Though the livability of our communities depends on reliable public services, the region's infrastructure systems face challenges with investment and maintenance shortfalls, uneven funding systems, and multi-layered jurisdictional patterns.
Some types of infrastructure are provided through rate-based funding systems, such as water, sewer, electricity and natural gas. Rate-funded services tend to enjoy more stable and predictable funding but can face significant difficulties in obtaining large amounts of up-front capital needed to make major improvements or expand capacity. Non-rate-based infrastructure providers generally suffer from a lack of significant and stable sources of funding for maintenance and operations and experience varying degrees of success in gaining support for voter-approved bonds to fund capital improvements. Also, jurisdictional boundaries for service providers tend to be haphazard and based more on historical happenstance than thoughtful design, making it hard to realize efficiencies through the coordination of service delivery and capital investments.
The Regional Infrastructure Analysis focuses on eight different types of infrastructure that are needed to create and sustain great communities:
Civic buildings and facilities: Capital funding for civic structures is often subject to voter support and must compete against other interests for scarce resources. Urban amenities such as plazas, streetscapes, and some civic structures - critical components of downtown redevelopment efforts - are often supported through urban renewal programs and public/private development agreements. No dedicated funding source for operations and maintenance exists for this type of infrastructure.
Energy: Based on current trends, the region will require two to three new 400-megawatt power plants to supply adequate power in 2035. However, technological advances are likely to change the region's energy supply and infrastructure needs in unknown ways. Continued efforts to manage demand and reduce peak demand can reduce projected energy needs and produce savings. The most prominent challenge for energy providers is coordination with other service providers (transportation in particular) in the planning and installation of infrastructure.
Parks and Open Spaces: The availability and cost of land represent the most significant challenge for ensuring adequate parks and open spaces for a growing population. As urban communities increase in density, park space becomes both more necessary and more expensive. Given population projections, the region will likely need 5,000 acres of new urban park space and 8,000 acres of open space. While the region has had recent success in funding the acquisition of new parks and open spaces, funds for maintenance and operations are scarce.
Sanitary Sewer: No reliable funding stream exists for construction and maintenance of sanitary sewer infrastructure, which is more than 100 years old in some parts of this region. Because new infrastructure cannot be added incrementally in a cost-effective manner, communities face the significant challenge of securing upfront capital. Collaboration and consolidation may provide service and cost efficiencies but are extremely challenging to realize.
Stormwater management: Many of the region's stormwater management systems are aging. Increasing permitting requirements regarding treatment and discharge are resulting in significant new compliance costs. Stormwater facilities are most effective at a local (watershed) level, and existing systems have little to no excess capacity.
Schools: Some areas of the region have unused school facilities while an increasing population will bring new school-aged residents to newly urbanizing areas, creating a geographic mismatch between existing school capacity and new school capacity needs. As land values increase, siting schools on land near population centers becomes increasingly difficult, as traditional facility designs require significant amounts of property. Funding, dependent on local bond support, is inconsistent across the region and unreliable.
Transportation: Transportation costs represent the largest portion of unmet infrastructure needs. The current Regional Transportation Plan identifies a $7 billion finance gap for the financially constrained system, which would be even higher if the full range of transportation costs to support great communities were identified. Three quarters of annual local transportation budgets are spent on maintenance. Local roads are funded through development fees, LIDs and other mechanisms, but there are no dedicated sources of revenue for regional transportation systems.
Water: While significant conservation efforts have reduced per-capita demand, projected demand due to population growth will exceed regional supplies. Water sources exist, but source development and transmission of water to new users will be challenging. Upfront capital represents the largest hurdle to meeting new capacity demands.
Assuming current levels of service delivery, capital costs to accommodate population and job growth in the region through 2035 could run as high as $41 billion. Traditional funding sources are expected to cover only about half of this amount. Total costs include approximately $10 billion for repairs and reconstruction that would likely be needed even if the region did not experience population or employment growth as projected. These maintenance costs generally do not have identified revenue sources.
A common method to pay for infrastructure has been through system development charges (SDCs) assessed on new development. The use of SDC revenues, however, is limited to certain types of infrastructure and can only fund capital improvements. Charges in many jurisdictions have not kept pace with rising infrastructure costs.
Other causes of funding gaps vary across the region and include:
National experts agree that providing infrastructure in urban settings and compact new development is generally less expensive per unit than in areas with more land-extensive development patterns. Case studies in five existing urban areas and twelve newly urbanizing areas in the region found that while public infrastructure capital costs vary depending on specific location and access to existing infrastructure, they generally reflect this national pattern.
In urbanizing areas, developments on relatively flat land and close to existing transportation facilities have the greatest return on investment. Transportation infrastructure is the most critical investment needed to accommodate rapid growth in newly urbanizing areas. In urban areas, civic amenities such as parking structures and transit can increase the cost of development significantly. However, both current and future residents benefit from these investments.
High levels of upfront investment are generally required to make urban redevelopment projects successful, while urbanizing developments can finance infrastructure in phases over many years. However, despite its higher initial costs, development in urban areas can be less expensive over time.
Over the next several months, Metro, local governments, service providers and the private sector will work together to develop a comprehensive regional infrastructure strategy to address the identified funding gaps in infrastructure financing and develop potential solutions to regional infrastructure needs: