Finance data needed to inform infrastructure investment

bridge cash

Innovative engineering solutions are necessary to improve the durability and extend the life of transportation infrastructure. On their own, however, they are insufficient for addressing our nation’s nearly trillion-dollar repair and capital backlog. Strategic financial management practices must be combined with engineering solutions to improve decision making about long-term infrastructure investment in the United States.

U of M researchers led by Zhirong (Jerry) Zhao are providing the expertise needed to inform these financial decisions. Zhao, an associate professor in the Humphrey School of Public Affairs, launched the Institute for Urban and Regional Infrastructure Finance (IURIF) in 2017 to advance research and engagement on strategic issues of infrastructure investment across urban and rural areas. The institute promotes and amplifies multiple areas of expertise, including state and local public finance, infrastructure sustainability, and urban and regional affairs. IURIF’s goal is to address critical challenges in the collective provision of transportation infrastructure across geography and boundaries.

Zhao’s team has analyzed new revenue sources (see related article) and developed the Minnesota Transportation Finance Database, which integrates data about transportation finance mechanisms and shows changes in transportation spending over time and geography (see related article). This view of infrastructure investment can support decision making by showing where contributions come from and where they are allocated.

“In the most recent analysis of funding from 2010–2015, for example, we observed that local governments fund a significant proportion of transportation infrastructure, primarily through property taxes,” Zhao says. “This information can be used to understand how changes in property tax could affect local transportation infrastructure.”

Other studies have looked at public-private partnerships, value capture (a mechanism to capture some of the value resulting from transportation investments), and the impacts of transportation investment on economic development.

This information is essential for transportation agencies in their asset management practices. In 2016, the Federal Highway Administration issued a final rule requiring states to develop asset management plans for the National Highway System and establish minimum standards for states to use in developing and operating bridge and pavement management systems. “In the years since the final rule was issued, DOTs have evolved from defining parameters for asset management to developing transportation asset management plans that support decision making about infrastructure investment,” says Tim Henkel, MnDOT assistant commissioner and chair of the TRB Standing Committee on Transportation Asset Management. “Going forward, agencies especially need help with understanding cross-asset decision making and the implications of broader transportation goals on asset management.”

Other University of Minnesota researchers, such as professors Catherine French and Mihai Marasteanu of the Department of Civil, Environmental, and Geo- Engineering (CEGE), are contributing to the engineering practices that will make bridges and pavements more durable. French and others in CEGE have monitored structural health and studied how bridges respond to traffic, the environment, and other conditions over time. Pavement researchers including Marasteanu have explored new materials, designs, and applications for asphalt and concrete pavements, especially under Minnesota’s cold weather conditions.

“Combined, the University of Minnesota offers the expertise needed to find engineering and financial solutions to meet the infrastructure needs of Minnesota and the nation,” Zhao says.

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