Communities can build and repair much-needed infrastructure by joining together.
- Municipality consolidation can provide a means to reduce infrastructure costs for rural governments
- Consolidation could allow rural municipalities to receive rates on bond issues comparable to those of larger ones
- Communities may be able to attract private investment by procuring larger projects
The need for rebuilding America’s infrastructure is in the forefront of many state and local officials’ minds, but the costs involved represent significant hurdles to procurement. This economic stress is even more acute in rural areas that have experienced decline due to a lack of employment and aging populations.
In this environment, municipality consolidation can provide a means to reduce infrastructure costs for rural governments.
Municipal consolidation is the combination of two or more municipalities into a single entity.
By joining together, rural governments can receive rates on bond issues comparable to those of larger ones. Moreover, they can qualify for larger state and federal grants than they would be eligible for individually.
The American Society of Engineers maintains that nearly $3 trillion dollars of infrastructure projects are in need of immediate attention throughout the United States. Those projects include drinking water, power generation, and transportation.
With increased funding, rural municipalities can rebuild roads and bridges, or procure new projects which could lead them to rebound. Consolidation could also open the door to private- sector financing for a wide range of infrastructure including roads, bridges and lighting, as well as attract new industry.
To be sure, the private sector is increasingly joining in with state and local governments to assemble the funds needed to undertake these projects through bond financing programs such as public-private partnerships. We at CREF see a future in which the private sector will ultimately provide more funding for infrastructure than the federal government. This will open the doors for more creative thinking and faster problem solving as well.
“With increased funding, rural municipalities can rebuild roads and bridges, or procure new projects which could lead them to rebound.” – Terry Smith, president and CEO, CREF
An infrastructure development plan is critical for municipalities exploring consolidation. CREF advises each municipality to plan on the new infrastructure to function for at least 15 years after installation. Additionally, the entities must also determine what infrastructure will be required for future growth.
Leadership is also required for infrastructure development. Consolidation requires mayors and local officials to give up their power, as well as an elimination of duplicate authorities. Officials must cooperate with each other in order to best determine the needs of the community, and allow those with experience in different infrastructure sectors to guide them in rebuilding rural communities.
Finally, there has to be oversight. Scheduled weekly meetings to discuss the status of assignments awarded to qualified contractors are key to determining the speed and degree to which new infrastructure can be built. Regular communication among officials can also make it easier to engage with financing sources in the public and private sector, as they can provide clarity on presentation timelines and task schedules.
We at CREF believe that municipality consolidation can address a problem that grows more serious each year. In several of our meetings with rural municipality officials, the conversations always revert back to the cost of upgrading the present infrastructure, or in many cases, installing the infrastructure for the first time.
By working together, rural municipalities can take action to reinvigorate their communities and their local economies.