Infrastructure Action Team
- 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.
- 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
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.
1. Focus on ResultsPublic 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.
• 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 ConfidenceThe 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.
• 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:
• 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)
• 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 InvestmentA. 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.
• 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.