Infrastructure report: US not globally competitive

From ULI, Ernst & Young

David Crossley, May 17, 11.

In contrast with its global competition, the United States is lurching along a problematic course—potentially losing additional ground in terms of essential infrastructure development, according to a new report from the Urban Land Institute and Ernst & Young. Among other things, Infrastructure 2011: Strategic Priorities says

After more than 30 years of conspicuously underfunding infrastructure and faced with large budget deficits, increasing numbers of national and local leaders have come to recognize and discuss how to deal with evident problems. But a politically fractured government has mustered little appetite to confront the daunting challenges, which include finding an estimated $2 trillion just to rebuild deteriorating networks. Operating beyond their planned life cycles, these systems include roads, bridges, water lines, sewage treatment plants, and dams serving the nation’s primary economic centers.

Although President Obama ranks infrastructure as one of his administration’s top three “win the future” initiatives (together with education and innovation), the chances for setting and executing national priorities appear to be foundering in partisan debate over tax burdens and how to cut exploding
government debt. Plans for transformational networks—regional high-speed passenger rail, a new electric grid tied to energy-saving technologies, and state-of-the-art satellite air traffic control systems to replace obsolete radar stations—will probably get delayed, pared back, or shelved. Despite the nation’s unemployment woes, the vast job-creation potential of infrastructure projects is being sidetracked by concerns about government spending appetites and potential cost overruns.

Related benefits from reducing carbon footprints—energy efficiencies and greater independence from problematic foreign energy sources—are also failing to gain much traction. The overriding stumbling block to generating support for rebuilding the country’s infrastructure remains simple public resistance to paying more for these systems—either through higher taxes or user fees. Although informed voters have passed bond issues and even some sales tax increases for new projects, Congress perennially refuses to raise the federal gasoline tax or allow states to put new tolls on interstate highways, which could help ramp up funding for mass transit alternatives and repair existing highways and bridges.

The report suggests a “path forward:”

Real progress may still be possible if waste hawks concentrate more of the limited funding available on merit-based projects with significant national and regional economic benefits and government agencies are motivated to fashion workable partnerships with private operators through improved procurement protocols. The interest in gaining access to private capital and expertise through PPPs should accelerate as public funding sources diminish. Officials realize these transactions can help reduce expenditures in building and/or managing certain types of projects and concessions. Some states and local governments wisely are beginning to undertake realistic life-cycle budgeting for operating and maintaining systems, which can result in lower costs and greater efficiencies over time.

This report also recommends:
• focusing attention first on making necessary repairs and upgrades to existing systems;
• developing a national infrastructure plan, then using a “Race to the Top” model for funding merit-based projects at the state and local level that dovetail with the country’s overall economic priorities;
• concentrating spending on the nation’s primary metropolitan areas, and in particular the global gateway markets where population and business activity are concentrated, and at the same time integrating infrastructure and land use planning to gain greater efficiencies;
• providing greater long-term certainty for federal funding to support planning for capital projects;
• instituting federal and state infrastructure banks to help support project financing, including public/ private partnerships; and
• phasing in user fees to help fund infrastructure initiatives on a continuing basis.

The report includes a short section on the Houston region:

Houston | Light-Rail Plans Try to Get Back on Track
Despite an early history of crashes and continuing local opposition from anti-transit groups, Houston’s initial foray into light rail has proved a relative success. The city’s 7.5-mile Main Street corridor rail line attracts about 40,000 passengers daily, the second-highest ridership per track mile in the country after Boston’s Green Line.

Now, the Metropolitan Transit Authority hopes to build the nation’s first non-hub-and-spoke light-rail configuration, with four new lines and an extended Main Street corridor crossing and interconnecting with each other. The design reflects mobility patterns in this multi–urban node suburban agglomeration and could serve as a model for similar metropolitan areas like Phoenix, parts of southern California, Atlanta, and Dallas that have no predominant city centers. But potentially costly missteps have delayed the start of construction and earliest completion until 2014; the agency lost $900 million in federal grants by not complying with Buy American guidelines for the system’s rolling stock. Political leaders, including the city’s congressional delegation, are lobbying to regain funding in a much less hospitable, post-stimulus budget environment. And, in a bid to raise funds to supplement fares and sales tax revenues,
the city is considering converting 84 miles of existing HOV lanes into managed toll lanes.

When the public experiences the impacts of deteriorating infrastructure directly, they are more willing to dig into their pockets to correct problems. That happened in Houston last November. Street flooding helped convince enough voters to narrowly pass a drainage fee referendum that will fund repairs on the city’s deteriorating sewer and roadway infrastructure. Over a 20-year period, the new monthly taxes, averaging about $5 per homeowner, would raise about $8 billion for new storm drains and related flood control systems. By some estimates, 65 percent of the city’s drainage and street infrastructure has passed its useful life.

Report