Category Archives: Infrastructure

New York’s prevailing wage law: A cost-benefit analysis

Source: Russell Ormiston, Dale Belman, and Matt Hinkel, Economic Policy Institute, November 1, 2017

… State prevailing wage laws across the country have increasingly been assailed by those who appeal to lawmakers’ other responsibility—minimizing taxpayer costs—in an attempt to weaken or repeal these policies. These nationwide campaigns are built almost entirely upon a single argument: higher wages must equate to higher taxpayer costs. … And with a recent publication by the Empire Center (McMahon and Gardner 2017), it has become apparent that some in New York will attempt to pitch the same narrative to state lawmakers. There’s one problem. According to the most advanced economic research on state prevailing wage laws, the simple narrative largely isn’t true.

To separate fact from fiction as it relates to New York’s prevailing wage law, this report provides a thorough cost-benefit analysis of state policy relying extensively on independent, peer-reviewed research. As summarized in this report, academic economists from around the country have made prevailing wage laws a research priority over the last 15 years. In study after study, economists have found no evidence that these laws have had any significant cost effects on the biggest drivers of New York’s capital budget: highways and institutional buildings (e.g., schools). …

Read full report.

Opinion: Puerto Rico suffers amid disaster capitalism

Source: Amy Goodman and Denis Moynihan, Press Connects, November 5, 2017

There are people coming to the island, though: the disaster capitalists. As eloquently articulated by journalist Naomi Klein in her book “The Shock Doctrine: The Rise of Disaster Capitalism,” disasters both natural and human-made are increasingly being exploited by for-profit corporations and so-called free-market ideologues to reshape vast swaths of impacted societies, undermining social-welfare systems, privatizing public utilities, busting unions and making obscene profits rebuilding. Post-hurricane Puerto Rico is shaping up to be a textbook case of the shock doctrine.

… Case in point is the $300 million, no-bid contract awarded to Whitefish Energy to rebuild the island’s power grid. … As we spoke, news broke that Gov. Rossello had called for the cancellation of the contract. Jaramillo demanded not only that, but also the firing of the head of PREPA, who signed the contract, and a full criminal investigation into all those responsible for it. Like Mayor Cruz, Jaramillo is working to incorporate solar power into the rebuilt power grid, without privatizing the grid in the process. In the meantime, Fortune 500 Fluor Corp. has also received a $200 million contract to work on the power grid. As Whitefish eventually heads back to Montana, there are two things you can be sure of: More disaster capitalists will be lining up to take its place, and the proud, resilient population of Puerto Rico, growing intolerant of the delays and the corruption, will be increasingly vigilant, while building momentum for renewable alternatives to the fossil-fuel power grid that has failed them.

Related:

The Puerto Rico Power Scandal Expands
Source: Vann R. Newkirk II, The Atlantic, November 3, 2017
 
A second federal contract with a company hired to rebuild Puerto Rico’s all but collapsed power grid is coming under scrutiny, drawing the attention of federal investigators and even members of Congress even as most of the hurricane-ravaged island remains without power. The news of a second faulty contract is also raising questions about the contracting process for the island’s government-owned power company, the  Puerto Rican Electric Power Authority (PREPA).  Puerto Rico’s crumbling, aging electrical grid was at the heart of the island’s crippling debt and infrastructure problems even before Hurricanes Irma and Maria slammed into it over a month ago. But now, in the wake of recent scandals over contractors hired to fix that very grid, some experts expect the timeline for full recovery to last well into next year. …

FBI Is Probing Puerto Rico Power Contract
Source: Andrew Scurria, Wall Street Journal, October 30, 2017
 
The Federal Bureau of Investigation is investigating a decision by Puerto Rico’s power authority to award a $300 million contract to a tiny Montana energy firm to rebuild electrical infrastructure damaged in Hurricane Maria, according to people familiar with the matter.  Agents from the FBI’s San Juan field office are looking into circumstances surrounding the deal that the public power monopoly known as Prepa signed with Whitefish Energy Holdings LLC, according to the people familiar with the matter.  Puerto Rico Gov. Ricardo Rosselló canceled the contract Sunday, saying it had become a distraction from the U.S. territory’s efforts to restore the devastated grid. Only 30% of the island’s power customers have had electricity restored. …

