U.S. Infrastructure General Investor
Introduction:Recent failures of Bridges, River locks, Levies and re-routing of Commercial Traffic (highway & waterways) due to structural integrity issues, is a constant reminder that we are sitting on a ticking time bomb, the continual decaying of the country’s transportation network. Addressing this issue is mandatory if we are to avoid further failures, possible lost of life and economic adversity.
In addition to Bridges & Highways, securing and modernizing the Nation’s Ports, Railways and Transit networks is necessary if we are to ensure our economic and security stability.
With the U.S. facing massive budget deficits, at the Federal & State levels, and several sectors competing for Public dollars, financing these efforts will be an issue. The questions being asked of the Transportation Infrastructure effort are:
* What’s the best way to finance, using Public & Private funds, the re-building effort?
* What’s the time lag before projects are started? – From funding (once approved) to actual start of the project. Generally, there is a time-consuming pre-construction phase for Engineering Projects, namely Planning, Feasibility Analysis, Environmental Review, Permitting, Pre-Engineering Analysis, Design and more- before actual construction work begins.
* How will funds be allocated to States & local Municipalities’?
* How will projects be prioritized?
These are a few of the questions that must be answered. That said here are some of the solutions being proposed:
Creating a synergy between Public & Private funds is the key. The fact that the Public coffers are limited (National & State deficits) and Billions of private dollars – newly created Infrastructure funds, Pension funds and others- are looking for sound investments (when Transportation assets are structures properly the risk levels are tolerable) merging the funds presents a viable solution. The question then becomes how best to structure the financing effort.
Senators Christopher J. Dodd and Chuck Hagel have establishes a new method through which the Federal government can finance infrastructure projects of substantial regional or national significance more effectively with public and private capital “NATIONAL INFRASTRUCTURE BANK ACT OF 2007”
In addition, Senator Obama, now President Elect, has a similar proposal “National Infrastructure Reinvestment Bank.”. One can expect more clarification as to how they will proceed when Congress reconvene in a special session after the elections.
The second concern, time lag between pre construction and the actual construction phase, is only an issue for new projects. That said, there are a multiplicity of projects, that are ready to go, on the Federal, State and local levels that have gone through the pre-construction phase.
A January 2008 survey, of the State Department of Transportation by The American Association of state Highway and Transportation Officials (“ASSHTO”) identifies 3,071 “ready to go” Highway & Bridge projects, totaling 17.9 Billion dollars. A 90 to 120 days lag-time is expected between funding and start-up (actual construction work).
The third issue “allocation and fund distribution”, will be addressed in the pending legislation. However, this issue has been addressed in previous Bills such as “The Additional Infrastructure Investment Funding Provided by H.R. 7110, the Job Creation and Unemployment Act of 2008, the Highway & Bridge Investment amounts specified and distributed by state".
Where we are:
As of 10/4/08 several hearings were held, in regards to the Transportation Infrastructure issue. A summary of each hearing is presented below:
On October 29, 2008 House Transportation & Infrastructure Committee – held a hearing to examine how infrastructure investment contributes to job creation and economic recovery. The hearing addressed infrastructure across the Committee's jurisdiction, including highways, bridges, public transportation, rail, aviation, ports, waterways, wastewater treatment facilities, and Federal buildings. (see: Summary of the hearing)
On October 24, 2008 House Education and Labor Committee – held a hearing to examine strategies – including investments in rebuilding crumbling infrastructure – to create good-paying jobs in order to put the nation’s stalled economy on the road to recovery. More than 2.2 million American workers have lost their jobs in the past 12 months and millions more are still looking for permanent employment. A summary of the relevant Panel Witness Testimony:
Chairman Miller's Opening Statement
Robert Pollin - Professor of Economics Founding Co-Director of the Political Economy Research Institute University of Massachusetts at Amherst
William W. Beach – Director Center for Data Analysis The Heritage Foundation
Allen Sinai - Chief Global Economist and President Decision Economics, Inc.
