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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?
The American Society of Civil Engineers released its 2013 Report Card for America's Infrastructure last week, giving the nation a D+ overall for the state of its roads, bridges, levees, aviation, dams, energy, etc. Generally, that puts the country somewhere between "poor" and "mediocre." Sounds about right.
There is some mild good news. ASCE does this report ever four years, and the country's infrastructure actually showed improvement since 2009 and 2005, when the all-around grade sat stubbornly at a D. Of course, in 2001, the grade was a D+. But then again, it was a D in 1998. The country's infrastructure is definitely a problem student.
Let's put this in perspective. These engineers are not grading on a curve. To get an A under ASCE's framework, the utility under its inspection needs to be "exceptional." That has never happened. The highest overall grade, a C, came in 1988 from a similar report card issued by the National Council on Public Works. (ASCE cautions against making direct comparisons between the 1988 report card and the grades issued in the last 15 years because the categories and measuring tactics are different.)
Excluding 1988, then, the only infrastructure category that has ever earned above a C is solid waste disposal, which was rated at a B- this year. That's somewhere between "mediocre" and "good." That's because people are recycling. ASCE applauded the 34 percent recycling rate, which has doubled since 1980.
Even though the grades persistently hover around Ds, the report card is useful because it provides the transportation community the ammunition to push for more infrastructure investment. The players all weighed in when the report was released, saying more or less the same thing--the economy depends on a functioning roads, railways, aviation, [fill in the blank]. Senate Commerce Committee Chairman John Rockefeller, D-W.Va., used the report to plug his legislation creating an infrastructure fund within the Transportation Department. Rep. Peter DeFazio, D-Ore., used the report to plug his proposal to index the federal gas tax to construction costs and fuel economy standards.
What does the report card tell us that we didn't already know about the nation's infrastructure? Is ASCE being too tough? What would an "exceptional" road, runway, or levee look like? How does the United States compare with other countries on a similar grading scheme? What are the most pressing needs for the United States, and how can they be addressed?
Here is a puzzling quandary: If an industry--say, airlines--struggles under federally-mandated taxes that must be added to the price of tickets, how can a federal agency--say the FAA--not struggle under a mandatory 2.5 percent cut? Or can both the industry and the federal agency handle a little bit of belt tightening?
This was a question that piqued my interest at the Aero Club luncheon last week, which was keynoted by House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa. The newly minted committee chairman must have made the airline industry cheer when he said that airlines are "the most regulated deregulated industry."
"We treat [airlines] like a piggy bank" with the various taxes and fees that lawmakers attach onto airline tickets, Shuster said. Taxes make up 20 percent of the cost of an airline ticket, according to Airlines for America. "Only alcohol and tobacco do we tax as high as that. It's like it's a sin to fly," Shuster said.
Airlines are forever on the defensive about their ticket prices, and they repeatedly remind anyone who will listen that their profit margins are extremely narrow. It's a tough industry, and Shuster seems sensitive to that fact.
Yet Shuster has a lot less sympathy for the Federal Aviation Administration, which is operating under mandated budget cuts that went into effect at the beginning of the month. "The sky isn't falling. Everybody realizes that a 2.5 percent cut in your budget is doable," he said Friday. Speaking specifically about the FAA, Shuster said, "They have monies they can move around. ...The FAA's workload has gone down 17 percent."
Nonetheless, furlough notices have already gone out for FAA workers. Greg Stanton, the mayor of Phoenix, Ariz., was in town earlier in the month to beg FAA to keep its federal resources flowing to air traffic control towers at two of his local airports to keep them from closing. Like many other state and local officials who were pleading their cases to the FAA, Stanton was told he would have to find the money elsewhere.
As far as I can tell, Shuster's sympathies lie with the airline industry and its tax burden but not with the sequester burden that is weighing down the entity that regulates the same industry. Shuster's biggest complaint with the FAA is that he has not gotten good information about how they are implementing the mandated cuts. More broadly, Shuster is like most Republicans who have lost faith with the administration on negotiating overall deficit reduction. The FAA is caught in the middle.
Given the general animosity, any communication between the FAA and Shuster is laden with political overtones and competing visions: For Shuster, the FAA has a bureaucratic mess to clean up. For FAA employees and the administration, the cuts are nothing short of a crisis.
Is it fair to compare the airline industry's tax burden with the FAA's cuts under the sequester? Are airline ticket taxes appropriate? Should they be changed in any way? Is Shuster right that the federal government treats the airline industry like a piggy bank? How serious is the FAA's budget cut? Is the sky falling or not?
It's that time of year again. House Democrats convened a press conference last week introducing legislation to expand the "Buy America" requirements for infrastructure investments. In short, the lawmakers want to boost the American raw materials and manufactured components that are required to go into major road, bridge, and transit projects.