Continue reading

Trump boosts disaster aid for Puerto Rico rebuild

Source: Roberta Rampton, Reuters, November 2, 2017
 
U.S. President Donald Trump on Thursday agreed to expand the use of disaster aid to help rebuild Puerto Rico’s power grid and other infrastructure wrecked by Hurricane Maria, the White House said. In a unique agreement recognizing both the massive devastation on the island and its dire financial problems, aid from the Federal Emergency Management Agency (FEMA) for infrastructure projects will be released in a faster, more flexible way than is typical after disasters, a senior White House official told Reuters.  The plan, agreed to with Puerto Rico Governor Ricardo Rossello, will also provide for third-party advisers to estimate how much money is requires for big-ticket projects, and how it is spent – a provision aimed at protecting taxpayer dollars in what is expected to be a massive, long-term effort to rebuild the island. …

Related:
Puerto Rico Lays Out Energy Future With Tesla, Privatization
Source: Jonathan Levin, Bloomberg, October 22, 2017

A Puerto Rican official who has been in talks with Tesla Inc. said the island is serious about transforming its energy infrastructure after it was leveled by Category 4 Hurricane Maria, despite questions about how such an overhaul would be funded.  Speaking in a telephone interview Sunday, Department of Economic Development and Commerce Secretary Manuel Laboy said Puerto Rico’s government understands its skeptics: The island’s finances are shot and its electricity system is in tatters. But he said the U.S. territory has a historic opportunity to use federal funds to modernize an aging and weak power grid.  At the core of the argument is the government’s belief that funding related to the Federal Emergency Management Agency, or FEMA, can be used to build a new system, not just repair the old one, so that it won’t be susceptible to collapse when the next storm hits. Laboy said Governor Ricardo Rossello’s government is prepared to make its case. …

Puerto Rico taps public private partnerships to boost economy
Source: Robert Slavin, Bond Buyer, October 19 2017

…The island government said Monday that it’s working on six public private partnership projects that would lead to $300 million to $400 million of investment in projects ranging from a hydroelectric dam to student housing.  Puerto Rico will seek requests for qualifications for three of the projects and it is already working with companies on the other three. If the projects go forward, they would boost an economy that has been struggling with long-term economic decline compounded by the impacts of two major hurricanes in the last two months….

Elon Musk Is Not the Hero Puerto Rico Needs
Source: Kate Aronoff, In These Times, October 11, 2017

… According to a tweet from the governor late last week, the two are now in talks about bringing renewable energy from Musk’s Tesla and SolarCity operations to the island, whose long-embattled public utility—the Puerto Rico Electric Power Authority (PREPA)—was decimated by Hurricane Maria. … On the one hand, the talks can be seen as a positive development: More than 80 percent of the island remains without power, and the storm could be a once-in-a-lifetime opportunity for Puerto Rico to get back online and become a leader in the transition away from fossil fuels. But the budding friendship between Rossello and Musk is also taking place in the context of a massive attempt to privatize Puerto Rico’s electric utility. Musk’s companies could deliver tangible improvements to Puerto Rico’s grid, but they could also prime the pump for a corporate takeover of the United States’ largest public power provider, putting decisions like who gets power and how much it costs into the hands of corporate shareholders. …

Puerto Rico Faces Restart on Financial Plan After Maria
Source: Heather Gillers and Andrew Scurria, Wall Street Journal, September 26, 2017

It took months to put together a financial overhaul plan for Puerto Rico. Now officials may have to start over following Hurricane Maria. The federal board supervising Puerto Rico’s bankruptcy plans to meet Friday and is likely to discuss possible changes to a commonwealth fiscal plan it approved in March, according to a person familiar with the matter. The conversations could affect the severity of write downs on Puerto Rico’s $73 billion in debt.