On October 28, 2008 – The Small Business Committee held a hearing on "Creating Opportunities for Small Businesses in an Economic Recovery." This hearing is indirectly relevant to the Transportation Infrastructure issue, it shows the problems many small Businesses (i.e. Industrial, Construction etc.) when there is a slow down in Economic Growth. A summary of the relevant Panel Witness Testimony:
Mr. Richard A. Brown - President and COO, Krause Corporation, Hutchinson, KSOn Behalf of Association of Equipment Manufacturers
Mr. Jim Bradbury – President, Grand Rapids Controls Co., LLC, Rockford, MIMr. Thomas Franke - Executive Vice President and Chairman of the Board, Riemeier LumberCincinnati, OH
Mr. Stephen P.Wilson - Chairman and CEO LCNB Corp. Lebanon, OHOn Behalf of the American Bankers Association
Ready-To-Go Projects:
A list of ready-to-go projects is presented by category:
Bridges & Highways:
State Department of Transportation (“DOT”) have a backlog of projects that could be quickly implemented if additional funds were made available. A January 2008 survey of the DOT by the American Association of State Highway and Transportation Officials “ASSHTO” identified 3071 read-to-go projects at a total cost of $17.9 billion. Here are some examples:
Transit:
The recurring cyclic patterns of inflated gas prices have regenerated interest in expanding & improving the nation’s public transit systems.
The numbers show an increase in demand for transit services across the nation. In 2007, 10.3 billion trips taken on public transportation, representing the highest number of trips taken in 50 years. In 2008, ridership continues to rise, with a 4.4% increase in trips taken during the first half of 2008 than in the same period last year.
Additional funds are needed to meet this demand while creating and sustaining good paying jobs and economic activity. An October 2008 survey of public transportation agencies by the American Public Transportation Association (“APTA”) indentified 559 ready-to-go transit projects at a total cost of $8.03 Billion.
Typically these projects involve purchasing buses and rail cars and accelerating existing construction and maintenance projects. Specific examples, provided by the “APTA” are summarized below:
Purchasing Buses and Rail Cars
- Virginia Rail Express “VRE” - VRE signed a contract with MotivePower to purchase 20 Locomotives; actual only purchased 5 due to a lack of funding; would use additional funds to purchase the remaining 15. Costing $63,000,000 Manufactured by MotivePower (Boise, Idaho.)
- Muncie Indiana Transit System - Would exercise existing option to purchase 4 diesel-electric hybrid buses costing $2,100,000, Manufactured by Hayward, California.
Construction and Maintenance Projects
- Regional Transportation District, Denver Colorado - Transit Station improvements, costing $235 million
- New York City Transit - Station Rehabilitation (12 plus stations) costing $550,000,000
- New York City Transit - Welded Rail – replacement of obsolete rail & plates -$30,000,000
- New York City Transit - Public Address / Customer Information Screens for 43 stations -$100,000,000
I-5/I-205 Interchange,
U.S. Route 20,
Passenger Rail
With record ridership revenues in fiscal year 2008, demand is growing across Amtrak’s entire system. The following brief examples of ready-to-go projects were provided by Amtrak, and illustrate how additional funding could be used if it is made available.
Amtrak Overhaul Projects
AmFleet Rail Car- refurbishment includes new interiors, rebuild air conditioners, Disabilities Act – compliant restroom modules, rebuild air brakes and rebuild trucks (wheel assemblies); Cost $85,900,000Amtrak Overhaul Projects- Refurbish rail cars, other than AmFleet, and equipment cost $25,000,000
Amtrak Engineering ProjectsADA Station Upgrade- Modify Stations to meet Americans with Disabilities Act by 2010 Cost $25,000,000
Emergency Back-up Power Systems-For the following stations:Penn Station (NYC), 30th Street Station (Phili, PA) & Washington Union Terminal Total Cost $11,000,000
30th Street Façade Preservation - A phased rehabilitation and repair program is needed cost $40,000,000
Ivy City Car Shop Roof Replacement (Washington D.C.)- Replace the facility’s roof cost $5,000,000
Aviation
FAA states if Federal Funding were available the types of AIP projects that are ready to go include runway or taxiway rehabilitations, extensions and widening , obstruction removal, apron construction Airport Rescue equipment ...etc. Costing an additional $600,000,000
These are a few of the types of project that would benefit from passage of the Transportation infrastructure portion of the stimulus package.
Long-Term Projects:
Projects of substantial regional or national significance, requiring long term structured funding are highlighted in this section :
High Speed Rail
Currently, there is no high-speed rail service in the U.S… Amtrak Acela, between Washington D.C. & New York City at an average speed of 83 mph, is the Nation’s fastest passenger service. This service, in the northeast corridor is the only right-of-way Amtrak owns with the potential for high-speed rail service. There in lies the mainproblem for high-speed Amtrak service. This is due to the fact that most of its other passenger services runon tracks and right-of-way owned by private fright rail. This underscores the reason why the bill, H.R. 5644, sponsored by Rep. John L. Mica (R-FL) only seeks to develop high speed rail service between Washington D.C. and New York City (the northeast corridor).
