Recently the White House Rural Council, chaired by the United States Secretary of Agriculture Tom Vilsack, announced the creation of a new U.S. Rural Infrastructure Opportunity Fund to allow private entities to invest in rural infrastructure projects across the nation.
Ten billion dollars have been pledged to start the Fund and it expects to grow with additional funds. Co Bank, a national cooperative bank serving rural America, is the anchor investor and Capital Peak Asset Management will manage the new fund.
With assistance from the United States Department of Agriculture (USDA), this unique fund will target rural projects such as hospitals, schools, water systems, broadband, and energy systems. This positive development presents a tremendous opportunity for New Mexico to enhance its rural communities and economies at a time when it is needed most.
New Mexico’s economy is on everyone’s mind as the state recovers from the recession but its infrastructure also deserves serious attention. The 2013 Report Card for America’s Infrastructure published by the American Society of Civil Engineers awarded New Mexico a “C” for the quality of its infrastructure. There is a need to do better in a state highly dependent on its highways, bridges and water systems. New Mexico’s backlog of water projects alone stands at an estimated $900 million; not to mention the schools, highways, hospitals, clinics and other public facilities in need of funding.
Investments in these infrastructure projects do more than just provide improved public services—they create jobs and economic growth. A 2011 report by the Center for American Progress’s titled, “Now is the Time to Fix our Nation’s Broken Infrastructure,” highlighted two important statistics showing the impact on job growth via infrastructure investments. First, economists James Feyrer and Bruce Sacerdote reported that on average during the Recovery Act, 12.3 jobs were created for every $100,000 spent by federal agencies like the Department of Transportation and the Department of Energy. Secondly, economists James Heintz and Robert Pollin of the University of Massachusetts, Amherst, found that infrastructure spending creates about 18,000 total jobs for every $1 billion in new investment spending.
The U.S. Rural Infrastructure Opportunity Fund may be used to leverage existing USDA funding programs or fund infrastructure projects outright. Other tools in our USDA toolbox for rural development include 40 or more utilities, housing, facilities and business programs. We’ve added to that toolbox the $150 million Rural Business Investment Company, just announced earlier this year, which allows USDA to help facilitate private equity investments in innovative agriculture-related businesses.
During the last five years, USDA provided $1.9 billion in New Mexico for conservation, farming, ranching, agricultural research and exports. Some are surprised to hear that USDA also invested in New Mexico more than $682 million in New Mexico’s infrastructure and $511 million in small businesses, job creation and economic development. We have not only been aggressive in funding New Mexico projects but we are creating new financial vehicles, like those mentioned above to give communities and businesses further options.
Great ideas are emerging from our rural communities and New Mexico’s leaders need to help marry those great ideas with the financial support needed to make them happen. The opportunities are there to get creative and get to work in helping to improve New Mexico’s infrastructure which should, in turn, enhance New Mexico’s overall economy.