US President Barack Obama has been chasing institutional and private-sector investment in infrastructure since taking office, and now has a plan to make it happen.
The Build America Investment Initiative—launched July 17 by presidential memorandum—is a government-wide program aiming to “harness the potential of private capital to complement government funding,” according to the White House.
The plan includes a “one-stop shop” investment center housed at the Department of Transportation to guide state and local governments, investors, and developers in unconventional project financing.
“The center will share best practices from states that are leading the way on private investment to states that have not yet adopted innovative financing strategies, encouraging a more robust national market,” the White House said. It aims to help guide interested investors through the maze of credit and grant programs available for road, bridge, and other transport-related projects.
Furthermore, the Treasury Department has scheduled a summit for institutional allocators, developers, and government officials on September 9. According to the White House, the session will focus on non-standard infrastructure financing approaches and highlight investment opportunities.
“My administration is going to help states and cities apply for federal loans, get more public-private partnerships up and running, and get more investment flowing into communities,” Obama said during a speech in Wilmington, Delaware, before signing the executive action. “This builds on other action we’ve taken to speed up the permitting process for big projects.”
Delaware’s Governor Jack Markell stressed the urgency of improvements to roads, bridges, ports, and more while introducing Obama.
“The condition of infrastructure statewide and across the country is unacceptable, and it cannot continue to support the world’s strongest economy,” Markell said. “What we need to come to grips with—and what this president understands—is that our advantages in the global economy will shrink rapidly if we don’t make these needed investments.”
Institutional allocations to infrastructure has for years remained at a low level relative to assets under management, according to a 2013 study by a G20 working group. The report noted evidence of growing interest in the asset class from pension funds, but it did not translate into greater capital flows.
“This seems to confirm the importance of barriers and disincentives, which limit such investments, and the relevance and need for policymakers to address them,” the authors wrote.
Source: G20 and World Bank
Related content: Obama Proposes Tax-Free Infrastructure Investing for Non-US Pensions