The legislative Outline for Rebuilding Infrastructure in America: A Christmas wish book
Reading through the recently released infrastructure proposal from the White House I am reminded of the Sears and Neiman Marcus Christmas Wish Books I used to receive in the snail mail. They dazzled the eyes. Contained some things you could actually need, lots of things you did not want, and most of which you could not afford.
The proposal, which is not actually a legislative proposal, but rather a litany of changes the White House is expressing interest in having the Congress address, broadens the definition of infrastructure from the traditional framework of transportation modalities to include all of that plus services for veterans, broadband, super fund clean-up sites, and work force development.
The proposal contains four broad themes that focus on incentives for general infrastructure development, special treatment for rural infrastructure development, transformative infrastructure development, and infrastructure financing mechanisms. Additionally, the proposal addresses infrastructure on public lands and the repurposing of federal real property. What the proposal does not address is how to pay for the anticipated $1.5 trillion price tag the White House has put on this package.
The authors of this package deserve great credit for the comprehensive and imaginative approach they have taken to assembling this wish book. They’ve thought about virtually every obstacle that stands in the way of improving our current infrastructure, except how to pay for the return on investment the administration hopes the private sector will make if regulatory reviews and public accountability is sufficiently reduced or eliminated.
Fortunately, this is only a wish list that Congress and the American public will have ample time to consider, modify and/or discard. It is also unlikely that whatever legislation is developed and eventually sent to the President for his signature will be many months in the making. The current surface transportation, water, and aviation reauthorizations will not lapse until at least 2020, and given the way Congress currently operates, there is little likelihood congress will act before it faces those deadlines.
GLDPartners knows well the potential of joining public and private resources to further the public objectives for transportation efficiency and economic development. We believe that simplistic views about having the private sector fund those public objectives are, well, naïve and therefore unproductive. With that said, it is right to push the limits in the US about developing comfort and sophistication about producing a supportive political climate and creating policy that enables specific project investment opportunities for ready infrastructure investors. In most US states or local governments there is not today a significant comfort, interest or level of sophistication about reducing the public risk profile by joining their objectives with private investment. This might be about funding projects where the State or local government just doesn’t have the cash flow to support the debt to fund infrastructure that is called-for in strategic plans.
In some other (highly developed) parts of the world, there is a structural comfort in exploring the multiplier effect of undertaking public-private arrangements. There are numerous examples of successful integration of public and no-public resources to not only fund core infrastructure but also to support strategic investments in economic growth. The US is far behind in this integrated thinking. It seems to not matter much whether places consider themselves more fiscally conservative or not, generally speaking Americans seem to worry a lot about having public and private resources touch. We know that there are some pretty sophisticated and well-funded private investment groups that are waiting for this to evolve, but they’ve been waiting for some time for the US to catch-up to other places that have had successful experiences. in our world, we see quite a lot of opportunity in road (and associated direct economic development) construction, and for airports and seaports. More on this soon.
So back to Washington, get ready to be engaged in the deliberations ahead, but rest easy, that sugar plums will have every opportunity to dance in your head, before you need to make your selection from the Administration’s infrastructure wish book.
Eric Peterson and Adam Wasserman
GLDPartners is an international investment and advisory firm that specializes in revenue and infrastructure development projects at and around high-opportunity airports, seaports and strategic trade and logistics hubs. The foundation for GLDPartners’ work is its proprietary Market Competitiveness Model which can accurately portray a realistic forward-view of competitiveness. The MCM uses a range of sector business intelligence and produces a forward view of sector growth and development. The Company also advises global companies about supply chain strategy and corporate facility location. GLDPartners is headquartered in Scottsdale, Arizona, with offices in New York, Washington DC and in the UK. www.gldpartners.com
