March 18, 2013 By Jessica Renee Napier
At a time when many state governments face difficult decisions about how to finance and execute public projects, four regions are banding together to improve economic competitiveness, support families and enhance quality of life.
California, Oregon, Washington and British Columbia have formed the West Coast Infrastructure Exchange (WCX), funded by two Rockefeller Foundation grants totaling $750,000, to achieve cost savings via collaboration in order to make projects more feasible. As state and local governments are increasingly confronted by limits on available financing through traditional sources, the WCX is designed to tap the expertise of development and finance leaders to save money and find innovative investment methods.
“The idea for it came about because of the vast infrastructure needs,” said Bill Ainsworth, press secretary for the California State Treasurer. “In California, there’s about half a trillion dollars' worth of needs. The idea behind the exchange is to explore ideas together, to share best practices and technical expertise, to help identify infrastructure projects that might help benefit from some private involvement, and to work together to find out what projects might be bundled to make them more appealing to the private sector.”
The WCX, which is still in its startup phase, will work toward the following:
“In the coming decades, California, Oregon, Washington and British Columbia will need to invest an estimated $1 trillion to improve their roads, rail, power grids and other infrastructure,” said Rockefeller Foundation’s President Judith Rodin, on the WCX website. “With state budgets tight and with less financing from the federal government, private finance is going to be required in order to meet these needs."
By establishing a center of expertise to provide technical assistance, set standards and provide investment information, and simultaneously advancing new mechanisms for project finance with the potential to attract private investors, she said, "we’re creating the space for institutional investors to get involved in a big way.”
Assessing the WCX
The West Coast Infrastructure Exchange is employing a performance-based infrastrucure, which approaches project management differently than traditional models, the ways in which are detailed in the chart below (click to enlarge).
Sarah Clark, president and CEO of Partnerships British Columbia, said that all West Coast states and the province of British Columbia must expand and upgrade energy facilities; update water and wastewater treatment plants; improve airports, dams and transportation facilities; and construct other projects. Although specific projects have not yet been identified, there are discussions taking place about how to prioritize projects and detailing services to be offered.
“British Columbia has a solid track record in planning and delivering major infrastructure projects through alternative, performance-based procurements that result in on-time, on-budget delivery to meet the growing needs of British Columbians,” Clark said. “Working with our neighboring states and finding regional solutions is the next phase in the evolution of infrastructure management.”
In traditional project management models, infrastructure is funded via taxes and grants by a single jurisdiction. The WCX will explore regional projects funded with user fees. As opposed to separating the designers and builders, the new model would allow a public owner to contract with one entity for the best value on infrastructure services over the life of project.
For example, in 2001, Oregon utilized the performance-based method to extend its light rail to the Portland International Airport. The result was a project that cost approximately one-third as much as a similar light rail project.
When WCX pilot projects begin, they will likely include small-scale energy and water projects. Currently,the WCX is seeking a director with experience in public infrastructure management.
“We’re just getting off the ground,” California’s Ainsworth said. “We’re really excited about the possibilities.”
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