Brainstorming Session

1
Brainstorming Session

• Executive Workshop
• Renewing Californias Infrastructure
• October 26, 2007

2
Key Stakeholders

• CA Government Entities
• Governors Office
• State Legislature
• State Agencies like Caltrans, water resources
  department
• Local Govt. Entities like Riverside Transport
• Regional transit agencies like Bart, Caltrain
• Unions
• Public employee unions like PECG
• Construction Unions like Carpenters
• Also building trades council
• General Taxpayers
• Electorate care about social and economic
  fairness
• Potential Users care about the value for ex
  toll road etc

3
Key Stakeholders

• Large Contractors like Kiewit, Granite
• EPCs like Bechtel, Fluor, etc.
• International infra developers - ACS
  infrastructure, Cintra, Ferrovial (Spain)
• Think Tanks - Keston Institute USC, CFEE
• Bond Rating Organizations
• Investor Community like Goldman, JP Morgan,
  Macquarie
• Consulting Community PWC, KPMG, EY
• Big city mayors
• Environmental Groups like environmental defense-
  Michael Rapogle

4
Key comments

• Most stakeholders are reactive rather than
  proactive
• Anti-corporate sector bias
• Profits rip off
• Public efficiency private efficiency
• Foreign firms evil

5
Public Policy Issues

• Depolitization to adminstrative entity vs.
  embracing politics in legislature
• Governments role in control of PPP What
  entity should move them forward?
• External shocks could destroy perfect policy
  proposal
• Goal setting - Prioritizing efficiency vs. cost
  effectiveness vs. social equity
• Which sectors should be prioritized?
• What level of risk transfer will be desired or
  required?

6
Public Policy Issues

• Fragmentation of CA government creates governance
  problem for Partnership CA entity
• Most quasi-independent state agencies have large
  boards in which appointments and/or membership is
  divided among legislative leaders and state
  elected officials
• In California, it is very difficult to create
  uniformity of purpose (as in a joint stock
  corporation or a parliamentary government)

7
Public Policy Proposals

• Partnership BC-type advisory body to help public
  sector design, analyze and negotiate good PPP
  agreements
• Fixed to AB2660 to make more effective as to the
  type of projects already covered
• Use carbon emissions auctions to finance
  infrastructure spending
• Avoids opposition motivated by budget
  substitution in general budget
• Move decision to approve user fees out of the
  legislature to an outside authority

8
Communication Strategy

• Developing Strategy
• Agree on what we want
• What do key stakeholders think?
• Link what we want to what key stakeholders want
• Show people that
• Costs are lower
• Quality as at least as good
• PPPs are not atypically prone to employing the
  poor/middle-class and illegal immigrants!

9
Communication Strategy

• Verbiage
• - Dont privatize partner with
• Dont sell off assets to pay bills
• Dont use P3 use Alternative Finance
• Dont use buy-side/sell-side use public
  party/private party
• Move focus from build more infrastructure to
  build-operate-maintain more effectively
• Be inoffensive maintain foresight avoid strong
  opposition

10
Communication Strategy

• Frame issue as the need for growth vs. cost
• Competition in selecting service provider
• Transparency in project approval process
• User fees necessary to reduce congestion, and to
  improve efficiency of transportation systems
• Build support regionally and locally
• Demonstrate Values of Accountability,
  Transparency, Discipline

11
Communication Strategy

• P3s are sources of
• International best practice
• Innovation
• A test bed of ideas and new sources for public
  development
• A way to ensure lifecycle costing
• Compare to the success of international
  experience