissolved, ending the diversion of tax increment revenues from participating local governments.

Prior to Proposition 13, very few RDAs existed; however, after its passage, RDAs became a source of funding for a variety of local infrastructure activities. Eventually, RDAs were required to set aside 20% of funding generated in a project area to increase the supply of low and moderate income housing in the project areas. At the time RDAs were dissolved, the Controller estimated that statewide, RDAs were obligated to spend $1 billion on affordable housing. At the time of dissolution, over 400 RDAs statewide were diverting 12% of property taxes, over $5.6 billion yearly.

In 2011, facing a severe budget shortfall, the Governor proposed eliminating RDAs in order to deliver more property taxes to other local agencies. Ultimately, the Legislature approved and the Governor signed two measures, ABX1 26 (Blumenfield), Chapter 5 and ABX1 27 (Blumenfield), Chapter 6 that together dissolved RDAs as they existed at the time and created a voluntary redevelopment program on a smaller scale. In response, the California Redevelopment Association (CRA) and the League of California Cities, along with other parties, filed suit challenging the two measures. The Supreme Court denied the petition for peremptory writ of mandate with respect to ABX1 26. However, the Court did grant CRA's petition with respect to ABX1 27. As a result, all RDAs were required to dissolve as of February 1, 2012.

1. Attempts to Replace RDAs. After the Supreme Court’s 2011 Matosantos decision dissolved all RDAs, legislators enacted several measures creating new tax increment financing tools to pay for local economic development. The Legislature authorized the creation of EIFDs [SB 628 (Beall), Chapter 785, Statutes of 2014] quickly followed by CRIAs [AB 2 (Alejo), Chapter 319, Statutes of 2015]. Similar to EIFDs, CRIAs use tax increment financing to fund infrastructure projects. CRIAs may currently only be formed in economically depressed areas.
   

The Legislature has also authorized the formation of affordable housing authorities (AHAs), which may use tax increment financing exclusively for rehabilitating and constructing affordable housing and also do not require voter approval to issue bonds [AB 1598 (Mullin), Chapter 764, Statutes of 2017]. SB 961 (Allen), Chapter 559, Statutes of 2018, removed the vote requirement for a subset of EIFDs to issue bonds and required these EIFDs to instead solicit public input, and AB 116 (Ting), Chapter 656, Statutes of 2019, removed the voter requirement for any EIFD to issues bonds in favor of a formal protest process. SB 852 (Dodd), Chapter 266, Statutes of 2022, created climate resilience districts (CRDs), which can also utilize tax-increment financing. CRDs were also given the authority to issue general obligation bonds and impose special taxes. While these entities share fundamental similarities with RDAs in terms of using various forms of tax-increment financing, they differ in two significant aspects, 1) not having access to the school’s share of property tax increment, and 2) not automatically including the tax increment of other taxing entities.

1. EIFD Governance. To create an EIFD, the legislative body of a city or county must adopt a resolution of intention to establish the EIFD. The resolution must state a time and place for a hearing on the proposal, the proposed district’s boundaries, the types of facilities and development to be financed, the need for the district, the goals the district proposes to achieve, and that incremental property tax revenues may be used to finance the EIFD’s activities.
   
   An EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity’s legislative body and a minimum of two public members. Member agencies can also appoint an alternate member from their legislative body. If at least three taxing entities participate in the district, they can agree to reduce the district’s governing board to one member and one alternate member of each legislative body and a minimum of two public members.
   
2. EIFD Formation and Plan Adoption. The city or county must create the PFA at the same time it adopts the resolution of intention. The PFA then provides public notice and directs an official to prepare an infrastructure financing plan (IFP). This process requires the PFA to make the draft infrastructure financing plan available to the public and to each landowner within the area at least 30 days before noticing the first public meeting. SB 1140 (Caballero), Chapter 599, Statutes of 2024, made a number of changes to EIFD law, including reducing the number of meetings a PFA must hold to consider an EIFD’s formation from four to three as follows:
   
   1. One meeting to present the IFP to the public and answer questions.
      
   2. One public hearing to consider any written and oral comments and take action to modify or reject the IFP.
      
   3. If the IFP is not rejected at the first hearing, the PFA must hold a second public hearing where it must hold a protest proceeding to consider IFP adoption.
      

