THE AVENUE SEPTEMBER 8, 2010
There is nothing like getting two or even three benefits for the price of one investment. Getting a two-fer and even better, a three-fer, is something to strive for when making a business investment. President Obama’s proposed infrastructure bank for transportation investment is a three-fer America desperately needs … plus it is fiscally conservative.
The first benefit of investing in transportation infrastructure investment is the direct job growth the economy needs. The thousands of miles of roads, rail, and runways that will be repaired and built will result in tens of thousands of jobs this year and next.
The second benefit is these investments will be leveraged with private dollars which should multiply the impact of the proposed $50 billion of public investment by a factor of three to five times. The private money will help insure the investment is smart--private investors are looking for a financial payback, not a political payback. The risk will be spread and private investors will insure it is prudent.
The third benefit is probably the most important because transportation drives economic development. Today, there is huge pent-up demand for higher density development in human-scaled urban places. These places have price premiums that are 40 percent to 200 percent higher than the auto-oriented suburban development--the kind of development that has driven the economy into its Great Recession ditch. Transportation investment in repairing existing road networks, building new and repairing existing rail and bus transit, bike trails, and walking infrastructure will encourage the walkable urban development the market is demanding.
The built environment (real estate and infrastructure) is over 35 percent of the assets our economy deploys, the largest asset class by far. That asset class is on the sidelines because we have overbuilt the drivable suburban fringe of our metropolitan areas, and banks are still nursing the hangover of underwater suburban residential and commercial loans.
This very sluggish economic recovery is due to the lack of participation by the largest asset class in the economy; the built environment. The infrastructure bank is the best idea to get this huge sector moving again by leveraging federal money, spreading the risk to the private sector, generating direct jobs and building the walkable urban places the market is demanding. This is a three-fer we should definitely invest in.