How to rebuild the state’s aging transportation and water system: An infrastructure plan

150 150 Justin Ewers

(photo credit: Matthew Grant Anson)

California has always been rich in human capital, but to take advantage of the state’s greatest assets, Californians’ boldness and creativity—and to compete in the global economy—the state must make smart investments in its physical capital, as well.

The physical backbone of the state’s economy—its transportation and water infrastructure, in particular—is the focus of the Summit’s Infrastructure action plan, which outlines a comprehensive new infrastructure investment strategy for California.

Summarized in the Policy Playbook with the Summit’s six other initiatives, the plan takes aim at two of the state’s “highest-risk” budget issues: huge funding shortfalls facing the state’s transportation systems (a $290 billion gap over the next decade) and water infrastructure (a $40 billion investment will be needed to provide safe drinking water statewide in the decades to come).

The state can’t borrow enough—or raise taxes or shift spending enough—to close these gaps. But with the right strategy in place—and with the support of the more than 500 regional leaders who will be attending the 2013 Summit in Los Angeles—there are ways to get this done.

“It’s clear the federal government isn’t riding to the rescue with these funds,” Sean Randolph, president of the Bay Area Council’s Economic Institute and one of the leaders of the Summit Infrastructure team, told a group of legislative and executive staff at a briefing on the plan in Sacramento this week. “It would be unwise to expect the state to come up with these funds. The money simply isn’t there with the governance systems we have.”

An infrastructure action plan for California

Which is why the Summit plan pushes the state to explore new approaches for financing public works, including attracting private sector capital to extend the reach of public dollars.

“We’re going to have to figure out a new and different way of building infrastructure,” Mark Pisano, a senior fellow at USC’s Price School of Public Policy and Summit team leader, said at the same briefing. “Water, energy, and telecommunications have used different models for a long time—relying on user fees and other approaches. These aren’t new notions. We’re going to have to figure out how to bring it to areas like transportation, figure out what we did in the past that worked, and how we can move it into the future.”

The Summit plan—in addition to outlining a new approach for accessing untapped sources of public revenue and integrating the processes of infrastructure planning, development, and financing—outlines the following actions the state could take to drive more private investment in public works projects:

  • Strengthen the role of the state infrastructure bank: The state should position its existing public financing authority, the State Infrastructure and Economic Development Bank (I-bank) to facilitate more private sector investment. The I-bank is currently revising its criteria to broaden its support of infrastructure and local economic development.
  • Encourage new local governance models: The state should review the current structures used for major projects—the existing joint powers authority, for example—and consider new local and regional institutional models such as Public Benefits Corporations, which can build partnerships across sectors to tap public and private resources and effectively manage interagency projects. One successful example is the Presidio Trust in San Francisco, a federally operated PBC with multiple objectives—park management and conservation among them—that have allowed the organization to participate in the largest public-private project in the state, the $1 billion renovation of the Presidio Parkway.
  • Expand authority for projects seeking private investment: The state should clarify existing Infrastructure Financing Act rules to expand public-private project financing. This could involve providing flexibility in the selection of private partners, encouraging alternative deal types, and extending the time frame of public-private deals.
  • Integrate risk assessment: To ensure the financial risks taken on by state and local entities are understood, the state should create a risk assessment system to assess project proposals that combines the expertise of the financial, insurance, engineering, and governance fields.

At the Summit in November, participants will have the opportunity to refine these proposals, discuss how to raise public awareness about the state’s infrastructure challenge, and commit to joining a the Summit’s efforts to expand the pool of public revenue and private capital the state can invest in critical public works.

A group of state officials and infrastructure experts will be kicking off this conversation the day before the Summit, on Thursday, November 7 from 1:30-3:30 at the L.A. Hotel (333 South Figueroa St, Los Angeles).

This discussion will be led by:

  • Bill Lockyer, California State Treasurer
  • Brian Kelly, California Transportation Agency Secretary
  • Anthony Rendon, Chair of the Assembly Water, Parks, and Wildlife Committee
  • Chris Taylor, West Coast Infrastructure Exchange

Join the conversation. If you haven’t already registered for the November 7 event, RSVP here.


Justin Ewers

All stories by: Justin Ewers