Why procurement matters & What cities can do about it

It’s Infrastructure Week, and everyone is saying that it’s #timetobuild. We agree! The next 5-10 years offer a once-in-a-generation opportunity for hundreds of US cities to upgrade to the smarter, cleaner and greener systems their citizens want and expect. To buy these different things, cities need to be able to buy things differently. So, let’s talk about procurement! Below are some of the creative ways cities can improve procurement processes to achieve better outcomes for their communities.

Working with cities can be hard. In part, it’s because cities are, rightly, risk averse, and have no opportunity to swing and miss. This is compounded by the fact that many of the most innovative urban solutions come from engineering, infrastructure, and social technology startups that don’t have the capacity or resources to identify and connect with the cities that need their solutions the most. Even when a city knows what they want and how to ask for it, public procurement processes are often biased against new, cross-cutting solutions.

To buy different things, cities need to be able to buy things differently.

Every day, cities fail to leapfrog to modern, smart, sustainable, and resilient infrastructure, while innovative urban solutions simultaneously struggle to scale. This is a problem we need to (and can) solve by prioritizing procurement innovation. To make procurement work well, we need three things:

  1. Knowledgeable and demanding buyers (cities, counties, utilities),
  2. Capable sellers (engineering and technology firms), and
  3. An efficient system that connects the two.

City leaders can’t achieve all three on their own, but below are some examples of how cities can jumpstart procurement to achieve better results for their citizens:

Ask for Help: Challenges and Requests for Information (RFI) work best when cities define challenging, cross-sector problems to solve, without prescribing solutions. Challenges and RFIs signal that the city issuing them is an engaged and committed public partner, and this motivates innovative suppliers to deliver integrated solutions tailored to city needs. These types of open calls or contests can significantly expand the range of bids, and because they have lower barriers to entry are particularly attractive for small and medium enterprises (SMEs) and startups. Cities should consider copying Boston’s wicked coolRFI asking citizens and startups to come up with solutions (ps. note the focus on shifting away from pilot projects and toward full-scale, deployable initiatives!), or Philadelphia’s FastFWD, a new kind of local business accelerator designed to create a pathway for new players to bid on city work.

Be Transparent: As the City of Austin’s Ted Lehr recently said, “pitches [to cities] for…emerging technologies are often lost in translation.” Solving that problem falls primarily on solution provider’s marketing and business development professionals, but there are some things cities can do to help. The most important thing cities can do to help is transparency. Open data, open planning sessions, open bidding conferences – all can help startups and other companies better understand how, when, and where cities can and want to connect with companies about solutions.

Make Things Simple: Public procurement rules were designed to protect taxpayer dollars from getting spent unwisely. But when rules and regulations are regularly causing delays and keeping cities from innovating, then they need to be revisited. One step is to ensure that pre-qualifying requirements are achievable by early stage or small businesses. For example, when bidding for public sector contracts companies in São Paulo only need to display their tax compliance at the time of bidding to pre-qualify for the contract. US cities, often constrained by state and federal rules, should look to São Paulo and other international peers for models they can use within their respective boxes while petitioning states for more flexibility.

Get the Word Out: There has been a positive trend in cities towards eProcurement, which ensures all procurement opportunities are visible online through a single portal. This has been great for buying regularly used products and services –like printers and plumbers– but existing eProcurement systems are not well designed for buying big infrastructure solutions. That is because procuring systems (not widgets) is extremely complicated, and building systems right requires the right partner(s). You wouldn’t shop for your house through Costco, right? To leverage the efficiency of eProcurement for infrastructure, city departments should engage their procurement officials – along with engineering and infrastructure technology companies – sooner rather than later. Whenever possible, cities should also advertise upcoming RFPs well in advance of when they are issued, which ensures the best bids. Taking both of these steps helped Australia realize 20% savings on individual project costs.

Level the Playing Field: Changing proposal or bid evaluation can help ensure that all firms start on equal footing, regardless of whether they are big, small, new, or old. For example, Total Cost of Ownership – a strategy employed by the private sector for years – enables cities to prioritize sustainable and long-term cost savings strategies over short-term benefits and the lowest price. Along the same lines, cities should consider following Kansas City’s lead and establish a Sustainable Procurement Ordinance that leverages the planning and design tool Envision, and applies equally to both products and services.

And of course, we think all cities should join the Atlas, because our goal is to inspire cities about how they can creatively solve their most pressing infrastructure challenges, and to provide the actionable information needed to pursue those solutions. For example, we’re working to capture the specific language a city used in its procurement documents to get an innovative project built (e.g. what does an RFP look like for a stormwater harvesting and direct use project? Or for an advanced energy storage microgrid?).

