RCBJ Perspectives: Immigrant Capital Investment and Priority Infrastructure

12.13.21 | Government Affairs

by Lincoln Stone, Partner, Stone, Grzegorek & Gonzalez LLP

Through the Base Realignment and Closure (“BRAC”) process, successive Administrations in the post-Cold War era sought to increase efficiency and cut costs in the Department of Defense by closing and realigning military bases.  For the 1990s economy of the Inland Empire of Southern California, the closures of Norton AFB (San Bernardino) and George AFB (Victorville), followed by the downsizing of March AFB (Riverside Co.), meant the loss of $3.1 billion in total economic activity and 27,400 civilian jobs.  The Riverside-San Bernardino MSA was thus the region of the country most adversely impacted by the early BRAC, a severe blow to an area already afflicted by high unemployment rates, low incomes, and declining property values, all helping explain why one-third of San Bernardino residents were on public assistance.

The former Norton AFB had served as an aircraft and missile logistics depot, tasked with maintenance and support, supplies, and heavy lift transport, and as a consequence its 2,000 acres of developable industrial and commercial space and FAA-approved tower held out promise as a civilian commercial asset.  The local base reuse authority, the Inland Valley Development Agency (“IVDA”), was challenged with determining how to transform the location to productive civilian use, which would require substantial investments in roads with connections to interstate freeways, demolition of outdated buildings and asbestos removal, and replacement of electrical, natural gas and telecommunications infrastructure.  However, BRAC did not include the funding needed for redevelopment, nor did IVDA then have abundant other resources.  Into this void $650,000 was lent to IVDA by a partnership associated with a designated regional center in the EB-5 investor visa program, providing the seed funding that enabled IVDA to obtain a matching $1.8 million infrastructure development grant from the U.S. Department of Commerce Economic Development Administration.   This seed funding for infrastructure led to the rehabilitation of light manufacturing buildings with new electrical wiring, fire sprinkler systems, and roofing as well as street access ways and asbestos removal.  These core infrastructure investments paved the way for transformation of the former Norton AFB.

Infrastructure, its current state or the need to invest in it, is very much in the news coming out of Washington as the current Administration seeks to pump money into the economy in ways that yield both near- and longer-term benefits.  “Hard” infrastructure, generally, refers to the physical systems like roads, transportation, water, sewage, electric, and communications that form the backbone for a developed economy.  The framework of “critical” infrastructure provides a somewhat different lens, focusing on the assets, systems and networks (as in the energy sector, information technology sector, waste and wastewater systems, to name a few) that are vital to the interests of the United States.  Their incapacitation would jeopardize security, national economic security, national public health or safety.  Funding sources of infrastructure development vary considerably and increasingly involve a public-private partnership (“P3”).  Questions concerning sources of funding often run into the public vs. private and federal vs. state debates.  Certain infrastructure development has identifiable funding sources, as in user fees and tolls for transportation and gasoline taxes for roads maintenance, while other infrastructure classes do not have standard sources.  Where P3s exist, the added consideration of private ownership of infrastructure assets may surface as a political challenge…

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