Investing in Infrastructure

The Bond Buyer and parent company Arizent will take the pulse of municipal finance leaders ahead of the conference to identify opportunities and obstacles the industry faces and report on the findings. How are issuers dealing with the policy changes in Washington? Where do market participants see the sector in five years? Ten years?

Transcription: 

Euriah Bennet (00:08):
All right. Good morning everyone. Before we begin, given the nature of our discussion, I just want to say that any forward statements from our panelists are subject to market risk.

(00:24):
Also, I know it's 8:30 in the morning, so if half of you have to step out for coffee, we won't be terribly offended. But the Bond Buyer took the pulse of the municipal market with some slides here. So we have some data from a forthcoming report that we're going to refer to with some of our comments. Let's see. First of all, with this report, we covered about four different topics: political volatility and the municipal market impacts, infrastructure needs and the capital markets, macroeconomic policy concerns, and resiliency. I'm going to try to cover each of those four topics with some discussion points and questions, and let's get started. With the first question I have, I think I'm going to direct this to our issuers regarding political volatility. Political dynamics remain a dominant driver of municipal market volatility, and our survey respondents cited federal legislative changes and political dysfunction as among the top challenges in 2026. So with our first question to the issuers, how has political volatility at the federal level influenced your timing or structure of bond issuance?

Michael Gaughan (01:53):
Well, thanks everyone for joining us this morning, and thank you to the Bond Buyer for inviting me. I'm always humbled to have acknowledgement of the fact people care about my voice. What's interesting about us is that the Vermont Bond Bank is an infrastructure bank essentially for the state of Vermont among 14 or so bond banks around the country that are active. And so we kind of follow our issuers, our borrowers, where they want to go. For them, and I don't know that this is true for more sophisticated places like Columbus, but the real considerations are actually getting bids that they can get their arms around in terms of capital construction and getting to a place where they can get voters to approve a project. So they are a little bit insulated from things that are going on at the federal level.

(02:51):
What is more concerning for them is watching, or what is more pressing, is deploying the remaining amounts of their ARPA dollars and getting themselves in a place where they meet those compliance requirements and then finalizing projects that are either partially funded by those ARPA projects or that have been a long time waiting as construction costs increase over the last five years. So that's the main way from our side. On the issuer side, we are more sensitive to potential volatility in the market that comes along with that political volatility. Obviously, April would be a concerning time to go to market. So what we are telling all of our borrowers prior to each deal—and it feels like this gets amplified each deal more and more—is that we're going to try to close and price on these days, but just to warn you, if there's any sort of turbulence in the market, we're going to hang on. Please get your bond anticipation notes in place. Please talk to your banks about potentially extending those terms or giving yourselves flexibility because we won't want to get ourselves in a place where we're at a disadvantage when we go to market. Those are the main ways in which we're thinking about the volatility. More and more the political volatility is seeping into the market volatility. I'm sure that's no surprise to all of you, but that's how we're managing it at the issuer level.

Megan Kilgore (04:18):
I think to piggyback on something that Michael said, infrastructure in our world is built on long arcs; they're generational projects. And the struggle is right now, more than any time in my career, the political headlines are built on increasingly shorter arcs. There's a really stark contrast to us simply carrying out typical work. I think there's a couple of pieces that would really help us be more successful. One is around being more clear about disclosure. What I mean by that is I think there's a gargantuan, important role that governance plays right now at the local level. The fact that we have to make decisions on the fly that could arguably put us in a better or more advantageous position to being more secure about our funding streams—or if we have local government officials who want to take a very intentional position and say, we are not going to lose our intent or our core values—that could materially change the types of funding that are coming our way.

(05:36):
That to me is something that has taken the scale of what local government officials can and cannot do to a much broader place. I think that needs to be reflected in disclosure, which is not quite there yet. We're really struggling with how much we disclose. We're getting guidance from all kinds of different places. But just to give you a little taste, we actually did dashboard our federal risk as it pertains to grants. When DOGE put out the keywords that they were seeking in certain grants and so forth, we created our own LLM and we actually ran our entire grants universe through that using their same keywords, which you might remember would be points for things like the word equity or justice. Keep in mind, for the city of Columbus, those words were some of the most frequently used words too. But it was really important for us to understand from a materiality standpoint. When the rating agencies ask us, "How vulnerable are you?", we had a dashboard to show them that expressed how much we could do without access to these grants, how many jobs were tied to them, and so forth.

