This week, California sold $1.8 billion in tax-exempt bonds. Preliminary yields ranged as low as 1.15% on three-year securities. 10-year bonds were priced to yield 3.51%, or 0.34 percentage point more than securities with a comparable maturity in a $2.5 billion sale in September 2011. 30-year bonds were offered at seven basis points more than in September. In addition to the $1.8 billion in tax-exempt bonds, California offered $200 million in taxable debt.
“When we invest in infrastructure, we provide a homegrown economic stimulus to create jobs and ensure our state is prepared for the challenges of the future,” said Governor Brown. “Investor confidence in California’s fundamental strengths, combined with an on-time, balanced budget, means that we can make important investments to boost the state’s economic recovery and put Californians back to work.”
The following summary, taken from the Office of Governor website, shows how certain of the bond proceeds, as well as existing fund balances, are being put to work:
- California Department of Transportation - Caltrans will be able to start 26 new projects, with a total (multi-year) construction cost of $1.2 billion. The projects, which are expected to create 30,000 jobs, are designed to increase traffic flow by adding lanes, widening roadways and installing traffic management systems.
- Local Streets and Roads – Approximately $38 million in bond proceeds will be used to start roughly 70 local street and road projects, including mainly general maintenance projects on local roads, such as sealing and resurfacing. Many cities and counties have combined these funds with other local or federal funds to complete larger road projects.
- K-12 School Construction – Existing funding for K-12 school construction will be fully expended by December 2011. The additional $1 billion provided in the fall 2011 bond sale will fund the start of approximately 450 new projects, which are anticipated to consist of approximately 250 modernization projects, 130 new construction projects and 70 other projects.
- California Community Colleges – Community Colleges will be able to start five new construction and modernization projects with the $24 million in additional bond proceeds.
The Department of Transportation (DOT) recently announced that additional funds will be made available for the Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grant program. Approximately $537 million in grants for road, rail, transit and port projects that have a significant, long-term impact on the nation, a region or a metropolitan area will be awarded in denominations between $10 million and $200 million.
Several factors will be used to determine eligibility:
- Long-term outcomes (i.e., state of good repair, economic competitiveness, livability, environmental sustainability, and safety)
- Job creation and economic stimulus
The TIGER Discretionary Grant program is accepting applications from state, local and tribal government entities. Pre-applications are due by October 3, 2011, and must be submitted electronically to the DOT. Final applications will be accepted between October 4, 2011 and October 31, 2011 on Grants.gov.
House Ways and Means Committee Democrats introduced H.R. 992 (Building American Jobs Act of 2011) on Thursday, a bill that would reinstate Build America Bonds, the higher small issuer limit for bank-qualified bonds, and six other bond, tax credit and loan guarantee programs.
The Center for American Progress concluded in its study, “The Economic Benefits of Investing in Clean Energy: How the Economic Stimulus Program and New Legislation Can Boost U.S. Economic Growth and Employment,” that public transit generates 31% more jobs per billion dollars invested than similar spending on highways.
Finally, in its analysis of the effect of stimulus spending on job creation, the U.S. Department of Transportation concluded that 2008 stimulus dollars spent on public transportation projects created up to twice as many jobs as highway spending for the same amount of money.
These studies appear to confirm that investing in public infrastructure will most certainly generate more jobs.
One of the big differences between President Obama’s new proposal for infrastructure construction and that set forth in the American Recovery and Reinvestment Act (ARRA) is how projects are evaluated. Under ARRA, shovel ready projects get priority. Under the new plan, President Obama desires an Infrastructure Bank that would award funds to projects on a merit basis.
Abengoa Solar recently received approval from the California Energy Commission (CEC) for the construction of a 250 MW solar thermal plant in San Bernardino County, California, to be known as the “Mojave Solar” project. Pacific Gas & Electric has already contracted with Abengoa Solar to buy the electricity generated from the plant. The CEC approval is the last approval required before Abengoa can break ground on the project, which it hopes to do before year end to utilize stimulus moneys provided under the American Recovery and Reinvestment Act.