Working with cities is hard, but it doesn’t have to be. And to ensure that cities can upgrade to the systems communities want and demand, it can’t be any longer. That is why procurement matters.

Passing the Baton: Taking Resilience from Strategy to Construction & Operation

The City of New Orleans is moving forward to construct the first portions of a city-wide network of green infrastructure projects to address chronic and extreme flooding. Implementing these kinds of innovative, green projects is notoriously tough, though, so how did New Orleans get to where they are now?

Infrastructure project development is a team sport. Just like a relay race, there are clear legs — catalyst, predevelopment, construction, and operations & maintenance — multiple team members, and important “exchange zones” where the baton must be passed from one runner to another. When the baton is dropped, projects stall. Clear lines of sight from one development phase to the next is key to ensuring resilience projects are not just planned, but get over the finish line to deliver long-term benefits to the communities they serve.

Catalyst Leg — Kicking off on the Right Foot (6–18 months)

The catalyst stage involves identifying and conceptualizing the design of an infrastructure project that responds to community needs. Like in a relay race, a false start, or a trip coming off the block, can stop a project in its tracks. The catalyst leg is the least thought about stage of project development — by cities, investors, government funders, design and engineering firms alike — but it is vital to long-term success.

In this first stage, cities define project scope and scale, and determine what they want the project to achieve, ideally through a set of initial design specifications. For example, a city may decide that it seeks to protect a specific geographic area from a 200-year storm and to minimize disruptions to critical services and businesses in the case of an extreme event using natural infrastructure (e.g. constructed wetlands) whenever appropriate. A different city may decide during its catalyst phase that it wants to address its traffic congestion by constructing new light rail, rather than rapid bus transit. It’s important to emphasize that activities should be project-specific, not broad-based polices, strategies or plans. Specific activities that are typically completed during the catalyst phase include: designate and empower city project champion & her team; collect, review and analyze project-specific baseline data; explore different funding/financing options; and build coalition and political support.

Heading out of the catalyst leg into the first exchange zone, the city should have two things. First, it must have a conceptual design of the project. Conceptual design is roughly equivalent to “10% design” — which includes sketches or drawings (often in illustration software), along with back of envelope cost and performance estimates. Second, the city should have enough data and community enthusiasm to support applications for funding predevelopment.

Led by the champion, most of the activities completed during the catalyst phase are conducted by city staff. However, as infrastructure challenges have become more complicated and solutions more integrated, cities are leaning on non-traditional methods for support. Competitions like RE.invest and the HUD Rebuild by Design Competition have provided cities with access to a relatively small group of firms dedicated to the catalyst phase. In addition, more and more cities are publishing Requests for Ideas (RFIs) to source new ideas during the earliest stages of the catalyst phase.

The amount of funding required for the catalyst stage is modest, but funding is very limited. Some philanthropies have begun to fund the catalyst stage via competitions and technical assistance. But barring that support, cities often struggle to carve out dedicated capacity and resources to get through the first leg of infrastructure project development and set a resilience project up for success.

In 2010, New Orleans kicked off its catalyst phase to address systemic flood and subsidence concerns via the Greater New Orleans Urban Water Plan, which was funded by a federal Community Development Block Grant and informed by significant planning work completed since Hurricane Katrina in 2005.

Continue reading “Passing the Baton: Taking Resilience from Strategy to Construction & Operation”

Cities aka Laboratories of Innovation

When Mayor Roberts from Charlotte, North Carolina said today, “let cities be cities…the laboratories of innovation!” we almost jumped out of our seats cheering. Cities are creatively addressing our nation’s most important problems: inequality, mobility, climate change. This is especially impressive when you consider that cities don’t have much—if any—room to fail, and experts agree that ability to experiment is a key driver of innovation. Can you imagine a mayor explaining to her constituents that a day-long disruption of an important city service, say a mass-transit line, was because the city was experimenting with a new technology to streamline payment and collect ridership data? Of course not. That’s because all day and every day, cities provide essential services like clean water, efficient transportation, and emergency services, and citizens are rightfully outraged when there’s a disruption or degradation of one of these city services that impacts their daily lives.

For many cities, it’s a challenge to balance the need to consistently deliver essential services with fostering a culture of experimentation, improvement and innovation.

Today, as a part of Infrastructure Week, Bloomberg Live brought together mayors from six cities in the United States that are truly leading the way towards making our cities smarter, stronger and more sustainable. In each of their cities, they’ve figured out ways to foster cultures of innovation, despite not having much room for failure. Their wide-ranging conversation included a discussion of innovation and the role of experimentation in their cities. Here are some of the thoughts we found particularly insightful:

Mayor Muriel Bowser (Washington, D.C.) stressed that citizens—especially millennials—want to live in cities that are constantly improving and changing for the better.

