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How can cities effectively invest federal funds?

The Philadelphia Citizen practices solutions-based journalism. We don’t just report on the challenges our city faces, we report the potential solutions to those challenges. In this story: 

In order to effectively invest federal funding and  implement solutions to our climate crisis, cities need to collaborate across multiple public entities. But cities have established specialized agencies and authorities that govern services: fire, police and sanitation, sea and airports, public housing, sewer and water, parking garages and convention centers, school districts, utilities, and colleges and universities. 

This means that all the fresh federal funding is being distributed to multiple silos, preventing successful development in places where different kinds of infrastructure overlap like waterfronts or commercial corridors, failing to leverage private and civic development resources, and hamstringing distribution of funds for underserved communities. 

How can cities quickly organize to make the most of massive federal investment?

  • Cities like Buffalo, NY and Erie, PA have implemented Investment Playbooks which present portfolios of priority projects that are budgeted and ready to break ground. 
  • City procurement needs to “respect, reflect and adjust to the needs of entrepreneurs.” The process of registration, bidding, and contracting should be streamlined so contractors can bid across city departments for similar projects and services, and easily access financing. Cities should collaborate on this process with business chambers, banks, community development finance institutions, and entrepreneurial support organizations.
  • The federal government should treat cities and municipalities as a system instead of allowing funding to be split into individual agencies as they traditionally have. 
  • Leadership should create a “Power Map,” detailing responsibilities and direct and indirect reports, enabling a unified vision to be created and deployed.

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The Urgent Need for Public-Public Partnerships

A conversation with a Philly official taught Drexel’s Finance Metro head to think differently about what cities need to succeed

The Urgent Need for Public-Public Partnerships

A conversation with a Philly official taught Drexel’s Finance Metro head to think differently about what cities need to succeed

For the past several decades, public private partnerships (or PPPs, as they are traditionally known), have been part of the urban lexicon. The phrase is often used to describe cross-sectoral collaborations to design, finance, build and operate infrastructure projects. More broadly, the concept describes the ways in which cities and metropolitan areas solve problems through networks of public, private, civic institutions and leaders.

As the federal government rolls out dozens of energy, transportation, climate, innovation and other programs, the U.S. needs a focused conversation about the role PPPs could play in making sure these dollars are delivered efficiently for maximum impact. But traditional PPPs are not sufficient. More importantly, it’s high time to think critically and expansively about “public public partnerships.”

I give full credit to Emily Schapira for bringing this evocative phrase to my attention. Schapira is the dynamic CEO of the Philadelphia Energy Authority. I reached out to her recently to get advice on how cities could organize the disparate climate-related investments coming through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.

Schapira immediately pointed out a central challenge: Responsibility for implementing climate solutions is divided up across multiple public entities and requires a level of radical collaboration if cities and metropolitan areas are to realize the full potential of this investment moment.

Local government is a collection of fiefdoms

The imperative for public public partnerships eloquently captures the balkanized reality of local government. In many respects, the governance of 21st century cities was largely determined 75 to 100 years ago, when cities began to establish a set of specialized authorities and agencies to deliver a disparate array of projects and activities.

Just think about the plethora of public entities that exist in the average U.S. city: There is general purpose local government, of course, that focuses on essential services like police, fire, sanitation and public works and the implementation of a host of government-funded programs. But cities also host a myriad of separate public authorities that focus on, among other things, the building and maintenance of convention centers, industrial areas, parking garages, ports, airports, public housing, redevelopment, stadia, and sewer and water systems. Electric utilities are sometimes public, sometimes private. School districts are a parallel public universe, purchasing and employment hubs all their own. And then there are public universities and public community colleges.

These authorities, agencies and districts generally operate as mini fiefdoms, with their own governance structures, funding streams, bureaucratic cultures, procurement and employment practices and ways of operating. To make life more complicated, these local entities interact with an array of county, metropolitan and state authorities and agencies, including state departments of transportation, metropolitan planning organizations, workforce investment boards and the like.

The public sector in U.S. cities is a fragmented mess. Rather than curbing this fragmentation, the latest burst of federal largesse is enshrining it.

We know how we got here. Many of these authorities were formed during a period when political machines continued to rule cities. The creation of separate authorities and districts was driven by the need to drive out corruption in the delivery of projects. It was also driven, no doubt, by the racial and ethnic divisions of the day, and efforts by some groups to continue to control power even as demographics shifted.

