Recently in Infrastructure Category

Water Bill to Boost Public-Private Partnerships

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We have previously written regarding critical repairs and updates needed for the Nation's aging infrastructure. We have also noted the need for private investment to get these capital-intensive infrastructure projects off the ground. An Act recently passed with strong bipartisan support by Congress and expected to be signed into law as early as this week by President Obama seeks to promote private investment in water infrastructure projects through innovative financing programs and the use of public-private partnerships ("P3s").

The Water Resources Reform and Development Act of 2014 ("WRRDA") (H.R. 3080) establishes a five-year pilot program - the Water Infrastructure Finance and Innovation Act ("WIFIA") - which provides low-interest federal loans and loan guarantees for major water infrastructure projects. WIFIA authorizes the Army Corps of Engineers and the Environmental Protection Agency to provide up to $175 million in direct loans and loan guarantees for the construction of critical water infrastructure projects, including those delivered through P3s. WIFIA is modeled after the Department of Transportation's Transportation Infrastructure Finance and Innovation Act, a successful federal program which has supported major P3 transportation projects.

In addition, WRRDA creates a separate 15-project pilot program - the Water Infrastructure Public-Private Partnership Program - to assess the use of P3s to accelerate projects in such areas as hurricane, storm, and flood damage reduction; coastal harbor improvement; and aquatic ecosystem restoration. These pilot projects authorize the Army Corps of Engineers to enter into agreements with private entities and state and local governments to help address a significant project backlog.

It is estimated that the U.S. water and sewer infrastructure will need an investment of between $600 billion and $1 trillion in the coming decades. Given the magnitude of capital needed and the critical nature of these projects, P3s seem to be an ideal structure for accomplishing the work, particularly given the current financial pressures faced by the government and its agencies. If WRRDA and its programs prove successful, it makes sense to expand such financing programs and encourage the use of P3s to fund projects addressing other sectors of the Nation's infrastructure.

Hallmarks of Infrastructure Success

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Enhancing the quality of life and economic opportunity in any region will require investments in social infrastructure--facilities for civic life, health care, education, and social services--as well as transportation infrastructure--transit, highways, surface streets, and parking. These projects entail considerable risks in design, approval, and execution, and must compete with investments elsewhere in the public and private sectors. Attracting economic and political support of all types for infrastructure will be critical to achieving the region's potential.

In this article, reprinted with permission from the Bay Area Council Economic Institute, Pillsbury Partner Rob James identifies the hallmarks of projects that tend to realize the greatest success in navigating the risks and meeting the competition.

Building Around Nature - Literally

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Construction is set to begin in April on a highway bypass south of College Station, Texas. But a group of ancient oak trees sits near the site where the road will run. The Texas Department of Transportation ("TxDOT") intended to remove four of the trees, each 200 to 300 years old, which stood in the way of the planned bypass. And the safety of the nearby trees, including a massive 500 year-old oak tree thought to be one of the oldest trees in Texas, could not be guaranteed.

But community outcry has forced the TxDOT to reassess. For nearly 150 years, Regina McCurdy and her family have owned the land on which the ancient oak trees sit. The last 7 of those years, she and her family have been fighting with the TxDOT to save the trees.

It appears their pleas in favor of nature were finally heard. Last week, the TxDOT decided to redesign the road. The new design will use a narrower median to allow the road to be built around the oak trees. According to John Barton, TxDOT Deputy Director, it is an "urban design in a rural setting." Additionally, an arborist will monitor the trees during the construction process to ensure their survival.

Now THAT is sustainable design.

California's High Speed Rail Inches Toward Construction

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Since we last checked in on California's planned high speed rail system nearly a year ago, it has continued to take baby steps toward construction.

Mike Rosenberg of the San Jose Mercury News notes here that on June 6 the California High Speed Rail Authority's (CHSRA) board authorized its CEO to negotiate final terms of a contract for the first phase of construction with a Tutor Perini-led group after its $985 million bid beat its nearest competitor by about $100 million and the initial estimate by over $200 million.

The project also avoided a potential roadblock with the June 13, 2013 decision of the federal Surface Transportation Board (STB) to grant the CHSRA an exemption allowing it to proceed with construction without subjecting itself to the STB's approval requirements in addition to the hurdles already cleared. The STB's decision, effective June 28 according to its text, is available here.

Light at the End of the (PortMiami) Tunnel - Harriet Reaches Watson Island

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THE QUESTION: (A question pondered as far back as October 1981.) What do you do when the only way for 16,000 cars to get from point A to point B each weekday is to go through congested streets of downtown Miami?

