Show me the money

May 2013 » Departments » COMMENT
Bob Drake

In these days of scarce public funds, some engineering firms aren't just waiting for project funding to materialize. News releases issued in March and April highlight how private-sector engineering firms are betting on infrastructure as a solid investment, as well as a source of work, and helping find the money to move projects forward.

AECOM said its $150 million investment fund – AECOM Capital – currently is focused on investments in U.S. public-private partnership transportation and infrastructure opportunities as well as private real estate projects. CH2M HILL reported that it joined forces with EKO Asset Management Partners, a specialized investment and advisory firm, "to form a new partnership aimed at developing and implementing infrastructure projects that create positive environmental impact and unlock new types of investment capital."

AECOM Capital allows the firm to provide badly needed financing along with its traditional services. "Through these investments, we now have an opportunity to participate as a vital partner in advancing projects with our clients," explained Michael S. Burke, AECOM president, "while also generating revenue as our clients utilize AECOM's traditional services."

CH2M HILL's and EKO's new venture, called Green Path Partners (GPP), is focused on the growing market for green infrastructure. "Green Path Partners combines EKO's track record of innovative finance as well as its access to investors, policy makers, and other key stakeholders together with CH2M HILL's expertise in project delivery, engineering, risk management, and sustainability," said Elisa M. Speranza, president of CH2M HILL's Operations Management Business Group and the firm's executive sponsor for sustainability.

GPP said it will target projects that:

  • utilize natural infrastructure or offer an opportunity to integrate natural infrastructure into a traditional infrastructure approach;
  • provide a positive ecological impact with significant and demonstrable social and economic outcomes; and
  • afford an opportunity to use innovative financial structures, non-traditional impact investment capital, or both.

According to Jason Scott, EKO's co-founder and managing partner, GPP intends to work with clients to identify potential projects that meet these criteria; help them secure investor funding or alternative financing that will pay for the project; and help identify revenue sources that can be used to repay investors or creditors, similar to traditional funding through a municipal bond issue. Projects can be delivered on a "pay-for-performance" basis by private companies, raising private capital and using environmental approaches – bioswales, permeable pavement, rain gardens, etc. – to deliver the services. Private investors take the risk of financing the infrastructure development and only are paid by government if and when the infrastructure is built and delivers the desired services, Scott said.

NatLab, a partnership between the Natural Resources Defense Council, the Nature Conservancy, and EKO, developed a report in collaboration with the Philadelphia Water Department and funded by the Rockefeller Foundation – "Creating Clean Water Cash Flows" (www.nrdc.org/water/stormwater/green-infrastructure-pa.asp) – that focuses on Philadelphia's "Green City, Clean Waters" program as a model for stimulating investment in natural infrastructure. According to NatLab, it demonstrates how local municipalities and state government can potentially drive billions of dollars of private investment to modernize broken, aging stormwater systems.

The report highlights Philadelphia's plan to spend at least $1.67 billion during the next 25 years for stormwater retrofit projects by developing policies that include "fee and credit systems with potential for stimulating private investment and providing attractive rates of return for project developers." Other cities across the country have announced plans to spend billions more on green infrastructure during the next 20 years, giving civil engineering firms reasons to help not only in the design work, but also in securing private investment to move infrastructure projects forward.

Bob Drake
bdrake@zweigwhite.com


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