The end result is that the public sector in U.S. cities, on a good day, is a fragmented mess. Rather than curbing this fragmentation, the latest burst of federal largesse is enshrining it. The fire hose of federal funding is arriving through dozens of different programs that are governed by different agencies and distribute funding to local public entities that are often replicas of their federal parents. Silos within the federal government concretize and harden silos at the local level.

The excessive level of fragmentation has real consequences for the delivery of infrastructure.

  • Different kinds of Infrastructure co-exist in the same geographies — say a waterfront or central business district or innovation district or industrial or commercial corridor. The left hand of government, therefore, needs to know what the right hand of government is doing to ensure that the delivery is staged and efficient and combined in such a way that has synergistic effects. Ideally, street repair, broadband expansion, grid upgrades and the like should be carried out in tandem.
  • Cities must also use federal and state funding to leverage private and civic resources, both for infrastructure projects and the larger development that these projects enable. The disjointed design and delivery of infrastructure undermines the potential to leverage a disparate array of investments for maximum effect.
  • The public sector makes up a substantial part of what I call the “Procurement Economy.” This federal investment moment could be a vehicle for growing Black- and Brown-owned firms that can design, engineer, construct, maintain and finance next generation projects. But fragmented procurement practices that force vendors to navigate separate systems place undue burdens on small enterprises that are already under-resourced.

So, what to do?

There is a strong argument that formally merging some authorities with duplicative missions, and providing them with a new set of 21st century financing tools and mechanisms, would be a smart thing to do. That’s what Tulsa recently did to great effect.

I’m all for that and hope other cities follow Tulsa’s lead. But, given that federal funding is flowing now, perfect is the enemy of the good. Radical collaboration, virtual mergers in a way, must be our immediate focus.

It is imperative that cities get organized, quickly, to make the most of these federal funding opportunities. Only at the local level will the myriad of infrastructure and other investments be pulled together for cumulative rather than disjointed impact and long term rather than short term effect.

That requires several things:

  • As I’ve written elsewhere, places like Buffalo, NY and Erie, PA are using Investment Playbooks to take full advantage of federal resources in geographies like downtowns, waterfronts, innovation districts, and commercial and industrial corridors. These Playbooks generally present portfolios of priority projects that are fit to place, costed out and ripe for investment. Only in that way can cities access federal and state resources, leverage private and civic capital and combine and align projects for a “big bang” effect.
  • Cities should start experimenting with Whole Infrastructure Playbooks that show the alignment of key transportation, energy, water, digital and climate-resilient projects in key geographies and link them with other investments in housing, economic and workforce development, place making and the remediation of former industrial properties. Local and national philanthropies — and anchor corporations and financial institutions — should step up to give communities the discretionary funds and breathing room to get this done in real time.
  • The Procurement Economy needs to respect, reflect and adjust to the needs of entrepreneurs. Registration requirements should be harmonized so that vendors can easily bid across agencies for similar projects and services. Contracts should be the new collateral for financing that is reasonably priced and easily accessed. Responsibility for business building should be shared across public procurement agencies in close collaboration with entire ecosystems of business chambers, banks, community development finance institutions, and entrepreneurial support organizations.

The best examples of mentoring and teaming between large prime contractors and subcontractors ready and eager to scale should become the systemic norm rather than the peculiar outlier. Technology should enable all of this, enabling procurement marketplaces that enable the seamless and transparent matching of demand and supply.

  • The federal government needs to take responsibility for the fragmentation that it has helped engender and maintain. Thinking as a system rather than as a silo would be a good start. Flooding the zone with incentives and resources that reward integrated planning and delivery would be better. The ability of the nation to achieve the goals of infrastructure — economic competitiveness, inclusive growth, climate resilience — depends on it.
  • The design and delivery of transformative projects and the use of those projects as a vehicle to build quality businesses is a product of leadership. In the end, the myriad of authorities and agencies are accountable to someone, elected officials who appoint boards and commissions who then, in turn, appoint CEOs, executive directors and the like. Every community needs a Power Map that unveils direct and indirect reports, so that a unified vision can be created and deployed.

In the end, this season of federal investment is forcing the country to come to grips with a 20th century public sector architecture that deified specialized expertise and skills. Solving 21st century problems, by contrast, naturally requires interdisciplinary thought and action and synchronized execution and implementation. It, in a phrase, demands public-public partnerships.

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University.


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