… Reconstructing Puerto Rico’s power grid may prove particularly costly because of financial difficulties at its struggling electric utility. … Congress is starting to debate how best to rebuild Prepa. Setting up a reliable power system will require expensive modernization using federal dollars. Prepa is a flashpoint in Puerto Rico’s financial crisis because power rates are a drag on family incomes and company budgets. The oversight board has said it wants to privatize power generation to lower costs and transition Prepa to a regulated utility model. Creditors are skeptical of privatization, concerned that by selling off assets Prepa would lose the revenue streams backing its debt. But raising power rates to repay creditors is politically toxic in Puerto Rico, where the cost of importing fuel from oil tankers has driven power prices higher than in any U.S. state but Hawaii. …

Puerto Rico’s bondholders worried after Hurricane Maria turns out lights
Source: Francine McKenna, MarketWatch, September 21, 2017

If Puerto Rico is without power for months after Hurricane Maria, as authorities now warn, many investors in the $9 billion of Puerto Rico’s outstanding electric utility bonds risk never seeing their money. … The plight of Prepa bondholders—Prepa is Puerto Rico’s main supplier of electricity—was grim even before Irma. … Prepa’s bonds, $9 billion worth, are revenue bonds whose funding stream is based on collecting customer fees. Even before Hurricane Maria knocked power out for good, bondholders were worried that Prepa would deliberately force some plants offline, jeopardizing the collateral, creating justification for a privatization plan that could leave current bondholders high and dry. Proponents argue that a brand new electric authority, free of debt, would be a huge boon to the Puerto Rican economy. …

Hurricane Irma Unleashes the Forces of Privatization in Puerto Rico
Source: Kate Aronoff, Angel Manuel Soto, and Averie Timm, The Intercept, September 12, 2017

For struggling governments around the world, privatizing utilities has come to be seen as a kind of get-rich-quick scheme, offering an upfront infusion of cash to underfunded municipalities. Given Prepa’s size and that of its debt — $9 billion — it has been a long-standing target for privatizers, even before Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act last year to help rein in Puerto Rico’s mounting debt crisis. The blackout following Irma just added fuel to the fire. Days before Irma hit, Rosselló emphasized that privatization is firmly on the table, telling the New York Times that Irma “can become an opportunity or another liability.” …

Irma Grazes Puerto Rico but Lays Bare an Infrastructure Problem
Source: Luis Ferré-Sadurní, New York Times, September 10, 2017

As government workers cleared roads obstructed by uprooted trees and repaired toppled electricity lines, residents of Puerto Rico felt some relief that the eye wall of Hurricane Irma had skirted the island on its recent rampage through the Caribbean.  But while the commonwealth had largely been spared the 185-mile-an-hour gusts that had flattened its smaller island neighbors, hundreds of residents still lost their homes, at least three people died and almost 70 percent of households were plunged into darkness. The storm knocked out Puerto Rico’s fragile power grid, exposing the island’s decrepit infrastructure and raising questions about its future viability amid a worsening economic crisis.

… How a commonwealth going through a decade-long recession will be able to pay for much-needed upgrades is the key question. One option is to turn to the private sector, local economists say. Private investments, Mr. Rosselló said, could be accelerated under a provision of a contentious new law called Promesa, which placed the island’s finances under the oversight of a federal board. The provision could expedite and facilitate the process for private investment in electric, highway and water projects. … But the idea of privatizing public utilities is a divisive one on the island. The electrical workers’ union fears that the government purposely let Prepa deteriorate over time to justify privatizing it. …

Puerto Rico wasn’t ready for Hurricane Irma. We couldn’t possibly be.
Source: Carla Minet, Washington Post, September 7, 2017

On the surface, Puerto Rico was as ready as it could be for Hurricane Irma. Government agencies and Gov. Ricardo Rosselló have been taking a proactive, hands-on approach. President Trump has declared a state of emergency, which will generate emergency funds from the federal government. Refugees from the northeastern corner of the island, where Irma’s Category 5 winds already reached Wednesday afternoon, were arriving in shelters. … But Irma — a storm the likes of which we haven’t seen here in decades — is heading for an island whose resources to truly prepare for an emergency are already in grave doubt. … Now Irma may be used as a new rationale for the strategy of privatizing the public service by the Fiscal Control Board, whose members have publicly declared support for selling off the utility. The agency announced that 44 percent of the population — 692,350 clients — were already without electricity service by Wednesday afternoon. …

Government labor strife is latest test for fractured Puerto Rico
Source: Nick Brown, Reuters, August 30, 2017

