What is the future for public-private partnerships?
By Fawn Johnson
Correspondent, National Journal
President Obama upped his own ante on public-private partnerships last Friday, plugging a major construction project that will allow PortMiami in Florida to be linked directly to Florida's interstate highways through an under-the-bay tunnel. "State, county, and local governments got together and agreed to jointly fund PortMiami Tunnel. Everybody had some skin in the game," Obama said after touring the project. "They did something else--they partnered with a group of private sector companies to finance the design and construction of the project."
The PortMiami tunnel is being paid for by two French companies--Meridiam Infrastructure and Bouygues Travaux Publics--and several state and federal government funding sources.
It is also worth noting that the technological centerpiece of the PortMiami project is a "Tunnel Boring Machine" nicknamed Harriet by the Miami-Dade Girl Scouts that is 42.3 feet high (as high as a four-story building) and a 361 feet long. There's a great picture of Harriet on the Port of Miami Tunnel's web site.
Obama wants the business acumen that came with the PortMiami tunnel deal to be replicated elsewhere. He is proposing a $21 billion infrastructure plan that includes a national infrastructure bank, direct-subsidy bonds designed to attract new capital to infrastructure investment, and an expansion of the Transportation Department's TIFIA loan program. The details of the proposal, much of which have been discussed by the White House before, will be spelled out in the president's budget that will be released on April 10.
One of the more intriguing parts of the proposal involves increasing the size of private activity bonds that can be tax-exempt to attract private investors to large, complex projects like the MiamiPort tunnel. The ability to issue tax exempt bond to raise money has become increasingly more attractive to private investors since the upheaval in global bank markets, according to David Narefsky, a partner at the legal services firm Mayer Brown who specializes in infrastructure.
Obama's proposal also is a tacit acknowledgement that public-private partnerships are the one of the only ways major projects will get financed over the next several decades, absent billions of dollars magically appearing in the federal treasury. The goal of increasing the volume of the bonds, according to Narefsky, is "to make more of this incentive available and there's a recognition that the use of this will be increasingly popular."
TIFIA, the Transportation Department's direct loan/loan subsidy program already is tremendously popular, with a hand most major projects underway in the United States. Both the private bonds and TIFIA also enjoy wide bipartisan support in Congress, which must approve any of the changes Obama suggests.
What does Obama's latest infrastructure proposal indicate for the future of transportation and the role of government? How would raising the cap on private activity bonds impact the transportation construction market, and how quickly would the effects appear? Is expanding TIFIA a viable option? What about the infrastructure bank, which has consistently been rejected on Capitol Hill? Can there be new life breathed into that tired proposal?
By Fawn Johnson
Correspondent, National Journal
Being pissed off at the airport is something we all understand, so that's probably why everyone from President Obama to former White House chief of staff Erskine Bowles is talking about how much worse it will be for air travelers when automatic budget cuts go into effect on Friday. It's the public's common denominator.
"When you guys have to go out here to Reagan airport and wait in line three hours for security, you're going to be pissed and so is everyone else," said Bowles at a recent Politico briefing.
Yet Congress appears incapable of fending off the "sequestration" cuts, which were part of a debt ceiling deal negotiated a year and a half ago. The cuts will impact all of government; Washington D.C. is bracing for pink slips. In the transportation world, sequestration will add to the already heavy burden being placed on an infrastructure system badly in of upgrading.
No one really knows what's going to happen. If the budget hawks are right, it could be nothing. But if the sequester amounts to anything, the place where the public will see it first is at the airport. The Federal Aviation Administration is looking at $600 million in cuts, with virtually all of their 47,000 employees being furloughed for one day per pay period for the rest of the year. The Transportation Security Administration will experience a id="mce_marker".27 billion cut under the sequestration plan, which Homeland Security Secretary Janet Napolitano has said would lead to unspecified furloughs.
This isn't the first time we've seen this happen. The transportation community rarely gets its day in the spotlight unless air travel is somehow impacted. Look at the furor that erupted over a partial FAA shutdown in August of 2011, which led to a fairly swift resolution of aviation legislation that had been languishing in Congress for years. By contrast, a similarly stalled highway bill only limped to completion last summer by hitching a ride on a bill that kept student loan interest rates from increasing.
What's going on here? Why is air travel the thing that the public seems to care most about? How can the public's interest in aviation be used to broaden a general understanding of infrastructure? Other than long lines, how will the aviation industry be impacted by sequestration? What about the surface transportation industry?
Read more: The Airport Canary in the Sequestration Coal Mine
Infrastructure Banks as Back Up?
By Fawn Johnson
Correspondant, National Journal
For cash-strapped states, all hope isn't necessarily lost.
Despite shrinking federal funds, innovative tools such as revolving state loan funds present "an increasingly important mechanism for financing and funding infrastructure projects such as state infrastructure banks," according to a Brookings report out last week.
The way such loan funds are implemented is far from perfect, Brookings found, but they can represent an important means of delivering infrastructure projects. The short report walks through how the funds are structured in various states and how they can be improved on. For one, many state infrastructure bank officials say complying with federal environmental and contractual regulations can slow down the investment process--a problem that could be magnified for states with smaller projects and less-developed banks of their own.
A national infrastructure bank, as proposed by the administration, could help relieve states of some of those problems by offering expertise in dealing with complex regulations and project delivery, the report found.
Such loan funds and infrastructure banks may just be tools in states' infrastructure project delivery arsenals, but they're tools that can be sharpened and strengthened. Is there a broader role the federal government can take in fostering innovative financing like these funds? If so, how? What more can states do? Or is this barking up the wrong tree?
Transportation is a Civil Right
By Fawn Johnson
Correspondant, National Journal
The Bus Riders Union and several other civil rights organizations took to the streets in Los Angeles last week, saying the Los Angeles County Metropolitan Transportation Authority should restore 1 million hours of bus service that were lost over the last four years. The union charges that the cuts in service, along with fare increases, have disproportionately harmed 500,000 African-American, Latino, and Asian-Pacific Islander bus riders.
That's not all. The coalition wants President Obama to personally intervene in the negotiations between the Transportation Department and the LACMTA. DOT slammed the city for implementing service changes without conducting a legally required analysis about the impacts on minority and poor riders. But the federal government has not gone so far as to require the city to reverse its decisions, which agitates the bus riders.
"We're framing this fight right now as a fight over the future of our city," said Eric Mann, director of the Labor/Community Strategy Center in Los Angeles. Mann says the city's emphasis on rail commuting is gentrification at its worst--harming the most disadvantaged populations who rely on bus service. "The rail system is going to bankrupt the transit system," he said.
The protest is a potent reminder that transportation systems are about more than state budgets, contracts, and traffic manipulation. A transit system sets the character for an entire city. Even the best-intentioned changes to it can have devastating and unexpected consequences.
What are city residents entitled to when it comes to mass transit? Do the same rights apply to road access? Does it make sense to consider access to transit or roads a civil right? If so, how does that change the policy conversation? How can city officials stay cognizant of the needs of various populations? What rights do city and state governments have with regard to their transportation systems? How can transportation officials balance the needs of everyone while staying within their budgets?
