Local governments find innovative ways to fund infrastructure projects

75 percent of infrastructure projects are funded by state and local governments. However, in the face of economic uncertainty, local governments must find innovative means of funding these projects, according to Infrastructure 2013: Global Priorities, Global Insight,a report released by the Urban Land Institute (ULI) and Ernst & Young.

The annual report, based on analysis of global infrastructure trends, policies and issues, found that some state and local governments are advocating traditional means, such as tax hikes, user fees and tolls to pay for infrastructure investments. Governors and mayors are promoting these initiatives by emphasizing the benefits of infrastructure projects as employment opportunities and as economic stimuli.

But some cities are considering more innovative means. The report said Chicago may establish infrastructure banks to enable more creative financing of local projects. However, these business models remain in development as they work to address governance and tax-exempt finance complications.

Pooling resources is another way cities and states fund infrastructure projects. California, Oregon and Washington have joined forces with British Columbia to explore funding strategies for shared infrastructure projects upwards of $1 trillion over the next three decades, according to the report.

The report also emphasizes the growing need for greater public transportation, airports and shipping ports. “Well-conceived infrastructure is a foundation for growth and a higher quality of life in any city or community,” Mike Parker, infrastructure advisory leader for the Americas area of the Ernst & Young organization, and senior managing director of Ernst & Young Infrastructure Advisors said in the press release.

An example included in the report was Atlanta’s Multi-Modal Passenger Terminal. The Terminal is a $1.2 billion subway-bus-streetcar-passenger rail project that will help expand the city’s mass transit network. The project is funded through a public/private partnership with funding coming from both the government and private enterprise.

Another example is Seattle’s viaduct project. The city is moving forward on replacing a decrepit downtown viaduct with a $3 billion, 1.8 mile toll tunnel which will revamp the city’s waterfront, reduce center-city congestion and pave the way for new commercial projects, according to the report. 



“We are encouraged by the growing recognition by leaders in both the public and private spheres of the importance of infrastructure investment,” said Parker.  “We are seeing renewed efforts to accelerate needed projects, make hard decisions and bring creativity, foresight and sound economic stewardship to critical infrastructure development. ”

To view the report, visit www.uli.org/infrastructurereport.