Mayor proposes new funding for affordable housing, infrastructure in State of the Downtown speech

Sacramento (Feb. 22, 2022) The Downtown Sacramento Partnership Tuesday held its annual State of the Downtown breakfast after skipping 2021 due to the pandemic. In his speech, Mayor Darrell Steinberg proposed the City explore creating an Enhanced Infrastructure Financing District — or EIFD — to help spur the reinvention of downtown into a place with more affordable housing and mixed use development.

Mayor Steinberg also said he would work with Assemblymember Kevin McCarty to aggressively pursue $50 million in funding for adaptive reuse projects. Gov. Gavin Newsom has proposed $100 million in such spending statewide.

Below is slightly abridged version of the mayor’s speech and a recording of the speech as it was given.

State of Downtown, 2022

I want to start by saying it’s time for all of us to shed the Covid lethargy. Today is a great day because we are together. Let’s smile and laugh a little more. Let’s appreciate what we have done together to help so many people during the last couple of years. Let’s recommit to building back this downtown and the city we all love.

Today’s theme is rebirth and reinvention

Before we start on the downtown, I just want to remind you what’s occurred in our fair city over just the past 7 days. Last Wednesday, we broke ground on Aggie Square, the billion-dollar jobs and research center in the heart of three proud neighborhoods.

This is a big deal. UC Davis, a world-renowned university which previously leaned closer to the research and economic centers of the Bay Area, has committed itself to building the economic future for OUR city and OUR region.  

Last Tuesday, we approved plans for a new teaching hospital and medical school in North Natomas. The Northstate University Hospital not only fulfills our promise to bring thousands of jobs to the former Kings arena site but also will strengthen our reputation as a center of health and life sciences.

And last Tuesday, we made another significant equipment and workforce investment in the California Mobility center. This unique partnership with SMUD, Sac State and industry has already put Sacramento on the map, attracting young companies that represent the future of clean mobility.

 And that’s just last week.

 During Covid, we’ve had a 12. 9 percent increase in personal income in the Sacramento region. Our region’s economic recovery is the second-fastest in the state. We are recovering faster than the state itself.

Yet there’s no question that for many reasons the downtown has been hit harder than the region as a whole. While all the state employees worked from home and did not see their incomes drop, businesses in the core suffered deeply from their absence.

The last few weeks I’ve spent a lot of time thinking about the future of our city and region’s center.

I will never shrink from talking about and working hard on the tough problems, but if all we ever talk about is homelessness, that’s all we will ever talk about.

I want to use this forum, this day, to both dream together and put forward a big idea.

Some have been known to refer to me, maybe with a little roll of the eyes, as a wonk… Oh no, not another big idea. Not another big stretch goal. You said what? You want to get it done….when?

Well I have a firm response to my critics.

 I resemble those remarks!

 The job of a Mayor is to uplift, and uplift with more than platitudes like “don’t worry, it will be alright.”

 As the creatives would say, ‘Here’s my jam,’ and it’s one that has mostly delivered for my constituents over 25 years of service. Lay out a big vision. Don’t be afraid of controversy or complexity. Work hard. Land the plane with something that brings meaningful change and progress.

And oh, never, EVER give up.

Which brings me to the State of the Downtown and the big idea.

I bet few here have ever invoked Mark Twain in a State of the Downtown speech. Well, I’m about to.

Twain said, “Rumors of my demise have been greatly exaggerated.”

People who think downtown isn’t coming back….will not come back…..should read more Mark Twain.

 C’mon people: in the midst of the worst health and economic crisis in a century, we kept building. The Seventh Street Standard, Nash and Proper, Frog and Slim, Anthropologie, Salt and Straw. New Convention center and Theatre. Hamilton!!

Three thousand housing units under construction. Five hundred and thirty new hotel rooms. Adaptive reuse like Hyatt Centric and the Exchange.

 Al Fresco dining on a warm Sacramento evening. Love it! Restaurants staying afloat by feeding shut in seniors. Inspiring!

Hundreds of millions in new investments in our central city.

 Brilliant, committed, and yes, fearless business leaders. Too many to name.

 I’m also not naïve about the setbacks.

I’ll tell you one: The Waterfront. We’re standing in this beautiful ballroom today because the hoteliers in our town agreed to impose a fee on themselves to pay for it. That freed up $40 million in hotel taxes to use to modernize the waterfront. We had such a beautiful plan, and we were ready to go. But we just one financial tool, the hotel tax, and Covid pulled it out from under us.

That’s a cautionary tale. One tool is not enough. We need to be more aggressive if we are going to write our own story, not have it written for us.

Resources matter if we are going to reinvent downtown in the post-Covid world.

Look, the world is changing for downtowns. I will shout to the rooftops, to the Governor and other state leaders that the state should bring all their workers back. Everyone working from home permanently is just too much isolation. People should be going out to lunch downtown, not just Zooming from outside the Central city.

But let’s be real. It’s probably not coming back the way it was.

We can try and regain what was or we can be the first to successfully define what will be.

