Lessons Learned of Infrastructure in 2017

With inadequate public funding, government entities are looking for alternative funding sources and collaborative partnerships

By MARY SCOTT NABERS

There were high hopes for 2017 after President Trump promised a trillion dollar infrastructure plan. There was bipartisan support, as well as support from the general public. Yet, we are about to end 2017 the same way we started it – with our infrastructure still crumbling and hundreds of critical projects still waiting to be launched.

Billions of dollars in deferred maintenance will cost taxpayers more each month that repairs are not made. Traffic congestion will continue to escalate and impact our GDP. Our bridges, many of which are structurally unsafe, carry millions of motorists every day and one could fail at any time. Cities struggle with water resources and the country’s electrical grids are obsolete. Local communities need broadband expansion, and our seaports and airports need immediate attention.

What’s stopping support from Washington D.C.? Congress has neither approved a plan nor appropriated significant funding for an infrastructure program. The $1 trillion infrastructure plan promised for the first 100 days of the Trump administration is still non-existent.

In spite of everything, there is hope for 2018. Congress continues to proclaim that infrastructure is a very high priority. Most believe that help is coming soon.

President Trump’s first iteration of his $1 trillion vision for solving the nation’s infrastructure problems relied heavily on private capital and public-private partnerships (P3s). In fact, only $200 billion was going to come from federal funds, with the remaining $800 billion expected to be leveraged through private capital and state and local government funding.

Recently, however, the Trump administration began to waver in its support of public-private partnerships. There has not been a complete “about-face,” but the administration’s support for private-sector investment is not as robust as it was just months ago. Most people realize that it is simply not possible to fix the country’s infrastructure problems without private capital. Along with equity investments, private-sector expertise will be required. The good news is that capital, expertise and willing partners are abundant.

A senior advisor to U.S. Transportation Secretary, Elaine Chao, in October said the $1 trillion plan is still evolving and private-sector capital will likely be encouraged.   Trump’s infrastructure advisers have indicated that cities and counties will be able to apply for federal grant funding that can be used to incentivize other funding sources. As much as $50 billion may be set aside for rural projects. And projects that involve transformative technologies such as autonomous vehicles, Hyperloop projects and smart city solutions, will get significant consideration.

The President announced an executive order designed to shorten the time it takes for public officials to maneuver through the current jungle of bureaucratic red tape to qualify infrastructure projects. In the past, some infrastructure projects were stalled for up to 10 years. The projects languished so long that private-sector firms completely lost interest in the projects.

It is a commonly accepted premise that billions of dollars will be required for the U.S. to regain the world-class status it once held. The last time U.S. infrastructure was number one in economic competitiveness was 2005. America now ranks ninth.

Fearful that Congress will continue to drag out a comprehensive plan that supports infrastructure funding, many government officials have already reached out to collaborate with private-sector partners.

One of the most ambitious initiatives is a first-of-its-kind infrastructure investment fund in Kentucky. Six of the state’s largest community banks have joined forces to create the $150 million Commonwealth Infrastructure Fund to promote and support public-private partnerships. Several other state and local governments are considering similar trusts or banks to fund P3s.

Numerous government officials are relying on alternative funding options and some include public revenue comingled with private-sector investment. The Michigan Department of Transportation has announced a P3 for a $1 billion highway renovation in Oakland County. A private-sector partner will be selected sometime in 2018.

And with tens of billions of dollars in damages recorded in Texas, Florida, Louisiana and Puerto Rico as a result of hurricanes this year, contracting opportunities – some of which will last for years – will be abundant. Public schools must be repaired or rebuilt, water and wastewater systems need replacement, roads and bridges face major repairs and public buildings such as senior centers, public safety buildings and courthouses will have to be repaired or replaced.

As the new year approaches, construction projects in the U.S. are expected to be abundant. Public funding will not be adequate, so many government entities will definitely be looking for alternative funding sources and collaborative partnerships. In spite of all the setbacks in 2017, there may be a light at the end of the infrastructure tunnel in 2018.

Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. She may be reached at mnabers@spartnerships.com.

 

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