Euriah Bennet (06:54):
I'm going to go ahead and direct the next question to the market participants on the panel. How do you incorporate political volatility into credit analysis, especially with the uncertainty around federal funding streams? Doug or Rob, could you address that?

Doug Kilcommons (07:14):
Sure. I guess I'll start. Good morning everyone. Political risk is like many other risks as a rating agency; we have to evaluate it in the context of rating methodologies, be it for a transit agency, for a state, or local government credit. For us, we're looking—and Megan mentioned this in her comments—at what the acknowledgement on the governance side is of these risks and how they're being planned for. For political risk, in this case federal funding, we're asking questions around: if you are receiving X number of grants and these are being applied towards these projects, what are the off-ramps for those projects and what are the alternate sources of funding you might pursue if these funds do not show up? If these funds come in much lower than you expect, what can you do?

(08:13):
What are the alternatives? So we're looking for that acknowledgement that there has been some planning done and considering, if more of those costs need to shift onto the actual entity's capital budget or operating budget, how are they going to manage that? Again, we are looking for sources of flexibility on the revenue side and the expense side. Unfortunately, what we've seen over the course of this year is a lot of noise out of Washington and not much in the way of certainty as to what is actually to come. That makes the planning horizon difficult. It makes this notion of "we know this is coming, so we're going to do X, Y, or Z with our budget" not possible to do in many cases. So what we're looking for is the acknowledgement from the management team on solutions and alternatives—what we can and cannot do.

(09:05):
And then just the acknowledgement that in some cases, projects or initiatives may have to be descoped, re-scoped, or downsized. That's not necessarily a bad thing either, because it shows that we've got some alternatives available to us. But it is challenging, and if you think about ratings and what a rating measures, it's the full and timely payment of debt. Methodologies are not calibrated to a specific risk; they have to pick up a whole host of risks. We have to balance those in arriving at a rating. From our standpoint, one of the things we often focus on is governance. To Megan's point, the idea that looking at what a management team is doing does matter. If there's a plan for the rainy day and those plans are taken off the shelf to deal with that rainy day, chances are that will give the rating a level of stability that otherwise would not be there. Those plans and what you talk to us about during the good times matter. We look for those things as part of our analysis and also from the standpoint of stability and ensuring ratings don't move. The actions of leadership do very much matter.

Euriah Bennet (10:24):
Real quick, I don't think anyone else has talked about this much over the past day or so, but if some of you can just give a real quick comment around tax exemption. I know that's sort of a political volatility. It may have already been decided, so I don't think we have to have a long discussion, but does anyone have any comments around risk around tax exemption?

Rob Hillman (10:47):
I think—and I think I speak for a lot of people in this room—that debate is over. I'm hoping that it is over. It was so hotly debated earlier this year as the "big beautiful bill," as it's referred to, was being put together, and it was clearly excluded from the bill. We are all safe; we're all smiling in this room relative to where we would've been. But given, as it was mentioned yesterday, that the personal income taxes are now permanent, I'm hoping that means that the revenue offset that was going to be needed, or at least looked to from tax exemption, is now a settled issue.

Megan Kilgore (11:28):
I think that retail participation is kind of our ballast. I'm a bit of a romantic when it comes to municipal bonds, but for me, tax exemption and the idea of municipal bonds is kind of a hundred-year handshake between our city and our residents, many of whom participate in buying our bonds. We don't have quite the level of community engagement that Michael has the benefit of experiencing, but with a gargantuan university like Ohio State University and a very thoughtful resident population, we've had 96 of our 101 voted bond issues passed. The last one that failed was in '81, and that was for a public arena, so it was something contentious. What I love about tax exemption is that our residents understand it. While if a Babs 2.0 or something like that comes around, I think what is different about this period is that we would implement them. Of course, we would use them for their purpose, not necessarily their novelty, but when you have local issuers, even that one CFO who does 15 jobs and has a three-person office, when even she knows the word "sequestration,"

(12:50):
I think we're going to have to earn some trust back before we get real comfortable with using all the ingredients.

Michael Gaughan (12:56):
Yeah, I think what's so important about the tax exemption is it is peculiar because it is a federal program, but it's also a federal program that is going to help issuers mitigate this uncertainty because it is plastic and it goes where issuers need to go in terms of the projects they have. To the extent a grant program doesn't come through, the tax exemption is always there on a relative basis as a low-cost alternative to finance the missing pieces of that grant not materializing. What is also just so extraordinary about it is that for 50 years, we did a fairly conventional business with issuing bonds and then meeting our borrowers where they were in terms of making loans via direct purchases. But we've gotten into the federal space and everything's very designated. It's very siloed. This project needs to meet this box, this box, this box.

