May 5, 2004 - From the February, 2003 issue

Keston Outlines L.A. Region's Challenges In Opening Speech To Infrastructure Summit Participants

Earlier this month, the Keston Institute at USC's Lusk Center for Real Estate hosted a summit on Los Angeles County infrastructure. At the summit, a wide spectrum of experts commented on the 2002 Report Card for Los Angeles County Infrastructure, which provided grades for the condition and maintenance of the region's key infrastructure components. Metro Investment Report is pleased to present Michael Keston's opening address to the seminar.

Michael Keston

In the early 1960's, a visionary California Legislature and dedicated Governor Pat Brown created a Public Investment Program to build one of the greatest Infrastructure Systems of all time. Most of the State's Freeway System, University of California campuses, the California Park System and the California Aqueduct were built in the 1960's and 1970's. What a remarkable achievement! These Infrastructure Systems enabled the State's population to increase by 20 million people, from 15 million in 1960 to the 35 million we have today in 2003. California was "the Golden State" and people everywhere envied our Quality of Life. It took only 15 minutes to get anywhere in our cities on our wide, free-flowing freeways. Our green parks, open spaces and education systems were second to none.

Today we are projecting a population increase of another 20 million people over the next 40 years in California. Unfortunately, there is no Infrastructure Investment Program in place today to service this growth. Estimates place the level of infrastructure needs in California at more than $10 billion a year or $200 billion over just the next 20 years. While in the 60's and 70's we spent more than 20% of the State's General Fund Revenues on infrastructure construction and maintenance, for the past 10 years that figure is less than 2% a year. That is why our infrastructure systems are in disrepair and why we have not prepared ourselves for the tremendous growth in population we will experience over the next 20 years.

Accordingly, today in 2003, our Quality of Life in California is suffering dramatically. Many sections of California's freeways are in constant gridlock. Our Governor recently seemed to indicate that we have built the last of our great freeways. It takes an hour to get to and from places that used to take 15 to 20 minutes. During rush hours, the time increases from one hour to one and a half to two hours. Our K-12 education spending per capita is among the lowest of all States in the U.S. and our great University of California system no longer has the dominance in higher education that it once had. Our State energy grid seems inadequate to serve the needs of our population and our spending on highways is 48th in the U.S. with substantially nothing new being built.

In September 2001, the California Commission on Building for the 21st Century released their report on the status of infrastructure issues in the State. Some of the issues they identified are as follows:

FACT: Almost 50% of the in-state electrical generation capacity comes from facilities more than 30 years old. 40% more electrical capacity is required for 2020 needs.

FACT: One out of every two Californians live in the Los Angeles Region and the Central Valley is projected to become the second most populous region in the State. Future infrastructure investments must support where the population lives and will live.

FACT: 80% of Southern California commuters drive to work alone. Studies predict that without significant "congestion relief," commute travel times and costs of delay in urban areas during the "rush hour" peaks will lead to nearly "gridlock" conditions on many of our urban freeway systems.

FACT: More than 80% of the State's water supply is used by the Agricultural sector. Because of ancient water ownership laws and agreements between farmers and Federal Agencies, in some cases precious water is used to produce crops which have no real economic value.

When it comes to Quality of Life, Californians deserve the best. We are the 5th largest economy in the world. Our Freeways, Water, Power and Sewer Systems, and Parkland and Open Space areas should be second to none. There have been hundreds of studies and research reports performed by SCAG, ABAG, Caltrans and others which list all the current problems and even provide an abundance of recommended alternatives with price tags and cost estimates.


I believe an infrastructure crisis can be averted and we can begin immediately to move forward in the fast lane if we all work together to accomplish the following:

First, our elected Republican and Democratic State and local officials must lead us and not abdicate their responsibility to develop an Infrastructure Investment Plan for California. Such a Plan will require compromises and common sense approaches to spending. We also have 53 elected Congressional Representatives who, acting together, can exert a tremendous amount of clout in Washington, DC to obtain infrastructure funding for their California constituents.

With respect to transportation issues, we have to examine if the time for congestion pricing has finally arrived. Is it acceptable to charge truckers a surcharge if they choose to use the freeways and impacted roadways during peak morning and evening hours? If drivers wish to travel alone in their automobiles during these peak times, is it also okay to ask them to either pay a surcharge or get another passenger or two and avoid the surcharge? Public Officials don't like this concept because some group, somewhere in the State, will be offended if they support the idea. Unfortunately, many Public Officials wait until enough signatures are "purchased" to put the concept on the ballot so that whichever way the vote goes, they are not to blame. This method of ballot box decision making should not continue.

With respect to water issues, we must recognize that no more rivers will be dammed and very few new reservoirs will be built. An article in the Los Angeles Times on February 9, 2003 put it succinctly when it concluded: "At some point, we have to ask why we are growing fruits and vegetables in the desert, and why we are growing water-intensive crops such as rice, cotton and alfalfa in the Central Valley. Choosing where we irrigate, planting crops that can survive on less water and improving our irrigation methods could free untold amounts of water for urban growth-and still keep the agricultural industry healthy The flow of water from farms to cities is inevitable. Better to plan for it-in a way that can sustain both farming and farm towns-then try to buck it. All this is entirely doable with current water supplies."

Finally, we have to develop an Infrastructure Spending Program that will provide unalterable and dedicated sources for more than $200 billion over the next 20 years. This will likely be a combination of (a) annual dedicated State General Fund Revenues, (b) State and Local General Obligation and Revenue Bonds and (c) Infrastructure Construction with funding from the Private Sector repaid by public user fees.

ACA 11 sponsored by Assemblyman Keith Richman is a major first step in an Infrastructure funding program. If passed by the voters in March 2004, ACA 11 could generate an estimated $60 to $70 billion for infrastructure and open space acquisition during its first 20 years without raising taxes. Beginning in 2006-07 with 1% of General Fund Revenues dedicated to infrastructure spending and growing to 3% of General Fund Revenues over 8 years, ACA 11 would require that 50% of the funds be allocated by the State Legislature for acquisition, construction and renovation of state-owned infrastructure. The other 50% would be sent directly to local government for acquisition, construction and renovation of local roads, highways, transit projects, water facilities, parks and open space.

The California Commission on Building for the 21st Century Report concluded that: "We can no longer live off the investments of past generations, for we will sacrifice not only today, but also the future of our children and grandchildren." The Keston Infrastructure Institute was founded at USC in late 2002 to provide information on Infrastructure planning alternatives and public investment concepts to elected officials and to the general public. Research related to new Infrastructure Systems and associated Quality of Life impacts are the main issues we will be addressing at our new Institute, and with this research we hope to contribute to a better California for future generations.


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