Infrastructure Action Team

Problem Statement

  • California’s infrastructure is not adequate to meet the needs of a 21st Century economy and promote global competitiveness, environmental sustainability, and equal opportunity.
  • With growing fiscal challenges, the State will have fewer resources to pay for infrastructure and finance long-term debt, yet California’s highly-centralized system for building infrastructure relies on large capital investments by state government.
  • The state only has the resources to pay for about half of the estimated $765 billion in infrastructure investments it must make over the next decade.

Goal Statement

  • Adopt a comprehensive approach to infrastructure planning, development, resource conservation and finance that is focused on economic growth, environmental sustainability, and equal opportunities for all.
  • Ensure that all levels of government have sufficient financing and project delivery authority to facilitate investment in support of state, regional and local economies.

Action Team Co-Leads

  • Mark Pisano, USC Senior Fellow
  • Sean Randolph, Bay Area Council Economic Institute

For a full list of Action Team members, click here. For the team’s 2012 accomplishments, see the Summit’s 2013 Year-End Summary Report.

Tracking Progress

Action Team

Goals for the Year

Progress update - September 1, 2015

Priority action identified in Summit Plan to Advance Prosperity in 2014:

Build a project pipeline, working with the Infrastructure Bank to identify projects suitable for public/private participation.

Expand the use of new financing tools to support infrastructure development.

Projects identified: Identify and connect with I-Bank leaders several projects in different sectors (water, transit, etc.) that can be supported with I-Bank participation and/or other public and private resources.

Infrastructure financing authority:

Locally: Inclusion of Summit ideas for tax increment financing, integrated financing, and benefit assessments in state's expansion of Infrastructure Financing District authority or other local economic development tool to replace redevelopment.
More broadly: Inclusion of Summit ideas to facilitate use of assessments for benefits and fees to finance projects beyond the community-level--at regional scale, for example.

Transportation: Adoption of Summit ideas for sustainable approach to transportation funding. Examples include:

• Developing a sustainable balance of funding (raising gas tax or vehicle license fee, for example) to support Summit's long-term focus on infrastructure.
• Repaying loans made by transportation special funds to General Fund that are part of state's 'Wall of Debt.'

Water: Inclusion of Summit ideas--a focus on results, for example--in budgeting for Water Action Plan and drafting of water bond.

Vote thresholds: Revision of local vote requirement for special taxes and general obligation bonds devoted to infrastructure.

Sustainable communities: A new opportunity for collaboration among four Action Teams emerged in January to include Summit ideas in a range of state actions related to sustainable communities and environmental planning.

Update - September 29, 2014 Local financing tools: The Governor signed SB 628, Summit-supported legislation that will broaden local authority to invest in infrastructure--from transit stations and water systems to maintaining neglected roads. The Summit network is scheduling convenings in early 2015 to identify a list of projects that could benefit from this new authority. Update - August 30, 2014 Local financing tools: Both houses of the Legislature approved SB 628, a bill that adopts the Summit's proposals for expanding the authority of Enhanced Infrastructure Financing Districts. The legislation now awaits the governor's signature. Update - August 5, 2014 Local financing tools: The Infrastructure team, joined by leaders of the Housing team, sent a letter to the Governor and Legislature urging state leaders to enact new “Enhanced Infrastructure Financing Districts,” a promising new financing tool for increasing local infrastructure development. Accompanying the letter was a brief How-to Guide created by the Summit demonstrating how communities could use this new authority to invest in everything from sidewalk repair and water infrastructure to the implementation of sustainable communities plans. The letter also encouraged the Administration to support efforts to create a permanent funding source for affordable housing. Update - June 16, 2014 The 2014-15 state budget directs more than $1 billion toward one of the Summit’s top priorities: closing the state’s massive infrastructure deficit. It includes $497 million for neglected local roads and makes substantial new investments in affordable housing: $100 million this year to multi-family housing development and at least 35 percent of all future cap-and-trade revenues to transit, affordable housing, and sustainable communities--a source of funding totaling $1 billion annually. The state will also spend over $100 million on drought response, bringing total water emergency spending this year to more than $800 million. The Summit has also pushed lawmakers to give local governments more authority to take on infrastructure challenges, including an expansion of Infrastructure Financing Districts. That proposal, supported by the governor, will be voted on later this summer. Update - May 13, 2014 The governor's May Budget Revision includes a Summit proposal to dramatically increase the scope of Infrastructure Financing Districts authority. The revised budget includes a Summit recommendation that will roughly double the size of the pool of revenues IFDs can tap—making about $400 million available each year for local infrastructure development. The proposed budget also expands IFD authority beyond just incremental growth in property tax revenue—the financing tool once used by redevelopment agencies—and includes user fees and assessments for benefit, as well. The proposal also includes a requirement that IFDs report on their progress every two years by conducting a performance audit. Update - April 5, 2014 Projects identified: Summit participants have organized a meeting in Los Angeles--hosted on May 16 by the Southwest Megaregion Alliance--that will bring Southern California infrastructure experts together to develop a pipeline of projects. Infrastructure financing authority: The team has created a detailed set of recommendations for strengthening the governor's proposed expansion of IFD authority. The Summit submitted these ideas to the Department of Finance in March, and Summit members have testified on their behalf in committee hearings. Transportation: The Summit offered its views on an effort early this year by Transportation California to put a measure on the November ballot to develop a more sustainable source of funding for transportation infrastructure. (The transportation coalition has since withdrawn the measure.) The Summit has also supported the governor's budget proposal to repay loans to transportation special funds and is tracking its progress. Water and sustainable communities: Two co-leads of the Infrastructure team signed a February 25 letter to the Governor and Legislative leaders outlining 11 Summit recommendations for aiming the state's expanding drought response at the triple bottom line. In March and April, Summit staff conducted briefings with aides to the authors of four water bonds, along with members of the governor's Drought Task Force. California Forward has also outlined its views on how to craft a winning water bond.
Infrastructure Team's 2013 Action Plan

1. Focus on Results

Public agencies should integrate infrastructure project planning, development and financing at the earliest stage to make them more transparent, to encourage use of technology, and to improve return on investment.