Mayor Jon Mitchell (New Bedford, MA) explained that they are creating an “ethos of innovation.” He explained that as a historically industrial city, it is especially important to be seen as a test bed for new ideas and technologies.

Mayor Andrew Ginther (Columbus, OH) pointed to the importance of partnering with local universities and discussed their successful partnership with Ohio State University on neighborhood revitalization efforts.

Mayor Jennifer Roberts (Charlotte, NC) had the group laughing when she jokingly suggested calling everything a “pilot.” In all seriousness though, she explained the importance of using pilot projects to help avoid the fear of rapid change, and of making sure not to leave low-income neighborhoods out if they want to participate.

Mayor Michael Hancock (Denver, CO) discussed the importance of smart cities data and how that data can be used to understand project impacts and communicate those impacts to communities.

Mayor Megan Barry (Nashville, TN) flipped an old saying on its head when she said she’s fostering a culture of “Yes in My Backyard.” She stressed how important it is to get to yes – whether that’s for mixed income neighborhoods or diverse schools.

These mayors lead cities that are shining examples of the power technology has to address some of the toughest, most complicated problems out there, and we can’t wait to learn more from them about specific ways cities can encourage innovation as Infrastructure Week continues.

For those of you who work for or with cities: do you think cities need the ability to experiment in order to creatively solve problems? How can we make sure that cities are learning from the cities that are the first (or second, third) to experiment with a particular solution? In our minds, streamlining city-to-city learning is key to scaling and replicating the best, most innovative solutions.

 

Smarty Pants

Sometimes walking into conference exhibitions, we feel like we’re living in the Silicon Valley parody of TechCrunch. But, after attending Smart Cities Silicon Valley this week, we feel genuinely energized about the range of city-centric technologies being developed and deployed to make local governments more efficient and effective, while also improving our daily lives.

Here are some of the companies and technologies that caught our eye:

Echelon: We know that LED lighting reduces energy use and saves money, but this adaptive control system lets a city adjust streetlights block by block to better match neighborhood needs. This level of responsiveness is pretty great from a public safety and economic development standpoint too.

Fybr: Knowing that legacy water and sewer systems are something many cities in the US are dealing with, we were most excited about their ability to provide real time insights into the operations of wastewater, stormwater, energy and streets systems on one dashboard. Not only will that save utility and public works staff time (and $) but it may also help cities find opportunities for system integration.

CNX: Last mile broadband expansion is a big issue for a lot of small and mid-size cities. Making the permitting process easier for both cities and companies, using a platform like theirs, will go a long way towards solving it.

Ike: These digital kiosks are cool not only because they provide guidance to tourists, visibility to local businesses, and are designed to match the local vibe…but also because they generate revenue for the cities that deploy them.

Inrix: They’re doing a lot of thinking about how autonomous vehicles will impact our cities. Also, after getting to play with their system we’re hoping my next car comes with Inrix navigation.

LocalIntel: We loved that this unique data-driven economic development support is applicable to nearly everyone, including the small cities that often need the most support. Also, we appreciate their CEO’s commitment to keeping operating costs down so they can continue offering affordable solutions.

Ingenu: Still wrapping our heads around this one, but it sounds like this network is designed specifically to support smart city deployments – and ensures that monitoring flood sensors won’t be impacted by our constant streaming of The West Wing.

Hitachi: Obviously not a small company, but one that is doing innovative work to improve public safety and streamline emergency response by aggregating data captured by everything from video feeds to social media.

We’re looking forward to understanding more about the tangible benefits (and any challenges) that these, and other smart solutions, are providing for cities and their citizens.

What other smart city technologies have you been impressed by?

Sustainability You Can Count On

Almost always, conversations about measurement and sustainability focus on the measurement of systems: reductions in energy usage, for example, or the number of affordable housing units built throughout an entire city. Setting metrics to measure the sustainability of systems is important, but too often, conversations about the measurement of systems sustainability is separated completely from conversations about the measurement of specific projects. Project-specific modeling, monitoring and evaluation is absolutely essential if specific projects are to have political and community buy-in, and often times, if they are to be funded or financed. As the field of sustainability transitions more and more from planning to implementation, project-specific measurement is paramount.

Community members need to see themselves and their loved ones in projects in order to support them, especially if taxes, construction or service disruptions are involved. Residents, business owners and community leaders want to know “how will this project impact me?” They want to know the amount of money they will save on their water or electricity bills, the reduction in the number of days that the beach will be closed due to water quality issues, how many jobs will be created, how much shorter their commutes will be. Infrastructure projects – explicitly “sustainable” projects or otherwise – that do not know the answers to questions like these have difficulty getting off the ground.