These meetings must be at least 30 days apart and noticed in an easily identifiable and accessible location on the EIFD’s website. The PFA must mail a written notice, within the propose EIFD, of the meeting or public hearing to each landowner, each resident, and each taxing entity at least 10 days before the meeting or public hearing. Before the PFA holds each public meeting or hearing, it must meet certain noticing requirements. All notices must describe the:

• 1. EIFD’s boundaries.
     
  2. Purpose of the IFP.
     
  3. Time, place, and location where people can provide written and oral comments.

To reduce mailing costs, SB 780 (Cortese), Chapter 391, Statutes of 2021, allowed the PFA to consolidate some of the mailing and meeting notice requirements. Under this alternative process, the official responsible mails each landowner, resident, and affected taxing entity a notice at least 40 days prior to the first meeting with: (1) a plan summary, (2) a website where the documents are available, (3) a contact person to receive requests for mailed materials, and, (4) the location and time for the first two public meetings. SB 1140 revised the alternative mailing and noticing process to include all EIFD formation meetings, annual reports, and potential amendments, and required specified information to be included in the notice, as applicable. The PFA must also review the IFP annually and adopt an annual report by June 30 each year, make any amendments to the IFP that are necessary, and prepare an annual independent financial audit.

1. What can EIFDs Finance? EIFDs can finance public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community with an estimated useful life of 15 years or more. EIFDs may also finance projects that include:
   
   1. Highways, interchanges, ramps and bridges, arterial streets, parking facilities, and transit facilities.
   2. Sewage treatment and water reclamation plants and interceptor pipes.
   3. Facilities for the collection and treatment of water for urban uses.
   4. Flood control levees and dams, retention basins, and drainage channels.
   5. Child care facilities.
   6. Libraries.
   7. Parks, recreational facilities, and open space.
   8. The acquisition, construction, or rehabilitation of housing for persons of very low, low, and moderate income for rent or purchase.
   9. Acquisition, construction, or repair of commercial structures by the small business occupant of such structures, if such acquisition, construction, or repair is for purposes of fostering economic recovery from the COVID-19 pandemic and of ensuring the long-term economic sustainability of small businesses, among others.

The EIFD must not use bond proceeds to finance maintenance of any kind, and must not finance costs for ongoing operations or providing services.

1. Sacramento EIFDs. According to the City and the County of Sacramento, at least three EIFDs have been created in recent years including:
   
   1. The Stadium Area EIFD was established by the City of Sacramento on December 10, 2019 to finance certain public infrastructure improvements in support of a new Major League Soccer stadium, including roadway and sewer improvements, a new Regional Transit station, and a paseo for bike and pedestrian access located in or around the Downtown Sacramento Railyards. Along with a territorial expansion of the Stadium Area EIFD, it has been proposed to be renamed the Railyards EIFD.
      
   2. The Aggie Square EIFD was established by the City of Sacramento on April 13, 2021 and was formed to finance certain public infrastructure improvements in support of the Aggie Square Innovation and Research Center. The infrastructure improvements include roadway, storm water, water, and sewer improvements within and surrounding the Project, and affordable housing investments.
      
   3. The Metro Air Park EIFD was established near the Sacramento International Airport by the County of Sacramento on April 5, 2022. The public facilities proposed to be financed by the Metro Air Park EIFD are generally described as roadway, freeway, fire station, water system, storm drainage, pump station, light rail, and sewer facilities.
      
