RNRF Round Table: Creating A Sustainable Path Forward for America’s Infrastructure

On August 10, RNRF conducted a virtual round table on the issues facing America’s infrastructure and explored how to create a progressive path forward during climate change. Speakers were Doug Sims with the Natural Resources Defense Council (NRDC), and Cris Liban with the Los Angeles County Metropolitan Transportation Authority (LA Metro). Both speakers discussed the intricacies of implementing sustainable infrastructure projects and practical lessons learned.

Doug Sims is a senior advisor for Green Finance and director of the Green Finance Center at NRDC. Sims provided an overview of NRDC’s High Road Infrastructure framework and shared his insights on its practical implementation.

High Road Infrastructure differs from typical infrastructure in that it fulfills the core function of traditional infrastructure while delivering resilience, environmental, and social benefits cost- effectively. Taking the High Road means more beneficial outcomes for all. High Road Infrastructure accomplishes these outcomes by applying broader standards to infrastructure projects.

The High Road methodology incorporates upfront capital costs and minimal service delivery as well as environmental, social, and climate performance into project design and conceptualization. It elevates the highest value projects, raises resilience, preserves natural resources, creates quality jobs, builds community consensus, and ensures the “biggest bang for the buck.”

These additional screens and standards are needed to fill crucial gaps in traditional infrastructure project analysis. Environmental and resilience standards account for true costs and benefits missed by traditional metrics (e.g., water and air quality) and social standards ensure value is added rather than extracted (e.g., jobs and affordability). High Road Infrastructure uses traditional financial standards but supplements the analysis with other measures (e.g., lifecycle analysis, triple bottom line, and value for money) to allow for better outcomes. Resilience standards are also needed to signal long-term value to investors interested in resilience and economic growth. Sims emphasized that these concerns must be continuously considered at every level of an infrastructure project.

The need for High Road Infrastructure has been accelerated by the COVID-19 pandemic. COVID has reduced government revenues, increased borrowing, and added new COVID-related spending requirements. Sims argued that infrastructure should be a foundational piece of any federal stimulus relief with an emphasis on low-carbon solutions. Equitable solutions that focus on people-of-color and frontline and fence-line communities, and find a “just transition” in fossil fuel-reliant communities are greatly needed. All of these groups need to be included when thinking about the kind of infrastructure we are going to build in the future. Process is also extremely important – transparency, public participation, and accountability are key to passing policy and moving projects.
High Road Infrastructure incorporates traditional sectors such as airports, transit, waste and recycling, wastewater, bridges, “MUSH” markets (i.e. municipalities, universities, schools, and hospitals) as well as new and emerging subsectors. These subsectors include environmentally focused assets (e.g., solar and EV charging), resiliency focused assets (e.g., green infrastructure), social and community focused assets (e.g., affordable housing and green space), and a geographic focus (e.g., low- and moderate-income economic development and connectivity).

The High Road approach has ten distinct steps. Sims believes the most critical element of this approach is community and stakeholder engagement. If community and stakeholder engagement is not conducted throughout the process, projects will not pass the finish line.

First, community priorities must be established within the High Road framework. Projects need a commitment from the necessary officials (e.g., mayor or CEO of an agency). To be successful, sustainability principles and a set of goals and metrics to implement those principles are needed. After a plan is created, the second step is to create a system where you can prioritize High Road projects and define delivery alternatives. There are key concepts and tools that enable you to value the High Road appropriately such as project life-cycle analysis, value for money, triple bottom line, and cost benefit analysis.

In step three, you need to identify and screen applicable funding sources. Typical funding needs include master plan, administration, design, construction, and operation and maintenance. Aligning funding sources based on this expanded project design provides new opportunities. Next, you need to identify and screen relevant finance and project delivery strategies. Top line items include: direct fees, debt tools, credit assistance, equity/private sources, value capture mechanisms, grants, and emerging tools (e.g., green banks and green bonds).