The legislation has no Republican support and is unlikely to go anywhere, but it's worth looking at the summary of the proposal to see where Democrats think the current system falls short. In addition, the Transportation Department's overview of the law gives us a textbook example of balancing competing needs--protecting the country's dwindling manufacturing capacity without making it impossible for the private sector to invest in big projects. Legislate, but do no harm.
The Transportation Secretary now has the authority to waive Buy America provisions for almost any reason--if it's against the public interest, the raw materials aren't available, or the materials are simply too expensive. Democrats want to make it harder for him to do so, and they want the Federal Highway Administration to review whether old waivers are still warranted.
The Democratic Buy America proposal also would gradually increase the requisite American-made percentage of transit-related components from its current 60 percent level to 100 percent. And why not? The original numbers in current law are simply a product of legislative haggling.
This is not a new debate in Washington, but it's worth exploring the origin of the law. What is the purpose of Buy America? Is it necessary? How does it affect private-sector investments in infrastructure? How does it affect employment in the transportation industry? In its current form, is it doing what it was intended to do? Would it be more or less effective with the changes suggested by House Democrats?
Amtrak ridership has grown 55 percent since 1997. That is faster than any other transportation mode over the same time period. Here are some comparison figures: Driving, as measured by miles traveled, only grew by 16 percent. Domestic air travel grew by 20 percent. But here's the catch. Eighty percent of Amtrak's ridership are on short corridors of 400 miles or less. The short runs are responsible for almost all of Amtrak's ridership gains over the last 16 years. Not coincidentally, they are also the only corridors that are operating in the black.
These are the most relevant take-home facts in the latest report on passenger rail from the Brookings Institution.
The success of Amtrak's short runs shouldn't be a surprise, according to the researchers. "Research and international experience show that routes less than 400 miles are the most competitive, especially with air travel," the report says.
Even so, the researchers recommend that state and federal governments concentrate on bolstering the longer rail lines--not because they are profitable but because they will establish parity across the nation with the more heavily trafficked areas. The 18 Amtrak lines that are longer than 400 miles represent the "geographic equity" part of the rail line. "They pass through nearly all 46 states that Amtrak serves, far more than their short-distance peers do. These routes also travel for vast stretches between major population centers and offer service to many smaller, relatively isolated communities with limited inter-metropolitan alternatives," the report said.
In other words, even rural residents should have a rail option, at least according to this report.
Congress, particularly Republicans, is not particularly friendly to Amtrak. This was most definitely the case when Rep. John Mica, R-Fla., had the helm of the House Transportation Committee. The committee's hearing this week on the role of freight and passenger rail in the transportation system could shed light on the new chairman's, Bill Shuster, R-Pa., views on Amtrak and passenger rail in general. He has generally sided with Mica on the issue, but perhaps he will be less vocal about it. (I'm told the hearing is not intended to be "gotcha.")
What does the data on Amtrak suggest about travelers' habits, particularly with trains? Is there an untapped market between major metropolitan areas for rail? Why are short distances so popular? Why is it important to include longer runs on a rail system if they aren't profitable? Are the areas of the country that aren't cut out for rail? How should intercity passenger rail connect with intracity transit? Do we need another passenger rail system besides Amtrak?
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 $1.27 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?
President Obama loves to invest in infrastructure. He has been asking for a $50 billion in "frontloaded" investments to repair bridges and roads for the past four years. The State of the Union address last week was no exception. His latest name for the plan--notice he doesn't use the term "stimulus"--is "Fix It First." The money would be targeted to the most urgent upgrades, "like the nearly 70,000 structurally deficient bridges across the country."
Not to be a downer, but Obama is living a fantasy. Congress has consistently rejected this proposal for years. I think he knows it, too, given that "Fix It First" got one sentence in the actual speech.
Republicans were ready with their rejections. Even before Obama's speech, Sen. John Cornyn, R-Texas, said he hoped the president wouldn't ask for investments. "Every time he uses the word 'investment,' the American people will hear the word 'spending,' government spending," he said.
We have covered this topic on the blog many times. In honor of the SOTU madness, let's do it once more with feeling: Is an immediate investment in infrastructure really important? Would it make more sense to figure out a way to fix our long-term funding needs? What do Obama's consistent requests to Congress do for the overall attention to infrastructure? The White House says there has been progress since Obama first took office--300,000 miles of U.S. roads repaired, 22,000 bridges repaired, and 6,000 miles of rail improved. Did that make a difference?
Washington D.C., Los Angeles, San Francisco, New York City, and Boston rank at the top of the country's worst cities for traffic congestion, according to the most recent urban mobility report from the Texas A&M Transportation Institute.
