Change Leader: Steering Infrastructure Toward More Private Investment
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Voting for Changes In Financing
California voters recently approved Proposition 68, a $4.1 billion bond measure expected to help stimulate new opportunities for public-private investment in water-related infrastructure projects in the state. The new bill also is deemed more flexible than California’s last major water bill, Proposition 1, which was passed in 2014.
Elizabeth Dubeck is a lawyer who helps and advises her large corporate clients on the effects and opportunities the new bill will create. She’s also doing the same for another, larger water bill up for vote in November 2018.
“Water tends to be a little behind sectors such as energy in terms of innovation, and that’s part of the reason we’re focusing on water as an increasingly important industry over the next couple of decades,” notes Dubeck. “The innovation, development and money that has gone into renewable energy is overdue in the water space, so we’re expecting additional work in the coming years in that sector.”
Dubeck believes that some of the large support for Proposition 68, which passed with 57 percent support, stems from its variety of funding mechanisms, including P3s, as well as its flexibility in which projects are eligible for funds.
“Giving priority toward projects that would leverage other funds makes the bill more attractive to voters,” says Dubeck. “The efficiency of how this money is spent and the ability to leverage other funds is an important way for the state to ensure that money is being spent wisely.
“These projects have significant benefits to the state of California and can be done efficiently and delivered in a relatively quick timeframe,” she adds. “We can sooner start seeing actual infrastructure on the ground.”
Proposition 68 combines a parks and water bill; about two thirds of the $4.1 billion funding is for parks as well as wildlife management. The remaining third is for water, specifically water infrastructure related to water supply, clean-water management and flood-protection work. The bill outlines a dozen specific areas eligible for funding; and priorities are given to projects in underserved areas, in areas that haven’t previously received funds and also in areas that can leverage funds from other sources—private funds as well as federal and local funds.
It also provides funds for critical projects coming up in California’s water-management plans, including $200 million for Salton Sea protection and remediation.
“Proposition 68 is long ranging and addresses a broad range of water projects that are important to a variety of communities across the state,” adds Dubeck.
Structurally, Proposition 68 is not an income tax; it’s a bond measure, which is an authorization for the state to issue “general obligation bonds” to finance these projects. California generates revenues by selling the bonds to investors, and the state then has an obligation to pay the bond investors back, with interest, over time.
Proposition 68 is long ranging and addresses a broad range of water projects that are important to a variety of communities across the state.
November Election’s $9 Billion Initiative
In November 2018, California voters will consider an even larger initiative that focuses solely on water issues. Dubeck is again involved in client advisory work and helping clients understand what funds are going to be available, and how this can impact their ongoing business. Her firm is not involved in sponsoring the proposal or lobbying.
“We’re helping to prepare our clients and advise them on the ramifications of these bills,” she adds.
The proposition authorizes funds for some of the same projects covered by the June bill, including another $200 million for Salton Sea projects, but it also has unique aspects such as approximately $640 million for implementing the Sustainable Groundwater Management Act to allow local and regional governments to manage groundwater. Another $500 million is set aside for public water infrastructure improvements. This bill, like the June bill, explicitly gives priority to projects that leverage other funds such as P3s.
“We anticipate there being opportunities for our private clients and investors working in the water space to partner with local regional communities to make use of those funds in terms of supporting a broad range of water-sustainability, water-management and water-conveyance projects,” says Dubeck.