Salinas weighs a tax district to fund infrastructure at Ag Industrial Center project.

Salinas city officials are exploring the formation of a new tax district to fund infrastructure improvements that would help develop the long-gestating Salinas Ag Industrial Center.

Since being approved by Salinas City Council in 2010, the 257-acre agricultural property on the southeastern edge of the city – meant to house cooling, processing, warehousing and distribution facilities for local ag producers – has lain dormant. The main culprit has been a lack of roads, utilities and other “backbone infrastructure,” according to city officials, which are estimated to cost nearly $70 million to build – a price tag deemed “financially infeasible” for the site’s property owner, Uni-Kool Partners.

Yet with the city looking to spur the center’s development, which promises 4.3 million square feet of facilities and nearly 3,000 permanent jobs, officials have floated creating a new tax district that would funnel the site’s future property taxes toward funding those infrastructure improvements. On Oct. 24, Salinas City Council unanimously approved a resolution allowing city staff to take steps toward forming an enhanced infrastructure financing district (EIFD) for the project.

An increasingly popular form of tax increment financing in California, EIFDs allocate the revenue from a development’s future property tax increases for up to 45 years toward funding infrastructure improvements – typically using that revenue to pay debt service on bonds issued to finance the project. Marina officials recently pitched an EIFD as part of their unsuccessful proposal to house a new factory for air taxi startup Joby Aviation.

With the site’s property taxes only gradually increasing over time, Salinas Community Development Director Lisa Brinton says revenues from the EIFD would likely be combined with other forms of public and private financing to make the project pencil. But she believes the proposal could solve the “chicken-and-egg” dilemma that has stunted development thus far.

“The reason there hasn’t been traction is, who makes that [infrastructure] investment? Is it the property owner, or is that onus put on a future tenant?” Brinton says. She notes that Salinas considered an EIFD several years ago to fund an ag industrial facility that eventually went to Gonzales.

City Council also approved a $129,000 contract with Kosmont & Associates to advise on the proposed EIFD. From here, the process will involve further fiscal analysis and stakeholder outreach.