The high-speed rail provisions in the Amtrak legislation include:
- The Department of Transportation will solicit proposals for development of a high speed rail link along the Northeast Corridor between Washington, D.C. and New York City;
- Proposals will include engineering, financing, and development plans for the DC/NYC corridor;
- Proposals will require DC to NYC express service of no more than 2 hours;
- DOT will convene a Commission of state, local, federal, rail and rail labor stakeholders to evaluate the proposals and report its recommendations to Congress;
- Congress will evaluate the Commission’s report and take the necessary action to commence work on the corridor;
- The DC/NYC link will serve as a pilot for similar projects across the United States, and the DOT Secretary may request proposals for other corridors after selection of the Northeast Corridor proposal;
- Guarantees labor protections; and
- Requires a study to examine how to achieve maximum economic utilization of the Northeast Corridor.
Note: Current High-Speed passenger service:
China – Shanghai Maglev: 350 mph
French AGV: 200 mph
Japan’s slowest Bullet Train 125 mph
The latest Congressional actions on High Speed Rail Initiative are documented below:
Information on Rep. Mica's High Speed Rail Initiative
On October 16, 2008, the President signed into law a proposal by Rep. Mica to help bring true high-speed passenger rail service to the United States. The nation currently lacks a high-speed rail system that could be considered on par with the rail systems of Europe and Asia.
Link to Public Law 110-432, the legislation that includes Rep. Mica's high-speed rail proposal
Press Releases:
3/14/08: Bipartisan High-Speed Rail Initiative Introduced in U.S. House
5/8/08: Amtrak Bill Provides Historic Opportunity to Bring High-Speed Rail to U.S.
5/13/08: Mica Presents Historic High-Speed Rail Proposal to Finance Experts
5/22/08: Committee Approves Historic High-Speed Rail Initiative
6/11/08: Historic Effort to Develop High-Speed Rail in the U.S. Passes House of Representatives
9/24/08: House Votes to Launch Historic High-Speed Rail Initiative and Enhance Rail Safety
10/1/08: Mica Hails Senate High-Speed Rail Vote as "Historic"
10/2/08: Mica: President to Sign High-Speed Rail Measure
10/16/08: President Signs Historic High-Speed Rail Measure
More information regarding the need for true high-speed rail in the United States:
Mica op-ed printed in Progressive Railroading
Q&A
Did You Know? High Speed Rail Rountable hosted by Rep. Mica
High-Speed Rail for America Act
In addition to the High Speed Rail measure, the legislation entitled " High-Speed Rail for America Act" is begin marketed by Sen. John Kerry. The legislation creates the funding mechanism to create a world class high-speed rail system in the United States, and establishes an office of high-speed rail in the Federal Railroad Administration to ensure we have the leadership needed to keep this mission on track.
The bill provides a consistent source of funding – over the course of six years, this bill provides $200 million per year in grants, $3 billion in tax exempt bonds, $10 billion in tax credit bonds for high-speed intercity rail facilities, and $5.4 billion in tax credit bonds for rail infrastructureAt this time the plan lacks detail analysis as to how it would be implemented. We are awaiting an offical announcement and more details on the plan.
Local States High-Speed Rail Service:
California has spear-headed it’s own initiative to build a network of high speed rail service. With the passage of Proposition 1A California has demonstrated it’s political, legislative and populace commitment to developing a high speed train service.
The plan calls for an 800-mile network of trains operating up to 220 miles an hour and linking California's major cities between San Diego in the south and San Francisco and Sacramento in the north.A complete Business Plan detailing the economic and environmental impact, cost revenue stream estimates etc., is available @ http://www.cahighspeedrail.ca.gov/
The project's next step is to secure funding.
Given this and the meltdown of the Global Economy, Congress is expected to address ways to rejuvenate job and economic growth, beyond re-capitalizing banks & corporations, in a second stimulus fiscal package. A tentative lame-duck session is schedule for mid November where legislation is expected to be drafted and presented for the President’s signature. It’s not known whether President Bush will sign the bill, but the President Elect is expected to sign shortly after he assumes the Presidency. Funding for Transportation Infrastructure projects is expected to be included in this bill.
