Alert December 29, 2008

California PMIB Cuts 3.8 Billion Infrastructure Dollars

In response to California’s current budget crisis, the state’s Pooled Money Investment Board (PMIB) recently cut $3.8 billion in funding for approximately 2,000 infrastructure projects statewide, including projects for highways, prisons, and schools. PMIB’s chair, California Treasurer Bill Lockyer, noted that PMIB’s action is "extremely regrettable," but that the board "had no other option to keep crucial public services operating as long as possible." PMIB’s action will necessarily prompt local issuers and developers to explore alternative methods of financing vital infrastructure going forward. As the economy recovers and private development resumes, the use of land-secured financing strategies is expected to increase dramatically, including the Mello-Roos community facilities district structure that has been used so effectively in California.