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Page 11 of 18 credits, or supplemental capital funds. As a public agency, the City is also empowered to create special funding districts and mechanisms to facilitate larger-scale infrastructure investments. In light of these considerations, and the benefits of a coordinated infrastructure financing approach, staff recommends creating a mechanism for property owners benefiting from new public infrastructure to help finance this infrastructure. One possibility is to create a community facilities district (CFD) that would apply to properties in East Pleasanton. A CFD is a special taxing district that can issue municipal bonds to raise funds upfront for infrastructure projects. These bonds are repaid over time with revenues generated from special taxes or assessments levied on properties within the district. Tax rates for each property would be based on a pro-rata cost sharing formula that accounts for the fair share cost attributable to each property benefitting from the infrastructure. Neighboring jurisdictions, including Dublin and Livermore, have used CFDs to help finance larger-scale infrastructure for new development (particularly in similar “greenfield” areas). Staff has begun to explore the process and requirements to form a CFD. Doing so would require participation/agreement among the benefitting property owners and the City, further study to determine the total infrastructure costs and fair-share allocations among properties and the City, and evaluation of the assessment capacity of future development. Staff has discussed infrastructure financing mechanisms with the Arroyo Lago and East Lakes applications but has not reached agreement on general terms, but plans to continue these discussions with the goal of reaching agreement. Staff also intends to engage with a specialist consultant to advise on the CFD process and may have the opportunity to provide a more in- depth presentation or overview to City Council at a future date, if there is interest in this concept. Calculating and apportioning the fair share costs of new infrastructure, determining eligibility for fee credits, etc., in these circumstances is a complex exercise requiring evaluation of total infrastructure needs and costs, calculation of the relative demand different properties place on that new infrastructure, and coordination of funding and phasing of construction to allow for reimbursement or cost-recovery to the entity which initially funded the improvements. Staff is beginning to develop the comprehensive picture of the infrastructure needs and costs, and will work with the applicants to refine and come to agreement on the related terms of future agreements to create equitable terms for the City and participating projects. County Property Tax Sharing When a city annexes unincorporated land from a county, the property tax revenues generated from that land must be redistributed to account for the shift in responsibility for providing local services. State law requires the city and county to negotiate a property tax revenue exchange agreement before the annexation is approved. The agreement specifies how the county's share of property tax revenue from the annexed area will be divided between the city and the county. The City negotiated property tax-sharing agreements with the County for annexations of residential properties in 2010, 2013, and 2015. Each of these agreements follows the same tax-sharing formula, which establishes that the City receives a property tax revenue allocation equivalent to the average citywide share of property tax it receives each year, which is approximately 25 percent of the 1 percent property value-based tax rate received by the Page 210 of 749