Effort is intended to create jobs and support rural economy by connecting public projects with private dollars.
Rural America just got access to a lot more money--$10 billion worth of capital to start—to update and upgrade infrastructure such as roads, water systems, and more under a new public/private initiative announced today by Secretary of Agriculture Tom Vilsack.
Backed by a $10 billion initial investment by CoBank, a national cooperative bank based in Greenwood Village, Colo., the new U.S. Rural Infrastructure Opportunity Fund is designed to connect rural projects in need of funding with interested investors and lenders, finally providing access to the capital needed to get these big-ticket projects done.
"What this means is that we can begin aggressively addressing the infrastructure deficit in rural America," said Vilsack during a press call about the fund’s launch, noting the need for investments in roads, bridges, water and wastewater systems, broadband, energy projects, local and regional food networks, and more.
Capitol Peak Asset Management will manage the fund, which will provide debt and/or equity to projects at market rates, based on the level of risk involved.
Delayed maintenance and investment in infrastructure has become an increasing challenge for many localities, rural and urban, across the country. According to the American Society of Civil Engineers ‘ most recent infrastructure report card, more than 103,000—or 23 percent—of rural America’s bridges are structurally deficient or functionally obsolete. Overall, the association gave the United States a "D+" and estimates that $3.6 trillion in spending is needed nationwide by 2020 to address the country’s infrastructure issues.
That’s a daunting number for taxpayers and elected officials, but Vilsack and CoBank CEO Robert B. Engel clearly believe that these projects, with their considerable price tags, also represent an often-overlooked chance for a mutually beneficial public/private partnership.
"The USDA has been a critical source of funding, but the agency has finite resources," said CoBank’s Engel, whose bank belongs to the federal Farm Credit System and serves agribusinesses in all 50 states. "The agency has finite financial resources and finite people resources, and there is an understandable backlog of projects across these sectors" of rural infrastructure.
He hopes other firms will see the opportunity that CoBank does and invest, growing the new fund. "$10 billion is a nice start, but guess what?" Engel said. "There’s a lot more [money] out there than that."
Vilsack agrees. "These are loans that everyone would like to do," he said, but he also acknowledged that it’s been difficult for the big institutional investors—pension funds, endowments, and others—to connect with rural investment opportunities. "The point of this is building a network," Vilsack said. "We know the need [for capital and credit] is out there, and we know the profit opportunity is out there."