Furthermore, modeling and measuring project-specific outcomes like these can often form the basis of a project’s funding applications or a more innovative public-private partnership. Here are some examples where project-specific modeling, monitoring and evaluation are essential and often prerequisite to project finance:

Reduction in flood insurance claims that results from a coastal protection project like constructed wetlands or seawall to unlock financing from a resilience bond or catastrophe bond

Reduction in stormwater runoff that results from city-wide green infrastructure to take advantage of an environmental impact bond like DC Water’s

Reduction in energy use that results from a blue roof project to use PACE (Property-Assessed Clean Energy) Financing

Reduction in environmental health metrics, like asthma attacks, that results after targeted home counseling to utilize a Social Impact Bond

Increases in property values resulting from public space improvements, like new parks or recreation facilities, to use Tax Increment Financing (TIF) in a way that’s beneficial to the community

The challenge to planning, sustainability and resilience professionals is to link broader systems sustainability measurements to these less familiar kinds of project-specific measurements. Doing so will require strategic coordination and collaboration with the staff leading specific projects (think: public works directors, city engineers). It’s this kind of integration that will help sustainability professionals break down often lofty sustainability goals and targets into tangible, implementable projects and programs, spurring investment in green projects at scale.

To the folks in communities pursuing sustainable, resilient or innovative infrastructure projects: We included examples in this piece about project-specific measurements that are necessary to gain community and leadership buy-in or unlock specific financing sources. What big examples did we miss?

Innovative Financing & The Myth of the Shovel-Ready Project

Content originally written for and posted on Meeting of the Minds.

With every new Administration in Washington there are always sweeping promises about improving the nation’s infrastructure. Since the last recession, these promises have become inextricably linked with talk about mobilizing private finance.

In 2009, after the immediate impacts of the recession abated, it was clear that cities, dependent on tax income, were going to be cash strapped for years to come. Which means while our infrastructure was getting worse, the money to fix it or upgrade it was getting harder and harder to find. This jumpstarted a national conversation—led by pension funds, environmental and social responsibility divisions at big banks, and impact investors—about how private capital could fill the public financing gap through instruments like P3s, Green Bonds, Social Impact Bonds. While there have been a handful of one-off examples and exciting new models, nearly a decade of talk about financing has not translated into substantially larger or speedier private investments in infrastructure.

Why? Because the mantra “if you build it, they will come” unfortunately doesn’t translate to infrastructure. More often, if you built it right, no one will notice.

The highest value infrastructure investments for cities today are those that help clear the massive backlog of deferred maintenance projects, but the greatest value for investors are new greenfield projects that lock-in long-term revenue streams. This mismatch is most evident in the lack of a clear pipeline of financeable infrastructure projects.

Innovative financing doesn’t magically create new projects, let alone a whole pipeline of shovel-ready financeable projects. To understand why, let’s look at a few of the sexier financing tools which get a lot of air time.


Green Bonds
: Green Bonds, like other municipal debt, are tax-exempt issuances specifically earmarked for funding projects, assets, or business activities that have positive environmental and/or climate benefits. In 2016, issuances topped USD 50 billion by September (nearly 5x the 2013 issuances supporting everything from brownfield development, to transportation and energy projects). In addition, the number of corporations issuing green bonds has grown significantly in recent years, but most have been used to support corporate finance rather than project finance.

Social Impact Bonds: A Social impact bond (aka Pay for Success Financing or Social Benefit Bond), is tax-exempt municipal debt structured as a contract between private financiers, often philanthropies, and a public-sector agency. Funds are provided to pay for improved social outcomes that result in public sector savings. Investors are only repaid if and when improved social outcomes are achieved.

Payment for Ecosystem Services: PES contracts are most often structured as legal agreements whereby a user of an ecosystem service makes a payment to an individual or community whose practices, like land use or deforestation, directly affects the value of that ecosystem services.  Because payments are based on the quantity of services provided, ecosystem service programs must concretely measure the ecosystem benefits generated, which can be a difficult task. These schemes work best when private companies, public-sector agencies, and non-profit organizations collaborate, and have most often been used internationally to support corporate social responsibility agendas.

All three of these innovative finance tools have one thing in common: each one requires projects that are already designed, quantified, and valued. This means that public entities have had to invest up-front in designing a project to generate savings that can be attributed to a specific entity. Therefore, a city must have collected significant baseline data upfront, made sure that they can measure changes in that data across the lifetime of the investment, and committed that they have the capacity to capture those savings as payment commitments under contractual agreements. All of which can be a burden for big cities, let alone many of the small and midsize or rural communities across the country that are often both cash- and data-poor.