Once operational, the plant is expected to generate almost as much electricity as all of California’s current concentrated solar power (CSP) systems combined, power approximately 90,000 homes and eliminate over 431 kilotons of greenhouse gas emissions per year.
The CEC is also considering for approval a 1,000 MW plant proposed by Solar Millennium in Blythe, California, near the California-Arizona border. If approved, it would constitute one of the world’s largest solar facilities.
California Attorney General Jerry Brown filed suit yesterday on behalf of the State of California against Fannie Mae and Freddie Mac for blocking green financing loans provided under PACE, a home clean-energy program he says will create jobs and stimulate local economies. Brown argues that the actions of the mortgage giants put more than $100 million in federal stimulus funding at risk.
PACE or the Property Assessed Clean Energy Program was part of the $787 billion economic stimulus legislation last year. PACE bonds cover the up-front costs for energy efficiency improvements and installation of solar energy systems for residential and commercial properties within a city or county. The property owner then repays the cost of these installations over 20 years through a special fee on their property tax bill.
According to the Wall Street Journal, sixteen states have passed legislation that would allow municipalities to establish PACE programs, including Texas, Virginia, California and Colorado. To date, nearly half of the counties in California have adopted PACE programs or have planned to, including the metropolitan counties of: Los Angeles, San Francisco and San Diego. Advocates say the programs could fund$1 billion in projects in California.
Property Assessed Clean Energy (PACE) programs, which offer homeowners a method of paying for the installation of solar panels and other energy efficiency upgrades through municipal finance, have become extremely popular across the country. So popular, in fact, that the U.S. Department of Energy intends to contribute $150 million in stimulus funds to help continue and expand PACE programs and give an economic boost to companies that install energy systems.
Recently, however, Fannie Mae and Freddie Mac informed mortgage lenders that they would not subordinate their mortgages to the lien of an assessment for solar facilities. As many local and state officials have noted, the liens that secure PACE loans are no different than other types of special property taxes, like those used to finance sidewalks and underground utilities, which have previously been approved by Freddie and Fannie.
State and local officials, including California Governor Arnold Schwarzenegger, New York City Mayor Michael R. Bloomberg, and some members of Congress, are pressing the Federal Housing Finance Agency, which oversees Fannie and Freddie, for clarification of its position on the financing programs. Stay tuned.
Study Predicts Energy Efficiency Spending to Rebound in 2010 – Increased spending on energy efficiency improvements is being propelled by cost reductions, enhanced public and brand image, government and utility incentives, greenhouse gas emissions reduction, and customer attraction. (Eco-Structure Magazine Online)
Bill Gates Says Large Scale Renewable Projects Are Decades Away - Renewable energy projects will not replace dirty fuel sources like coal and oil in the coming decade, says Gates. (Treehugger.com)
Raise the Gas Tax to Save Money? - Would an increase in the gas tax really be political suicide? (Fox Business Online)
What Does $600 Million Get You? In PA, a D- for Roads and Transit System - American Society of Civil Engineers says Pennsylvania roads are worse despite $600M in Stimulus dollars. (Infrastructurist.com)
A Bullish View of Wind Power Out West - New study finds that the power grid for five western states could operate on as much as 30% wind and 5% solar power without constructing extensive new infrastructure. (The New York Times’ Green Blog)
Annals of Urban Planning Ambition: Getting To Know The South Bronx Greenway - The New York City Economic Development Corporation is planning to transform one of New York City’s poorest neighborhoods into a bike-friendly, green neighborhood. (gbNYC.com)
Thinking Green: Function over Form – News from the National Design Triennial. (The New York Times)
Roundup: Analysis Of Kerry-Lieberman Bill – Numerous groups, including Transportation for America, weigh in on climate bill. (National Journal)
Solar Power Could Produce 25% of the Global Electricity by 2050, Sources Say – Greenspace: Environmental News From California and Beyond. (Los Angeles Times)
James Oberstar Stymied on Transit Bill – House Transportation and Infrastructure Committee Chair Jim Oberstar’s spokesman quips, “Right now we’re looking at bake sales.” (Politico)
When Clean Energy Grants Run Out, Will a ‘Green Bank’ Take Over? – The push for a new federal financing mechanism. (The New York Times)