TTI has lots of ways to measure the costs of congestion, from the number of hours delayed in traffic to the carbon dioxide emission attributed to traffic congestion. This year, the research group introduced a compelling new variable, the Planning Time Index (PTI), which measures the amount of time travelers add on to a trip to meet an important event on time, like a doctor appointment or an airline flight. A PTI value of 3.0 indicates that a traveler should allow three times the actual length of the trip to get their on time--i.e., they would allow 60 minutes for a 20-minute ride in light traffic. (Washington D.C. ranks Number 1 in this category with 5.72, almost three hours designated for a half-hour trip.)
"Washington, D.C., has the dubious distinction of being number one in two areas. It is the capital of partisan gridlock, and now traffic gridlock," observed American Road & Transportation Builders Association President Pete Ruane.
Everyone knows that traffic delays trips, but the report highlights just how variable traffic congestion can be, causing stress and frustration to commuters. The worst trips, the ones you remember, are usually caused by accidents. But other days, the ride can be half as long. "As bad as traffic jams are, it's even more frustrating that you can't depend on traffic jams being consistent from day-to-day. This unreliable travel is costly for commuters and truck drivers moving goods," said Bill Eisele, a TTI researcher and report co-author.
What problems are caused by unreliable traffic patterns, as opposed to more steady gridlock? How can the variability be mediated? How important is transit reliability in easing congestion on the roads? What constitutes "reliable" transit? Are there ways to make congestion patterns more predictable, even if the roads are still crowded? Understanding that budgets are tight, what ideas offer the best bang for the buck in combatting traffic?
Who knows what the kids are going to come up with next? Some of them think owning a car is a big bother and would rather rent or borrow one. Others don't even have a driver's license! Their smart phones are an extension of their brains, which makes grown-ups cringe when they get behind the wheel. Still, all that connectivity has tantalizing possibilities for modernizing how people get from place to place.
These were some of the thoughts tossed around at National Journal's "Affordable Mobility" policy summit last week, where automobile manufacturers and greenhouse gas emission specialists convened to talk about how to make travel more affordable and environmentally friendly. For the government, it's a delicate dance to nudge the transportation industry towards greener thinking without squelching innovation. And it's even harder to do without dedicated resources. "We can't control what kinds of discoveries are going to come on line," said Mary Nichols, who chairs the California Air Resources Board. "But we need to fix our infrastructure to give us the biggest bang for the buck."
What would a truly cutting-edge transportation system would look like? I imagine computerized traffic management, cars that drive themselves along my commute, elevated buses, automated trains.
The most advanced ideas need an up-to-date transportation grid to be anything but a pipe dream. The automobile industry has come a long way in improving gas mileage for its newer cars, in part because of a productive working relationship with the Environmental Protection Agency and the Transportation Department. Mass transit can't make those kinds of improvements without a commitment from government to support their innovations. So far, that commitment is lacking. Senate Environment and Public Works Committee Chairman Barbara Boxer, D-Calif., recently told Politico that she wants the soon-to-be-antiquated gas tax to be replaced with a user fee that takes into account newer electric and hybrid vehicles. Good luck with that one, senator.
What are the best new ideas in transit and mobility? What new ideas in transportation are on hold because of outdated or crumbling infrastructure? How would the big ideas in transportation change if innovators were confident that they had government support for their ideas? Are investments in high-tech transit too steep to be worth it? What is a realistic forecast for the future of transit?
It was Christmas Eve at my sister's house, where her twin three-year-olds vied for attention by hanging on the treadmill bars and the grown-ups quizzed me about whether the country would go over the fiscal cliff.
"By the way," said my brother-in-law, "did you know the East Coast ports are about to go on strike?"
Actually yes, I did know. But I was so busy trying to ascertain the fallout of the fiscal cliff crisis that I barely paid attention. The rest of the country was similarly preoccupied.
That's unfortunate. Ports are an integral part of the U.S. economy, and they have the potential to grow exponentially over the next decade. The value of imports through U.S. ports was $1.16 trillion (that's trillion with a T) in 2011, according to the National Oceanic and Atmospheric Administration. A recent report from Building America's Future projects that port volume could double by 2020 and quadruple on the West Coast.
Unfortunately, says the BAF report, the U.S. port system ranks 19th in the world in terms of port infrastructure quality. The Shanghai port in China now moves more container traffic a year by itself than the top eight U.S. ports combined. (Ports aren't the only part of the problem, by the way. The report projects predominant congestion at crucial points in the country's internal freight network by 2035.)
Cynically speaking, it's too bad that the more immediate crisis of a dockworker strike was temporarily averted. Policymakers and citizens these days appear immune to national challenges unless they are literally hours away from doom. Maybe being 19th in the world won't get our attention, but a mass shutdown of the East Coast and Gulf Coast ports would certainly wake us up.
What should ports of the future look like? What are the immediate problems now? Who really needs to be paying attention to ports, the public or just the relevant business and government stakeholders? Is unionization a barrier, a sideshow, or an asset to U.S. port development? How do other parts of the freight system in the country need to interact with ports and what is their role? Where are the weak spots in the system? Where are the strengths?