Investing in local infrastructure to transform communities
Citizens want to live in areas that provide them with great services and enhance their quality of life. With this top of mind, local governments are continuously taking steps to improve infrastructure and invest in technologies that promotes economic growth and the community’s wellbeing for both residents and visitors. This is often a challenge for cities, where much of their infrastructure is aging and money is limited. Addressing infrastructure upgrades can be costly and staying within budget is critical.
Investing in progress
Cities’ goals may vary, but they typically focus on creating the safest, most sustainable and efficient environment possible. Often that looks like addressing safety and mobility improvements, and installing more efficient infrastructure, such as intelligent connected lighting, smart water technologies and advanced building automation systems. These technologies can allow local governments to improve operations and create a better quality of life for residents. However, the challenge is funding these improvements.
Because putting off necessary improvements can lead to more deferred maintenance and increase the chances of having larger infrastructure issues in the future, it’s important for cities to look for new ways to fund these projects.
Funding infrastructure improvements
Local governments often consider creating or raising taxes to pay for infrastructure upgrades but rather than burdening residents with a tax increase, cities can turn to creative funding mechanisms and procurement methods to address their financing challenges. Whether that’s through a public private partnership (P3), a performance contract or tax-exempt lease purchase (TELP), cities can find the capital for infrastructure improvements.
A P3 is considered an alternative financing approach to infrastructure or municipal renovations. However, in recent years, it’s becoming a more mainstream way of solving the finance challenge many municipalities are facing. This method puts the responsibility of the design, construction, finance and ongoing operations on a private consortium, in exchange for guaranteed fixed payment terms. This model enables local governments to accurately measure, budget and manage the total cost of ownership of a building with guarantees from the private sector. It also guarantees ongoing maintenance and continuous improvements meaning there will be no deferred maintenance at the end of the contract.
Performance contracts are driven by legislation at the local and state level. With this method, energy and operational savings over a fixed period are used to fund infrastructure improvements through a financial arrangement provided by a third-party financial institution.
A TELP is a lease arrangement used by local and state governments that allows a public organization to pay for infrastructure upgrades by using money that is already set aside in its annual utility budget. We’ll talk more about how Lubbock County, TX used a TELP below.
Bringing local infrastructure improvements to life
Lubbock County is a great example of a local government that was looking to make infrastructure improvements and address deferred maintenance. In this instance, they were looking to address 43 facilities throughout the county. They wanted to avoid disrupting their budget, bond rating or raising taxes. To make this possible, Lubbock County engaged in a TELP. Through this method, future capital funds that would have been spent on equipment failures or replacements can now be redirected into other projects within the county. The infrastructure improvements, including improved lighting, HVAC and plumbing as well as the installation of a building asset management system, are helping to provide the local community with a safe, comfortable and more efficient environment.
Local governments want to create communities that allow their residents to thrive. Making the necessary infrastructure improvements can be challenging, but with careful planning and creative funding approaches, achieving a desirable city is within reach. Through strategic infrastructure improvements, local governments can create safer, more comfortable environments that promote a better quality of life for citizens and visitors, all while maintaining their budget. Because the goal is to create a secure, connected and resilient community that will allow them to maintain vibrancy and enhance their economy for decades to come.
Lisa Brown is the national senior director of strategy, local government and municipal infrastructure for Johnson Controls where she is responsible for growth of the local government market in North America.