2. Policy Consideration. Existing law already allows the City and the County of Sacramento to create an EIFD. The only difference between a downtown district and a normal EIFD is that downtown districts include an explicit authorization to receive state funds. However, there is currently no explicit prohibition against any EIFD receiving state funds. Given that the ability of an EIFD to receive state funds is currently unclear, could this bill have the unintended consequence of implying that downtown districts are the only EIFDs that can receive state funds? The Committee may wish to consider if the specific authorization for EIFDs to receive state funds should apply to all EIFDs instead of a downtown district.
   
3. Committee Amendment. In response to the policy consideration above, the Committee may wish to consider amending the bill to specify that all EIFDs may receive state funds.
   
4. Related Legislation. AB 417 (Carrillo) makes numerous changes to EIFD law and CRIA law. AB 417 is currently on the Senate Floor.

SB 5 (Cabaldon) prohibits EIFDs and CRIAs from including taxes levied upon parcels enrolled in a Williamson Act or farmland security zone contract. SB 5 is pending in this committee.

SB 549 (Allen) removes the authority for a subset of EIFDs to receive sales and use tax revenue and authorizes Los Angeles County to establish a Resilient Rebuilding Authority. SB 549 is pending in this committee.

SB 782 (Perez) creates a subcategory of CRDs to finance disaster recovery efforts. SB 782 is pending in this committee.

1. Arguments in Support. According to the sponsor, the Downtown Sacramento Partnership, “In 2022, Sacramento became the first municipality in the state of California to be designated as a pro-housing jurisdiction, yet despite pro-housing policies, the city achieved only 42% of the annual housing production identified by the Regional Housing Needs Allocation (RHNA) in 2024. This legislation will help deliver mid-to-high density housing projects at all levels of affordability at our most location-efficient, transit-oriented locations in the neighborhoods surrounding the State Capitol and will serve as a model for a sustainable livability strategy which may be scaled in urban centers throughout the state.
   

“Without swift action and multi-jurisdictional participation at state and local levels, downtown Sacramento will miss the moment to lean into significant housing production, economic and educational diversification in its urban core, which must be the future for the capital city’s central neighborhood if we are going to create a more sustainable future.”

1. Arguments in Opposition. None on file.
   

REGISTERED SUPPORT / OPPOSITION:

Support

Downtown Sacramento Partnership [SPONSOR]

Cal Asian Chamber of Commerce (previous version)

City of Sacramento

Sacramento Metro Chamber of Commerce

Visit Sacramento

Opposition

None on file

Analysis Prepared by: Jimmy MacDonald / L. GOV. / (916) 319-3958

 THIRD READING  

Bill No: SB 516

Author: Ashby (D)

Amended: 4/30/25

Vote: 21

SENATE LOCAL GOVERNMENT COMMITTEE: 6-0, 5/7/25

AYES: Durazo, Choi, Arreguín, Cabaldon, Laird, Wiener

NO VOTE RECORDED: Seyarto

SUBJECT: California Capital City Downtown Revitalization Act

SOURCE: Author

DIGEST:

This bill enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district specific to Downtown Sacramento.

ANALYSIS:

Existing law:

1. Creates enhanced infrastructure financing districts (EIFDs) and allows them to finance public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community with an estimated useful life of 15 years or more, including projects that enable communities to adapt to the impacts of climate change.
2. Allows, in addition to construction costs, EIFDs to finance planning and design work, displacement of affordable housing residents, defending the district against protests over their formation, and the ongoing or capitalized costs to maintain the projects the district finances.
3. Provides that an EIFD is governed by a public financing authority (PFA) with three members of each participating taxing entity’s legislative body and a minimum of two public members. Member agencies can also appoint an alternate member from their legislative body. If at least three taxing entities participate in the district, upon agreement of all taxing entities participating, the district’s governing board can be reduced to one member and one alternate member of each legislative body and a minimum of two public members.
4. Requires the PFA to hold public meetings and meet notice requirements to consider an EIFD’s formation, as specified.

