A weak economy, tight budgets, increasing unfunded liabilities and deferred infrastructure maintenance have state and local governments looking at new ways to close budget gaps and finance infrastructure projects. Philadelphia issued a request for proposals for brokers to potentially sell its gas works, which serves about 500,000 residential and commercial customers. The net proceeds from a sale are estimated at $496 million. The City of Indianapolis and surrounding suburbs recently transferred their water and wastewater complexes to a public charitable trust called Citizen Energy Group. The proceeds were used to fund other infrastructure projects. Just last week, California, Oregon, Washington and British Columbia announced a partnership to use state issued debt to develop shared infrastructure. The “West Coast Infrastructure Exchange” will seek private investment to replace aging public works and develop new projects. It’s encouraging to see State and Local governments seek out new financing options. But one question that needs to be addressed: Are the assets sales, asset transfers or new finance structures being used to fill one time funding gaps, without correcting structural issues (pensions, healthcare costs, etc.)? SNW Asset Management will continue to follow these trends, analyzing each credit on a case by case basis to uncover the risks, and potential benefits, for our clients.