The answer to effectively managing public assets

Happy Finance Friday! This week, I’m writing about public assets and effectively managing them. It’s something I’ve been hearing more about in local government circles and no wonder—the Bipartisan Infrastructure Act and the Inflation Reduction Act have lots of opportunities for governments that have a good handle on what they have, how they’re using it, and what they’d like to do next. Below, I’ll run through the issues, some examples, and potential federal funding opportunities.

Managing public assets can be a beast

Asset inventories, a comprehensive catalog of public buildings and other assets (like parks), is widely regarded as an important step in infrastructure funding. Before we can rebuild and improve our infrastructure, we first need to figure out what all we have, what condition it is in, and what it costs to maintain over its useful life.

Sounds obvious, right? But in reality almost nobody does that in a comprehensive way. It’s labor-intensive to do in-house and with the current hiring crisis, it’s not like there are staff experts to spare. More broadly, it requires a cross-sectional commitment from city officials that’s hard to achieve when there are so many competing priorities.

Still, more folks I’ve talked with recently know they need to get better data on their public assets. This is partly because the use of public spaces and buildings has changed since the pandemic: We’re getting more stuff delivered, working from home way more and we have a greater appreciation for green space and urban mobility. Berke Atilla, director of general services for Baltimore, was on the Public Money Pod this week and talked about the idea of downsizing the city’s building portfolio effectively. Knowing the condition of all the city’s assets and priority for repair is essential to making those decisions in a fiscally sustainable way.

“We have this opportunity to reduce operating costs and then use some of those monies to retrofit and use less [energy],” he said. “With the infrastructure bill more folks are talking about that and the organizations that can articulate that better than others—they will get more grant money and funding because they can tell that story of why we need the money.”

Why does this matter? Aside from the infrastructure angle (read about federal grant program examples below), having a comprehensive list of assets and costs/worth can help tremendously when it comes to long-term financial planning. For instance, they can be put to work better to MAKE money for cities, as this story of mine suggests and so does this more recent GFOA study.

The larger point: Governments aren’t focused enough on their long-term wealth. Ignoring that part of the balance sheet can cause officials to make short-term decisions about finances.

“If you think all you have to work with to deal with emerging long-term liabilities are short-term cash and whatever assets you have on the shelf, then it will seem that there’s not much choice but to use gimmicks or kick the can,” infrastructure expert John Ryan once told me. But if instead you look at your long-term assets as potential “raw material for good long-term solutions, at least you’ll start to look for better, more sustainable options.”

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D.C.’s impressive model for asset management

Washington, D.C. is one of the few localities that has really tackled inventorying its assets in a meaningful way.