(13:47):
That's not the case with tax exemption. I think that makes it so important and will help in a weird way mitigate some of the challenges with decreased grant funding and delays. The other thing about it that I think is interesting is, again, more towards that flexibility; with grant programs, I think one challenge is that you've got to match your project to a very specific set of needs in that grant program. With that changing, folks can be a little bit more broad-based in how they think about what they would've financed otherwise. The example I always give—and I say it all the time, so excuse me if you've heard it before—is one of our most important resilience projects from a disaster standpoint was financing gravel pits in two small towns where they vertically integrated their highway departments. The BRIC program going away, for example, is devastating and will hurt a lot of communities on the adaptation side, but that program wasn't going to help folks purchase gravel pits. The tax exemption via the Bond Bank could. That's what makes it so important.

Rob Hillman (15:04):
One thing that I would add to this point about tax exemption is that retail investors are also voters. They have voted by their purchase of municipal bonds. Just since 2022, retail investors have increased their holdings, either direct or through ETFs—one of the fastest-growing sectors—by nearly $300 billion in just the last three years. Each one of those retail investors votes. I think that will be taken into account going forward as well.

Euriah Bennet (15:36):
Let me move on to our next big topic on infrastructure needs and capital markets. Let me stay on the topic that Rob and Megan brought up around retail. What role does retail investor demand play in your syndicate composition? Megan or Michael, do you have any comments there? Let me set that up too: given volatility in general, issues around volatility have gotten wider. Retail can help provide stability when institutional pauses happen, but I know you guys have been thoughtful as well.

Michael Gaughan (16:21):
I'll go first. Our situation is quite different from a lot of other issuers out there. We're a specialty state and a relatively high-tax state, so individual investors prove to be a really important part of our overall distribution mix. We've had a great relationship with Fidelity who has a large presence all over the country, but in particular the Northeast. In our case, depending upon the rate environment, we see somewhere between 20% and 30% of allocations going to folks that have a Vermont zip code, be it professional individual investors via SMAs or just pure individual investors. It's around 8% for the "mom and pop." Those are very high numbers overall in the market.

(17:23):
It's a really important part of our distribution base, and that proves helpful in getting bonds out there and not being so dependent upon institutional forces to pick up the balance. What's changed is the dramatic shift in our order books over the last five years as SMAs of all types have become more common. It's all the same names, it's just their SMA practice. That has changed the dynamic quite a bit. From an issuer perspective, it concerns me a little bit—not that I don't think we'll have the distribution there, but at the end of the day, despite the fact it's professionally managed, you still have individuals that are the forces that put those orders in based on the individual needs of their portfolio management. The broader base of institutional buyers gave me as an issuer a little more comfort that they would be there time after time.

(18:29):
So things like April headline risks are just another source of potential volatility that we need to consider when we go to market. Not that we're going to time the market in any way, but you have political volatility and then a dramatically different investor base that might be more headline-sensitive, and those two things are correlated. It's another way in which we need to watch that volatility and give our borrowers notice that we're going to be selective about not getting ourselves into a bad market and getting a bad deal on a relative basis. We have all observed that just a few weeks later, things can change rapidly and recover quickly. It's a big, important part of what we do. It's increasingly a part of our entire distribution across the curve as National SMAs come in. But we have some concern about the potential volatility of that segment of buyers.

Megan Kilgore (19:34):
We've done a number of transactions where we've very intentionally prioritized our retail participation, especially with the community of Columbus. Where we are triple-A, it's more about the heart; it's individuals who want to have that connection to their community versus being able to really optimize their tax benefits. We have been intentional about our "Invest in Us" campaign—where the Columbus "US" is a nice play on words. I've been blown away by how many folks call us and say, "Can I buy a bond for my rec center?" or "Can I buy a bond for this community?" It's put me on a path where I am absolutely dedicated to the digitalization of our markets. My north star right now—if I could snap my fingers and do anything—would be to move my entire team from being calendar-centric to window-centric. When that window opens where political vulnerability is at a minimum and rates are at an excellent place for us personally, I could go. But as a market, we're not there yet because we have so many moving pieces. I do not envy the role the rating agencies have had to play in the start-stop volume game.

(21:05):
It has been an incredibly difficult period of time. With all the other conditions in our market, I would love to be more engine-ready where we could go when that window opens. But as a government, we don't have the benefit of those rails being in place quite yet.