Puerto Rico’s already frail economy faces a fresh test this week, as the bankrupt U.S. territory’s financial overseers try to force a defiant governor to furlough public workers, the single biggest block of employees on the island. An escalating power struggle between the democratically elected Governor Ricardo Rossello and the federally appointed oversight panel culminated on Monday when the board sued Rossello, saying he had no authority to reject pension cuts and furloughs ordered by the board. The measures are set to begin Sept 1. A competing lawsuit from the American Federation of State, County and Municipal Employees (AFSCME), which represents 12,000 Puerto Rican workers, argues the exact opposite – that the measures violate the U.S. Constitution, and should be halted. At least six unions are staging protests on Wednesday to oppose the austerity, featuring a midday march to the board’s San Juan offices. … Noting a Rossello initiative to privatize some public assets, Eiler said “the unions’ cooperation is imperative” for public-private partnerships. …

Hedge Fund Sues to Have Puerto Rico’s Bankruptcy Case Thrown Out
Source: Mary Williams Walsh, New York Times, August 7, 2017

A hedge fund sued on Monday to have Puerto Rico’s bankruptcy case thrown out, arguing that the federal oversight board guiding the island’s financial affairs was unconstitutionally established.  In a lawsuit filed in United States District Court in San Juan, the hedge fund, Aurelius Capital, cited the “appointments clause” of the United States Constitution, which calls for all principal officers of the federal government to be appointed by the president, and then confirmed by the Senate.  That did not happen when the seven members of the Financial Oversight and Management Board for Puerto Rico were selected, Aurelius said in its motion to dismiss the bankruptcy-like proceedings. …

Puerto Rico Teachers’ Union-AFT Join Forces Amid Debt Woes
Source: Jaclyn Diaz, Daily Labor Report, August 4, 2017 (subscription required)

The economic devastation in Puerto Rico has pushed the American Federation of Teachers to lend a hand to the island’s educators. Asociación de Maestros de Puerto Rico will continue to represent the 40,000 plus Puerto Rican educators. It signed a three-year affiliation agreement with the 1.6 million-member AFT to help it combat the island’s economic challenges, the two unions announced Aug. 3. … AFT and AMPR will work together to fight austerity measures and privatization on the island, Randi Weingarten, AFT president, told Bloomberg BNA Aug. 4. AFT will lend resources to help AMPR train teachers for the future and to bring in legal assistance to fight the fiscal plan adopted by the Puerto Rican government, she said. …

Is Congress’ plan to save Puerto Rico working?
Source: Edwin Melendez, San Francisco Chronicle, July 31, 2017

A year ago, Congress cobbled together a plan to try to save Puerto Rico from its US$123 billion debt and pension crisis without costing American taxpayers a penny.  The law, signed by former President Barack Obama on June 30, 2016, effectively steered Puerto Rico into bankruptcy-like proceedings in federal court to prevent a massive default, while saddling the commmonwealth with an oversight board to ensure it put its fiscal house in order.  Though the vote was bipartisan, critics called it a “Band-Aid” that would do little to solve Puerto Rico’s core problems: unsustainable debt that has kept the country mired in recession for almost a dozen years. …

For Sale: Puerto Rico
Source: Heather Gillers, Wall Street Journal, June 26, 2017

Puerto Rico has no cash and can’t borrow money anymore. So it is looking to sell itself off in parts. The troubled U.S. territory is preparing to seek bids in coming months from private companies willing to operate or improve seaports, regional airports, water meters, student housing, traffic-fine collections, parking spaces and a passenger ferry, according to a government presentation reviewed by The Wall Street Journal.

The Bankers Behind Puerto Rico’s Debt Crisis
Source: Michelle Chen, The Nation, June 8, 2017

Puerto Rico’s economic crisis has now washed the burden of its colonial legacy onto Washington’s doorstep. Congress has been trying to contain the island’s ballooning debt under the hardline austerity program of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). But since the program is governed by a control board run by the same financiers responsible for driving the debt crisis in the first place, the island continues to sink into poverty while its creditors feast on the spoils.  To underscore how Puerto Rico’s revolving door of big finance and politics is underwriting the debt crisis, a report by the AFL-CIO and the community-labor coalition Committee for Better Banks (CBB) traces the career of the head of PROMESA, Carlos M. García, from his role as a head banker of Santander to his current political post overseeing the privatization and pillage of Puerto Rico’s anemic public assets.