This bill:

1. Enacts the California Capital City Downtown Revitalization Act, which creates a new type of EIFD specific to Downtown Sacramento.
2. Allows the City of Sacramento or the County of Sacramento to create a California Capital City Downtown Revitalization District (downtown district).
3. Provides that a downtown district is an EIFD, but must be within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard.
4. Allows affected taxing entities with at least a part in Sacramento County to join a downtown district.
5. Allows downtown districts to accept state funds.

Comments

Purpose of the bill. According to the author, “As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento’s office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services. SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an EIFD, to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization.”

Necessary? The City and County of Sacramento can already create an EIFD. The only difference between a downtown district and a normal district is that downtown districts include an explicit authorization to receive state funds. However, there is no explicit prohibition against any EIFD receiving state funds. SB 516 could have the unintended consequence of implying that downtown districts are the only EIFDs that can receive state funds. Additionally, many downtowns, and other parts of cities and counties, are in dire need of economic development opportunities. While downtown Sacramento serves a particular purpose in California as the seat of state government, other areas, including those affected by recent wildfires, could also benefit from clear authority to receive state funds. Should the Legislature allow all EIFDs to explicitly receive state funds?

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/7/25)

Cal Asian Chamber of Commerce
City of Sacramento
Downtown Sacramento Partnership
Sacramento Metro Chamber of Commerce

OPPOSITION: (Verified 5/7/25)

None received

Prepared by: Jonathan Peterson / L. GOV. / (916) 651-4119

5/9/25 13:49:41

**** END ****

SENATE COMMITTEE ON LOCAL GOVERNMENT

Senator María Elena Durazo, Chair

2025 - 2026 Regular

California Capital City Downtown Revitalization Act

Enacts the California Capital City Downtown Revitalization Act, which creates a new type of enhanced infrastructure financing district specific to Downtown Sacramento.

Background

Enhanced Infrastructure Financing Districts. From the early 1950s until they were dissolved in 2011, California redevelopment agencies (RDAs) used property tax increment financing to pay for economic development projects in blighted areas pursuant to the provisions of the Community Redevelopment Law. Generally, property tax increment financing involves a local government forming a tax increment financing (TIF) district to issue bonds and use the bond proceeds to pay project costs within the boundaries of a specified project area. To repay the bonds, the district captures increased property tax revenues that are generated when projects financed by the bonds increase assessed property values within the project area. To calculate the increased property tax revenues captured by the district, the amount of property tax revenues received by any local agency participating in the district is “frozen” at the amount it received from property within a project area prior to the project area’s formation. In future years, as the project area’s assessed valuation grows above the frozen base, the resulting additional property tax revenues—the so-called property tax “increment” revenues—flows to the TIF district instead of other local agencies. After the bonds have been fully repaid using the incremental property tax revenues, the district is dissolved, ending the diversion of tax increment revenues from participating local agencies.

After RDAs were dissolved in 2011, local officials sought other ways to use TIF to raise the capital they need to fund public works projects. In response, the Legislature enacted SB 628 (Beall, 2014) to allow local officials to create Enhanced Infrastructure Financing Districts (EIFDs), which augment the tax increment financing powers available to local agencies under existing infrastructure financing district statutes. While the Legislature has created other similar financing tools, they have seldom, or never, been used.

EIFDs can finance public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community with an estimated useful life of 15 years or more. This includes projects that enable communities to adapt to the impacts of climate change, including, but not limited to, higher average temperatures, decreased air and water quality, the spread of infectious and vector-borne diseases, other public health impacts, extreme weather events, sea level rise, flooding, heat waves, wildfires, and drought (AB 733, Berman, 2017). To do this they must follow a specific process for adopting an infrastructure financing plan so that the public is aware of the projects the district intends to finance.

In addition to construction costs, EIFDs can finance: (1) planning and design work, (2) displacement of affordable housing residents, (3) defending the district against protests over existence or plans, and (4) the ongoing or capitalized costs to maintain the projects the district finances. The EIFD must not use bond proceeds to finance maintenance of any kind, and must not finance costs for ongoing operations or providing services.

The author wants to create an EIFD specific to Downtown Sacramento that can receive state funds.