Euriah Bennet (21:25):
Let me just keep us moving along. I want to get a couple of quick comments from Megan and Michael: how do you manage the tension between public affordability and infrastructure investment?

Michael Gaughan (21:41):
That's a great question. We oftentimes get asked from our borrowers, "What's our debt capacity?" We always have this conversation with them where it's one part hypothetical: what is your willingness to pay as a community? They don't know exactly, and then we benchmark for them. The challenge everyone is facing in Vermont, as well as nationally, is that costs have really exploded. Our median-sized town is 1,800 people, but on a portfolio basis, our numbers mirror what's going on in the overall market. Year over year, we're up about 15% in terms of new project volume, which is basically in line with the overall market. 2024 was nearly triple what we were in 2023 in terms of new money. We went from $41 million in '23 to $117 million in '24, and then $142 million in 2025.

(22:44):
At the same time, the median-sized deal has marched up from $1 million to $2.75 million. That tells you that costs have really exploded because we aren't working with more communities; we've got a fixed base of communities. The affordability challenges are real. Layering on more particularly vulnerable issues in Vermont is the loss of federal transfers, in particular disaster transfers like cutbacks in FEMA. You layer on those things and there's going to be a real crowding out of infrastructure investment. One thing I found fascinating in the survey was that Northeasterners thought in the next 10 years we would meet our infrastructure needs. Our stuff is so old, I don't know how that's possible. Maybe it's because Boston, with their AAA rating, are such good stewards of their infrastructure, but we have not been, and those grant-funded projects back in the '80s and early '90s need substantial repair. That's going to be a real challenge. We're going to face some really difficult issues in terms of what we choose to fund and what we don't. Things will be more expensive and taxpayers will be more burdened. Services might be, on the margin, potentially a little worse. That's the pessimistic view, I suppose.

Megan Kilgore (24:14):
In central Ohio, we've developed this "Silicon Heartland." Most of that is because our region continues to say yes to every data center. Data centers to me are kind of like cotton candy: you have one bite and it's okay, but that second bite you totally regret. As a region, we are in a contextually weird position in that we provide the regional water and sewer to 38 separate governmental jurisdictions, but we as a city own that water and sewer. Think about the lopsided seesaw: we're building the region and churning the economy but being very careful not to overburden our residents because of that growth.

(25:18):
I've tried to communicate to our council members that prioritization is not austerity. It's being very intentional about leading with what projects must be built, staging the "ought-to-dos," and prototyping the "want-tos." That's our structure right now. It's because our capital plan for water and sewer tripled from $2.1 billion in 2021 to $6.8 billion this past year. We have to maintain that, but it is tough.

Euriah Bennet (26:10):
Let's move on to the next big topic: macroeconomic policy concerns—inflation, higher construction costs, impacts of tariffs, and federal funding cuts. These are all concerns our market has to deal with. I'm going to turn to our market participants: what indicators do you monitor to evaluate whether inflationary pressures are materially eroding an issuer's fiscal capacity?

Doug Kilcommons (26:45):
Sure. I would start with the most obvious ones. If you take a look at a P&L and see an operating margin for the last five to seven years, you see evidence of higher costs by looking at how those margins have fared. Most issuers across the public finance spectrum have seen margin compression. When you look at what's driving it, it usually is not a revenue issue; it's an expense issue. Within the basket of expenses, the ones that pop in the current environment are supplies, maintenance costs, and labor. Those three are extremely subjected to inflationary pressures. I would say the ability to bring down labor costs is limited. For a university or a hospital, upwards of 70% of costs are locked into salaries and benefits that cannot be changed. That makes it very difficult to pursue expense savings because you're basically nibbling around the edges. It's similar in local governments where we've seen this huge increase.

(27:48):
That's a function of unions and just the need to be competitive with the private sector. Regarding the supply piece, when we came out of the pandemic, supply chain issues were the primary culprit. While some of that has abated, you still see pressure points. For issuers in the midst of large capital programs, we're asking what you have locked in in terms of contracts. Is this project completely bid out? What are you doing to manage the risk that this $500 million project is not going to go up by 20%? Truth be told, there has not been one issuer in any vertical we cover—from transportation to local governments—where we haven't seen escalation. Megan mentioned water and sewer; absolutely, these projects are all coming in much higher.