For step five, you need to identify and screen procurement mechanisms for each project step from design to ownership. There has been a lot of discussion about whether the private sector should be involved in infrastructure. Sims pointed out that the reality is that every single delivery option has a public and private mix – it is just a question to what degree.

At step six, you need to identify specific target investors. Identifying specific investors early sets the High Road framework apart. In the United States, most infrastructure is financed through the bond market but there is an emerging market for green bonds. Green bonds finance projects that demonstrate green characteristics. Green projects not only attract more investors, which lowers costs, but also increase community support and provide greater access to a broader audience for sustainability initiatives.

There are different types of investors including institutional investors and impacts investors. Institutional investors have a deep interest in trying to align their investments with their values. Impact investors are trying to earn a financial return and have specific outcomes. These investors are important for small innovative projects such as solar projects and stormwater. Identifying and reaching out to investors early can test market demand for a project and allow you to modify the project to meet the investors desired features and reporting requirements.
At step seven, you need to identify project bundling and aggregation needs and opportunities. A single project can be very costly and some institutional investors need scale to deploy their capital. You can get scale and efficiency by awarding a single track for several projects together. This could attract investors who otherwise could not invest or would not invest.

As you move towards procurement, it is important to realize that you only get what you procure. It is critical to engage in a pre-competitive request for information or request for qualifications from stakeholders and sponsors to assess the possibilities before putting the terms into a formalized bid process. Breaking down silos and evaluating internal systems is also important. If you focus on outcomes and realign resources accordingly you can rediscover savings. Then the narrative shifts from dealing with added costs to benefits in the short-term. This tactic helps unblock bureaucracies because they can see near-term benefits.

Prince George’s County, Maryland, showcases the implementation of the High Road framework. The county was experiencing Clean Water Act violations for not reducing runoff into the Chesapeake Bay and could not afford the needed infrastructure. In line with the High Road approach, the county conducted extensive community outreach and worked with a private partner. The selection process emphasized the parties demonstrated capacity to create jobs and engage with communities. The county also required the contracts to have performance-based components such as social outcomes (e.g. minority businesses and degree programs) that were subject to an adder on their fee – motivating them to achieve those goals. The Prince George’s Country project is a resounding success both in engineering and social aspects.

In closing, Sims asked if co-benefits (e.g., jobs and betterment of neighborhoods) are by design, then are they truly co-benefits? The High Road takes what used to be externalities and makes them core to the project. The takeaway from using the High Road is that these elements are in fact integral to infrastructure, and not merely co-benefits. This concept is how the High Road approach makes a difference.

To access Doug Sims’s PowerPoint presentation, click here.

To learn more about NRDC’s High Road initiative, click here.

Cris Liban is the chief sustainability officer at LA Metro as well as the national chair of the American Society of Civil Engineers’ (ASCE) Committee on Sustainability. Liban showcased LA Metro’s sustainability efforts and how they align with the High Road Infrastructure concept.

LA Metro is leading the way on implementing sustainable practices in the expansion and operations of its transportation system. The agency has worked to implement sustainable practices and initiatives for over a decade. The High Road framework, in essence, formalized these principles and provides a path to duplicate these with partners in Los Angeles.

Los Angeles County has a diverse population of over 10 million and the 21st largest economy in the world. LA Metro is a state-chartered special jurisdiction that acts as a regional transit planner/funder, system builder, and operator. The decisions made at LA Metro impact millions of people and have deep permeating effects.

Liban gave a brief overview of LA Metro’s existing and future transit program. In its expansion process, LA Metro examined critical and at-risk facilities. Stressors examined include high heat days, precipitation, flooding, wind, wildfire, earthquake, and sea-level rise. As the High Road framework points out, examining critical and at-risk facilities allows an agency like LA Metro to assess the operability and continuity of operations and understand how to work through the emerging issues identified by this process. Conducting this critical and at-risk facility assessment helped LA Metro to develop its resilience and climate action as well as its master plan.

