California Treasurer Fiona Ma and a Merced lawmaker are championing a bill that would create a not-for-profit corporation to fund large-scale infrastructure projects.
Senate Bill 769, authored by Sen. Anna Caballero, D-Merced, establishes the Golden State Infrastructure Corp. within the state treasurer's office as a not-for-profit corporation and creates a board of directors to oversee it.
The bill is sponsored by Ma and supported by the California Public Banking Alliance and the Rural County Representatives of California.
Existing financing mechanisms are insufficient and don't comprehensively address large-scale infrastructure challenges, Caballero said Monday at a press conference in Sacramento.
"Our roads are crumbling, our water systems are outdated, and the housing shortages continue and our grid, transit and emergency transit systems are in need of transformative projects," Caballero said. "Our infrastructure financing system is too slow, too fragmented and its resources are too limited to fund the kind of large-scale infrastructure projects we need."
"We cannot afford to keep using outdated financing tools to fix modern problems," she said.
The concept would be modeled on the California Infrastructure Economic Development Bank, according to the legislation, but the structure would have more flexibility, and a different regulatory framework, Caballero said.
"Our current financing authorities serve an important purpose, but they are not equipped to support the size, speed, and scale of the projects we need — especially when it comes to infrastructure," Ma said. "The Infrastructure Fund will change that by creating a process that the state can use to invest in our future by tripling our state dollars to complete projects and making both debt and equity investments into vital in-state infrastructure projects."
The regulatory structure of IBank and regulations around its structure prime it to help fund smaller projects, but it can't meet the needs of large scale, cross-jurisdictional projects, Caballero said.
"IBank is limited by statute in that it can only finance public agency projects, it excludes housing from eligibility, and it caps financing at $65 million per project," said a treasurer's spokeswoman. "These constraints make it difficult to support transformative, large-scale infrastructure or mixed-use developments that combine public and private elements."
The bill places the fund in the treasurer's office, because "it gives us the ability to invest across a wider spectrum of infrastructure — including housing, clean energy, and transportation — while also unlocking public-private partnerships that allow the state to continue to benefit from a project even after it has been built," according to the spokeswoman.
It also provides a central hub for coordinating with institutional investors, enables larger-scale financing without arbitrary caps, and aligns with the Treasurer's broader economic development priorities, she added.
"Rather than retrofitting IBank — an institution known for municipal lending — this new fund allows us to design a structure purpose-built for the scale, flexibility, and partnerships required to address today's infrastructure challenges without compromising IBank's current role," she said. "We are looking to supplement IBank's work with another financial arm."
It would be structured as a revolving fund that would replenish itself as loans are repaid, Ma said. Initial funding would be provided by the state.
"While private investment (and state and international pension funds) are interested in investing to build the projects we need, there are so many hurdles, the existing system makes working with our state governments and agencies completely unfeasible," Caballero said.
"We have billions, maybe trillions of infrastructure needs in the state," Ma said. "Whether it's roads or water or sewer, these projects are expensive and they need a stable funding source."
The bill, introduced in February, passed the Senate Business, Professions and Economic Development Committee on April 21 and is now being considered in the Senate's Judiciary Committee.