(29:45):
That gets to the question of affordability. If you have an inconsistent or volatile history of raising rates with one of your enterprise systems, that may be problematic because the population hasn't been used to these increases. We look at what's going on in the revenue versus the cost side. Lastly, regarding liquidity: you can't talk about anything without discussing liquidity. Often that's the fail-safe. If you're unable to raise rates or descope your project, you're going to rely on your unrestricted liquidity. We look to that as a sign that if you've gone over your budget and are grabbing what you've banked, the environment has become problematic.

Rob Hillman (30:31):
One thing I would add is that it's great that many revenue streams—sales tax, income tax—have inherent inflationary components. That being said, construction inflation regularly exceeds the CPI we all pay attention to. Whether that's due to labor costs or uncertainty with tariffs, the other factor is degradation. A project past its useful life is more expensive to fix tomorrow, not simply because of inflation, but because of the increased need for repairs. The conversation I have with many issuer clients is how to get money out the door faster. The best way to hedge against inflation and uncertain interest rate environments is to borrow and spend as quickly as possible. Construction inflation has averaged 7% to 9% over the last four years; compared to where issuers could borrow, there is a clear benefit to getting shovels in the ground as soon as possible.

Megan Kilgore (32:00):
I want to point out one thing that summarizes the issuer's difficulty. Everyone who's worked with large-scale projects has worked with engineers; they often come from a scarcity mindset. They feel they have to have the money now, even if they aren't spending it for four years. One of my colleagues in my office wrote this in an email to me: "Honesty is a lot cheaper than change orders." That really stuck with me.

Euriah Bennet (32:35):
Let's move on to the next big topic, which is resiliency. Back to the issuers, but the market participants can jump in: how is resiliency incorporated into capital planning in a way that both meets core funding needs and addresses climate and resiliency challenges? Resiliency is an interesting topic given the volatility around that word—how we're funding real needs, whether you call it climate change or just how you label it.

Michael Gaughan (33:21):
I could spend the next two hours talking about this. In '23 and '24, Vermont had massive flooding; this year we're experiencing unprecedented drought and wells are running dry. It's feast or famine—wild swings in weather volatility. Political volatility, market volatility, weather volatility; these are all things we're managing. I would love to think that every year at the Bond Bank we encourage capital planning to be integrated with hazard mitigation. But the challenge is the constraint on affordability. A critical facility or infrastructure project is now nearly three times as expensive.

(34:17):
At the same time, a resiliency project doesn't necessarily pay for itself in terms of being revenue-producing, nor is there a natural political constituency like there is for a fire truck. How do you get to that? We've gotten to that in many cases through grants and federal transfers, and that's not necessarily the case going forward. The question becomes how you shape resiliency knowing there's only so much we can do on risk avoidance or adaptation. This is where we can manage that at a portfolio level. We set up a program to do post-disaster lending after '23 and '24 to bridge FEMA, but also provide time for them to figure out the right solution if FEMA didn't materialize as expected—which has been the case. We have a natural ability to take out that short-term loan through a pooled loan program and avoid the federal question completely.

(36:02):
We're thinking about increasing that as a portfolio-level source of resiliency. We can manage that at a greater level. There is some diversification in terms of where the next storm or drought will hit. On the adaptation side, it's about having resources on hand to deploy in an emergency. We've got some ARPA grant dollars, so we're thinking about source exploration on wells to respond to the drought. But for those without those resources, the rate environment is higher. The best time to do this stuff would've been in 2021. I'm glad we have bonds in our portfolio with 2.5% coupons, but back then, people couldn't get contractors or concrete. The consequence is going to be that when disaster strikes, we may have to make hard choices about whether to adapt or not. That is where we're going to see the next level of political tension at the local level.

Megan Kilgore (37:23):
One of the gifts we can give is playbooks with other large issuers. Three points I would focus on: one is that with our data centers changing the load profile, investments in resilience today are simply a cost-saving metric to mitigate retrofits later. That is a huge reality for our capital plan. Second, the mindset in capital planning—this reminds me of the push-pull I have with insisting that technology and investments in AI should be on the same line in the budget as roads. We have to invest in where the future is; we have to invest in the climate we are going to have, not the climate we grew up in. Resiliency is not a "side quest"; it should be baked into the capital plan today.

(38:16):
Third, resiliency is best when there are co-benefits. Thinking about building storm sewers with incredible streetscape designs or redundancy in substations because of the electricity load challenges. When you can articulate those co-benefits, it moves the mindset of the organization. Showcasing those benefits has been a strong part of our playbook.

Euriah Bennet (39:16):
Did any of the market participants have additional comments?

