6 Questions About Financing Infrastructure, Answered
Jennifer Mayer, leader of the City Accelerator’s cohort on financing municipal infrastructure, talks about her favorite projects, the Flint water crisis and more.
"The infrastructure fairy ain’t coming." -- Jennifer Mayer
It’s an uncomfortable fact that most local governments have found to be true -- particularly in today’s political and financial environments. But it’s also a reality that is driving the search for innovative infrastructure financing models, the focus of the City Accelerator’s Cohort III.
Recently, I had a chance to talk with Jennifer Mayer, who is leading Cohort III. Each City Accelerator cohort has employed a uniquely qualified professional as a special champion and guide to assist the participating communities -- and Mayer is a strong choice for this challenging effort. She comes to the Accelerator with more than 25 years of experience advising federal, state and local transportation and environmental agencies on infrastructure finance and policy. In her work at Ernst & Young, Apogee Research, Inc., and as a technical advisor for the Federal Highway Administration, Mayer helped state and local agencies produce financial plans and issue bonds for infrastructure projects, create revolving loan funds, and consider and implement public-private partnerships (P3s). She was the founding chair of the Transportation Research Board’s Public-Private Partnership Subcommittee, and is currently chair of its Revenue and Finance Committee.
In our interview, Mayer said she was attracted to the City Accelerator’s project model and the focus on finding solutions that other cities -- dealing with the same or similar problems -- can replicate. Mayer also spoke with me about the changing landscape of infrastructure finance and her hopes and plans for Cohort III.
How has infrastructure finance changed over the last decade?
I think there has been a recognition that the federal role has diminished and state and local governments are bringing in the private sector in a lot of new ways. I would have to say that's one of the most significant changes. It used to be that municipal finance was perhaps not the most exciting sub-part of the discipline but in terms of having new models of how to pay for products, how to manage them and how to finance them with different relationships with the private sector, that's the most significant change.
New Mexico Highway 44 -- now U.S. Route 550 -- was a highway so dangerous that people used to have bumper stickers that said, ‘Pray for me -- I Drive New Mexico 44.’ It was two lanes with very slow moving farm vehicles and very fast-moving other traffic. The state had a choice to either fix this road or do the rest of their program -- because it would cost all they had.
The state found a way to tap state and federal grant anticipation bonds for the $314 million cost and then utilized the private sector for construction talent needed to tackle the diverse demands of the 118-mile project. However, the most innovative feature was a long-term performance warranty that guaranteed the road would be maintained and remain above specifications for 20 years. It’s ironic, but cars typically have longer warranties than the roads on which they travel.
Do you have recommended reading for individuals who want to learn more about financing infrastructure?
The Urban Institute has a really good book: Financing Infrastructure -- Innovations at the Local Level. It was published in 1991 and was probably one of the best summaries of innovations at the municipal level that I've seen and they just haven't done another one since then. The EPA has also created some good materials targeted to green infrastructure, including ‘Getting to Green: Financing Options and Resources for Local Decision-Makers.’ The EPA’s Environmental Financial Advisory Board has a wealth of resources, including a ‘Guidebook of Financial Tools: Paying for Environmental Systems,’ which has an encyclopedia-like listing of funding and financing tools used for green infrastructure.
Do you think the emergency in Flint, Mich., is a wave of the future?
There are definitely more Flints out there. It's sad, but it is human nature that we don't respond as well to chronic problems as we do to an acute crisis. I think there’s a complacency that’s built up after two decades of hearing about crumbling infrastructure. We keep saying the sky is falling, and when it doesn’t, people think we can just keep going on as we are. It’s a credit to the dedicated professionals in public works agencies, who often have to keep things going with duct tape and baling wire, but in the end their competency masks how bad the situation really is.
How can we finance expensive infrastructure projects without negatively affecting citizens living in poverty?
Some people think that to make a public private partnership feasible, users will inevitably have to pay more. I’d say two things in response to that: Not all P3 models depend on user fees, and even when they do, the strategies that work better for lower-income individuals are where the beneficiary pays something as well. If I ride the bus, I'm benefitting every driver who doesn't have to compete with me for road space. The business whose customers have light rail access, or whose bottom floor no longer floods every time it rains, is going to enjoy higher property values. Some of that value should return to the infrastructure that creates it.
What does success look like when “we get to done”?
As soon as I came on board I said I want each city to name a mid-point and final success metric. I don't want to have a project that doesn’t have that. An important part of the process is to encourage and even require intra-city partnerships. Many times, I would come talk to an agency about infrastructure finance, and people from different departments would be meeting each other for the first time. Building and strengthening those relationships among the many city departments who need to cooperate for project delivery is essential.
I came away from our interview impressed and convinced that Mayer has both the professional skills and unique career experience that will be needed to lead these communities in their quest for finding solutions for tough problems. Those qualities, coupled with her engaging personality, will enable leaders and staff of these communities to more easily collaborate. Her life's work has been at the confluence of finance, infrastructure and the interests of low-income urban residents, making her an ideal collaborator for the cities that are now navigating that tricky intersection through Cohort III.