How Private Wealth holds the key to Economic Development and Infrastructure
www.arrivatollc.com – It is another amazing day to visit together with you and share some thoughts.
You are hearing more talk about infrastructure throughout the United State in recent months since the Donald Trump has become President of the United States. Barack Obama also spoke heavily on infrastructure when he came into office as well back in 2009. There is no secret here. The United States is far behind where it should be in terms of addressing roads, bridges, electrical grids, ports. At the same time, there are downtowns that need economic revitalization and universities that are bursting at the seams.
So why is very little being done?
The answers are quite simple. (1) lack of money. (2) difficult permitting process (3) local politics get in the way.
We are hearing more about Public-Private Partners (P3) projects, but there are very few projects in the pipeline.
The answers are mainly the same. Most states have different P3 laws, some friendly, some challenging. At the same time, local politics plays a big role in whether these projects are completed because everyone who has a voice also has their own self-interest.
What is the solution?
It starts with me and you. I believe people with special skills in the private sector ultimately hold the cards to getting these projects done. I can tell you story after story of municipalities who have no idea how to make a project reality. I would say that most of them have no understanding how to structure a project, how to work within their P3 framework, no understanding who to even call.
In the past year, I saw how one city council completely screwed up a major project. First, they called a financial institution with no experience in working with municipality-based economic development projects. Secondly, they let their city council get in the way and run amok. There were various people within the council that had no understanding of economic development, but pushed their own agendas to make the project difficult. As a result, what should have been an easy project to structure and make reality in 90 days became a 20 month nightmare.
I have seen another state that has been stuck in neutral in addressing their top economic development priority for a few years. The state committed capital that it does not have to the project, so nothing has happened.
That sounds silly, wouldn’t you agree?
Of course. And this is why nothing gets done.
What really is the answer?
As I said earlier in our conversation, it starts with me and you – the private sector.
It takes people with an understanding on how to structure deals within the framework of a Public-Private Partnership. It takes people with an understanding on how to work through local politics, understanding people, and their various interests. There are very few people within the United States that understand how to navigate through these two components. I can honestly count the people on my hands who have the elite skills to come up with the creative architecture to make these economic development projects a reality.
For your record, I am not one of those people. Fortunately, two of my partners are among the handful of people with this unique skill set. What an advantage to have, wouldn’t you agree?
The bottom line is structuring these projects and working with people are the keys to getting these projects in the pipeline.
Now for the 64 million dollar question – where is the money coming from?
We know the governments are basically broke. With that being understood, there is a tremendous opportunity for private global wealth to make the difference in rebuilding America.
There is enormous private family wealth sitting on the sidelines across the world that wants to deploy capital within the United States. After all, the United States remains the business playground for the world. Most holders of private wealth are looking for alternative investments to create more yield since their traditional investments have gone flat. Since we are out of cash within most government entities here in the United States, we need the private family wealth sector to step in and rebuild America.
It is a win for all sides. Injecting this capital into American Economic Development will create jobs, will bring revenues into downtowns, which will anchor local entrepreneurs to piggyback from those efforts, and will bring confidence back to areas that have been depressed.
As for the private family wealth, not only are they leading a role in rebuilding local economies and true economic development, these projects can be structured to create compelling long-term yields on their wealth, with the security of investment-grade credit addressing their preservation of wealth.
This is how we make things happen. We bring people, resources, and real capital together.
Let’s create some productive activity…starting now.
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