Urban Land Institute’s Nashville District Council hosted a symposium last week titled “Creative Solutions to Infrastructure Finance.”  The speakers were Michael Skipper, the Executive Director of the Nashville Metropolitan Planning Organization (MPO) and John Miller, head of the Barchan Foundation, an MIT based group that is cataloguing infrastructure programs world wide in an effort to arrive at “best practices” solutions. Your humble scribbler served as moderator and gave a brief presentation to “set  the table for the discussion.”

The American Society of Civil Engineers, ASCE, releases an annual report on the state of America’s infrastructure. Our grade for 2009?  A “D.”  We got a “C+” in solid waste and “D-‘s” in waste water, roads, inland waterways and drinking water.  There is no curve to these grades.  They also estimate the cost over a five-year period to maintain the status quo – i.e. so we can keep from totally flunking – this year’s number was $2.2 TRILLION.  The report also focuses on state needs – those little eye openers like “21% of Tennessee’s bridges are structurally deficient or obsolete;” and the costs to get back to some form of normal.

The problem is, there is no money.  A quick look at the national debt clock shows a debt to GDP ratio north of 86% and total debt per citizen of over $177,000.  Simply put, it is unsustainable -as we have argued vociferously on these pages.  Not that anyone in Washington has received that memo!

Michael Skipper set the stage for our local needs, exploring our growth patterns over the last thirty years and projecting where we will be over the next thirty.  In aggregate, we are growing at roughly 2% per year.  Not the explosive boom-bust pattern of Vegas, (thank goodness!),  but steady.  That population growth means more schools, drinking water, and roads.  A lot of Michael’s information is available at the MPO site, in their “Publications and Resources.”  He is looking down at our patterns from 50,000 feet and with his team, trying to manage how best to accommodate the good fortune of our growth.

John Miller followed with a history of infrastructure financing in the United States and how we have evolved from a culture where private enterprise funded most of the infrastructure to one where we sheepishly turn to the government for everything.  Here in Tennessee the names of many of our streets bely their past: “Hillsboro Pike,” “Granny White Pike,” to name two.  The pike system was essentially a toll road that was carved out and maintained by private citizens and small companies – often, as in Granny White’s case, to ease transit to their businesses – the Granny White Inn.  According to Miller, beginning in the 1930’s with the FDR administration, the Federal government began to assume increasingly larger roles in infrastructure.  He argues persuasively, however, that this is unsustainable and that more creative means must be explored and experimented with.  Take Hong Kong, for example.  The subway there was built by the city government, inasmuch as they dug the hole, laid the tracks and bought the cars.  The stops, however, are all privately owned.  You want your mall to do well?  Better build a stop!

One of Miller’s persuasive points is that we have to overcome our shortsightedness in planning large scale infrastructure projects.  He argues that we should take more of the real estate developer’s approach and examine the total life cycle cost of a project before embarking on it’s construction.  Too often we only look at the initial costs and forget that down the road, there are going to be serious maintenance costs.  Unless those are budgeted for and some form of capital reserve fund set aside allocated, we are only kicking the cost can down the street with the end result of failure.

In all, it was a fascinating evening and a great service that ULI performs to engage the community in calm, thoughtful discussion of this massive problem.

My presentation and Dr. Miller’s presentation are here:

ULI Infrastructure Setup

2010_02_18 JBMiller Nashville ULI Presentation