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Infrastructure Bonds Are a Positive Investment for California, But Long-Term Needs Require Additional Resources

 Liisa Lawson Stark is a legislative representative for the League. She can be reached at lstark@cacities.org. Bill Higgins and Genevieve Morelos also contributed to this article. Bill Higgins is a legislative representative for the League and can be reached at higginsb@cacities.org. Genevieve Morelos is a policy analyst for the League and can be reached at gmorelos@cacities.org.


As Californians, we are fortunate to live and work in the Golden State. We boast the fifth largest economy in the world and are visited by millions of people each year, who come to experience the unique cultures of our cities and our diverse natural resources. California is “Hollywood,” and we represent what so many others think is the ideal life. The world looks at California as a leader in economic prosperity, employment opportunity and recreational activity for a healthy and well-balanced lifestyle.
 
As evidenced by the passage of the 2006 Infrastructure Bond Package, California voters are keenly aware of the need to invest in transportation, housing, levees, water supply, parks and education systems to sustain our economy and quality of life. Like the spokes of a bicycle wheel, each of these areas is connected to the other, and the success of one impacts the success of the others.
Our economy depends on a good transportation system. Our roads lay the foundation for moving goods and people from one place to another, and to and from work. Our homes are our sanctuaries and provide a stable, secure place to raise a family. Parks in our communities allow children to play outdoors and adults to engage in life-long activities for exercise and socializing. Safe drinking water and strong levees protect young and old as well as supply farmland with needed resources to feed our residents. And a strong education system fosters the development of future generations. All of these factors working together will ensure a healthy and vibrant future for California.
Investment Significant But Needs Are Still Great
The $43 billion-plus bond package (Propositions 1A, 1B, 1C, 1D, 1E and 84) represents the state’s largest investment in infrastructure to date. While the package ensures a significant investment in new roads, new schools and parks, safe housing and flood control, it is imperative that federal, state and local governments continue to build upon these investments to meet all of California’s long-term needs. In other words, we must not rely on, or expect, that these bond funds will address all of our infrastructure issues.
In 2000, more than $116 billion in un-funded transportation projects needed just to shore up our existing system of roads and highways were identified by the California Transportation Commission. And according to an October 2006 Road Information Report published by tripnet.org, five out of the 10 urban areas with the “bumpiest rides” in the nation are in California. Los Angeles and San Jose top the list with 66 percent of major roads and highways in poor condition, followed by San Francisco-Oakland and San Diego with 58 and 54 percent, respectively, in poor condition. Sacramento is fifth on the list because 50 percent of its major roads and highways are deemed unacceptable.
California motorists pay an extra $600 to $700 a year in vehicle operating costs as a result of driving on substandard roads, the highest in the nation.
California’s unmet needs are significant. We must build and maintain infrastructure essential to building and preserving the economic and social well-being of our cities. But sometimes this is easier said than done.
Generating Local Revenues to Pay For Capital Projects Is Challenging
The state was able to pass the 2006 bond package with a majority vote (50 percent plus one vote required) of the electorate. The challenge for cities and counties to do the same is that local measures for specific capital projects and purposes must be approved by a two-thirds vote (or “supermajority”) — the highest in the state (even school bonds require only 55 percent approval).
The fate of the local measures on the November 2006 ballot demonstrates that the supermajority requirement is preventing many cities from financing local priori-ties with only locally raised revenues. Just three of 11 special transaction and use tax measures passed, but five of the eight that failed would have passed a 55 percent voter threshold. Additionally, five of 10 countywide transportation tax measures passed, meeting the two-thirds requirement, while three of the five failing measures would have passed a 55 percent voter threshold.
In contrast, of the local general tax measures requiring only a majority vote, 12 of 16 city measures passed.
The League has advocated that local governments need more tools to finance local capital needs. One idea that has continually been proposed is changing the voter threshold for local capital projects from the current two-thirds to 55 percent, as is required for schools. It’s highly un-likely that this idea could reach fruition through the Legislature, especially on the Republican side of the aisle where there is virtually no support for any sort of tax measure, local or not. However, a statewide voter-approved ballot initiative could give local governments this flexibility.
 
