Can the Private Sector Save American Cities?

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Detroit may be the largest city in American history to go bankrupt, but it's not alone.

As more cities struggle to pay their bills, from payrolls to healthcare to pension funds, many face crumbling highways, outdated water systems, and electric grids that shrinking budgets can't keep up with.

But there's a way to make those desperately needed infrastructure updates without using government money. It's called public-private partnerships.

"Under a partnership, the private sector will come and do the investment, so it's not on the books of the public sector, it's a private sector debt," Richard Norment, executive director of the National Council for Public-Private Partnerships, told CBN News.

Norment said these partnerships can improve the quality of a wide range of services.

"We use partnerships for transportation, that's an obvious one, but for energy systems, water systems, real estate, and economic development, housing, hospitals, schools…it's an almost endless supply," he said.

Poor maintenance contributes to the growing need and new building projects rarely make it to the city's drawing board. But private investors can replace aging infrastructure and provide state-of-the-art services.

There's a big need in New York City, where engineer Mitch Simpler called the Big Apple's electrical infrastructure insufficient.

"Con Ed has the issue that the rest of the utilities had and that is that they had never envisioned the kind of electrical growth that the city has experienced," Simpler said. "And the good news is the city is growing."

"We are building new buildings, all of which need significant amounts of power, and Con Ed is doing their very best to deliver it, but it's a finite resource and their infrastructure has finite capabilities," he explained.

"Because of all that, their utility rates are extraordinary," he continued. "And it's, again, because of the rates that they have to charge to cover this infrastructure upgrade -- not making it more reliable or more robust, simply to keep pace with the increasing demand."

Former New York Gov. George Pataki said the stage is set for private investors to step in with financially effective solutions.

"It insulates it from politics and it allows the private sector to make the right decisions and it provides billions in additional capital that the government frankly just doesn't have right now," Pataki said. "The need exists...and the private funding is there."

Now it's up to state and local leaders to take advantage of the opportunity.

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Caitlin Burke

Caitlin Burke

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