Rural groups call for PPPs in US infra plan

While rural advocates have stressed the limits of private sector financing, a coalition of agriculture and rural advocates see a key role for PPPs.

Public-private partnerships are needed to meet rural America’s infrastructure needs, according to a coalition of more than 220 rural and agricultural groups.

In a letter to Secretary of Agriculture Sonny Perdue, the Rebuild Rural Coalition encourages the secretary “to explore creative solutions through public-private partnerships to catalyze new sources of capital investment.” The letter highlighted the role for private finance, stating that “budget constraints likely will require finding areas where both the public and private sectors can work in partnership.”

Since President Donald Trump’s election, there has been a heightened focus on PPPs and on efforts to tap into private capital for infrastructure projects. But bringing private money to rural projects is seen as a challenge, since rural areas, to use a transportation example, are unlikely to see traffic levels high enough to interest major investors.

When discussion of an infrastructure plan heated up this winter, Republicans representing rural districts were among those to push back against unduly focusing on private finance. “Public-private partnerships needing sizeable private returns are not a surface transportation solution for rural states,” South Dakota Governor Dennis Daugaard said during a Senate committee hearing in March. A report by the American Action Forum, a center-right think tank, concluded that an infrastructure plan relying on private sector backing would benefit urban areas, but do little for rural communities.

The rural coalition’s recent letter points out that traditional funding mechanisms can also fail to meet rural needs, noting that “smaller tax bases in rural communities often make funding projects at the local level difficult, if not impossible.”

Trump, who has promised to spur $1 trillion in infrastructure spending, put out an infrastructure blueprint in May and is expected to release a more detailed plan sometime this fall. A spokesman for the Farm Credit Council, a member of the Rebuild Rural Coalition, said groups are concerned the plan will focus on urban and suburban projects.

“Often times, [rural] projects are smaller and do not attract the major financial institutions,” the spokesman told sister publication Infrastructure Investor. “So we are trying to advocate for affordable, long-term financing options that make it viable for these rural communities.”

In February the coalition, which also includes the American Farm Bureau, the National Grange and the National Farmers Union, released a letter to President Trump urging investment in rural infrastructure. That letter also mentioned the need for private sources of capital, though it went into less detail than the letter to Perdue.