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May 20, 2022

Gonzales creates first special financing district for industrial development in Monterey County

Incremental tax revenue to pay for development at city’s business park

GONZALES — City of Gonzales has become the first city in Monterey County — and one of the first in the state of California — to create an Enhanced Infrastructure Financing District (EIFD) to help fund economic development projects. 

In collaboration with the county, Gonzales will use the mechanism to help pay for infrastructure improvements at its Agricultural Industrial Business Park and also to provide housing assistance in the city. Monterey County Board of Supervisors approved the city’s EIFD plan on Dec. 7.

“There have been significant evolutions in public financing since the Great Recession of the early 2000s,” said Supervisor Chris Lopez, who represents the Third District, which includes Gonzales and the entire South Monterey County region. “Gonzales and Monterey County continue to pursue innovative opportunities to provide support for economic development, benefitting both the City and the County, and result in good paying, sustainable jobs for our rural communities.”

EIFDs use tax increment financing, which allows the city to dedicate any new property tax revenues above a baseline in a designated project area to improvements within the district. 

The improvements are designed to encourage new industrial and business development, increasing property tax revenue in the district.

Local governments lost the ability to use tax increment financing for economic development when the state abolished redevelopment agencies in 2014. 

That changed in 2018 with the approval of legislation authorizing the creation of new EIFDs for economic development — but only a few local jurisdictions in the state have so far navigated the approval process to create their own EIFDs.

“What is noteworthy about the creation of the EIFD is the partnership between the City of Gonzales and Monterey County is setting forth a model that other cities and counties can use to develop economic opportunities, jobs and local revenues for housing for local communities,” Gonzales Mayor Jose Rios said.

Gonzales estimates its EIFD will generate more than $30 million over the next 30 years for important infrastructure needs in its industrial park and will help the city lure new projects and enable expansion by existing tenants. 

According to City Manager Rene Mendez, about 20% of the incremental tax revenue will be used to help spur residential development in the city, which currently has a shortage of available housing.

“The EIFD will help us capture future revenues to reinvest in our community that over time will lead to increased economic development and more importantly the jobs needed for our residents,” Mendez added. “In addition, it establishes a much-needed local revenue source to help develop affordable housing opportunities for our residents.”   

The city hopes to have infrastructure projects underway in about six months that can draw on EIFD funds.

Ryan Cronk
Ryan Cronk is the managing editor for King City Rustler and Salinas Valley Tribune, a unified publication of Greenfield News, Soledad Bee and Gonzales Tribune. He covers general news for South Monterey County and the surrounding communities.

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