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West Coast States, Province Jointly Fund Infrastructure

Downtown Seattle and Elliott Bay
California, Oregon, and Washington have joined forces with British Columbia to determine how to use innovative financing methods, including private investments, to fund significant infrastructure projects. New funding mechanisms could be used for projects to keep storm-water runoff from polluting Puget Sound, for example, or improving highways or building a resilient electrical grid. Wikimedia Commons/Ian Maddox

California, Oregon, and Washington have joined together with British Columbia to create a nonprofit entity that will look to the future of infrastructure funding.

December 18, 2012—The three states located along the United States’s West Coast—California, Oregon, and Washington—joined together with British Columbia last month to create a nonprofit entity that will explore new ways to generate private investments in infrastructure. The West Coast Infrastructure Exchange (WCX), based in Salem, Oregon, seeks solutions to the increasingly urgent problems raised by aging infrastructure, particularly in light of changing climate patterns.

Significant spending is necessary to update and upgrade the infrastructure within the United States; the WCX estimates that more than $1 trillion in investments is required over the next 30 years within the West Coast states.

“Just in California, we estimate there is a need for $500 billion [in infrastructure investment] in the next couple of decades,” says California State Treasurer Bill Lockyer. “And there is no way that that can be financed with the traditional tax-exempt bond mechanism—so we have to figure out other ways to do it.”

The WCX is meant to enhance the collaboration between West Coast governing bodies in order to create wise infrastructure investment opportunities, the treasurer explains. But it is not a financing entity at the moment: “It’s informational, it’s common-term sheets, looking for smart deals, learning from each other’s experiences,” the treasurer says.

“British Columbia has more experience with these kinds of deals than Washington, Oregon, or California. But all four of us are determined to work together in a constructive manner,” the treasurer says. “We don’t want it to just be another unused collection of data. We want it to help facilitate infrastructure investment that’s badly needed.”

According to the framework agreement, which was signed on November 14, the mission of the nonprofit WCX includes identifying public project development and delivery methods that offer more measurable value for public dollars, creating new performance-based mechanisms for financing projects—particularly those that will draw in private investors who have not typically invested in public infrastructure—and providing consistent high-quality data about opportunities and risks for investors and project sponsors. The agreement also specifies that the infrastructure designs funded by the organization clearly consider climate risk factors, including rising sea levels, changing precipitation patterns, and increasing numbers of extreme weather events.

In California that focus could start with such needed infrastructure projects as those focused on water, solid waste, the electrical grid, or transportation, according to the treasurer.

In Oregon, the initial infrastructure projects could focus on bundling small water projects that have strong community support into investable pools; energy-efficient buildings and municipal lighting systems; and multiuse community courthouses and other buildings, according to James Sinks, the communications director for the Oregon State Treasury. To accelerate this project pipeline, Oregon Governor John Kitzhaber issued an executive order last month calling for new procedures when planning state investments of $20 million or more in capital facilities.

In Washington State, the initiative could aid funding efforts for projects to keep storm-water runoff from polluting Puget Sound; improving roads and highways, particularly in the face of declining gas taxes; and building a resilient “smart” electrical grid that can distribute renewable energy from a variety of sources, according to Washington State spokesman Jason Kelly, the acting deputy communications director for the office of the Governor.

The WCX agreement was formally approved last month by the California State Treasurer’s Office, the Oregon Joint Treasurer-Governor Working Group on Innovative Infrastructure, the Washington State Department of Commerce, and the British Columbia Ministry of Transportation and Infrastructure.

WCX is an outgrowth of the Pacific Coast Collaborative, a 2008 agreement between the governors of California, Oregon, Washington, and Alaska, and the Premier of British Columbia, which was created to formally bring together the various Pacific Rim leaders for information sharing and cooperative action.

The effort began when Oregon Treasurer Ted Wheeler and Oregon Governor John Kitzhaber convened the West Coast partners to look at new ways to finance infrastructure in November of 2011; this effort attracted the attention of the Rockefeller Foundation, which provided $750,000 in start-up grants to the Oregon State Treasury to develop the WCX.

The West Coast partners hired CH2M HILL, the Englewood, Colorado-based engineering consulting, design/build, operations, and program management firm, to explore whether or not such a collaborative organization would aid infrastructure needs in the partnering regions. CH2M HILL’s final report—which found that by working together the West Coast jurisdictions had the best chance of redesigning the way they plan, build, and finance public infrastructure—was released concurrently with the framework agreement creating the WCX.

During the initial start up phase in 2012-2013, the West Coast jurisdictions will develop criteria to evaluate infrastructure projects and hire a manager for the WCX.



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