A fund to invest more in rural infrastructure

Tracey Samuelson Jul 24, 2014

Parts of rural America might be getting an infrastructure upgrade.

The Department of Agriculture is partnering with the private sector to launch a new investment fund stocked with $10 billion to go toward rural infrastructure development.

The idea is to bundle projects together so investors can more easily fund them, ranging from schools and hospitals to wastewater treatment facilities or even broadband.

For example, the state of Georgia exports nearly 30 percent of its agricultural products, according to Kent Wolfe, director of the Center for Agribusiness and Economic Development at the University of Georgia.

“In order to get those products to the port and compete on a global basis, we need to make sure that we have an efficient transportation system, requiring additional funds in rails, roadways, and port facilities,” Wolfe says, describing the type of investment his area might benefit from.

Especially in more rural locations, communities simply can’t afford to do these large projects on their own.

“Rural areas often have farmland and lower cost rural housing and that’s about it to tax,” says Larry DeBoer, a professor of agricultural economics at Purdue University. “In order to do a big project, the tax rates you’d need to do this sort of thing at normal interest rates would be quite high.”

CoBank, a national cooperative bank based in Colorado, is putting up the first $10 billion, though the Department of Agriculture is seeking additional funding from other private sources, like pension funds, endowments, and foundations.

The agency will then act as the matchmaker, finding projects for this fund to invest it. Some loans will be all private money, others a mix of private and public funding.

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