Proposed Law

Senate Bill 516 enacts the California Capital City Downtown Revitalization Act, which creates a new type of EIFD specific to Downtown Sacramento. The measure allows the City of Sacramento or the County of Sacramento to create a California Capital City Downtown Revitalization District (downtown district). The measure provides that a downtown district is an EIFD, but must be within the downtown Sacramento geographic area, defined by the Sacramento River, the American River, Broadway, and Alhambra Boulevard. Affected taxing entities with at least a part in Sacramento County can join a downtown district. Finally, downtown districts can accept state funds.

Comments

1. Purpose of the bill. According to the author, “As the Capitol of California, Sacramento has a uniquely high concentration of state-owned buildings and property, particularly within its downtown core. Over 60% of downtown Sacramento’s office space is owned or leased by the state and is therefore exempt from local property taxes. This leaves the city with fewer resources to invest in infrastructure, housing, and public services.

“SB 516 gives the City and County of Sacramento the ability to establish a special financing district, an Enhanced Infrastructure Financing District (EIFD), to reinvest local tax dollars back into the downtown area. Once created, the district would also be eligible for state funding and could issue bonds, providing the city with a flexible tool to move forward on critical projects like housing, transit, and revitalization.”

2. Necessary? The City and County of Sacramento can already create an EIFD. The only difference between a downtown district and a normal district is that downtown districts include an explicit authorization to receive state funds. However, there is no explicit prohibition against any EIFD receiving state funds. SB 516 could have the unintended consequence of implying that downtown districts are the only EIFDs that can receive state funds. Additionally, many downtowns, and other parts of cities and counties, are in dire need of economic development opportunities. While downtown Sacramento serves a particular purpose in California as the seat of state government, other areas, including those affected by recent wildfires, could also benefit from clear authority to receive state funds. The Committee may wish to consider amending the bill to explicitly allow all EIFDs to receive state funds.

3. Show me the money. While SB 516 makes it clear for downtown districts to receive state funds, the measure does not identify a specific state funding source or include an appropriation. One of SB 961’s (Allen, 2018) requirements was for the Office of Planning and Research, now known as the Office of Land Use and Climate Innovation (LCI), to study on the effectiveness of tax increment financing tools. LCI found that post-redevelopment TIF tools have limited revenue potential to make district formation worthwhile, especially when considering the lengthy formation process. Until a downtown district actually receives state funds, its revenue potential is the same as any other EIFD. Does SB 516 meaningfully address these limitations without including an actual appropriation of state funds?

4. Special legislation. Section 16 of Article Four of the California Constitution prohibits special legislation when a general law can apply. SB 516 contains findings and declarations explaining the need for legislation that applies only to County of Sacramento and City of Sacramento.

5. Related legislation. The Legislature is considering several measures dealing with infrastructure financing districts:

• SB 5 (Cabaldon), which the Committee passed on a 5-2 vote at its April 23^rd meeting, prohibits enhanced infrastructure financing districts (EIFDs) and community revitalization and investment authorities (CRIAs) from including taxes levied upon parcels enrolled in a Williamson Act or farmland security zone contract. The measure is currently pending on the Senate Floor.
• SB 549 (Allen) Removes the authority for a subset of enhanced infrastructure financing districts to receive sales and use tax revenue, and no longer requires them to be contiguous. The measure is also scheduled for the Committee’s May 7^th meeting.
• SB 782 (Pérez) creates disaster recovery financing districts, which have similar powers to a climate resilience district. The measure is also scheduled for the Committee’s May 7^th meeting.
• AB 417 (Carrillo) makes numerous changes to EIFD law and Community Revitalization and Investment Authority (CRIA) law. The measure is awaiting referral in the Senate Rules Committee.

Support and Opposition

(5/2/2025)

Support: Cal Asian Chamber of Commerce
City of Sacramento
Downtown Sacramento Partnership
Sacramento Metro Chamber of Commerce

Opposition: None Submitted

-- END --