Identifying ways to pay for critical infrastructure projects and stretching those public and private investments as far as possible was a key focus of the first National Infrastructure Financing and Construction Summit held on 20-21 November in Reston, Virginia.
Sponsored by the American Society of Civil Engineers, organizers said the event aimed to bring together leaders from federal and state agencies, financial investment firms, engineering and construction firms and advocacy groups, entities that they often don’t work closely, said Maria Lehman, ASCE. president emeritus and infrastructure manager of the GHD consultancy. “We really need to look at how we go about getting the financial community and the infrastructure community to work together,” he said.
An analysis released by the group earlier this year of the projected economic impacts of infrastructure investment through 2043 highlighted that despite the large influx of funds released starting in 2021 through the bipartisan Federal Infrastructure Act, the CHIPS Act and the Inflation Reduction Act, the gap between funding needs and the money to address them remains huge.
The report compares two scenarios: “returning” to more traditional funding levels after investments in new infrastructure laws end in 2026; and “continue acting”. It concludes that a funding shortfall remains in both scenarios, but would be smaller if the US Congress continues to prioritize infrastructure investment.
But public infrastructure owners and their consultants and contractors will have to become increasingly resourceful in accessing and deploying every allocated dollar, several speakers at the meeting said.
Dan Walker, a senior geologist in the Department of Civil and Environmental Engineering at the University of Maryland, noted that over the past 40 years, the number of natural disasters that exceed $1 billion has increased exponentially. “What it really reflects is what we build, where we build it and how we get more and more exposure,” he said. “More infrastructure is being placed in areas that are susceptible to natural disasters and it’s really causing significant losses that are obviously of concern to the entire industry.”
While ASCE published its first standard, ASCE 73-23, in October 2023, which provides specific guidance to project owners on how to develop and implement sustainable infrastructure, only 32 U.S. jurisdictions have adopted it in its building codes, even as it gains strength. the world, said ASCE Executive Director Tom Smith.
The World Federation of Engineering Organizations, the Asian Civil Engineering Coordinating Council and the Pan American Federation of American Societies have endorsed the standard, he said. ASCE 73-23, which includes chapters on infrastructure resiliency and life cycle costs, “is something I think the financial community will be very interested in, [as efforts grow] to protect the assets you finance.”
Lehman suggested that the ASCE standard could be incorporated into financial covenants as a condition of project financing. “You have the ability to reduce your risk and avoid a 20-year delay in getting the latest and greatest by going straight to the standards, instead of going to the patchwork we see across the country and coasts” , he said.
Tax-exempt municipal bonds to finance critical infrastructure projects are also a viable option, but their tax-exempt status is a perennial target of lawmakers looking to pay for tax cuts and could be at risk in the next session of Congress beginning in January, he said. Caroline Sevier, ASCE’s managing director of government relations and infrastructure initiatives.
Terence Smith, CEO of Smith’s Research and Gradings, an investment research and credit rating firm, noted that during the conference, it became clear that the financial industry and the engineering community do not always think alike and that there may be miscommunication. “This is the start of something,” he said.