The Charter
Presently awaiting signed legislation.
A recent (11/7/08) article in the NY Times highlights the urgency of the issue, as revealed in this excerpt; Ms. Granholm is a strong proponent of a stimulus package in the lame-duck Congressional session. Previewing her advice to Mr. Obama, she sent a letter to Congressional leaders on Thursday urging them to finance public infrastructure projects, extend unemployment and food stamp benefits and provide aid to states and the troubled auto industry. (see article “Obama Convenes Economic Advisers “)
Federal, State & Organization Links
Federal:
APPORTIONMENT OF FISCAL YEAR (FY) 2009 COORDINATED BORDER INFRASTRUCTURE PROGRAM FUNDS
U.S. Department of Transportation (Federal Highway Administration)
This Notice transmits the certificate of apportionment of Coordinated Border Infrastructure Program funds authorized for FY 2009 pursuant to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Public Law Number (Pub. L. No.) 109-59.The apportionment is effective immediately.
Summary of Notable Federal Infrastructure Programs and Initiatives for Water and Transportation
National Surface Transportation Policy and Revenue Study Commission - Congress created The National Surface Transportation Policy and Revenue Study Commission in 2005 under Section 1909 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users (SAFETEA-LU). The Commission was created because, as Congress declared, “it is in the national interest to preserve and enhance the surface transportation system to meet the needs of the United States for the 21st century.”
APPORTIONMENT OF FISCAL YEAR (FY) 2009 COORDINATED BORDER INFRASTRUCTURE PROGRAM FUNDS
This Notice transmits the certificate of apportionment of Coordinated Border Infrastructure Program funds authorized for FY 2009 pursuant to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Public Law Number (Pub. L. No.) 109-59.The apportionment is effective immediately.
States:
DOTs
California
$190 MILLION IN PROPOSITION 1B FUNDING APPROVED FOR TRANSPORTATION PROJECTS
ECONOMIC IMPACT OF FUNDING CALIFORNIA’S TRANSPORTATION INFRASTRUCTURE
California’s $2 trillion transportation infrastructure system is a prime ingredient in the fuel that fires the state’s economic engine. In fact, economists and business leaders agree, investment in transportation brings jobs to California and encourages vital business investment, which creates permanent economic benefit to the state.
New York
For a list of projects in your in and around your community.
New Jersey
Transportation Capital Program Fiscal Year 2009 (NJDOT & NJ Transit)
Transportation Project Contact Information
Transportation Infrastructure: Funding Transportation in Pennsylvania
How does Pennsylvania pay for roads, bridges and transit systems in Pennsylvania? IssuesPA looks at a recent study by the Pennsylvania Economy League to learn more.
Transportation Project Information
Funding Transportation Infrastructure
Presents funding alternatives
Indiana
Transportation Long Range Plan
Ohio Regional Planning Commission Infrastructure Funding & Planning
MORPC serves as the federally-designated Metropolitan Planning Organization (MPO) for Columbus and environs. MPOs are established in all urban areas of the U.S. that are over 50,000 population, to perform the “3-C” (continuing, comprehensive, and cooperative) transportation planning process.
Maryland, Minnesota, North Carolina. Vermont, Virginia
Organizations:
InnovativeFinance.org is an Internet based clearinghouse providing information on innovations in all areas of surface transportation finance. InnovativeFinance.org offers information on federal, state, local, and private funding of highways, passenger rail and bus systems, intermodal links, intelligent transportation systems, and other related facilities, with an emphasis on innovative alternatives to traditional funding methods.
