Innovative Infrastructure Delivery - Metropolitan Planning Council

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Innovative Infrastructure Delivery

Expanding options for infrastructure

John W. Iwanski

MPC and Chicago-area decision-makers are fundamentally rethinking how we invest in infrastructure, from deploying new financing tools to prioritizing regional investments and plans that will put us back on the path to growth.

Issue

Investing in infrastructure is critically important, not only to maintain safe and reliable roads, public transit, water mains and sewer lines, but also to expand the economy. Infrastructure is literally the backbone that supports thriving communities and companies.

The Chicago region and Illinois are facing mounting modernization needs: In 2013, the American Society of Civil Engineers gave Illinois’ infrastructure a “C-“ and estimated the total cost of urgently needed repairs at $100 billion—five times the state’s total FY’15 capital budget. Dramatic examples such as buckling floors at the Joliet Courthouse and a crumbling overpass at Belmont and Western avenues in Chicago underscore the consequences of allowing infrastructure investment to lapse.

Meanwhile, the Chicago metropolitan region has come together to prioritize several urgent infrastructure improvements. Economic growth hinges on capital investments in Chicago’s Union Station, to serve 120,000—and growing—daily passengers. Growth depends on the pipes under our streets carrying—and not leakingclean water to serve the 74 percent of Illinois' population living in Chicagoland. And many suburbs are seeking financing for new developments to improve retail, reduce traffic and commute times, and attract new businesses.

Repairs and new capital investments—it’s not an “either-or” proposition. Pursuing both aggressively and with transparency is the ticket to economic growth.

Solution

From city and state transportation agencies to municipalities, governments across the country are working to identify new, better and faster ways to deliver infrastructure projects to serve residents. The playing field is far from level—while some governments have the expertise to wade into new and complex financial transactions, many others are fiscally stressed and/or are still getting up to speed. That’s why on July 17, 2014, President Obama announced the Build America Investment Initiative, including a national knowledge center to support state and local governments that want to harness the potential of alternative capital to complement traditional infrastructure funding.

While support from the White House is welcome, the strongest solutions to our local infrastructure needs will require both committed national leadership and creative regional solutions. Through our Innovative Infrastructure Financing initiative, Metropolitan Planning Council (MPC) has identified key obstacles to unlocking the potential for alternative investments and wise allocation of risk:

  • In February 2014, MPC and the Metropolitan Mayors Caucus brought together municipal leaders and investment experts to explore private investments in needed infrastructure. The forum pinpointed a communication gap between the private and public sectors and the opportunity for communities to aggregate common needs that may otherwise be too small to implement via nontraditional delivery.
  • In June 2014, MPC partnered with Lazard to host global infrastructure investors and public sector leaders to explore the need for a regional intermediary to better facilitate, procure and implement infrastructure projects.
  • National conversations with the Ford Foundation, U.S. Chamber of Commerce and other respected national advocates have confirmed that differences in communication and expertise are key barriers to tapping private investment at the local level and lead to increased risk of transaction failures.

MPC is helping Chicago-area decision makers fundamentally rethink how to invest in infrastructure, deploy new financing tools when appropriate and stay committed as a region to priority investments and plans that will put us back on the path to growth.

Benefits

MPC is studying the use of innovative financing tools on a number of regional projects, from Chicago Union Station to implementing projects identified in Chicago Metropolitan Agency for Planning's GO TO 2040 plan.

Union Station

Union Station serves more passengers daily than Midway Airport, but the station has reached its passenger capacity limit. Without improvements to Union Station, the region stands to lose billions of dollars in potential economic development, particularly in the growing West Loop neighborhood. MPC is exploring value capture financing to help advance the Chicago Union Station Master Plan, which outlines a renovation strategy that would allow for projected ridership growth on both inter-city and commuter train lines; and transform the station into a vibrant destination and economic catalyst for West Loop, Chicago and the region. A similar overhaul of Washington D.C.'s Union Station had an estimated $14 billion economic impact. 

Bus Rapid Transit 

MPC is analyzing the potential to use value capture to fund Chicago's planned Bus Rapid Transit (BRT) route along Ashland Avenue. Well-planned transportation investments in the Chicago region, such as BRT on Ashland, are shown to increase land values near transit stations by 10 to 20 percent. Some of the increased value generated could be used to repay the cost of the public investment—a smart approach that would connect the benefit of the infrastructure investment with the cost to provide it.

Variable priced parking in Wicker Park/Bucktown

As part of CMAP’s Local Technical Assistance program, and with input from local businesses and residents, MPC analyzed parking demand and pricing in Chicago’s Wicker Park/Bucktown neighborhood. MPC recommended variable pricing—by time of day and day of week—to achieve just the right number of available parking spots and, potentially, to generate additional revenue for pedestrian and transit improvements. These strategies also would encourage foot traffic and parking spot turnover—a spot-on solution for drivers, pedestrians, local businesses and the community.

Regional infrastructure investment

MPC is exploring how existing state and regional governments can work together more seamlessly to advance GO TO 2040, World Business Chicago's Plan for Economic Growth and Jobs and local development plans. Our goal is to identify new, better and faster ways to deliver infrastructure solutions in this region—and ultimately create a replicable standard for project delivery across the U.S.

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