Oakland is one step closer to establishing a new model for funding affordable housing, called an enhanced infrastructure financing district—but the City Council’s vote Tuesday does not guarantee it will be created.

The unanimous vote asks city staff to analyze the potential costs, benefits, and structure of a West and East Oakland EIFD. This kind of infrastructure district is the same tool that the Oakland A’s want to use to fund their Howard Terminal ballpark complex. 

How it would work: While property tax rates would stay the same, and continue to fund the same services, a portion of future increases in tax revenue in a designated district—increases from new development projects or rising property values—would be set aside for new affordable housing. For example, the city could reserve 35% of all future increases in tax revenues from West Oakland properties for new housing projects in the area. 

The city could choose to issue bonds for projects, and pay back the debt with the property tax set-aside.

“This is one of the ways we remediate historic disinvestment from our communities,” said Councilmember Carroll Fife, a co-author of the item with Councilmember Sheng Thao. 

Fife represents West Oakland, where she said neighborhood conditions are a product of “redlining, segregation, and the extraction of resources from Black communities during urban renewal.” An EIFD could enable the city to reinvest in the area, including by remediating toxic sites so they’re ready for development, she said.

The EIFD would create a new governing body, including some members of the council and some members of the public.

At Tuesday’s council meeting, real estate consultancy Kosmont Companies presented its findings on the projected revenue from an Oakland EIFD. The firm looked at a model district that would include a sizable chunk of West Oakland and deep East Oakland, totaling about 12% of the city, but didn’t explain how the particular boundaries were selected. 

Depending on what percentage of future tax increases the city set aside in that district—between 25-50%—the EIFD could accumulate between $20-$60 million over its first five years and $45-$119 million over 10 years, according to Kosmont. The money would better position Oakland to receive public and private grants that require matching funds, proponents say. 

The EIFD model is similar to a previous California funding mechanism called Redevelopment. Governor Jerry Brown dissolved Redevelopment in 2012, diminishing a reliable source of housing funds for Oakland. A couple of years later, the state authorized the use of EIFDs by cities.

“This is a better version of redevelopment,” Thao said Tuesday.

After proposing a feasibility study about a year ago, Thao sought funds from affordable housing developer TODCO to finance Kosmont’s research. Developers like TODCO could benefit from the creation of an EIFD, though the company’s leadership has said they got involved because they’re generally passionate about the model.

Thao, who’s running for mayor, has made the EIFD concept a cornerstone of her platform, promoting the idea whenever she’s asked about her plans to help Oakland meet its far-off affordable housing goals. The state and regional governments have required the city to plan for roughly 18,000 more low- and moderate-income units by 2031. 

Both of the other councilmembers running for mayor, Treva Reid and Loren Taylor, said in Oaklandside interviews that they’re supportive of continuing to explore an EIFD, though Taylor expressed some skepticism that it would generate significant money. “I am supportive of exploring that. I do have questions,” he said. 

On Tuesday, Taylor asked how much of the projected revenue from the EIFD would come from already expected property tax revenue growth—which would go to other city services—and how much would be generated from the development enabled by the EIFD itself. For example, one proposal for Howard Terminal would take the new tax revenue generated from the project itself to pay off the construction costs. 

Joseph Dieguez from Kosmont said the company tries to project what would happen naturally, and what would only happen with the district: “You’re facilitating growth but you’re also…carving some of the property tax pie and directing it away from the general fund,” he said.

Thao told The Oaklandside that her other mayoral housing plans generally include prioritizing affordable housing over market-rate development, especially in affluent areas like the East Oakland hills. 

Taylor said that as mayor, he’d establish a “social impact fund” allowing residents to invest in affordable housing projects. He would also reorganize the Planning and Building Department to make it easier to obtain permits and approvals, especially from underrepresented, local developers.

Reid would also target housing funds to Black neighborhoods, including pushing for a program boosting homeownership in those communities. (Read about all the mayoral candidates’ housing platforms.) 

If Oakland established an EIFD, the infrastructure district’s board would come up with a spending plan that would require final approval by the whole council. While the proposal has so far focused on housing, the revenue from the district could be allotted to finance a range of infrastructure projects and programs. Some officials on Tuesday talked about investing in cultural initiatives, like the redevelopment of West Oakland’s once-thriving 7th Street corridor, which was a victim of urban renewal.

There are currently 21 EIFDs in California, funding everything from sewer systems to libraries, according to Kosmont.

“The point is to customize it for the local community,” Dieguez said.

The council asked city staff to present further analysis and proposals for a separate East and West Oakland EIFDs, as well as a combined EIFD, at a Finance & Management Committee meeting in December. A potential vote to establish a district wouldn’t happen until sometime next year if the council decides to move forward with the concept.