Articles
Bridging the gap
Sep 1, 2007 12:00 PM, By Meredith Preston
In the wake of the tragic collapse of the Interstate 35W bridge in Minneapolis, government officials are elevating the discussion on how to fund the country's transportation infrastructure. House Transportation and Infrastructure Committee chairman Rep. James Oberstar, D-Minn., has developed a proposal to create a dedicated fund — similar to the Highway Trust Fund — that would pay for the repair and inspection of National Highway System (NHS) bridges.>>>>more
The Political Economy of Transport Infrastructure Funds
Obama backs funding for transportation infrastructure
Updated October 27, 2008 3:39:59 PM
Democratic presidential nominee Sen. Barack Obama, D-Ill., in a letter to the National Industrial Transportation League, renewed his support for infrastructure funding, freight rail transportation and the country's domestic waterways.>>>> more
Private Equity and Debt Poised to Help Build U.S. Transportation Infrastructure
With the pending reauthorization of federal surface transportation programs, investing in transportation infrastructure is a hot topic. In particular, how to finance that investment is being strongly contested.>>>more
Main St, not Wall St, should fix crumbling U.S. infrastructure
Kan. and Washington - At its best, America's infrastructure has powered our economic prosperity, created well-paying jobs, and served the public interest. >>>more
The case for high speed rail in America
Passengers fill every seat in the glass-roofed Parlor Car on Amtrak's Coast Starlight train en route from Oakland to Los Angeles. Running along the Union Pacific Railroad tracks as it hugs the California coast, the Coast Starlight route offers some of the most spectacular scenery in the USA. >>> more
Rail advocates urge closer look at train travel
For decades, many American advocates of high-speed train travel have looked longingly at nations such as Japan, France and Germany, dreaming of a day when travelers in the USA would zip from city to city faster than they could drive and nearly as fast as they could fly. >>> more
Bloomberg to Meet with Rep. Mica on High Speed Rail Link
the New York Sun reported that Mayor Bloomberg will be meeting with Rep. John Mica on Friday to discuss his proposal for a high speed rail link – or “rocket train” – between DC and NY, a bill we detailed last week (see ”New DC/NY High Speed Rail Link?” and “DC/NY High Speed Rail Legislation Advances in House.”) It's no surprise that Senator Moynihan was an early proponent of the idea >>> more
Congress Eyes a Rocket Train To Washington
A two-hour rocket train between New York and Washington is the goal of new legislation that cleared a key hurdle in Congress last week, the House Transportation and Infrastructure Committee. >>> more
New high-speed rail bill from John Kerry?
Back in July, Massachusetts Senator John Kerry spoke a bit about the need toimprove the average speed at which the Acela travels the Northeast Corridor. (For more discussion about top speed vs. average speed, please see this post.) In a conversation with the Boston Globe (story now archived, snippets here), that paper reported the following: >>> more
Transportation infrastructure: National Surface Transportation Policy and Revenue Study Commission releases findings to fix U.S. surface transportation systems
WASHINGTON—The current state of surface transportation in the United States is at a crossroads, with a looming crisis coming if steps are not taken to address the myriad needs for improved infrastructure improvements and to meet the expected demand in domestic freight growth in the coming years, according to a long-awaited report released by the National Surface Transportation Policy and Revenue Study Commission today. >>> more
NYSDOT Announces $20.4 Million For Airport Infrastructure
New York State Department of Transportation (NYSDOT) Commissioner Astrid C. Glynn today announced approval for more than $20.4 million in grants for aviation capital projects across New York State. This funding, primarily from the Renew and Rebuild New York Transportation Bond Act of 2005, will support infrastructure, security, and economic-development projects at 48 public-use airports in the state
Companies To Watch:
Automotive & Transportation
AC Propulsion
CleanAir Logix
Myers Motors
Mygistics
Phoenix Motorcars
PML
Tesla Motors
Think Global
ZENN Motor Company
Construction
Alternative Construction Technologies, Inc.
Summary:
As of 11/9/08; we are awaiting a second stimulus package that is expected to include funding for Transportation Infrastructure projects. A survey of The Department of Transportation by “ASSHTO” indicates over 3,000 plus Bridge & Highway projects, totaling 17.9 Billion dollars that are ready to go given funding. In addition, an October 2008 survey of public transportation agencies by the American Public Transportation Association (“APTA”) identified 559 ready-to-go Transit projects at a total cost of $8.03 Billion. Passenger Rail, Amtrak identified projects totaling $160,000,000 in cost that are ready-to-go. Aviation - FAA states it needs an additional $600,000,000 to complete or continue on going projects.
Long term projects such as high-speed rail travel, aviation, ports etc. will be addressed in future legislation. The question as to the best way to fund these projects is being addresses by Senators Christopher J. Dodd and Chuck Hagel. To date they have establishes a new method through which the Federal government can finance infrastructure projects of substantial regional or national significance more effectively with public and private capital “NATIONAL INFRASTRUCTURE BANK ACT OF 2007”.
The issue of High-Speed Rail is also being addressed on the state level by California, with the passage of Proposition 1A, which calls for an 800-mile network of trains operating up to 220 miles an hour and linking California's major cities between San Diego in the south and San Francisco and Sacramento in the north (see 2008 California High-Speed Trains Business Plan Released).
