Infrastructure Alert - July 24, 2012

On July 6, President Obama signed the transportation reauthorization bill, culminating a three-year stretch of bipartisan back and forth over highway and transit spending. Last week, the US Conference of Mayors released its annual U.S. Metro Economies Report which indicated American cities will become more congested, straining their transportation systems. At the state level, Georgia is scheduled to hold a referendum for a proposed one-cent transportation sales tax to raise revenues for future infrastructure projects.

On the Hill

On July 6, President Obama signed the bipartisan transportation bill. The law provides $100 billion in transportation spending for the next 27 months and also extends the federal flood insurance program for five years.

Significantly, the law as enacted is aimed at greatly enhancing the scope of the Transportation Infrastructure Finance and Innovation Act (TIFIA). TIFIA funding will be increased from $122 million to $1 billion, with the ability to lend up to $10 billion. The law expanded the program’s eligibility by eliminating a series of onerous requirements for project selection, including a substantial environmental requirement. The Department of Transportation Credit Council will now approve projects based on creditworthiness and the loans will be disbursed on a rolling basis. The transportation bill also creates the National Public Transportation Safety Program. The program will allow the Department of Transportation to put in place new federal safety requirements for mass transit.

In other federal news, last week, the Congressional Budget Office released a report titled “Infrastructure Banks and Surface Transportation.” The CBO stated that an infrastructure bank could enhance investment in surface transportation projects by providing new federal subsidies in the form of loans to a limited number of large projects. The CBO also considered such large projects would have significant national or regional economic benefits. Proposals for infrastructure banks that had requirements for internal mechanisms to generate revenue, such as tolls, were considered potentially too restrictive for many potential applicants.

The GAO released a report last week indicating that while the federal government is making substantial progress in implementing the OMB’s cloud computing initiative, they are having problems implementing cloud services. The OMB policy, called “Cloud First,” requires that agencies utilize cloud services whenever a secure, reliable, and cost-effective cloud solution exists. Agencies have found implementation of cloud solutions to be difficult due to federal security requirements and certifying vendors.

On July 18, the House Natural Resources Committee approved HR 6082, a bill that would replace the Obama administration’s current offshore drilling plan with a more expansive strategy. The legislation would create a timeline for the lease of 28 specific areas over the course of the next five years, whereas the Obama plan only provides for 15 areas. According to a Congressional Research Service report released earlier in the week, 15 offshore leases over the course of five years would be the lowest allotment offered since 1980.

On July 19, the U.S. Conference of Mayors released the next installment of its ongoing series of U.S. Metro Economies Reports, providing 2011 economic output numbers for the nation's 363 metro areas in addition to the 2012 economic outlook. The report, prepared by IHS Global Insights, indicates that metropolitan areas will absorb the vast majority of the nation’s population growth over the next 30 years, taxing the nation’s infrastructure. The total urban population will increase by about a third, with some larger cities, such as Dallas, Atlanta, Tampa, and Denver, on track to grow by more than 50 percent. Population growth, in addition to rising congestion costs and exports, will place greater strain on transportation systems.

At the Agencies

The Department of Defense and the Department of Transportation announced the approval of $180 million from the Office of Economic Adjustment (OEA) for the Federal Highway Administration (FHWA) to widen U.S. Route 1 through Fort Belvoir. Acting through an interagency agreement, the Federal Highway Administration Eastern Federal Lands Highway Division will complete the project in coordination with Fairfax County, the Virginia Department of Transportation, and the Command at Fort Belvoir. The project will begin once all environmental requirements have been met.

The Federal Railroad Administration (FRA) has issued a Notice of Intent that it will prepare an Environmental Impact Statement to evaluate potential passenger rail improvements on the Northeast Corridor (NEC) between Washington, D.C., and Boston. The purpose of the NEC Future program is to define current and future markets for improved rail service and capacity on the NEC, to develop a plan to incrementally meet those needs, and to create a regional planning framework to engage stakeholders throughout the region in the development of the program.

On July 9,Amtrak released a new plan for a $151 billion redevelopment of the entire Northeast Corridor.  The plan is highlighted by high-speed rail travel, including 37-minute trips between Philadelphia and New York. Amtrak would improve existing tracks, signals, bridges, and power lines and also build a separate high-speed corridor between Washington and Boston to accommodate trains traveling at 220 m.p.h. From a cost benefit perspective, Amtrak claims that the project would create 40,000 construction jobs a year for a 25-year period and 22,000 permanent jobs. The high-speed segment between New York and Washington would be completed by about 2030, and the route between New York and Boston by 2040.

As the nation's pipeline industry and merchant electric power sector remain at odds over how to address the need to expand the infrastructure to ensure enough future delivery capacity, the Federal Energy Regulatory Commission (FERC) is preparing to hold five regional conferences on natural gas-electric power coordination issues next month.

In the States

New York: On July 13, New York Governor Andrew Cuomo announced that $9 million in flood mitigation and control grants will be awarded through the state’s NY Works program.  The money will be given to 23 counties to help restore and rehabilitate waterways that were severely impacted by Hurricane Irene and Tropical Storm Lee in 2011. In addition, New York State is providing $7 million in funding so counties can meet their 25 percent non-federal match requirements to be eligible for federally funded stream restoration projects through the USDA Natural Resources Conservation Service.

New Jersey: A report by the Tri-State Transportation Campaign, “Tracking State Transportation Dollars” was released on July 17 and noted that New Jersey infrastructure spending is increasingly being shifted from transit projects to highway expansion.  While New Jersey still allots 31 percent of its transportation budget to transit spending – compared with the national average of 20 percent – that figure is down almost 20 percent from the 50 percent spent on transit in 2004. Transportation advocates would like to see more money spent on maintaining existing roads and bridges, 50 percent of which are deemed deficient.

In more ranking news, CNBC’s “America’s Top States for Business Survey” dropped New Jersey from 30th in 2011 to 41st in 2012.  The state was ranked worse than last year in six categories measured by CNBC, did better in only three categories. The biggest drop was in the “infrastructure and transportation” category, where New Jersey fell from 23rd to 41st. That category measures “the vitality of each state’s transportation system by the value of goods shipped by air, land and water” as well as “the availability of air travel in each state, and the quality of the roads.” Unsurprisingly, Lt. Gov. Kim Guadango has already questioned the validity of CNBC’s ranking system. For those wondering,CNBC declared that the top states overall for business were Texas, Utah, Virginia, North Carolina, and North Dakota, and the top five states in the “infrastructure and transportation category” were Texas, Minnesota, Georgia, Tennessee, and Nevada.

Georgia: On July 31,Georgia voters will decide whether to adopt a regional one-cent transportation sales tax that could potential raise billions of dollars to help pay for infrastructure projects across the state for the next decade.  Interestingly, the plan will be voted on in 12 regions throughout the state, each holding a separate regional election. The vote is all-or-nothing in each of the multi-county regions. If a majority in a region votes in favor of the referendum, it passes there — even if other regions defeat it. The metro Atlanta region has the most to gain by passing the referendum, as it stands to gain more than $8.4 billion between 2013 and 2022 to put towards infrastructure projects.

 Upcoming Events

On Wednesday, July 25 at 10 a.m. the House Transportation and Infrastructure Committee’s Subcommittee on Water Resources and Environment will hold a hearing on “Integrated Planning and Permitting: An Opportunity for EPA to Provide Communities with Flexibility to Make Smart Investments in Water Quality.”

 

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