The Wisdom of Investing In Our Public Infrastructure

Sadly, we are letting our nation literally crumble around us.
   Throughout the country we have deferred the maintenance on our public infrastructure to the point where the roads, bridges, public buildings, water lines, sewage treatment plants, and dams that service our nation's primary economic centers are all now well beyond their planned life cycles.
   It has been estimated that just to refurbish our national highway infrastructure--the roads and bridges that keep our national economy moving--would require several trillion dollars over five years.
   It turns out that spending on our national infrastructure, besides guaranteeing that our national economy keeps moving, is also a wise investment.
   A February 2012 study found that, in the short-run, $1 spent on infrastructure construction produces roughly double, about $1.92, the initial spending in direct and indirect economic output.
   Conducted by researchers at the College of William and Mary’s Thomas Jefferson Program in Public Policy, the study also found that when looking at an infrastructure project over 20 years, every dollar of investment generated an accumulated $3.21 in economic activity.
   Other studies have shown similar results.
   When Moody's--one of the nation's largest credit rating agencies--looked at public infrastructure spending resulting from the 2009 federal stimulus, it found that for every $1 spent, $1.57 was returned to the economy.
   A Congressional Budget Office report found that some of the projects funded by the same stimulus reached a return to the economy as high as 2.2 times the investment.
   An October 2011 study released by the New America Foundation stated, "Indeed, long-term investment in public infrastructure is the best way simultaneously to create jobs, crowd in private investment, make the economy more productive, and generate a multiplier of growth in other sectors of the economy."
   However, investment requires money, and in these tough economic times, funds are scarce. But there are options.
   As the William and Mary's study concluded, "In order to adequately fund public infrastructure, the U.S. must seek innovative new funding mechanisms that do not burden rising deficits, and likely must stimulate the private sector."
   One such solution offered by the study is public-private partnerships, which my experience has shown are powerful options worth considering in certain situations and under certain ground rules.
   A perfect example is the Downtown Long Beach courthouse. I worked at the state level to secure funding for this project, which brought together the City of Long Beach, Los Angeles County, and the State with a private developer.
   The unique $490 million project is being delivered under a Performance-Based Infrastructure contracting method. This essentially requires the contractor to build the project on his or her dime before getting paid by the state over a 30-year period.
   This PBI contract method should assure that this public project, being built by blue-collar union labor meeting the highest quality construction standards, will be delivered at a reduced cost.
   Another example is the Gerald Desmond Bridge replacement project in the Port of Long Beach, which saw an inter-governmental partnership bring together nearly a $1 billion in funding.
   No single branch of the government could afford the project alone, so, while I worked on securing more than $500 million at the state level, members of the federal government worked to bring in about $300 million. The port put up $115 million and even the regional county government offered nearly $30 million for the project, which has been deemed by the federal government as a project of "national significance."
   In addition to the economic return, just these two projects alone promise to create tens of thousands of jobs over the next several years, further adding to the economy.
   Imagine these types of projects multiplied across the nation.