Factoring Risk into Smart City Project Funding

Written by: Alex Hurley, Jr. Vice President of Operations, Venture Smarter

Municipal bonds are securities issued for the purpose of financing local infrastructure needs, and cities are increasingly using these financial tools for enabling smart infrastructure projects. As an example, in 2015 Atlanta issued $250 million in voter-approved bonds to improve infrastructure through the use of smart and connected technologies. These particular bonds were supported by property taxes, but municipal bonds can be secured by various kinds of taxes or by proceeds collected from the completed infrastructure asset, making them a rather secure investment (in fact, over the past fifty years less than one percent of the hundreds of thousands of municipal bonds issued have defaulted).


Looking ahead, ratings agencies such as Moody’s have indicated that they will begin to factor 21st century challenges like cybersecurity and climate change into bond ratings. For municipalities, this means that failure to address these kinds of challenges appropriately could make upgrading local infrastructure less financially attractive or even unattainable due to higher risks and therefore lowered bond ratings. Chris Rezendes of Context Labs and Spherical Analytics has discussed this topic in the past with Venture Smarter’s Smart Regions Initiative.

“We won’t see capital flow to smart city projects when one cyber attack could destroy an entire investment.”

-Chris Rezendes, Chief Business Officer at SphericalAnalytics.io & Executive Staff at Context Labs BV

Addressing both traditional and modern forms of risk is therefore crucial to ensuring that smart cities and smart infrastructure projects become and remain an attractive investment. If you are navigating smart planning and development efforts, please take a moment to discover how Venture Smarter's people, platform, and programs can help you address risks as you build the future of your city and/or region. Contact us to learn more.