State Rep. Tonya Schuitmaker (R-Antwerp Township)

The Michigan House Transportation Committee on Thursday is scheduled to discuss an innovative new way of funding infrastructure enhancements known as the Private Investment Infrastructure Funding (PIIF) option, which would bring a “business model” approach to infrastructure funding.

The plan is spelled out in House Bill 5461, introduced by state Rep. Tonya Schuitmaker, R-Antwerp Township. The bill allows private investors to fund public infrastructure enhancements while potentially reaping a return on their investments and without increasing the public’s tax burden.

“This is a completely new approach to funding infrastructure enhancements. It’s something that has never before been tried anywhere in the country,” Schuitmaker said. “This legislation would benefit all parties by providing a new funding source for the governmental agencies that own our infrastructure while allowing private investors – particularly those with an interest in the surrounding area – to pay for infrastructure improvements and be able to get reimbursed for their investment, with the potential for a profit.”

The PIIF offers a potential alternative to traditional infrastructure funding sources and provides an incentive for the private sector to invest in the infrastructure. The infrastructure targeted could be roads, drainage, sewers, mass transit, etc.

“Too often we are finding that there simply is no funding source available to make the infrastructure improvements that many of our communities need,” Schuitmaker explained. She added the PIIF relies upon increasing property values to repay the private-sector investment.

The PIIF would create a system to capture a portion of the property tax growth for a specific area that benefits from the infrastructure enhancement. That revenue would be used to repay a private investor who “fronted” the funding for the improvement. The investor and a partnership representing the local governmental entities involved would have negotiated a set rate of return based on estimated property tax growth over the repayment period.

All risk would be carried by the investor, who would only see a positive return on the investment if the property tax revenues increase as projected.

“The PIIF is another tool that communities, road commissions, drain commissions, etc. could use to address their growing needs – without increasing the tax burden on property owners,” Schuitmaker stated.

In order to be implemented, a PIIF would need to be approved by the local municipal government, the county general government and the government agency that owns the targeted infrastructure (if it’s not the municipality).

Potential infrastructure owners that could participate in a PIIF include county road commissions, county drain commissions, municipalities and the Michigan Department of Transportation.

The PIIF concept originated with the Oakland County Business Roundtable, a group of business leaders that advises County Executive L. Brooks Patterson.

Source:  News release from Michigan House Republicans