Infralogic Interviews: startup pitches vision for community infrastructure

Interview 5 October

Infralogic Interviews: startup pitches vision for community infrastructure

A new US infrastructure services company wants to help contractors and government agencies to scale up small infra projects using community connections and local resources.

Community Infrastructure Partners launched in September to bring disparate firms together to work on performance-based contracts that aggregate smaller projects into a larger whole, CEO Shawn Kerachsky told Infralogic in an interview.

Municipalities often don't have the capacity to seek grants and loans from states and other sources, while smaller contractors lack the capacity to bid for even some projects they could handle. Using a community-centered approach to bundle infrastructure projects will develop efficiencies for utilities, municipalities and contractors alike, Kerachsky said.

"The one-off approach takes a lot of time, takes a lot of resources," and many infrastructure projects can be better delivered through a larger process, said Kerachsky.

At the same time, a larger project structure can be leveraged to provide for greater outreach to residents and businesses in the communities where the infrastructure is being built, adding the community aspect to aggregated infrastructure programs. That community outreach can help tailor the aggregated projects, while building local job skills and business readiness, he said.

Stormwater abatement, lead pipe replacement and water-pollution control are all examples of smaller, discrete projects that can be bundled into wider programs, said Sean Agid, CIP's chief business officer, in an interview. Each individual culvert that's causing roadway flooding during heavy storms and each home's lead service line can be treated separately—or brought together under a larger contract that will prove more efficient, while at the same time provide more opportunities to bring in community partners.

Shawn Kerachsky

Shawn Kerachsky, CEO, Community Infrastructure Partners

CIP doesn't aim to become a vertically integrated firm, instead looking to act as a project coordinator or prime contractor and bring construction, financial and engineering firms together, two of the firm's founders said. In other situations, the firm will take the work of an engineering firm hired by a municipality and translate that into a contract for delivery.

The company bills itself as the "single point of accountability" on projects, tracking the implementation of infrastructure programs it's running as a project coordinator for a municipality or other agency and tying its compensation to on-time, satisfactory project delivery. Bundling smaller projects into larger programs helps prioritize which projects are built and saves money by not wasting capital on planning projects that never happen, according to the firm.

Municipalities "can access very cheap capital" but "there are a lot of administrative hurdles that these municipalities don't have the capacity" to handle, Agid said. CIP aims to connect projects needing capital with state or federal programs to help finance or fund their infrastructure needs, working for municipalities that have infrastructure needs, but don’t have the staff to pursue financing or grants.

Kerachsky, a former executive with Corvias Infrastructure Partners, and executives involved in CIP have experience guiding infrastructure programs that delivered multiple smaller projects under a larger umbrella. They have also worked to bring in local minority businesses as contractors and create local workforce development and deployment strategies.

CIP is pursuing this strategy, working with engineering firms to act as a project coordinator for work with local governments and utilities, Kerachsky said.

The company can facilitate capacity building on both sides, "by really being able to be single point of contact …bringing all of those delivery partners together," Kerachsky said.

One way to do that is to extend the successes of community-based public-private partnerships (CBP3), a model developed by the US EPA and used for stormwater projects, to different types of infrastructure.

Community-based projects do more than simply respond better to a neighborhood's specific needs. When small local firms are brought in to handle aspects of a larger project, a community-based procurement can bring in small businesses with one type of expertise and familiarize them with how to do a related task—like taking "a company that essentially was a landscaping company and get them training in stormwater management," Agid said.

Community-based projects are "not just investing in the infrastructure but also reinvesting in the community, not just hiring local businesses but preparing them to take on other work," Agid said.

The approach mirrors the community-based public-private partnership, or CBP3, model developed by the US EPA and used for stormwater programs, which has resulted in projects that were able to bring in participation of targeted groups' businesses at levels above 50%. That's "stunning compared to other delivery models," said Bruce Allender, VP for Sales-Water at Kiewit, who has worked on CBP3s with Kerachsky and other members of his team

"It's an exciting model, because of being able to get the minority participation up to a high level," Allender said.

Smaller infrastructure projects are notoriously difficult to deliver using a P3 model, in part because the detailed work needed to prepare for procurement and evaluate contractors isn't worth it for a small project, especially for smaller government bodies.

If, for example, a city has "75 projects that go through an evaluation process" and are then prioritized, they could combine them into larger procurement that would allow for more efficiency, Kerachsky said.

The CBP3 "model, from a financial point of view, it's agnostic," and doesn't have to have private equity, but can, and allows working capital to be "floated by the private partner," while also allowing for a maintenance portion of the contract, Allender said.

CIP is East Coast-based, but has staff located in different areas of the US. The firm will adapt its approach to the infrastructure needs of different parts of the country—for example, responding to ways to handle flooding on the East and Gulf coasts, drought on the West Coast, Texas and Arizona and aging infrastructure and lead service lines in the Midwest.

"You need to focus on what the community's needs and goals and objectives are," Agid said.

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