In all of these cases the biggest barrier to expanding innovative finance for infrastructure is the lack of funding available to design and develop strong infrastructure project proposals, not to build them. So, what can we, do to hasten the development of the project pipeline?  The first step is making it easier for cities to design new and innovative projects that tackle real problems, like upgrading aging and failing combined sewer systems, not just creating ribbon cutting opportunities.

Often being innovative for a city means being the second or third to do something. So, making sure successful projects are searchable and replicable is key.  The Atlas Marketplace has started to do that by capturing information about the people, policies, financing schemes, and procurement documents that got projects built.

The second step is improving project predevelopment starting at the ideation and design phase. Instead of relying solely on long-term capital improvement plans that respond to historic needs, cities should work to identify cross-sector opportunities that can create savings that up new opportunities. Like laying rentable dark fiber every time a road is repaved, or upgrading water infrastructure to reduce the costs of mudslides. This works best when cities engage early with financiers and engineers to unearth opportunities by issuing challenges or broad requests for ideas.

Finally, building local capacity is essential. There is a big difference between the type of data that governments need to support investment and the type of data private financiers need to support investment. Being clear about that and not conflating the two will go a long way in closing the gap between projects and money.

While it’s fun to talk about innovative financing, it’s time we change the conversation. Moving forward let’s focus on building a pipeline of innovative projects that opens the door for private financing. Because if we build it to make money, the private investors will most definitely come.

P3s are great, we want P3s! But what about…?

Last week, we proposed rethinking public-private partnerships (P3s). Instead of closing a financing gap, P3s should fill a project execution gap. This change in perspective can better align incentives upfront and address the fundamental fact that public and private partners have different priorities.

Today, we’re taking a closer look at the issues cited as top barriers to traditional P3s: political risk, payments, and responsibilities. Lack of clarity for any of these three issues will exacerbate differences and drive a wedge between partners when project financing, rather the project delivery, is the goal. Let’s dive into each area of concern, and consider how a focus on execution rather than financing could lead to more successful public-private-partnership.

 Political Risk: Traditionally in the US, P3s are developed after the project scale and scope has been established, and the project has become so big, complex and/or long-term that it cannot be entirely financed on a city’s balance sheet. These types of expensive, complicated, and long-term projects leave public and private partners exposed to all sorts of non-market risk — not the least of which is politicians changing their minds or being voted out of office mid-project. In traditional financing-focused P3s, changing political dynamics can doom an entire project. But if a P3 is designed for execution rather than just financing, then private partners are involved in troubleshooting and negotiations from the beginning, not just once it’s clear the money will be hard to find. That early engagement between public and private partners builds trust in a city’s staff and institutions, beyond individual elected leader(s) — which is key to ameliorating political risk. In addition, early engagement means all parties are driving towards and end goal that is focused on addressing local needs, not just on financing a solution. Some cities are already encouraging early engagement and participation with private partners through broader use of competitions and Requests for Information.

 Payments: Quality cash flows are one of the greatest risks for any public-private-partnership. Many public infrastructure deals have failed or been slammed by citizens because real cash flows end up being very different than were predicted. The Indiana Toll Road is just one of several P3s that filed for bankruptcy after revenue came in much lower than projected. On the other hand, Chicago’s 2008 parking meter deal with Morgan Stanley caused a citizen uproar when the city’s inspector general concluded, a year later, that it had undersold the rights by about $1 billion, forfeiting an important source of revenue for the City. When a project is designed from the start to focus on service delivery instead of solely on financing, there is often opportunity to uncover non-traditional funding sources. The same is true when designing a P3. When private partners are at the table to start, more creative work can be done to clearly identify and quantify a range of potential payback streams. Having private partners help design, verify, and securitize cash flows results in a better deal for the city, the developer(s) and the investor(s). That’s why availability-payment projects, which are focused on service delivery and often require earlier engagement by private partners, are often more successful and growing in popularity compared to revenue-backed P3s.

 Responsibilities: Designating a single entity — or at least a very clearly defined process — responsible for capturing, aggregating, and monetizing direct and indirect revenues is key to successful P3s. The easiest way to clearly define these responsibilities is through a contract between the city, the developer(s) and the investor(s) that allocates risk among the partners by defining sources of revenues, scope of work and payment terms, goals, and bonuses. A P3 focused on execution rather than financing helps define these lines more clearly so each partner can focus on what it does best. Government would set goals and standards to protect health and safety. Developers and investors would set targets, build and manage cost efficient systems. Government organized P3 offices have been used to successfully execute these arrangements internationally in Canada and Australia, and at the state-level domestically in Virginia, California, and Michigan. P3 offices provide the technical support public agencies need to coordinate public and private partners. These offices are effective because they steer governments towards projects that can thrive with P3s and help with upfront planning, and structuring using their in-house financial expertise.