Rob Hillman (39:20):
One point I would bring up is that resiliency has come up with all the environmental events we've seen lately. That being said, we can look to the way California has dealt with seismic risk. All the work put into seismically retrofitting buildings is really unexciting, does almost nothing for revenue, and was an enormous expense, yet it is a resiliency measure. Looking at how spending decisions were made there and how disclosure was made, we do have a model as a market for how to look at resiliency.

Michael Gaughan (40:11):
Yeah, two quick points for the bankers looking for opportunities: California is a great example with the Earthquake Authority. You have models in Florida where there's public finance intervention into the insurance markets. And I think flood control districts are an old concept but newly relevant. Maybe the crisis aspect of this time is an opportunity to look at regionalization and new authority structures where the benefit can be shared.

Doug Kilcommons (40:48):
The only thing I would add is that there are priorities. You cannot issue debt to finance a CIP that balloons without some type of focus. There may be situations where you have to make difficult choices between one project and another. Some non-resiliency projects may get bumped. We're looking at a CIP in terms of the overall financial profile. We're never going to judge a CIP saying one plan is better because it has more projects devoted to climate resiliency; it's about your priorities as an issuer and how you can fund them within your credit profile. The idea that you can borrow endlessly to deal with every "what if" is not possible. It's about managing priorities and putting together a credible financial plan that will not tie the issuer's hands to a point of financial duress.

Euriah Bennet (42:19):
We've talked a little about disclosure regarding seismic risk in California. Are there any other disclosure practices for large infrastructure projects that are innovative or thoughtful?

Doug Kilcommons (42:34):
I think the municipal market has a long way to go in terms of disclosure. Generally speaking, some issuers do a better job than others. We often get the question, "Does anybody read our MD&A?" I would say rating agency analysts and buy-side analysts do. We like more information than less, but we recognize it's a balance because putting it out there takes time and resources. As projects and technology get more complex, more information is appreciated.

(43:23):
I know Megan mentioned dashboards; we like having that snapshot available on the issuer's website and on EMMA. The timeliness and robustness of information are so important because it allows us to get comfortable with what's going on. It's also the best scenario when we see a dollar amount at the beginning of a multi-year capital plan and can track back to that original amount every year. If something has changed, we can figure out why it's 10% or 50% higher. That gives us confidence. If we have to guess why something has gone up without an ability to trace it, it suggests something has gone awry even if it hasn't. Targeted information around the price tag and where you are in the cycle is key.

Rob Hillman (45:03):
Bringing this back to where we started, the uncertainty out of Washington means not all grants are being treated equally. Universities and Medicaid are getting the brunt of it, while TIFIA and WIFIA are being held constant. Our investors are going to be doing more "what if" scenarios. Disclosure should give them the information to say, "If this grant were reduced or this program suspended, what would that mean for the bottom line and coverage?" It's letting our investors know at a granular level where the risk is.

Doug Kilcommons (46:00):
Just one thing I'll add: some issuers will tell you that if they lose a federal grant, they'll be okay because they have other sources to backfill it. Telling that story upfront is very important because it suggests to the market that you have alternatives. That word "alternatives" is very important. If something happens down the line, it gives an investor comfort that things are under control. With all the headlines out there, if you hear about a grant being cut and haven't managed the narrative, an investor might think the credit is going to fall apart. Controlling the narrative from the beginning and demonstrating that you have alternatives is key.

Megan Kilgore (47:30):
I yearn for a time when I don't have to discuss the "color" of a bond, but instead, I am judged exclusively on the quality of our governance, which is increasingly quantifiable. You have to look at the governmental decisions—how they're looking at the lifecycle cost. What could move our market in a positive direction is looking at the granularity of the lifecycle cost and the true ROI, as well as decisions that better the community through economic resiliency. I want to get to a place where there is a distinct separation in the market between me doing a billion-dollar lazy river and a billion-dollar water reuse project. That is my north star.

Michael Gaughan (48:36):
I'd add real quick: that's one of my big concerns with data. Most trades under $200,000 are automated. You've got a combination of data-driven credit factors plus automation. I'm not afraid of rating agencies; I know they do the work. But for automated trades with AI agents talking to each other, without standardized disclosure, we aren't going to be able to interject the mitigation factors for particular credit concerns. I worry we're going to struggle to intervene in that and get reflective pricing, particularly for smaller issuers.

Euriah Bennet (49:24):
We're just about out of time. I should allow for a question from the audience very quickly if there are any. If not, I want to thank the panelists for all your points. They are very helpful and thoughtful. Thank you again.

Michael Gaughan (49:40):
Thank you.