A Twist on Traditional Funding

The lack of funding for large-scale infrastructure projects is not a new problem — and creative financing to get capital projects moving is not a new solution. But as funding challenges drag on over decades, nontraditional financing methods are becoming less of an option to consider and more of a necessity to implement.

 

The 2017 ASCE Infrastructure Report Card estimates that the U.S. needs to close an infrastructure gap of close to $1.5 trillion by 2025. And while public investment in infrastructure has moved into a brighter spotlight recently, the proposed numbers don’t match the need. So, where will the money come from to bridge the gap?

The Current State of Funding

Large infrastructure initiatives — projects designed to provide services to the public and boost local economies — require massive amounts of capital to get off the ground. The significant sums required are precisely the challenge. Public entities are often strapped to find that capital within their budgets or procure the necessary funding to implement these projects.

Competition for traditional public funding mechanisms is becoming tighter and less lucrative for entities that can obtain them. Since the financial crisis of 2008, the shortage of public monetary resources for infrastructure projects in the U.S. has continued. A lack of funding — not environmental reviews or bureaucratic delays — often is cited as the primary reason for infrastructure projects stalling.

Faced with constraints on these funding resources but still recognizing the importance of infrastructure development and investment, public entities are forced to look for more creative funding mechanisms to complete capital programs.

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