Adaptive reuse? Taking underused or empty office space and turning it into housing or mixed-use? Sounds great, but it’s expensive. How are we going to pay for it?

 Resources matters because building out our downtown is our best climate strategy. Downtown Sacramento was and is the regions’s best example of climate action as people choose to live close to where they work, shop, and play. GIG cars and scooters are great, but not enough. We have an ambitious climate vision in this capital city. From electrification to active transportation, from more housing to comprehensive bikeway networks connecting the city to the central city, it all takes capital!

Congresswoman Matsui is delivering big for the downtown. So is Senator Pan and Assemblymember McCarty.

There’s gobs and gobs of federal and state climate money (otherwise known as billions and billions) for bikeways, electrification and transit. All require a big local match. Where are we going to get it?

We need downtown to lead the way for more affordable housing. Creating an entertainment, sports and dining destination for the region means you need places for workers to live. But affordable housing, too, requires local resources to supplement federal and state dollars.

We need more resources to help the areas within the heart of our city that need a spur to get going. Boarded up buldings along I, J and K. The northeast corner of 10th and J. The 12th and 16th street corridors. Small, outdated office buildings on S. The waterfront, including the dated low-rise motels along Richards and Jibboom.

There are just too many unrealized opportunities.

I’m proud of measure U, and what we have done with federal Cares, and ARP funding, hundreds of millions we have invested in our small businesses, housing, and the creative economy and so much more

 But aside from measure U, it’s all one time funding.

 And more taxes?? Might surprise you to hear it from me, but I think we are near our limit.

 What is our best underutilized strategy to invest tens of

Millions of additional resources into our central city.

 Drum roll, please! You’ve heard Farm to Fork. Sacramento Proud. The city of trees?

 I have a new slogan that rolls right off the tongue. The City With An Enhanced Infrastructure Finance District……yeah I don’t like it much either. Let’s just call it by its acronym. EIFD

 What is this strange bird? This EIFD?

 Simply put, it’s an economic incentive. It says to business, If you invest in our central city, we will return a percentage of the increase in property values to the central City. It can be bonded. It can be used for infrastructure, climate, and affordable housing.

 It’s a potential game changer for our central city.

 I was able to get $30  million from the Governor and legislature for the Railyards. That infrastructure investment and the promise of an EIFD has literally paved the way for three new major housing projects and the cusp of some major upcoming announcements regarding the entertainment future of the central shops

The EIFD we created for Aggie square will generate $250 million for infrastructure and affordable housing in the coming decades. We would not have broken ground last week without the city finding a way to make a major contribution to infrastructure and housing.

So this is not some wild haired idea. Our neighbors in West Sacramento are doing this for 25 percent of their city. Their EIFD is expected to generate $535 million for infrastructure and housing in the coming decades.

And it’s not going to hurt their general fund. The West Sacramento EIFD is expected to boost the general fund by $140 million over the same period. That’s without even capturing growth in the sales tax, which is now allowed by state law.

I propose today that we consider a downtown-wide Enhanced Infrastructure Finance District.

Lets make the entire Central city eligible. Let’s target its initial use in places where decades have shown us clearly that in our central city, if we don’t spark the growth, it ain’t going to happen on a wing, a wish or a prayer.

A real investment plan for job and industry growth, adaptive reuse, climate progress, and affordable housing.

I get the criticism already. We shouldn’t offer incentives where development will happen on its own. We could just take the money out of the general fund annually instead of making a long term commitment to infrastructure climate, and affordable housing.

If there is risk in over utilizing a long term financial tool, there is a greater risk in using it only sparingly. Will future councils really discipline themselves every year when faced with competing priorities to actually invest in economic development. If we do not aggressively use the tools that we have grow jobs, housing , and boldly lead on climate, what are we really saying?

I’m not OK with our city being a follower on climate. I’m not OK with blight. I’m not OK with it taking decades to redevelop the waterfront. And I’m not OK with all these holes and unrealized opportunities in our city.

Let’s harness sustainable growth to fund more sustainable growth. Together, we can shape the future of our central city.

The EIFD is not our only tool. The governor has proposed $100 million for adaptive reuse conversions. We are most affected by the stay-at-home orders. We need to fight for our fair share.

 I say $50 million for two or three key projects. Kevin McCarty has Introduced AB 2592 and we will work together to get this done. Same with the $50 million of historic tax credits. The state is also looking at converting several of its own buildings to affordable housing. There is so much opportunity.

 We won’t rush this EIFD plan. I will schedule a full informational hearing with the city manager for the spring so we can get going and include the business community, the broader community and do it right.

 Sometimes I look at the challenges and say Oh my God. But I always remember whatever struggles we face pale in comparison with those of people who are working day in and day out to support their families, build a business. Whatever difficulties we have had together I know that we are going to come back. We are coming back.

Nothing is going to change my belief and attitude that it's one for all and all for one. We can fight and disagree but we have to continue to act in ways that are positive and uplifting. And to realize that we really do all have the same goals and dreams for this city.