THE ANSWER: The Port of Miami Tunnel (POMT) - a $1 billion tunnel connecting I-395 to the Port of Miami.

POMTProjectSiteMapSMALL.jpg

THE DILEMMA: How exactly does one build a tunnel (twin tunnels actually) approximately 4,2000 feet long, almost 40 feet in diameter, and 120 feet below the surface of the water?

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Who's picking up good vibrations?

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New Tappan Zee Bridge.jpgDon't worry. That shaking you feel isn't an earthquake. It's the construction of the new Tappan Zee bridge across the Hudson River north of New York. I'm kidding of course. Construction on the $3.9 billion project hasn't even started yet, but much of the geotechnical work, not to mention the design, has. Now they are planning on picking up good vibrations with highly sophisticated shoebox-sized sensors posted around the construction site. This is nothing new, but the plan to make the data available online 24/7 is--at least as far as I know. Check back here in a few weeks to see the monitoring page.

But lest you think that the only people interested in the movers and shakers at the bridge are the contractor and the nimbies and gadflies nearby, note this: Columbia University's Lamont-Doherty Earth Obversvatory is just downriver on the West side, home to gobs of the largest and most sophisticated earth measuring equipment you'll find. My geotechnical engineer friends tell me that every year Lamont-Doherty hosts an open house, which is generally geared toward kids, but is fascinating for geeks (like me) of all ages. It's usually in early October, so check their website if you're anywhere near New York and take the kids. While you're there you can swing by and see a pretty cool construction site at the new bridge.

P3s and America's Ports

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By Pillsbury Winthrop Shaw Pittman

In a previous post, we reported that the American Society of Civil Engineers ("ASCE") released its 2013 Report Card for America's Infrastructure. America's cumulative GPA for infrastructure was a D+. One of the categories in this report focused on ports, which received a C grade. Now a new report goes into more depth on one particular part of our infrastructure: Ports. The question, it seems, is: CapEx or Capsize. More, after the jump.

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Sandhog view of New York's Second Avenue Subway Line

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For a visual tour of the construction of New York's Second Avenue Subway line, the Big Apple's first major expansion of its subway system since 1932, check out CBS Sunday Morning's video, NYC's subway, still under construction.

Amidst the obligatory interviews on the surface with planners, engineers, and inconvenienced neighbors, the video offers interesting glimpses of the excavation and construction of the first phase of the $4.5 billion project. Phase 1 of the planned four phase, two-track line will provide service from 96th to 63rd Streets and is expected to be complete in December 2016. The new line, once all four phases are completed, is to shuttle commuters up the East Side from Hanover Square to 125th Street.

If you don't have time for the six and half minute video, skip to the photo gallery, Building NYC's Second Ave. Subway, for photos and renderings of the project and equipment. For more detailed information on the project, including monthly project updates, go straight to the horse's mouth at MTA.info.

America's Infrastructure GPA: D+

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The American Society of Civil Engineers ("ASCE") has released its 2013 Report Card for America's Infrastructure. The Report Card assigns a letter grade to sixteen major categories of infrastructure - such as bridges, dams, and roads - based on capacity, condition, funding, future need, operation and maintenance, public safety, and resilience. The individual categories ranked by the Report Card range from a high of B- for solid waste to a low of D- for inland waterways and levees. The 2013 Report Card gives the nation's infrastructure a D+ GPA and estimates that $3.6 trillion in investment will be needed by 2020 to maintain a state of good repair.

The D+ rating is up only slightly from the D GPA given by the ASCE's last Report Card in 2009. And the study is replete with grim statements. For example, it notes that, "much of our drinking water infrastructure is nearing the end of its useful life," "one in nine of the nation's bridges are rated as structurally deficient," and "[f]orty-two percent of America's major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually."

The ASCE's President, Gregory E. DiLoreto, notes that much of the nation's infrastructure was put into place over fifty years ago and is simply "overwhelmed or worn out." Mr. DiLoreto notes the current backlog of infrastructure projects and deferred maintenance, and he stresses the need for innovative solutions and increased investment. According to Mr. DiLoreto, failure to address these projects will cost American families an estimated $3,100 per year in personal disposable income.

So how does America improve these abysmal grades? According to the ASCE, the solution is simple - "when investments are made and projects move forward, the grades rise." With many cash-strapped states now looking to public-private partnerships to address their infrastructure needs, perhaps the 2017 Report Card will be an improvement.

G2G Friday Favorites - Aug 16

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G2G Friday Favorites - July 20

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California High Speed Rail Moves a Step Forward

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On July 6, the California State Senate narrowly approved the use of $4.5 billion in proceeds from state Proposition 1A bonds for transportation projects. Governor Jerry Brown is expected to sign the bill into law. Full text of the bill can be found here. Senate Bill 1029 is intended to preserve California's rights to about $3.3 billion of federal American Recovery and Reinvestment Act (ARRA) funds for the long-awaited California High Speed Rail.

