Financing Infrastructure for an Urban Future

One of the most pressing issues that I see facing our clients around the world is the prioritization of much-needed infrastructure. The growing trend of urbanization is having an unprecedented impact on the need for infrastructure – whether it is transport, water and sewer, digital or social. By 2030, the world's urban population is projected to increase to 4.9 billion people, roughly 60% of the world's population. China, India and the United States will have the largest number of urban dwellers in the world. Infrastructure is critical to creating economic development, attracting talent, making cities more livable, and helping cities transition to a smarter, more sustainable future, yet not enough projects are moving forward to meet the need.

In February 2015, we launched the 'Financing Urban Infrastructure Initiative' in partnership with the New Cities Foundation, Arup and Cisco to focus more attention on the topic. Dr. Julie Kim of Stanford University, the Initiative's Senior Fellow, recently released a Handbook on Urban Infrastructure Finance, which provides actionable research that will serve as a resource for urban planners in cities around the world.

Earlier this month, we partnered with the New Cities Foundation to host participants from across the public, private, nonprofit and academic sectors at Citi's global headquarters in New York for a discussion about urban infrastructure development around the world, and importantly, how to finance this need. The event provided an opportunity for traditional and newer actors from around the world to come together to share innovative ideas and best practices.

Government officials at the local and regional levels are seeking ways to unlock capital to fund infrastructure transactions, but often times have not been able to move forward with critical projects. A recent survey that we commissioned here in the U.S. with our partners at the Boston University Initiative on Cities focused on top issues facing mayors of U.S. cities of all sizes. Nearly half of the 89 mayors surveyed said that aging and underfunded infrastructure is their most pressing challenge, with mass transit, roads and water topping the list of priorities. Yet they lack the resources and support from state and federal governments to implement all of the projects required to keep their cities productive and competitive.

Institutional investors, governments and financial institutions are all actors in this very complex theater that differs from region to region and country to country – yet we believe that the private sector is well-suited to address the financing gap by leveraging the capital markets to mobilize the much-needed funding for infrastructure.

Infrastructure is mission critical to our clients' goals of creating sustainable economic development and boosting social progress, and we're doing what we can to support their efforts. Take, for example, our financing of the streetlight project in Detroit, MI. At one point, 40 percent of the streetlights in Detroit didn't work. The unemployment rate in the city was at an all-time high and the auto industry was in the midst of a virtual collapse. The Public Lighting Authority of Detroit devised a way to re-illuminate the city, but finding a bank to finance the project was challenging. Citi stepped up and committed $60 million of its own capital, which encouraged other early investors, and then helped issue bonds to raise the remaining funds – $185 million – to install thousands of LED streetlights, improving the quality of life for Detroit residents.

Examples such as this highlight the value of partnerships and the importance of convening key players to discuss innovative ways to move infrastructure projects forward. As a leading global institution, we are proud of the work that we continue to do with our clients to finance these transactions. Yet we know we can't do it alone – it will require partnership, new ways of thinking and collaboration.

The recent New Cities Foundation convening was an important step in the right direction, and we look forward to working with partners across sectors to support the development of infrastructure – and ultimately the growth of cities around the world.