P3s are an effort to make building and maintaining big-dollar, complicated, long-term infrastructure projects more efficient and affordable. P3s are complicated. There will always be questions about political risk, payments, and responsibilities. But well-conceived P3s — those focused on project delivery instead of financing — can effectively align incentives and address risks for all partners upfront. Not only can these well-conceived P3s save taxpayer money and reduce burden on local governments, they can also result in better service delivery for residents and maximize the social benefits of a project.

For example, the City and County of Honolulu partnered with Covanta on the H-Power waste-to-energy plant with the goal of eliminating landfills from the island while creating a sustainable energy source. Since its initial completion in 1993, the plant has not only consistently met or exceeded environmental permits and invested in innovation, it has also generated more than $201 million in revenues for the City, which has more than covered the costs of operation. More and more, we are also seeing examples of startups and other technology firms developing exciting P3s with cities to upgrade infrastructure systems.

Next in this series, we’ll explore various examples of successful execution focused P3s — from the traditional to the more exotic.

How To: build an infrastructure laboratory

A number of our Atlas cities – from El Paso, to New Orleans and San Diego – are looking for ways to use municipally owned spaces as testbeds for innovative infrastructure technologies.  Doing so will not only help them understand how solutions work locally and support economic development, but it will also create space to engage residents around otherwise invisible infrastructure.

That was why we were so excited when we discovered The Ray! Its a public-private-philanthropic partnership (do we call that a P4?) reimagining our highways. Since being founded in 2015, the demonstration site has grown to include a Wattway solar road, solar powered PV4EV charging stations, roll over tire pressure & tread depth monitors, and bioswales. Next up is a  1 megawatt ground mounted solar array – 5th installation nationwide, and the 1st in the state of Georgia! – which will provide shade for a recently planted pollinator garden.

We asked Allie Kelly, Executive Director of The Ray, a few questions to understand how they got to where they are today, what cities can learn from their experience, and where they are headed next! Check it out:

Tell us how The Ray came to be. Who was involved? How long did it take? And what role, if any, did public organizations play?

The Ray was an epiphany. After noted green industrialist, Ray C Anderson, passed away in 2011, his daughter Harriet Langford petitioned the Georgia Legislature to name a portion of the highway that went through his hometown in his honor. It wasn’t until after that wish was granted that Harriet realized that she had put her father’s name on a dirty, unsafe highway. Harriet got together with me, a longtime friend, and together we strategized over how to handle this problem. Could we plant wildflowers? Maybe a solar panel? A report by the Georgia Tech College of Design revealed that the possibilities were endless. It took about 18 months for Harriet and I to get through those early steps of commissioning that first report and then a follow up feasibility study done by Innovia.

Public organizations have played and continue to play a huge role in The Ray. You can’t transform a section of the interstate into a living laboratory without cooperation from the state Department of Transportation and all levels of government. We’ve been very intentional that this is a community effort, this isn’t a nonprofit foundation coming in and making changes. The Ray is about the opportunities and success of the community.

The Ray living lab is located on a stretch of the I-85 highway in Georgia.

Any lessons you learned during the process that you wouldn’t want others to repeat if they set up a demonstration site like The Ray?

Luckily, there have been no major missed turns yet. We didn’t try to implement right out of the gate. We took time to figure out what we should be doing and the order it should happen. There wasn’t a blueprint to follow.

What we would suggest other demonstration sites do is bring their Department of Transportation along the whole way. The other thing that has been important is that we never felt an artificially limited timeline. We see our efforts continuing for decades so we never felt like we had to act impulsively or show instant impact. The transformation will happen overtime as the result of many different patterns. We’ve done a lot over the last year, especially for a small organization. We’ve been very transparent and open with people that we’re looking 30 years down the road.

You have been able to translate the startup mindset about failure into a public setting, how did you get Georgia Department of Transportation to buy in? Also, how did you deal with permitting? 

We mitigate risk for the Department of Transportation. Because of us, they don’t have to carry all the risk associated with innovation. We come in and spend the resources to curate the technology with their goals in mind and we bring the partners to the table. Then we bring it to the DOT and engineer it so that conforms to their standards. So our relationship has two important components. First, we accept the liability. And second, we never bring something outlandish to the table.

So far GDOT has been able to permit us under the existing permitting procedures. We have discussed that as a consequence of the transformational nature of The Ray, we may have to come up with new procedures to accommodate new technologies.

How did you build a relationship with Kia and other companies who sponsor the individual demonstration sites?

