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The Road to Better Infrastructure 

By Ben Brown, NCLM Advocacy Communication Associate

“Deplorable condition.”

Strong words, and certainly not a great assessment when, for instance, one applies it to the condition of infrastructure across the 50 states.
Grimly, a recent report from the National League of Cities (NLC) made that very conclusion, in the first sentence of its executive summary – though it wasn’t really a shocker. Reports and news blasts about the sorry shape of infrastructure have circulated for years.

What made this report so jarring was its finding that the massive costs of addressing the decay are increasingly falling on local governments.

Bringing all the existing public asphalt, concrete, pipes and transit systems up to speed would require such a gargantuan amount of cash – $2.2 trillion over the next five years, according to NLC – that it’s almost tempting to go back to nature, let the grass grow and forget all about it.

But, seriously, what can cities and towns do to improve the road ahead, so to speak? Solutions are elusive.

If you’re not paying attention, that is.

There are emerging tools and ideas for catching up on infrastructure, and there are examples of creative thinking that have joined together the public and private sectors right here in North Carolina.

Look at Raleigh, for one, where some of the first underground pipes went down in the late 1800s. "Some of those pipes, many of those pipes, are still in service," noted Robert Massengill, the city’s public utilities director, who often displays grizzled chunks of extracted pipe to residents so they can see first-hand where a wise investment might go.

As one of the fastest-growing cities around, Raleigh needs resources to keep up. How in the world could its old infrastructure handle it?

"… we needed to come up with something so that we (the city and the private development community) could both work together, let them stay on their schedules, let the market drive the schedule, and try to come up with a reasonable reimbursement program so they could go in there and replace the pipes and give them the capacity they need, while at the same time giving the rest of the customers brand new pipes and replacing some old pipes that needed replacing anyway," Massengill said.

He’s describing the city’s Urban Main Replacement Reimbursement Program, which went into place as the economy recovered from the Great Recession. And it’s been a hit with private developers.

In the past, when developers planned to redevelop urban areas where utilities already existed, they’d have to document whether adequate downstream sewer capacity existed. If there was a bottleneck, it was on the developer to upsize the pipe – which didn’t charm the industry. Now, under the reimbursement program, developers can factor in refunds that vary depending on the age and condition of pipes they replace. The worse the condition of the pipe, the greater the reimbursement can be.

"We’ve gotten a lot of positive feedback from the developers," said Massengill, who called it creative thinking with a pay off, "especially when (developers) are the folks who are driving economic development in the area. And we don’t want to be the holdup of economic development."

It’s an example of public-private partnership – one tool that the NLC report identifies as a way cities and towns across the country can gain ground on infrastructure needs.

Found online at nlc.org, the report’s title is "Paying for Local Infrastructure in a New Era of Federalism." It says that cities, as they take on an increased burden of responsibility, "need a more deliberate approach that recognizes the central role of infrastructure in the success of our nation’s economic engines," being cities themselves.

The League recently interviewed one of the report’s author’s, Nicole DuPuis, for an episode of Municipal Equation (the League’s podcast that debuted in June). She said the bottom line is that cities "need more flexibility at the local level to use the tools that might be at their disposal to pay for their infrastructure needs."

Municipal officials here will have no problem with that, but might wonder a little more about those tools.

Two of those suggested in the report are currently authorized in North Carolina – public-private partnerships and local option vehicle registration fees. Many of the others, including local-option sales taxes and local-option fuel taxes, would require legislative approval in North Carolina and many other states.

Another is an "emerging" tool now authorized in 27 states: infrastructure banks – revolving infrastructure investment funds established and administered by states that, like private banks, can offer a variety of grants and loans as well as "credit assistance enhancement products to public and private sponsors of infrastructure projects," according to a NLC factsheet. Federal funds and matching state funds capitalize infrastructure banks. 

Rep. Stephen Ross, the former mayor of Burlington, said he hopes to have a good conversation soon in the legislature here about local funding sources. That’s as North Carolina’s municipalities have seen revenue tools repealed in recent years, like with certain fee and taxing authorities.

"In fact, my contention is when you add it up, it’s a substantial amount of (lost) money, at a time when you need money to do exactly what we’ve been talking about," Ross said. He agreed that municipalities are the economic engines of the state, but aren’t always treated as such.

"We need to fuel the economic engine so that it can produce more," Ross said. "But at the same time, you’ve got to recognize that in doing so, you’ve got to move some of that revenue back into maintaining the very existence that creates these cities, and that’s the infrastructure."

Strengthening public infrastructure is among the League’s municipal advocacy goals for 2015-2016. The recent voter-approved Connect NC bond package was a great success in that it included $309.5 million for improvements to local water and sewer systems. But the League still seeks new financing mechanisms, particularly for transportation needs.

In the meantime, Rep. John Torbett, a chairman of the House Transportation Committee, opined that governments – city, county and state – need to prioritize dollars on hand to keep infrastructure in the highest tiers, ranking perhaps second only to public safety. 

For the state’s part, he pointed to recent legislative changes to stabilize Powell Bill funding. "And as time progresses, the hopes and plans are to increase that Powell Bill money to afford a greater opportunity for municipals to take care of their, in some places, crippling infrastructure," Torbett said.

In general, he said responsible parties should do whatever they can to keep existing infrastructure in good health. He referred to "old warehouse districts" that have fallen into disrepair. "But they are just as economically vital as new development, as long as we keep infrastructure up to the need required," Torbett said.

In Raleigh, utility customers receive small "infrastructure replacement charges," first implemented in summer 2014. One is for water infrastructure; the other for sewer. And the city is making clear to its customers that it’s not a shady add-on.

"What we’ve tried to do is what we call ‘truth in billing,’" said Massengill. "We want to spell out line items on the bill for what you’re paying for."

Raleigh utility bills offer the math line by line – an administration charge, which is the cost of day-to-day operations, no matter how much water the customer uses; and then the volumetric charge; and then the infrastructure replacement charges.

Most residential customers pay $1 per month for water infrastructure support and $3.25 for sewer, the latter being the more expensive to replace. The money generated specifically goes to pipe replacement – some of it for the developer reimbursement program, but most of it for the city’s overall capital efforts.

Beyond homegrown solutions, municipalities need "strategic and predictable investment from federal and state governments, of course," DuPuis said. "They need better communication between their state partners and the folks at the city level to determine what funding priorities might be. A lot of times, there’s a disconnect between the state’s and the cities’. And, of course, they need greater local authority to raise the revenue that’s necessary to pay for their infrastructure needs."

As the conversation continues, and remains in the queue for the N.C. General Assembly, Ross said one thing is certain when it comes to catching up – particularly in rapid-growing North Carolina:

"No one entity is going to be able to do it by themselves."