Bike lane construction in San Jose. (Photo Credit: Richard Masoner/Flickr)
After years of discussion by the Legislature and civic leaders seeking more authority to make much-needed investments in local infrastructure and economic development projects, Gov. Brown handed California communities a robust new financing tool today when he signed SB 628, a bill that will dramatically expand the authority of an existing investment mechanism known as Infrastructure Financing Districts.
The California Economic Summit has supported these proposals since they first appeared in 2013 and made their way into the governor’s January budget proposal—creating a guide that shows how “enhanced” infrastructure financing districts (EIFDs) could help local leaders make investments in everything from aging water mains and crumbling local roads to sidewalk repairs and next-generation transit stations.
A group of more than two dozen Summit leaders have worked with lawmakers and the administration this year to ensure the final legislation will allow local governments to tap into the full complement of public and private investing tools (including the tax increment financing mechanisms they had under redevelopment), that it will increase the types of infrastructure EIFDs can support (water facilities, for example), and that it will be flexible enough for the new districts to be created across city and other local agency boundaries.
“These enhanced financing districts will give communities across the state more authority to build the infrastructure California needs to achieve its growth and sustainability goals,” says Mark Pisano, a senior fellow at USC’s Price School of Public Policy who serves as one of the co-leads of the Summit Infrastructure Action Team. “The Summit has allowed a group of infrastructure and economic development experts from across the state to work together to seek these changes, and we applaud the administration for signing them into law.”
“These financing districts will not only support the development of all public infrastructure, they can also serve as a platform for multiple funding streams—and provide a foundation for the private sector to help build California infrastructure through public-private partnerships, a process that has great success around the world,” says Sean Randolph, president and CEO of the Bay Area Council Economic Institute, who also co-leads the Summit Infrastructure team. “Now we and our partners are looking forward to working with local leaders to get these projects moving so communities can begin making the infrastructure investments California so desperately needs.”
The next step: Building a project pipeline, cleaning up housing provisions
This new local financing authority certainly isn’t arriving a moment too soon. With ninety-year-old water mains bursting in the state’s biggest city, dams cracking in the Sierra foothills, and nearly 60 percent of local streets in cities like San Jose now in “poor” condition, the state auditor has put California’s long-neglected infrastructure in the same “high-risk” category as the state’s pension and health care systems. The City of Los Angeles alone, for example, is estimated to have a backlog of $8.1 billion in deferred infrastructure maintenance—a figure as large as the city’s entire annual budget.
While California’s state government lacks the resources to take on these challenges—and the federal government shows no sign of increasing infrastructure investment—SB 628 gives local governments more tools to do the job. “This bill will help local jurisdictions finance transportation projects and transit-oriented development,’’ the legislation’s author, Sen. Jim Beall (D-San Jose), said in August when the bill passed. “With the option of creating Enhanced Infrastructure Financing Districts…communities can…cut traffic gridlock, reduce commutes and greenhouse gas emissions. These investments not only ensure the health and well-being of our communities but they will also serve to create jobs.’’
Sen. Beall has said he wants to continue broadening public participation in the project development process, and he has committed to introducing another bill next year that will aim to ensure these new financing districts don’t cause gentrification and displacement—a concern expressed by some housing advocates and an effort the Summit also supports. The Summit will also be hosting several convenings in Northern and Southern California this fall with public agencies and private investors to begin creating a pipeline of projects that could benefit from creating an EIFD.
With the governor’s signature, the next step is clear: No matter what type of infrastructure a public agency needs—from upgrading sidewalks to developing next-generation transit and stormwater collection facilities—it is time to start building.