A hidden liability for US cities: looming infrastructure repair costs

Subscribe to enjoy similar stories.U.S. cities are facing huge liabilities that remain invisible on their books: dilapidated roads, bridges and buildings.A new study aims to put a dollar figure on the total wear and tear on the country’s urban infrastructure, and arrives at $1.03 trillion.

That is not necessarily what it would cost to bring the infrastructure up to date, but it offers a snapshot of the magnitude of the repairs local governments will need to address in coming years.The costs are hypothetical for now, but could someday hit cities’ bottom lines. About a decade ago, for instance, new rules made cities account for their long-term pension obligations.

Afterward, taxes rose, services were cut and muni bond prices fell for many cities.The new paper by municipal research pioneer Richard Ciccarone examines the age and expected life of infrastructure in 2,000 cities.“You’re hiding an obligation or a commitment that’s got to be made sooner or later,” Ciccarone said, “and it’s usually more expensive at that point.”He said many of the city structures in everyday use are already well past their intended expiration date.With no balance sheet penalty for putting off infrastructure repairs, cities trying to close budget gaps and avoid tax hikes often delay improvements to their roads, bridges, vehicles and equipment. The looming costs associated with keeping cities livable for residents can take a back seat to pension and debt payments—and remain invisible to investors in the $4 trillion muni bond market.“The study highlights a real and important challenge facing local governments nationwide,” said Spencer Duncan, mayor of Topeka, Kan.