About $2.6 billion of the state bond proceeds is now dedicated to High Speed Rail, intended to match the $3.3 billion of ARRA funds for a total of about $5.9 billion in funding for the early rail projects. (The remaining $1.9 billion is earmarked for local transit improvements, such as $140 million for new BART cars, $705 million for Caltrain electrification, $61 million for the SF Muni Central Subway, and $500 million for Metrolink and related systems.)

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The "Silver" Isn't Lining The Union Pockets -- Silver Line To Proceed Without Union Preference

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By Laura B. LoBue

Perhaps they saw that Scott Walker defeated a recall attempt in Wisconsin and decided that momentum is moving against organized labor. Whatever the thought process, a log jam has been removed and a major project can move forward. On Wednesday, June 6, the Metropolitan Washington Airport Authority (WMAA) agreed that Phase II of the Dulles Rail Project (extending the commuter rail line from Wiehle Avenue in Reston to Dulles Airport) can proceed without the pro-labor provision that has jeopardized project funding. The provision at issue would have awarded points to potential bidders that promised to use union labor on the project. Contractor bids are evaluated by WMAA, at least in part, on points awarded for any variety of factors, such as prior project experience and the strength of the contractor's technical proposal. Thus, award of the project might not necessarily have gone to the lowest bidding contractor. For more than a year the debate raged, even reaching the floor of the Virginia Assembly. Virginia, a right to work state, threatened to withhold its share of project funding if MWAA insisted on the pro-labor provision. Already, Governor McDonnell has pledged $150 million from Virginia at the start of 2013 now that the pro-labor provision has been taken off the table. Those that applaud MWAA's decision point out that the project costs will likely be lower, leading to lower costs both for taxpayers and commuters.

With this hurdle aside, the path is cleared to extend the Silver Line to Dulles Airport. The Loudoun County Board of Supervisors has yet to approve its portion of funding to carry the Silver Line past Dulles and into Loudoun County.

With or without you -- State and local governments aren't waiting for the feds; they're investing in infrastructure now.

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Maybe this is the ying to the yang of the American Society of Civil Engineers report that Paul Levin blogged about earlier this week. The Urban Land Institute and Ernst & Young just published Infrastructure 2012: Spotlight on Leadership, in which they detail how state and local governments have decided not to wait for funding from the federal government. It has become like Waiting for Godot (or perhaps Waiting for Guffman). In a Presidential election year the federal government is even more gridlocked than normal -- if you can believe that.

But that gridlock doesn't slow down the rate of decay of our infrastructure, so state and local governments are finding ways to get'r done. These range from old fashioned taxes and bonds to Public Private Partnerships. Of course, no one likes taxes and some object to public private partnerships as selling off our infrastructure. But remember, when a private company finances a road, they can't roll it up and take it home.

If you don't have time to read the 70 page report, you can see a condensed writeup about it here.

America in the Dark

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The American Society of Civil Engineers (ASCE) just released a report titled "Failure to Act, the Economic Impact of Current Investment Trends in Electricity Infrastructure" and no, the results are not pretty. According to the report, the gap between the amount actually spent on infrastructure across America and the amount that needs to be spent to maintain the system will reach $107 billion by 2020 and $732 billion by 2040. The Southeast and the Western portions of the country are particularly vulnerable to infrastructure underinvestment, making up approximately half of the country's infrastructure deficit. Furthermore, don't forget about the 2003 blackout across large sections of the East Coast, including New York City, that showed the grid's vulnerability. This report comes on the heels of ASCE giving the United States a grade of "D+" in the Energy category in 2009. D+ seems pretty generous.

The ASCE report predicts that disruption and inconsistent service resulting from faulty electricity infrastructure will lead to a reduction in U.S. GDP of almost $500 billion and half a million fewer jobs in America by 2020. The calculations implicit in this report are simple: if we can spend $100 billion to address this problem over the next decade, the country on the whole will be half a trillion dollars better off. It seems so simple.
However, the crunch of budget deficits at both the federal and state levels means that these profitable long-term investments lose out to short-term cost cutting. President Obama, however, has championed doubling overall infrastructure spending that would also help spur job growth and make up for years of underinvestment, but it is not enough.

Public-Private Partnerships will play an important role in bridging this funding gap by leveraging private investment over the long-term. The private sectors sees this $500 billion in potential savings and the United States needs to think creatively to spur further infrastructure development.