California governor, lawmakers consider expanded infrastructure financing power for local government

by Steve Blum • , , ,

A new plan to finance public infrastructure is being hatched in Sacramento and, at this point, broadband is included.

Chris Hill, a senior budget analyst working for California governor Jerry Brown, talked about the negotiations going on with legislative leaders, during an infrastructure breakout session at yesterday’s California Economic Summit conference at the state capitol. The idea is to allow local governments to create what are being called enhanced infrastructure financing districts that could sell bonds to build a wide variety of projects and repay the debt using property tax money.

Depending on your point of view, the plan would either upgrade or create giant loopholes in current law that allows a more restricted version of IFDs. There’s already a proposal on the table to explicitly include broadband infrastructure in the list of projects allowed under the current structure. But the enhanced IFD plan would go further.

Deal points on the table include…

  • Lowering the threshold for voter approval to 55% from the current two-thirds, and only requiring a single vote, instead of the three needed now.
  • Allow the bonds to be bundled with a wide variety of other financial vehicles, including fees and private investment.
  • Expand the list of allowable projects, including broadband, housing and transportatation, and give local governments the discretion to choose which ones to pursue – no requirements for set-asides for specific types of infrastructure.
  • Allow two or more local agencies – cities, counties, special districts – to collaborate on a project and jointly issue bonds.

The enhanced IFDs would be a replacement of sorts for the local redevelopment agencies that the governor and legislature scuppered a few years ago. One major difference is that, contrary what some local officials are urging, voters would be involved in the decision.

“This governor has made it very clear that the voters should have a say”, Hill explained.

The deal isn’t done. Negotiations over the details continue. Hill acknowledged that time is tight – the legislative clock is ticking down for this year, with a key deadline looming next week.