California legislature puts broadband infrastructure financing on par with water and roads

by Steve Blum • , , ,

Roads, water, sewers, broadband. You need it all to build an economy.

It’s up to governor Brown to decide whether broadband infrastructure gets equal treatment with transportation and water projects in California, at least when local governments want to build it. On a lopsided vote, the state assembly approved the final version of assembly bill 2292 yesterday, which explicitly allows local governments to use infrastructure financing districts (IFDs) to issue bonds to build broadband projects, and then pay the money back with property tax revenue.

Written and backed by assemblyman Rob Bonta (D – Oakland) at the urging of San Leandro mayor Stephen Cassidy, economic development is a primary goal of AB 2292, a point Bonta made yesterday on the assembly floor, saying the bill would…

…expressly allow local governments the ability to use infrastructure financing districts to finance projects related to broadband. Broadband provides cities and counties with an opportunity to stimulate the economic climate by providing businesses with the competitive advantage of being connected to high speed fiber optic networks. AB 2292 will help boost local economies, create local jobs and increase access for schools, libraries and other public facilities to state of the art telecommunications networks.

AB 2292 is not a magic bullet, though. To form an IFD requires the agreement of the local agencies involved and a two-thirds majority of the electorate. Then two more votes – including another one requiring two-thirds approval – are needed before any bonds can be issued.

Another approach – enhanced infrastructure financing districts – is still in the works in Sacramento. The idea is to reduce the super majority required to 55% and only require a single vote by the electorate to form an IFD. It would also allow more flexibility in putting financing packages and partnerships together. The specifics of that deal are being worked out behind closed doors at the Capitol, but if it’s to be approved this year, it’ll have to emerge soon – the California legislature adjourns in less than two weeks, and this Friday is a key deadline for getting bills into final form.

Tellus Venture Associates proudly counts the City of San Leandro as a client. I have talked to them about AB 2292, but it’s something I’d support regardless of whose idea it is. That said, it’s a bill that would benefit most of my clients. I’m not a disinterested commentator; take it for what it’s worth.