Architectural blueprint with building floor plans against mountain backdrop
Report

California's Disaster Recovery Financing Districts: New Tools for Local Recovery

A headshot of a man named Alexander Meeks. He is standing against a blurred background and smiling at the camera. He has brown skin, a short dark brunette beard, short dark brunette hair, and brown eyes. He is wearing glasses and a gray collared polo shirt.

Alexander Meeks

Director, 10,000 Communities Initiative, Milken Institute Finance
Alexander Meeks is a director at Milken Institute Finance. He focuses on helping communities accelerate resilient disaster recovery and adapt to extreme weather events.
Topics
Climate and Environment
Finance
Resource Downloads
Download Report
Stay informed by the Milken Institute

Within a year of the January 2025 wildfires that devastated Altadena, the Pacific Palisades, and Malibu, the State of California authorized disaster recovery financing districts (DRFDs) to localize financial controls and expedite rebuilding. The districts will rely, in part, on incremental property tax revenue to fund rebuilding, economic recovery, and resilience. 

This report traces the policy history that led to the creation of DRFD tools and assesses the constraints and opportunities that local governments and residents should weigh during district implementation. It argues that the greatest value of a DRFD may not be the incremental tax revenue it generates. DRFDs have other powers, including the ability to accept other nontax revenues. Most importantly, they can provide a venue for locally based community planning and decision-making. If successful, they could offer other communities a worthwhile model for local disaster recovery management.

The report offers five implementation principles for district leadership and residents to consider:

  1. Incremental property tax revenue will accumulate slowly, so DRFDs should issue revenue bonds and seek upfront operating grants to fund startup costs and accomplish quick wins.
     
  2. DRFDs should spend limited early revenues strategically, focusing on investments that will catalyze further property value growth. They should steer other capital toward projects that can support low-cost debt. 
     
  3. DRFDs should position themselves as conduits for potential future rebuilding grants. They will be able to steward such funds with greater levels of community control. 
     
  4. Existential questions about density, displacement, and preserving neighborhood character must be decided at the community level. DRFDs should serve as the venue for negotiating these challenging questions and collectively envisioning the future of these recovering neighborhoods. 
     
  5. DRFDs should experiment with established and innovative financial tools, including revolving loan funds, support for community land trusts, and even novel insurance products that complement individual residents’ insurance policies.

Related Content