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Credit: Balfour Beatty Construction

Constrained budgets and a lack of action at the federal level are causing states, regions, and cities across the country to develop innovative infrastructure solutions, according to Infrastructure 2012: Spotlight on Leadership, released by the Urban Land Institute (ULI) and Ernst & Young LLP.

State and local governments are increasingly adopting creative funding strategies such as public ballot measures for sales or gas taxes, bond issues, and user fees such as tolls. Public-private partnerships and sources of private investment are also a growing part of the equation.

In some cases, advanced technology is the answer. San Francisco increased parking meter revenue by 20% in 2011 with the SFpark management system, which uses sensors to adjust meter prices based on demand and allows users to track meter availability via smartphones.

“Tough times have a way of helping reshape priorities,” says ULI Senior Resident Fellow Maureen McAvey. “Local governments are stepping up to the plate, assuming more responsibilities, and leveraging many sources of funding to build the infrastructure to bolster flagging economies and position for the future.”

The study highlights forward-thinking solutions of local and regional governments: multicounty funding for a regional transit system in North Carolina; bundled ballot measures for civic projects in Oklahoma City; a $40 billion ballot initiative for transportation investments in Los Angeles; a Chicago-area effort to secure future water supply; and a regional transit corridor in Connecticut and Massachusetts.

The report stresses the United States still lags behind its global competitors in infrastructure funding. However, the gap may be closing as the global recession takes its toll on infrastructure spending in Europe, India, Brazil, and even China.

“In both the U.S. and Europe, the era of massive infrastructure investments may be over,” says Ernst & Young LLP's Global Real Estate Leader Howard Roth. “Although local governments may have success in doing more with less, the overall state of the infrastructure in these nations will deteriorate unless the political will and funding to make the needed investments materializes.”

A deeper look at infrastructure challenges

In the most recent issue of its Insightmagazine, KPMG LLP addresses the complex and urgent challenges of infrastructure funding. Articles offer key insights into topics such as innovative financing and funding models, sharing risk and reducing costs, and the evolving infrastructure fund market.

The semiannual magazine features a series of interviews with industry leaders sharing their perspectives on key issues:

  • Talking to pension funds about direct investment — Alain Carrier, Canada Pension Plan Investment Board; Gavin Merchant, Universities Superannuation Scheme; and Raphael Arndt, Future Fund
  • Examining the bank's perspective of infrastructure finance — Gershon Cohen, CEO and fund principal – infrastructure funds, Lloyds Bank; Chris Heathcote, global head of infrastructure finance, WestLB AG; and Scott Dickens, global head of structured capital markets, HSBC
  • High-speed rail in America: The view from the Northeast and the Southwest — Amtrak High Speed Rail Authority and California High Speed Rail Authority
  • Putting aid dollars to work — Daniel W. Yohannes, CEO of Millennium Challenge Corp.
  • Recycling capital — Barry Millsom, fund manager of the Lend Lease Infrastructure Fund.

Visit www.kpmg.com to read more.