Puerto Rico strikes second restructuring deal with bondholders
Source: Hazel Bradford, Pensions & Investments, May 15, 2017

Puerto Rico reached a restructuring agreement with bondholders invested in the commonwealth’s Government Development Bank, officials announced Monday in San Juan. … Puerto Rico’s Federal Affairs Administration said in that statement that GDB creditors “have agreed to substantial discounts to the principal,” but did not provide further details on the agreement, which calls for bondholders to exchange claims for one of three tranches of bonds issued by a new municipal entity. The new bonds will have varying principal amounts, interest rates, collateral priority, and other payment terms.  It is the second agreement reached with bondholders and Gov. Ricardo Rosello, following one announced April 6 with holders of bonds issued by the Puerto Rico Electric Power Authority. The PREPA agreement restructures $9 billion in debt by offering them 85 cents on the dollar, and giving PREPA more time to begin making payments. …

Puerto Rico board extends budget deadline by two weeks
Source: Robert Slavin, Bond Buyer, May 9, 2017 (Subscription Required)

The Puerto Rico Oversight Board extended the deadline for Puerto Rico Gov. Ricardo Rosselló to submit a fiscal year 2018 budget by two weeks.  Board chairman José Carrión III told Rosselló that the board had originally set May 8 as the deadline for either the board approving the governor’s budget or notifying the governor of violations and providing a description of corrective actions. “We have received a working draft of the proposed budget and are reviewing the submission and its completeness,” Carrión wrote Monday. “The board will provide the governor an additional 14 days to amend and improve the submission before it approves it or identifies violations.” …

Puerto Rico unveils energy PPPs amid economic turmoil
Source: David Casallas, BNamericas, May 5, 2017

Puerto Rico’s embattled government released a list of priority project proposals for this year, among them energy sector initiatives that would be carried out through public-private partnerships (PPP). The projects envision natural gas use at power utility AEE’s residual fuel oil fired-plants Costa Sur (990MW) and Palo Seco (602MW) which would cost US$150mn-265mn and US$200mn-360mn, respectively. Information from the Puerto Rico Public-Private Partnerships Authority also reveals that AEE seeks partners to develop renewable energy projects, including photovoltaic and wind, for between US$100mn and US$700mn. …

Puerto Rico Declares a Form of Bankruptcy
Source: Mary Williams Walsh, New York Times, May 3, 2017

With its creditors at its heels and its coffers depleted, Puerto Rico sought what is essentially bankruptcy relief in federal court on Wednesday, the first time in history that an American state or territory had taken the extraordinary measure.  The action sent Puerto Rico, whose approximately $123 billion in debt and pension obligations far exceeds the $18 billion bankruptcy filed by Detroit in 2013, to uncharted ground.  While the court proceedings could eventually make the island solvent for the first time in decades, the more immediate repercussions will likely be grim: Government workers will forgo pension money, public health and infrastructure projects will go wanting, and the “brain drain” the island has been suffering as professionals move to the mainland could intensify. …

Puerto Rico faces bank closure, privatizations
Source: Danica Coto, Associated Press, April 28, 2017

Puerto Ricans will be facing a water rate increase, privatization of government operations and the closure of a bank that once oversaw the island’s debt transactions, officials said Friday as they worked on measures to offset an economic crisis.  Some of the changes were outlined in new fiscal plans presented to a federal control board overseeing the island’s finances. The plans for four heavily indebted Puerto Rico agencies will be amended in upcoming weeks, although officials noted that the water rate increase will start in January and that the Government Development Bank will be liquidated within a decade.  The board recently approved an overall fiscal plan for the central government that contains several austerity measures. …

Puerto Rico pushes to privatize operation of public services
Source: Danica Coto, Associated Press, April 20, 2017

Puerto Rico is ready to sign dozens of new deals to privatize the operation of public services as government funds dwindle amid a decade-long recession, the island’s governor told some 800 investors attending a two-day financial summit Thursday.  Gov. Ricardo Rossello said public-private partnerships could create up to 100,000 new jobs and generate some $5 billion in the next three years for a U.S. territory mired in economic crisis and its government facing a $70 billion public debt load that it is struggling to restructure.

