The promise of private capital and “impact investors” – but what about capacity?!

There is a common dialogue in the water infrastructure sector about the promise of public-private partnerships (P3s) to help reduce costs and better deliver projects – and this is definitely true.  Beyond that, we hear about all the private capital – especially “impact investment potential” that is just sitting on the sidelines and waiting for good projects to be set up – and again, I’m not disputing this at all.  What I do have a problem with is the question of capacity to delivery infrastructure projects.

The funding gap in the various water sectors has been presented and is fairly well-known.  So the premise is, all we have to do is find that funding, and we’re good, right?  This is why we’re talking about things like leveraging state revolving fund (SRF) dollars, private capital, etc.  However, what we don’t seem to discuss is the ability to actually USE this money.  It’s like that old adage about being careful what you wish for.

Let’s say that – magically – all the funding needs were met for a community to meet their stormwater needs.  Their first decision would be – well, how do we use this funding?  I would presume that since humans tend to do what they know “works”, they first thought would be to simply implement through traditional methods.  However, I believe that if this tack were taken, there would be a quick realization that there is no way most communities could actually get all the work done within a reasonable time if they had the funds available to them.

What’s the point?  We often consider just the supply of funding, and not the backside part – which is how to actually use the funds and to use them effectively.  We don’t want to pay more than we should just because we have the funds, and we don’t want to wait decades before traditional infrastructure implementation can deliver the infrastructure in the ground.  THIS is another – significant – benefit to a Community-Based P3 (CBP3) approach, as this frameworks seeks to drive capacity to get work done as well as provide the means to deliver it faster and cheaper.  Simply put, the CBP3 model is one where capacity for a capital investment effort can be provided in a way that doesn’t burden the municipality with long-term unfunded liabilities, which is associated with large ramp-ups in hiring by public entities, and delivers a “force multiplier” to accelerate delivery time and capacity – all while driving implementation and maintenance costs down.

So the next time you hear any talk about the promise of funding or financing to solve the water sector’s problems, please ask how is it that we’ll actually get the work done.