Equity is a high priority for the transit system as well as LA Metro itself. To understand the full impacts of the transit system, vulnerable population data including poverty levels and transit-dependent populations are overlaid. LA Metro strives to build and expand a transit system that connects people and provides economic opportunities to those in need.

Liban looks at the transportation system not only as an economic driver but a potential community center. For example, LA Metro is trying to combat food deserts by encouraging farmers markets to thrive in metro stations at certain times of the year. Importantly, LA Metro recently designated an equity officer to shepherd this process. The equity officer will not only look at what LA Metro has done on its equity platform but will look for new programs and opportunities to further breakdown barriers to change. Liban wants to bring on the best ideas as they build LA Metro’s transportation system.

Then the pandemic hit. Liban detailed how LA Metro has been impacted by COVID-19 and how the agency plans to move forward. Due to COVID, and the associated lockdown, both ridership and revenues are down. Pre-COVID average ridership on a weekday basis was far above a million people per day but that has dropped drastically. LA Metro’s budget has also significantly shrunk due to COVID and Liban anticipates that the new adjusted budget will be 75% of budgets in the last several years.

Despite these issues, LA Metro refuses to fail. Many of the services LA Metro provided prior to lockdown remain intact and the agency is working hard to address any short-term issues in terms of transit demand, funding, and other elements of the transportation system. For example, the agency has adjusted its Long-Range Transportation Plan to incorporate current conditions.

What is next for LA Metro’s post-lockdown? Liban explained that everything has changed. Previous assumptions and baseline conditions are no longer applicable, which triggers many questions. What happens to ongoing services and projects? Should the evaluation tools the agency is using be adjusted?

The LA Metro Recovery Task Force was created to aid this process. As a result, LA Metro is revisiting and re-envisioning the baseline environmental assumptions in its sustainability plan. Liban emphasized that in its planning, the agency prioritizes investing in people through training programs like the Growing a Greener Workforce program and fostering partnerships with regional municipalities and NGOs. For example, LA Metro formed a Sustainability Council that requires member organizations to be endorsed by the community they represent in order to join. LA Metro is also developing a Sustainable Acquisition Program to discover new ways of extracting benefits from existing innovative procurement solutions.

LA Metro’s previous 2019 climate action and adaptation plan set ambitious emission reduction goals. Implementation of these goals, however, must be reevaluated because the agency is facing fiscal deficits due to COVID. How can this be accomplished?

Leveraging green revenues provides a path forward. Prior to lockdown, LA Metro was exploring opportunities to generate revenue from its existing environmentally positive activities such as carbon credits, electric vehicle chargers, and green bonds. Examples of these efforts include the establishment of the California Green Bonds Committee and the Climate-Safe Infrastructure bill (AB 2800, Quirk 2016).

The California Green Bonds Committee, convened and chaired by the California State Treasurer, was created to expand financing for climate-friendly infrastructure through green bonds. LA Metro is working with the committee to help develop a green bonds framework for California. The committee consist of 27 academic, engineers, investors, public policy experts, attorneys, and climate scientists. AB 2800 established a working group to develop recommendations on how to build climate resilient infrastructure in California. Recommendations include, among other things, permanent funding for science and infrastructure and changes in procurement processes.

Liban is also working to transform the engineering profession from within. Liban is working with ASCE on several initiatives including developing a sustainability standard, procurement documents, a certification program for sustainable infrastructure professionals, and incorporating climate data into practice. He is also working with the International Coalition on Sustainable Infrastructure.

Liban emphasized that LA Metro prides itself on a culture of continual improvement that strives not for perfection but for lessons to learn. LA Metro builds on what they know but has the ability to pivot when better science becomes available through its flexible adaption pathway model.

In closing, Liban explained the motivating factors for LA Metro’s efforts including the environment, community, and children. In essence, it is about human beings. The urgency of the issues of today will be exacerbated if we do not act to protect ourselves and our planet.

To access Cris Liban’s PowerPoint presentation, click here.

— Madeline Voitier, RNRF Senior Program Manager