AFSCME Pres. Lee Saunders on Puerto Rico Fiscal Plan
Source: AFSCME Press Release, March 13, 2017

AFSCME Pres. Lee Saunders issued the following statement on the oversight board’s approval of a fiscal plan for Puerto Rico:  “The plan approved by the Oversight Board will have devastating consequences for the people of Puerto Rico, especially its most vulnerable citizens. The plan adopts an austerity approach that will slash services, cut pensions and create yet more economic hardship for Puerto Ricans. The winners are wealthy investors who stand to gain from the mass privatization of the services that remain. These actions are the foreseeable result of an anti-democratic law adopted by the last Congress. The people of Puerto Rico have been forgotten; we call on the federal government to act quickly to restore services and pensions.”

Board to Puerto Rico: Cut Pension System, Impose Furloughs
Source: Danica Coto, Associated Press, March 13, 2017

A federal control board on Monday said Puerto Rico’s government needs to cut its public pension system by 10 percent, furlough tens of thousands of its workers and eliminate Christmas bonuses if it cannot generate other types of savings amid a nearly decade-long recession. The seven-member board created by Congress last year to oversee the U.S. territory’s finances voted unanimously to add those measures to a 10-year fiscal plan presented by the island’s governor that the panel approved Monday. The measures will be implemented if the government fails to find other ways to cut spending and increase revenue. Board members said the spending cuts will be necessary so the government will have enough funds to pay for essential services such as education, health and public safety. … The plan drafted by the government and approved by the board also will cap some Medicaid benefits, effectively raise property taxes and scrap some infrastructure projects while possibly turning ferries, ports and parking lots over to private companies. It will freeze salaries until 2020, seeks to privatize the generation of power and increase motor vehicle license fees by 10 percent. …

Puerto Rico governor wants fewer austerity measures
Source: Danica Coto, Associated Press, March 1, 2017

Puerto Rico’s governor submitted an austerity plan made public on Wednesday that would cut deeply into the U.S. territory’s budget while avoiding some of the most painful measures recommended by a federal control board that is overseeing the island’s effort to confront a debt crisis that has led to repeated defaults. Gov. Ricardo Rossello’s plan would cap some Medicaid benefits, effectively raise property taxes and collect a tax on internet purchases. It would also scrap some infrastructure projects and could turn ferries, ports and parking lots over to private companies. But it would fall short of the board’s recommendation of a 30 percent cut in payroll costs and 10 percent reduction in the government pension system, which is on track to run out of money next year. …

White House says it’s considering increasing the federal gas tax for infrastructure

Source: Ashley Halsey III, Washington Post, October 26, 2017
 
The White House is revisiting an increase in the federal gas tax to pay for infrastructure improvements President Trump promised to deliver on the campaign trail.  That news was conveyed to House members Wednesday in a meeting by Trump’s chief economic adviser, Gary Cohn. … After campaigning on a promise he would lure private capital to invest in infrastructure, Trump in late April said he would be open to bumping up the federal gas tax, which has not seen an increase since 1993.  Some Democrats, notable among them Rep. Peter A. DeFazio (Ore.), ranking Democrat of the House Transportation Committee, have fought an upstream battle to increase the tax. …

Related:

White House eyes 7-cent gas tax hike for infrastructure plan
Source: Melanie Zanona, The Hill, October 25, 2017
 
The White House may back the first hike in the federal gasoline tax in decades in order to pay for President Trump’s $1 trillion infrastructure package.    Trump’s economic adviser Gary Cohn told moderate House lawmakers at a private meeting on Wednesday that they’ll get a chance to vote on a gas tax hike early next year as part of an infrastructure bill, according to two lawmakers who were present. The discussion over the fuel tax during the meeting was first reported by Politico Playbook.  “Cohn seemed receptive to it,” one meeting participant told The Hill.  Separately, an industry source tells The Hill that the White House intends to back a 7-cent gas tax increase to pay for U.S. roads, bridges, highways and other public works, though it’s unclear if the proposal would be included in initial infrastructure legislation or if the administration will push to have it added at the committee level. …