Don’t Miss the Other Features In This Section
Prop. 1B Brings Opportunity to Local Governments
Housing Bond is a Step in the Right Direction
Prop. 84 Addresses Water Quality and Supply, Flood Control, and River and Coastal Protection
Riverside’s Renaissance Project Targets Long-Term Infrastructure Needs
 
Proposition 1B Brings Opportunity to Local Governments
 
Proposition 1B creates 14 transportation-related programs, and funds for most of them must now be appropriated by the Legislature. While many of the funds are self-executing, with money being added to existing programs per existing formulas, Prop. 1B has some significant benefits for local governments.
First and foremost is the inclusion of $1 billion each for cities and counties, which will be allocated directly to each city for projects to improve the local street and road system. Unlike Prop. 42 funding, which is dedicated solely to street maintenance and repair projects, local agencies may determine their own priorities for use of these transportation funds, including traffic congestion relief, traffic safety, transit, storm damage, maintenance, construction and other projects to improve the local street and road system. The League is working with the California State Association of Counties to draft legislation for allocating the local street and road funds.
Prop. 1B also includes:
• $4.5 billion to fund performance improvements on highly congested state highways and major access routes to the state highway system. The California Transportation Commission (CTC) adopted the guidelines for this program in November 2006, and the first deadline for project submittals was Jan. 16, 2007. The CTC will adopt an initial program to receive funding by March 15.
• $2 billion to augment the State Transportation Improvement Program (STIP). Cities are encouraged to work with their regional transportation agencies to communicate their local priorities.
• $4 billion for improvements to intercity rail and other transit-related projects and improvements that will be allocated per existing formulas. The allocation schedule for these funds has not yet been determined but does require legislation.
• $1 billion for the State-Local Partnership Program for transportation projects nom-inated by a transportation agency to be allocated over a five-year period. This program requires a dollar-for-dollar match of local funds. Project guidelines are still being discussed and will likely be decided through legislation.
• $125 million for seismic work on local bridges, ramps and overpasses. Local agencies are encouraged to work with Caltrans to access these funds, which will be used for the required 11.5 percent match for federal Highway Bridge Replacement and Repair funds for seismic work on local bridges, ramps and overpasses.
• $250 million for completion of high priority grade separation and railroad crossing safety improvements. This is significant because currently only $15 million is available each year to fund high priority grade separation projects. $150 million of this fund will be allocated per current statute, except that a dollar-for-dollar match of non-state funds is required. Of the $250 million, the CTC will allocate $100 million in consultation with the High-Speed Rail Authority.
The bond also includes funds for infrastructure improvements to seaports, land ports of entry and airports to relieve traffic congestion along major trade corridors, improve freight rail facilities, and enhance the movement of goods from port to marketplace. Program guidelines have not been determined. The CTC has held listening sessions with stakeholders around the state to determine how this program is going to work. To date, a consistent vision has not been established. Legislation to establish the program is likely needed to further define the program.
 
Housing Bond Is a Step in the Right Direction
by Bill Higgins
Like the Transportation Bond, the Housing Bond authorizes significant resources to develop a critical California resource, but the amount authorized is a proverbial drop in the bucket compared to what is actually needed statewide. Approximately half of the bond monies ($1.375 billion) fund existing programs offered by the Department of Housing and Community Development and the California Housing Finance Agency. Approximately half of this funding ($750 million) goes to specific affordability programs like the Multifamily Housing Program, the Joe Serna Jr. Farmworker Housing Program, and the Emergency Housing and Assistance Fund. Another $625 million was allocated to homeownership programs like the Self-Help Housing Fund and the Building Equity and Growth in Neighborhoods (BEGIN) program.
How the remaining funds will be allocated, however, is less clear. By far the largest pot of money is the $850 million to fund infrastructure related to infill development. There is also an additional $200 million for urban parks and $300 million for transit-oriented development. Of these three funds, the distribution of the transit-oriented development fund has the most developed criteria. Another interesting fund is the $100 million Innovations Fund, which ironically (or perhaps oxymoronically) requires the Legislature to define the criteria for being innovative by a two-thirds vote of each legislative body.
What is encouraging about this housing bond is that there seems to be recognition that a community is more than just a group of housing projects. It takes quality infrastructure to serve the kind of infill that California must have to house a population that is increasing by 500,000 people a year. The $850 million fund is a step in the right direction, but it falls woefully short of the need for such infrastructure statewide. The duty now falls on local communities to design quality projects and put these funds to good use so that future bonds may include similar allocations at higher levels.
 
Housing Bond Allocations (in Millions)
Funds are listed in their order of appearance in the bond.

 

