Raising the Grade on Infrastructure: Money, Methods and Message

America shouldn't settle for infrastructure that gets a grade of D-plus. There are steps we can take right now to build the infrastructure we need.
by , | May 23, 2013

We all know the "what's wrong" part of the infrastructure story. While China and South Korea race ahead on high-speed rail and broadband, America's under-maintained roads and bridges crumble. Extreme weather events like Superstorm Sandy further drive up the costs of replacing critical infrastructure to ensure resiliency for the next round. Federal coffers are low on cash and fall far short of the estimated $3 trillion needed. Meanwhile, the American Society of Civil Engineers ranks the condition of our infrastructure at a dismal D-plus.

No one who purports to care about the U.S. economy and value our competitiveness should be satisfied with this near-failing grade. The good news is there are steps we can take right now to steadily raise our grade by doing better on the crucial three M's of infrastructure: money, methods and message.

The first M, finding money to finance new infrastructure, is surprisingly the easiest problem to solve. Analysts such as former Congressional Budget Office director Peter Orszag point out that, with record low interest rates, now is the time for governments to borrow and build with traditional financing. If they can't borrow the traditional way, new financing innovations that President Obama has proposed, such as America Fast Forward Bonds and a national infrastructure bank, are designed to help connect cities and states to new sources of private and institutional capital that are eager to invest in American infrastructure. These creative models have worked well on a bipartisan basis in the United Kingdom, Canada and Australia.

Yet these federal financial innovations cannot scale unless local and state governments raise their game significantly on the second M, creating the methods to grow a pipeline of investable infrastructure projects. A number of cities, state and regions are therefore beginning to implement new performance-based standards designed to attract private and institutional investors and still keep infrastructure 100 percent publicly owned.

For instance, in Oregon, Gov. John Kitzhaber (one of the authors of this column) has proposed a statewide center of infrastructure planning that would, among other things, help develop standard lifecycle cost analysis of all major capital spending projects and enable the bundling of smaller projects to help local governments engage private capital. In Chicago, Mayor Rahm Emanuel has created the Chicago Infrastructure Trust to develop consistent new standards for energy-efficient infrastructure. And in New York, Gov. Andrew Cuomo has created a state infrastructure bank, which was proposed by the NYS 2100 commission on resilience, to ensure that infrastructure siting in the post-Sandy period includes comprehensive calculations including those relating to climate risk and insurance costs.

But our infrastructure needs reach beyond municipal and state boundaries, so the emergence of regional models is another needed innovation. On the West Coast, with funding from the Rockefeller Foundation, California, British Columbia, Oregon and Washington State have partnered to launch the West Coast Infrastructure Exchange (WCX), bringing together governors, treasurers and key stakeholders to collaborate on getting vital projects off the ground. The WCX aims to fill both the expertise gap at the local level and the relationship gap among governments, private investors and critical stakeholders such as organized labor who are concerned that "public-private partnerships" will lead to privatization of public assets rather than a new form of innovation that attracts private investment in quality public infrastructure.

Equally as important as money and methods is our message. There is a clear need to change the way we talk about infrastructure, it's role in ensuring American competitiveness and strong communities, and the importance of everyone -- governments, advocacy groups, nonprofits, private-sector actors and taxpayers -- to contribute.

In the past, government has largely carried the burden of asking for more taxes and user fees. Moving forward, we'll need businesses, both big and small, to play a critical role in making the case to the public for both traditional infrastructure such as roads and bridges as well as innovative infrastructure such as broadband, smart electrical grids and construction that encompasses and enhances energy efficiency. After all, a lot of our critical infrastructure involves not just the $30 water bill (a bargain) but also the $150 Internet bundle many of us pay without a blink. To create a resilient and robust economy, we need it all.

Working together across sectors and regions, with a combination of money, methods and message, we can raise our grade and build the infrastructure necessary to grow our 21st-century economy. We should not -- and simply cannot afford to -- settle for less.

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