By Camilla McLaughlin
National Association of Realtors
Reduced federal funding has left states and cities scrambling for ways to fund infrastructure improvements — from deteriorating bridges and highways to the growing demand for mass transit — necessary to handle population growth.
The flooding catastrophe caused by the failed levees in New Orleans is a prime example of the danger of disinvestment in infrastructure, says Tom Murphy, Urban Land Institute senior resident fellow. But examples of neglect can be found in cities nationwide, he adds.
The most recent assessment from the American Society of Civil Engineers assigned a cumulative grade of D for the nation’s infrastructure.
What’s more, a lack of infrastructure has contributed to a housing shortage in Washington state and elsewhere, according to a study commissioned by the Washington Association of Realtors. “Without local infrastructure, homes can’t be built. Yet state and local governments haven’t committed to funding the infrastructure expansion required to meet housing needs,” the report concluded.
Many state and local governments are “doing what they can” in this capacity, says Richard D. Baron, CEO of McCormack Baron Salazar, a property development and management company in St. Louis. He adds that urban areas “can’t endure the disinvestment by the federal government much longer. Until we start reinvesting, our cities will slip farther and farther behind the rest of the world.” Baron delivered his comments at the recent Urban Land Institute fall meeting in Denver.
One option discussed at the meeting was private funding, which is relatively new to the United States but has been successful overseas.
“The evolution of infrastructure investment funds, including private equity funds, holds promise in changing the investment landscape for a wide variety of major public infrastructure projects, including roads, mass transit, utility, and energy providers, water treatment facilities, and airports,” says ULI Treasurer Dale Ann Reiss, global and Americas director of real estate for Ernst & Young in New York City.
Other strategies, which ULI’s Murphy suggested could also offer solutions to the infrastructure funding shortfall, are:
• Better connections between land use and transportation planning.
• Public policies that address linkages between areas within an urban region.
• Greater emphasis on the relationship between infrastructure investment and quality of life.
• Political leadership on infrastructure investment.
ULI’s infrastructure initiative brings together public and private stakeholders in various communities to help them reach consensus on solving pressing infrastructure problems and examine the best ways to use and leverage available funding.