• Strengthen design-build authority by encouraging alternative procurement methods that yield measurable value.

• Promote the integration of planning, design, delivery including life cycle costs.

• Ensure that there is a measurable benefit from infrastructure investment in under-served communities.

Update - August 5, 2014: See update above Update - June 16, 2014: The Summit has also highlighted efforts at Caltrans to focus operations on results. November 8, 2013 Summit commitments:
Performance measures: Regional and city leaders committed to developing metrics for measuring infrastructure performance--how many jobs the infrastructure creates, for example, as well as other quality-of life metrics (including how many people stopped using cars as a result of a project) • State reforms: Commitments were made to push for state reforms so government delivers value and results • Procurement: One commitment was made to develop a procurement strategy that addresses demand-risk

2. Build Public Confidence

The public needs to understand the benefits to themselves and their communities of smart infrastructure investments, and public agencies need to clearly report progress.

• A regional and local communications effort should make the case for infrastructure investment, highlighting the cost of doing nothing and promoting performance metrics and tracking results to build public confidence.

Update - August 5, 2014: Summit participants continue to lead efforts to educate Californians about the scope of the infrastructure crisis and the cost of doing nothing. November 8, 2013 Summit commitments:
Education and advocacy effort: Regional leaders supported an effort to raise awareness about the importance of infrastructure and the cost of doing nothing--as well as alternative financing methods--in order to build public confidence and buy-in. • Making the case: A commitment was made to build a public-utility model for infrastructure, linking public revenue to private return on investment.

3. Ensure Adequate Revenue

A. Tap into appropriate revenue sources:
Expand the pool of resources: New dedicated revenue sources including private capital are needed to meet the state, regional and local infrastructure needs.
Increase use of user fees and assessments when there is an identifiable beneficiary of the investment.

B. Grant local governments more authority
The State should consider reducing the vote requirement for taxes and general obligation bonds that are dedicated to infrastructure and clarifying conditions under which assessments tied to benefits can be raised with a majority vote.

C. Find a new way to finance community economic development
The State should enact a new method-- one that combines the authority to use assessments tied to benefits and tax-increment growth--to allow communities to finance local economic-development projects in the absence of redevelopment.

A. Examples include:
For transportation:
• Raising gas taxes
• Raising vehicle-related taxes (e.g. VMT, VLF)
• Broader use of assessments related to benefits received from infrastructure investment

For water-related infrastructure:
• Maintain the user-based system for water-related infrastructure
• Develop statewide or region-based method for financing related ecosystem improvements

B. Revise the vote requirement for special taxes and general-obligation bonds dedicated to infrastructure.

C. Four major approaches include:
• Expand use of Infrastructure Financing Districts (SB 33, Wolk); recreate IFDs as jobs/ ed financing districts (AB 690, Campos)
• Focus broad ""revitalization"" authority in high-poverty, high-crime areas (AB 1080, Alejo)
• Create ""sustainable communities"" financing in transit priority areas (SB 1, Steinberg)
• Capture rise in land value created by infrastructure (An alternative approach)

Update - August 5, 2014: See update above November 8, 2013 Summit commitments:
Ensure adequate revenue: Summit participants pledged to support efforts to help the state access public resources the infrastructure system needs, including commitments to expand the use of benefit assessments to support infrastructure investment, to push for lowering the local vote threshold for infrastructure bonds to 55 percent; to advocate for a replacement for redevelopment authority; and to explore raising a statewide resource to support operation and maintenance of the state's transportation system. • Private investment: A rural economic development leader committed to increase by 20 percent the number of projects that include private investment • Local planning: A State Senate staff consultant committed to supporting long-term local infrastructure-planning efforts

4. Provide New Tools to Drive Private Investment

A. Strengthen the role of the state Infrastructure and Economic Development Bank (I-Bank)
Position the I-Bank to facilitate private sector investment through public-private partnerships.

B. Encourage new local governance models:
Consider new institutional models such as Public Benefit Corporations to tap into public and private resources for infrastructure investment.

C. Expand authority for projects seeking private investment
The State should clarify existing Infrastructure Financing Act rules to expand public-private project financing.

D. Integrate risk assessment
To ensure the financial risks taken on by state and local entities are understood, a responsibility for risk assessment should be applicable at all levels of government.

A. I-Bank should revise criteria to enhance the bank's ability to attract private capital.

B. Review existing governance models to determine if current models are sufficient.

C. Proposals could include:
• Provide flexibility in selection of partners
• Encourage alternative deal types
• Extend time frame of public-private deals

D. Integrate risk assessment into state, regional, and local infrastructure investment systems.

Update - August 5, 2014: See update above November 8, 2013 Summit commitments:
Build a project pipeline: A half-dozen participants committed to working with the I-bank to bring forward actionable projects that could benefit from private financing. • Procurement training: One regional leader committed to holding trainings for public-sector procurement officials to build capacity to structure deals; another promised to develop a strategy to build P3 expertise in the public sector. • Foreign investment: A business leader committed to exploring foreign investment in infrastructure projects.