Housing Rehabilitation Loan Fund for the Multifamily Housing program
(low interest loans)                                                                             $345
Housing Rehabilitation Loan Fund for the Multifamily Housing program
(loans for projects for people at risk of homelessness)                             $50
Multifamily Housing program (low-interest loans for supportive housing)  $195
Joe Serna Jr. Farmworker Housing Grant Fund                                     $135
Affordable Housing Innovation Fund                                                      $100
Emergency Housing and Assistance Fund for capital developments         $50
Self-Help Housing Fund                                                                      $290
Self-Help Housing Fund                                                                        $10
Self-Help Housing Fund                                                                      $200
Building Equity and Growth in Neighborhood (BEGIN) program               $125
Regional Planning, Housing and Infill Incentive Account                         $850
Transit-Oriented Development Account                                                 $300
Housing Urban-Suburban and Rural Parks Account                               $200
Proposition 84 Addresses Water Quality And Supply, Flood Control, and River and Coastal Protection
by Genevieve Morelos
Proposition 84 is a $5.4 billion initiative that includes funding for safe drinking water projects and programs, flood control and environmental protection. Among the items funded are $240 million for safe drinking water, $800 million for flood control (this is in addition to the $4.1 billion included in Prop. 1E for flood protection) and $450 million for wildlife and forest conservation. Additionally, Prop 84 includes monies that are set aside for competitive grants for local and regional parks.
$580 million will be available for improving the sustainability and livability of California’s communities through investment in natural resources, including:
$90 million for urban water and conservation programs. This includes greening projects that reduce energy consumption, conserve water, improve air and water quality, and provide other community benefits. Implementation legislation is needed and should provide for planning grants for urban greening projects.
$400 million for grants for local and regional parks. Funds may be allocated to existing programs or pursuant to legislation. The following conditions must be applied to any legislation:
1) Acquisition and development of new parks and expansion of overused parks that provide park and recreational access to underserved communities;
2) Creation of parks in neighborhoods where none currently exist;
3) Outreach and technical assistance to underserved communities to encourage full participation in the program or programs;
4) Preference to applicants that actively involve community-based groups in the selection and planning of projects; and
5) Projects designed to provide efficient use of water and other natural resources.
$90 million for incentive grants for local planning. These grants and incentives include revolving loan programs to encourage the development of regional and local land use plans designed to promote water conservation, reduce automobile use and fuel consumption, encourage infill and compact development, protect natural resources and agricultural lands, and revitalize urban and community centers.
 
Riverside’s Renaissance Project Targets Long-Term Infrastructure Needs
$780 Million Capital Improvement Program Is Cornerstone of Five-Year Plan
Like most cities throughout California, Riverside faces a growing need to invest in quality-of-life amenities and infrastructure to serve a diverse and active community. To address this need, Riverside’s city council unanimously adopted the Riverside Renaissance Initiative, embarking upon a plan to invest more than $780 million in the city’s infrastructure, parks, libraries, museum, railroad grade separations and other high priority public projects. The program will implement the city’s 30-year capital plan over five years.
The Riverside Renaissance Initiative comprises two basic elements:
1. A $384 million Capital Improvement Program to fund municipal buildings, as well as facilities and improvements for parks and recreation, surface transportation, sewer, water, refuse, storm drain, airport, public parking and electric services.
2. A $397 million Strategic Investment Plan to fund parks, public works projects, libraries, police and fire facilities, and redevelopment projects and acquisitions. A key component of this initiative will reinvigorate the city’s downtown area through renovation of the historic Fox Theater, a major convention center expansion, seismic retrofits for the city museum and municipal auditorium, as well as millions of dollars in upgrades to the pedestrian mall area.
The funding plan for the initiative will convert 30 years of income into resources that can be applied over the next several years to complete the projects outlined in the plan. Major financing components include the city’s general fund and redevelopment agency, the sale of surplus city property, and leveraging of federal, state and regional government funds. To preserve upgraded parkways and medians, residents will be asked to approve a very modest landscape and lighting maintenance assessment.
Trisected by major rail lines that carry goods from the Los Angeles and Long Beach ports, Riverside faces unique traffic and related public safety challenges associated with having more than 25 at-grade rail crossings. The Renaissance Initiative tackles this issue by directing more than $125 million to construct grade separations, in addition to railroad quiet zones and upgrades to sidewalks and medians.
The plan also directs $124.7 million toward 16 park projects spread throughout the city’s 80 square miles. Residents will soon enjoy new soccer, baseball and football fields, and several basketball and tennis courts, adult and youth sports complexes and an aquatic center. Additional soccer fields will significantly increase Riverside’s competitiveness as a potential future host for American Youth Soccer Organization games, which could generate millions of dollars in revenue.
The Renaissance Initiative will serve as a key to the ongoing rebirth of Riverside’s downtown by investing in key cultural and commercial areas. The Fox Theater, a cultural heritage landmark and part of the downtown Mission Inn District, will undergo a $28 million renovation. Other downtown improvements include expanding the Riverside Public Library’s main branch, providing structural improvements at both the Riverside Metropolitan Museum and Municipal Auditorium, and expanding the Riverside Convention Center to support significant national and regional gatherings.
The plan also calls for investing heavily in public safety and basic infrastructure projects to preserve the quality of life that has drawn more than 300,000 residents to Riverside. The program will construct a new fire station, neighborhood policing center, police and fire administrative facility and an emergency (911) dispatch center, as well as an updated water system and roadway infrastructure to meet residents’ needs.
For more information, contact Leanne Johnson, acting communications director, Office of the City Manager, City of Riverside; phone: (951) 826-2395; e-mail: lijohnson@riversideca.gov