The Ray is testing a number of innovative transportation solutions. Kia Motors Manufacturing Georgia is located in nearby West Point, and has been both a financial and strategic partner for The Ray.

We just started early. As early as two to three months into The Ray’s conception, we started talking to local politicians, state DOT, etc. As soon as we started talking to those local leaders we simultaneously had parallel conversations with corporate companies. They were overall positive and openminded but not willing to invest. It’s just a process to building incremental progress and momentum. With Kia, those conversations aligned with their company goals and the release of their first electric vehicle. That being said, we give them lots of credit for being a first mover.

Love your motto, ‘don’t do anything that doesn’t do multiple things’ –  such a great lesson for modern infrastructure investment! What are the most exciting new technologies you’re seeing that you can’t wait to try out at The Ray?

One of the things we’re going to look at in the UK and the Netherlands next week is noise barriers made out of solar panels and solar concentrated materials. Why are sound barriers made of corrugated metal? Why not have those sound barriers be solar and serve multiple purposes? We’re looking forward to exploring that opportunity and possibly bringing it to The Ray.

 

 

P3s are dead, long live the P3!

For cities, President Trump’s budget includes some proposals that are sources of optimism and others that have raised concern. President Trump’s consistent support for increasing investment in infrastructure has been encouraging. If the proposed $1 trillion in infrastructure investment is strategic, the investment could be a great help to those cities struggling to upgrade aging and failing systems. However, the President’s budget also proposes to eliminate or drastically cut many of the programs that cities around the country rely on to provide essential services to their poorest and most vulnerable citizens.

 

Amidst this uncertainty, two things are clear: federal funding will continue to dry up, and cities must take charge where state and national politics are deadlocked. This reality has jumpstarted a decades old conversation on the role and importance of public-private partnerships (P3s).

 

Unfortunately, traditional P3s are complicated for everyone. Not only does each state have different processes and practices, but the American public has varying levels of comfort with private ownership, or even operation, of public infrastructure. It’s those reasons — in addition a strong municipal bond market and regular infusions of federal funding for infrastructure after the 2008 financial crisis — that have kept P3s from proliferating here in the US the way they have in other developed countries around the world.

 

Or maybe we’ve been thinking about P3s the wrong way. Instead of thinking of P3s as a solution to the financing gap, we should approach P3s as filling the execution gap.

 

In the US, P3s have always been touted as a solution to the financing gap: “your city doesn’t have the resources to build an infrastructure project? You should pursue a P3!” But in Canada, and elsewhere around the world, they are used to fill an execution gap. This means P3s are focused on service delivery, optimization, and efficiency — where financing comes as a result, but isn’t the driving factor. May seem like semantics, but it gets to the fact that public partners tend to focus on services and private partners tend focus on ROI. Execution-focused P3s address that fundamental fact that public and private partners have different priorities, and explicitly seek to better align those differing priorities upfront.

 

Execution focused P3s can also better match the types of modern infrastructure systems that technological advances have allowed cities, and their citizens, to demand. These modern infrastructure systems — unlike highways and bridges — are often diffuse and consist of many small pieces and parts. For example, a modern stormwater management system might include thousands of street trees, green roofs, wetlands, and repaved roads to absorb water. Or a large power plant might be replaced with a network of neighborhood generators that turn food waste into energy. Because these systems tend to have a large number of smaller component projects, aggregating them into a single P3 focused on delivering project financing can have insurmountably high transaction costs.

 

Because these more modern infrastructure systems are deliberately designed to more flexibly and efficiently provide the same services to citizens as traditional projects, they tend to result in the same, if not greater, local benefits. In addition, they require extensive citizen participation, open new pathways for private investors to participate, and can take the burden off government budgets to build.

 

Examples of successful execution-focused public private collaboration abound, especially around smart cities technology. Waze, through the Connected Citizens Program, is partnering with cities around the world to use real time data to reduce traffic congestion. The City of Las Vegas released an app this year for Amazon’s Alexa that lets residents pay bills and fees, check the status of applications and permits, and get more information on city services and officials. These technology businesses have figured out how to approach distributed infrastructure systems by focusing on providing a service. We should aim to learn from these successful cases, and apply them to develop and deploy execution-focused P3s for in sectors, like electricity generation and delivery and stormwater management, moving forward.

 

As with any multi-party agreement, there will always be questions about political and staff turnover, ROI, payments, and responsibilities (more on that in future posts!). But if at the outset, a P3s focus is on service delivery and execution, the details — and the money — seem to shake out more clearly and in the public’s favor than they do in traditional financing-focused P3s.


