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21 Dec

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Vital Capital

December 21, 2015 | By |

Using Alternative Procurement and Financing Models to Capitalize on the ‘Infrastructure Moment’ in the Great Lakes and St. Lawrence Region

This paper identifies and analyzes existing and emerging models of alternative financing for infrastructure in the Great Lakes and St. Lawrence Region, particularly in partnership with the private sector, and explores opportunities for cross-border collaboration on infrastructure renewal.

Executive Summary

The Great Lakes and St. Lawrence Region (GLSLR) has an immediate need for major new investments in infrastructure renewal. These investments would support a new era of prosperous and sustainable metropolitan areas in the region.

Given the long inventory of projects that need funding, the recognized need for new investment and historically-low interest rates, we should be witnessing a period of extraordinary new building. Yet citizens have often been reluctant to pay the taxes needed to fund the scale of investment that is necessary. On the other hand, the private sector is interested in seeking out partnerships with public bodies and is investing globally in long-term stable investments like infrastructure projects. This paper explores various existing and emerging models of alternative financing of infrastructure in the GLSLR and identifies the most appropriate models for future projects in the region. Specific attention is paid to potential models for projects that involve more than one jurisdiction and their ability to coordinate efforts across borders.

There is significant potential for cross-border collaboration due to the integrated nature of the region and the potential for states and provinces to learn from one another and plan together around energy and transportation. The renewed interest in more collaborative regional work amongst Governors and Premiers reinforces the need to examine how alternative financing can be mobilized to deliver inter-jurisdictional infrastructure projects and finance infrastructure renewal in the region.

The jurisdictions of the GLSLR have increasingly shared interests as part of a post-rust-belt region competing globally with other economic regions. The GLSLR has a compelling value proposition for investment attraction — and the business case for investing in the GLSLR would be more compelling still with modernized, sustainable, technologically-enabled infrastructure. This report concludes that there is value in mobilizing alternative financing mechanisms in the GLSLR to respond to the need for infrastructure renewal and that closer cross-border collaboration is part of the solution to the challenges facing jurisdictions within the region.

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However, there are also clear obstacles to closer regional collaboration on infrastructure renewal and alternative financing: planning does not take place at the regional level, regulatory regimes differ, financing rules are not aligned and the self-awareness necessary to think and act at the regional level is not always present. These factors can undermine a collective ability to undertake significant, integrated infrastructure renewal in the region to support its economic, social and environmental sustainability.

To overcome these obstacles, the report concludes with a series of recommendations that are designed to facilitate greater alignment of processes and learning across the region, as well as to position the region as a centre of excellence in deploying innovative financing tools and by modelling best practices and agreements. These recommendations include:

  • The establishment of a Great Lakes and St. Lawrence Region Infrastructure Exchange
  • A move toward standardization of innovative procurement models across the GLSLR
  • More integrated planning and priority-setting across the region
  • The certification of socially-responsible investing and other classes of investments
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Authors

Sara Ditta
Michael Fenn
Matthew Mendelsohn
Robert Puentes

Release Date

December 21, 2015

ISBN

978-1-77259-010-4

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