Rural America looks to Trump to help with crumbling infrastructure
Source: Josh Siegel, Washington Examiner, October 16, 2017

Lawmakers and policy experts say the White House cannot forget rural America as it prepares to release the outlines of its infrastructure spending package. … The emphasis on partnerships worried proponents of rural infrastructure investment. Partnerships with private investors face tougher obstacles in rural areas, because it’s difficult for companies in places with smaller populations to generate the revenue needed to sustain the project. …

Continue reading

New Orleans’ summer of floods revives the threat of privatization

Source: Aviva Shen, ThinkProgress, October 20, 2017
 
This year’s spate of floods prompted sudden scrutiny of the city’s long-neglected infrastructure, but everyone knows the system is not fully prepared to manage the city’s regular downpours. … After the August flooding, the Sewerage and Water Board admitted that at least 14 of the pumps that constantly churn water out of the ground had been offline. Outrage erupted. Several board officials resigned in political sacrifice, and Mayor Mitch Landrieu (D) called for a private company to intervene and potentially take over the agency. … Private firms Veolia and CH2M quickly snapped up no-bid contracts to analyze New Orleans’ systemic failures after the August flood, stoking suspicion that the mayor would quietly transfer power over the water systems to for-profit companies. CH2M and its subcontractors have been tasked with servicing turbines that power the city’s pumps and finding back-up power sources. Veolia, which already manages part of the city’s wastewater system and its entire mass transit system, has been authorized not only to analyze the failings of the stormwater system but to “start taking the right steps to any necessary maintenance efforts.” The cost of fulfilling these contracts is still unclear…..

KC Council picks Edgemoor team for KCI terminal job

Source: Rob Roberts, Kansas City Business Journal, September 21, 2017

A joint meeting of two Kansas City Council committees voted Thursday in favor of selecting a team led by Edgemoor Infrastructure & Real Estate LLC to design, develop and arrange financing for a new airport terminal. … The committee’s decision comes after heavy lobbying and criticism by two other teams pursuing the roughly $1 billion project. … The airport ordinance calls for the city manager to begin negotiating a memorandum of understanding with Edgemoor. At the request of Councilman Jermaine Reed, it also spells out components of a community benefits agreement that must be part of the MOU, requires Edgemoor to institute a local hiring preference and requires negotiation of minority- and women-owned business and workforce participation goals that recognize “the transformative possibilities for disadvantaged businesses and workers that can result from a public infrastructure project of the magnitude of the proposed terminal modernization project.” …

Fleecing America’s builders

Source: Maryam Jameel, Center for Public Integrity, August 21, 2017

… The Wage and Hour Division must enforce at least 14 statutes across the nation’s 29 million businesses with a team of only 929 investigators as of the end of June. Federal agencies, which spent more than $470 billion on contracts during the 2016 fiscal year, are saddled with a flawed system to vet contractors and monitor their compliance with those laws. As a result, contractors’ violations rarely show up in government databases. Subcontractors, which often employ most of the workers on construction projects, get even less scrutiny.

Last year, the federal government spent more than $40 billion on contracts covered by Davis-Bacon. But a Center investigation found that about 70 percent of the businesses caught violating the law in 2016 don’t appear in federal databases designed to track companies’ contracting records. Weak oversight allows subcontractors in particular to shortchange workers on government projects with little fear of being caught or barred from future contracts. Meanwhile, their overseers often maintain clean labor records and continue to win government business. This fiscal year, federal agencies have spent more than $425 million on contractors found to have violated Davis-Bacon in 2016, according to U.S. Treasury and Labor Department records analyzed by the Center. The top spenders: The U.S. Department of Defense and the GSA. …

Taking the P3 Route to Reinvent Downtown

Source: Charles Renner, Public Management, July 27, 2017

… The past decade has seen a steady increase in the use of P3 structures, and 2016 was something of a watershed year with multiple high-profile projects coming online that address a variety of public needs, including a $1 billion water infrastructure project servicing San Antonio, Texas, the site of ICMA’s 2017 Annual Conference. In each case, the public sector identified a future need aimed at supporting the attraction of mobile talent, evaluated the limits of going it alone, engaged a P3 partner, and found leadership to achieve results. …