P3s in the Trump Era can’t look like P3s of the past. Instead of being a solution to the financing gap, P3s should be leveraged to fill the execution gap. They should be focused on service delivery, optimization, and efficiency — where private financing comes as a result, but doesn’t drive decisions. And where each partner is focused on what it does best: the government partner set standards and desired outcomes, permits and regulates; developers and investors build and manage cost efficient systems; and citizens actively engage in optimizing solutions for their community.

 

What do you think? What are some of the most impressive technologies, business models, or execution-focused public-private partnerships you have seen? What were the benefits and drawbacks to the public and private partners involved? What was the impact on citizens, and how did they respond?


Like this topic? Keep an eye out for future posts where we explore in greater depth some of the challenges of traditional P3s, as well as highlight examples of execution-focused P3s.

4380

THAT’S THE NUMBER OF HOURS SINCE THE ATLAS LAUNCHED!

We’ve learned a lot from our growing network of users in the past 6 months (welcomed Boulder & Burlington this week!). In honor of the occasion, here are 6 things we’re thinking about and using to inform future Atlas development:

Cities (and counties, and utilities) “don’t have the opportunity to swing and miss.” When making large, long-term infrastructure investments, cost efficiency, community health, and safety are top of mind — that’s why tried and tested solutions are often preferred. But we also know there are new, transformative infrastructure solutions being deployed here in the US and around the world every day. That is why we’re doubling down our efforts to unearth those installed solutions. Our goal is to help cities leapfrog to these new infrastructure solutions by making them easier to discover and easier to compare.  In addition, we’re exploring new partnerships that will help to directly connect our city users with a network of urban innovators.

And on that point…We’ve been really excited to learn about The Ray and other infrastructure demonstration sites like the Hempstead Energy Innovation Park or the new Claiborne Corridor Innovation District developing in New Orleans (an Atlas city user!). If the Atlas is like an Ikea catalogue, these demonstration sites are like an Ikea showroom. Not only can the city, and its citizens, interact with and understand innovative technologies, the demonstration sites also helps real solutions prove their worth. Before leaving public service, The Atlas Marketplace CEO Elle Hempen worked with Israel’s Ministry of Environment to understand how they supported water technology demonstration in public systems. Elle learned that some of Israel’s success in supporting innovative technologies was due to a willingness in local governments to create safe spaces for testing (and sometimes failure). Bravo to those doing the hard work of innovation here in the US, we’re excited to work with you!

In December of 2016, the City of Boston (also an Atlas city user!) released a request for information that asked for new ideas to improve its streets. Why is that so exciting? First, the RFI was purposely written in plain language, void of overly technical jargon, to maximize the number of respondents. Second, they asked that respondents ditch the pitch: instead of flashy PowerPoint presentations, the City asked respondents to demonstrate community engagement and to focus on tangible value for residents. This RFI, combined with Boston’s Smart City Playbook, aim to help ensure pilot projects are successful and leading-edge solutions can scale. Cool, right? Check out the ideas they received.

We know cities learn best from other cities. But when peers aren’t available, city employees revert to familiar resources – using, for example, Google and Pinterest to brainstorm solutions for their top infrastructure challenges. That’s why we’re leveraging the power of social networks in the Atlas. The Atlas works more like Match.com than Facebook or Twitter. An integrated matching algorithm identifies cities around the world facing similar challenges, and uses that information to find solutions that are most relevant to the local needs of an Atlas user. Want to act on the information? Users can message other city and company representatives to understand how projects are working and replicate them more easily.

Many of our city users are upgrading their aging water and wastewater infrastructure. This trend matches data from across the country: Onvia has reported a 21% increase in water and sewer maintenance contracts, 55% of which were issued by cities. What are some of the most interesting solutions to managing leaky pipes? One solution piloted in Australia caught our eye. TaKaDu is a cloud based big data system that uses raw data from multiple sources – meaning it often doesn’t require additional equipment be installed. In addition, the data platform can learn normal system behavior so not only does it detect problems quickly, but it can also predict problem spots. Talk about smart water!

Everyday technologies like Uber and Amazon have increased citizen expectations for on-demand delivery of goods and services. Those expectations now also extend to their local government. In addition, there is a new generation of government professionals who already accept technology as solutions to inefficiencies. Both reasons explain why technology solutions for government is a rapidly growing market. But even with a boost in visibility, many small and mid-size companies with technology based solutions for public agencies struggle to “get the word out.” (We’ve heard those exact words from countless companies at this point!) That is why to achieve our mission of helping cities leapfrog to modern infrastructure, we are helping raise the awareness of the companies who are building inventive solutions. Through the Atlas, we want to open the door and give city decision makers the information they need – from how the project is working, to how it was financed and contracted – to close the deal.

Have other ideas about how the Atlas can improve how infrastructure is found, compared, and procured? Leave a comment here or let us know @_The_Atlas!