Assembly Bill XX - Resilient Infrastructure
Assemblymember Buffy Wicks (AD-15)
THIS BILL: AB XX is designed to carry out the intent of the Governor’s Executive Order and of the legislature (Gov Code Section 7514.2) to encourage California pensions to invest billions of dollars into resilient infrastructure projects first locally identified and then evaluated and certified for suitability and risk by a Gubernatorial-appointed State Task Force on Resilient Infrastructure (including representatives and experts from across government and industry including Environmental, Labor and the Department of Finance).
THE ISSUE :The increasingly severe effects of climate change (including wildfires, coastal erosion, flooding, access to clean water and planned power shutoffs) have caused an urgent need for local communities to build more resilient infrastructure. The costs are daunting - $500- 750B in California over the next ten years. Communities need resilient infrastructure now. But they lack the funds to develop and build needed infrastructure even when they are fully capable of paying for it over 20-30 years. Many of these projects (micro grids with battery storage, distributed water storage, pipeline relocation) do not fit the traditional infrastructure model (dams, airports, government buildings, bridges). They require upfront development and are often smaller in scale. The historical tools for infrastructure financing, such as bonds and the Infrastructure Bank, lack flexibility and speed and given the competing demands on bonding capacity simply cannot supply all the necessary capital to meet the needs of California’s communities.
SOLUTION: AB XX creates a structure to accelerate the construction of local resilient infrastructure while encouraging potentially billions of dollars of new capital from government pensions to help meet the challenge.
• Creates and funds a Gubernatorialappointed Task Force on Resilient Infrastructure to evaluate and certify projects identified by local communities for suitability and risk.
• Encourages government pensions to invest in qualified direct investment vehicles which in turn invest in local resilient infrastructure projects.
• Provides a minimum return of 7% on Task Force certified projects
• Directs the Governor to designate and contract with a qualified direct investment vehicle(s) to support the Task Force and develop and invest in at least two demonstration projects This innovative approach will bring a new source of investment capital to California resilient infrastructure. Local communities win – the resilient infrastructure they want and need gets built fast. The State wins – additional source of significant funding at low risk. The government pensions win – steady guaranteed returns with low risk. Labor wins – good union jobs for building infrastructure and more stable pensions. This approach is complementary and additive to bonds and the I-Bank and may be the lowest cost approach to building infrastructure.
CONTACT Samantha Huynh Office of Assemblymember Wicks