A Sioux Falls Renaissance … A key part of the updated Downtown 2025 Plan is increasing the CBD’s available commercial and residential real estate. To help accomplish this, Sioux Falls opted for a P3 solution to design, build, operate, and maintain a mixed-use facility with retail, office, and residential uses that will ultimately increase the density of downtown. …

Nebraska Innovation Campus and P3 … Located adjacent to the University of Nebraska-Lincoln, NIC is a research campus designed to facilitate new partnerships between the university community and private businesses. …

San Antonio’s Vista Ridge … As a result, the San Antonio Water System (SAWS) crafted the vision of a 142-mile water pipeline project called Vista Ridge that will deliver enough water for some 162,000 new families by 2020, providing a 20 percent increase in water supply. … SAWS opted for a P3 undertaking in order to engage private equity and much needed development expertise in securing and constructing a resource delivery project that requires roughly $1 billion in investment, thousands of private water commitments, along with the 142 miles of built-to-last water pipeline. …

Congress must continue to block Trump plan to sell BPA

Source: Union-Bulletin Editorial Board, August 8, 2017

Late last month the U.S. House Budget Committee approved a budget resolution that rejects privatizing the transmission assets of the Bonneville Power Administration proposed by the Trump administration. A great move. The sooner this lousy proposal is dead the better it will be for Pacific Northwest residents who pay power bills — pretty much all of us. … President Donald Trump is calling for turning over the transmission network of power lines and substations owned by the Bonneville Power Administration, a federal agency that distributes most of hydropower from the Columbia and Snake rivers’ dams, to private companies. As Trump sees it, this would lower costs to taxpayers and improve efficiency. But in reality it would result in far higher rates for consumers. And putting the high-voltage grid in the hands of private investors — perhaps foreign investors — would create national security concerns. …

Related:

Down the Mighty Columbia River, Where a Power Struggle Looms
Source: Kirk Johnson, New York Times, July 28, 2017

To ride down the Columbia River as the John Day Dam’s wall of concrete slowly fills the view from a tugboat is to see what the country’s largest network of energy-producing dams created through five decades of 20th-century ambition, investment and hubris. … Now, the Trump administration has proposed rethinking the entire system, with a plan to sell the transmission network of wires and substations owned by the Bonneville Power Administration, a federal agency that distributes most of the Columbia basin’s output, to private buyers. The idea is part of a package of proposals that would transform much of the infrastructure in the United States to a mixture of public and private partnerships, lowering costs to taxpayers and improving efficiency, administration officials said. Assets of two other big public power operators, based in Colorado and Oklahoma, would be sold, too, if Congress approves the measure.

Debates about government and its role in land and environmental policy are always highly charged. But perhaps nowhere could the proposed changes have a more significant impact than along the great river of the West — fourth largest by volume in North America, more than 10 times that of the Hudson. Privatization would transform a government service that requires equal standards across a vast territory — from large cities to tiny hamlets — into a private operation seeking maximum returns to investors. …

The Untapped Wealth of American Cities

Source: Bruce Katz and Jeremy Nowak, CityLab, August 6, 2017
 
Americans who travel abroad sometimes wonder why many of our airports are lacking in comparison to the best international airports. Or they want to know why other nations seem to do a better job with public transportation and the management of other public assets, from ports to parks. The answers we are tempted to give are that we do not invest as heavily in public infrastructure as many other nations and that a market-oriented American ethos with an entrepreneurial culture prefers private solutions (cars versus trains) to public ones. … But there’s another answer: Compared to many other nations, in the United States government has more direct control of public assets such as airports, convention centers, and transport, water and sewer systems (just to name a few). And the government does not, for the most part, manage them well, failing to leverage the market potential and value of the assets they own. Far from being broke, many cities and counties have enormous untapped wealth, which could be used to finance not only infrastructure but investments in children and other critical needs. …

There is a better way, teased out in detail and with great authority in The Public Wealth of Cities, a new book co-authored by Dag Detter and Stefan Folster, two Swedish experts in public finance. The pair have studied public asset management and are promoting a third alternative to political management or full privatization—public ownership that relies on professional, private-sector management.… The authors’ core argument is a disruptive idea in public policy that links management systems, public asset value, intelligent financing, and the proper role of politicians in a democracy. …