Category Archives: Infrastructure

Texas bullet train could cost taxpayers $21.5 billion, new report concludes

Source: Bill Hethcock, Dallas Business Journal, February 14, 2017

A new report estimates the Texas bullet train could cost taxpayers $21.5 billion and concludes that privately funded high speed rail is not a feasible mode of transit outside of the Northeastern United States. The report from the Reason Foundation estimates that the proposed Texas Central Partners project between Dallas and Houston will run at a $537 million annual operating deficit over the its first 40 years of operations. The report also touches on the feasibility of other proposed privately funded high speed projects in California and Colorado. It comes at a time when President Trump’s infrastructure wish list apparently includes several high speed rail projects, and the president lamented a lack of high speed rail in a recent meeting with airlines executives. … The Reason report examines ridership trends and projections in the Dallas to Houston corridor, the cost of building a line along the 240-mile proposed route, and other factors, its authors said. … These factors indicate that “high-speed rail has no chance of succeeding in Texas, absent a dramatic change in land use and transit patterns,” the report concludes. It further finds that Texas Central Partners has exaggerated its ridership projections while underestimating costs, which will lead to revenue shortfalls, financial difficulties and ultimately, taxpayer subsidies. …

States, Localities Could Issue $5B of PABs for Public Building P3s

Source: Lynn Hume, Bond Buyer, February 9, 2017

Companion bills introduced in the House and Senate would allow state and local governments to issue up to $5 billion of private activity bonds to finance the repair or construction of public buildings under public-private partnership arrangements. The “Public Buildings Renewal Act” was introduced in the House on Feb. 7 as H.R. 960 by Rep. Mike Kelly, R-Pa., and eight cosponsors, five of whom besides Kelly are members of the House Ways and Means Committee. … The legislation would create a new category of tax-exempt PABs that would allow states and localities to partner with private parties to construct or renovate qualified government buildings, which would be governmentally owned. These could include public buildings, schools, state colleges or universities, public libraries, and courthouses, according to the bills’ text. They could also include government-owned hospital, health care, laboratory or research facilities and public safety facilities such as police stations or firehouses. The bonds could not be issued to finance buildings or facilities for retail food and beverage services, private golf course or country clubs, or other sports or entertainment facilities, according to the text. These kinds of projects cannot currently be financed with tax-exempt PABs because there is not a specific qualified PAB category for bonds for public buildings. …

Study: $389 Million Of Park Service Backlog Is Responsibility Of Concessionaires

Source: National Parks Traveler, February 12, 2017

The $11.9 billion maintenance backlog cited by the National Park Service inflates the true cost of high-priority infrastructure needs and elevates the risk for privatization and corporate giveaways in America’s parks, according to a report by an independent, nonpartisan policy institute. The analysis, released Friday by the Center for American Progress, noted that only $3.5 billion – or less than 30 percent – of the backlog is labeled as “critical systems deferred maintenance,” and only $1.3 billion is serious enough for the agency to consider a priority for necessary maintenance. In addition, the review found $389 million worth of items in the backlog that it says should be the responsibility of private concessionaires that run businesses in the parks, not taxpayers. … This is the second report in the past two months that urges the Park Service to reconsider how it approaches deferred maintenance. Last month, the Government Accountability Office released a 54-page report that said the Park Service must to do a better job of prioritizing its maintenance needs and stopped short of concluding that the agency is hamstrung by congressional appropriations. The deferred maintenance list is a tool for Congress to determine how much funding to allocate to national parks.

… By including maintenance at facilities like hotels, restaurants, and gift shops operated by concessionaires in the $11.9 billion total, the CAP report argues that Congress and the Trump administration could direct taxpayer funding to these businesses, which grossed $1.14 billion in 2012, instead of trails, historic sites, and conservation projects. Most contracts with the Park Service put the burden of maintenance costs at these facilities on the concessionaires. … The Park Service last year told the Center for American Policy that these items are included because taxpayers are ultimately responsible for these costs if a contractor does not pay to maintain a facility. The CAP, which says it “does not support or oppose candidates or political parties,” is concerned that President Trump “could allow companies to financially benefit from the national park brand and name” if he intends to pursue a privatization agenda. The report calls for the Department of the Interior’s Office of Inspector General to investigate concessionaire-operated NPS facilities to ensure that the concession industry is paying its appropriate share of maintenance costs. The brief also argues that Congress should not ignore investments needed in public lands administered by other agencies, including the U.S. Fish and Wildlife Service, the U.S. Forest Service, and the Bureau of Land Management.

Read full report (downloads PDF).

Reinventing the Port Authority of New York & New Jersey

Source: Robert Poole, Reason Foundation, February 2, 2017

The Port Authority of New York & New Jersey was established in 1921 to create a sustainable, de- politicized way to provide and manage bi-state transportation infrastructure. At the time, the highly centralized, Progressive-Era public authority model was state-of-the-art. Nearly a century later, however, the model’s three key limitations have become evident: politicized decision-making, money-losing facilities, and declining financial viability. … The PA needs more dramatic reform, and understanding why is based on a fundamental fact: Major transportation infrastructure requires ongoing investment: adding capacity as needed, renewing and replacing aging facilities, and keeping pace with the latest technologies. That is simply not possible until the PA abandons its decades-long practice of common-pool funding and extensive cross-subsidies, and moves instead toward infrastructure facilities funded by dedicated revenue streams and facility-specific accountability. The mechanism to do so is long-term public-private partnerships (P3s), which today mobilize hundreds of billions of new capital for infrastructure around the world. …

Read the full report.

Federal Barriers to Private Capital Investment in U.S. Infrastructure

Source: Robert Poole and Austill Stuart, Reason Foundation, January 26, 2017

The incoming Trump administration has proposed a $1 trillion program to foster private investment in aging public-sector infrastructure. Eligible projects would involve infrastructure that has, or could have, robust user-fee revenue streams. Large-scale public-private partnerships (P3s) would finance, redesign, rebuild and modernize, operate and maintain aging and/or under-sized airport, highway, seaport, water-supply and waste-treatment facilities. These projects would be financed via equity investment (20% to 30%) and long- term revenue bond financing (70% to 80%). Global infrastructure investment funds, U.S investment banks and large pension funds are eager to invest in such P3 projects in the United States. But to date, the opportunities to do such projects have been far greater in Asia, Australia, Canada, Europe and Latin America than here in the land of free enterprise. Part of this is due to the institutional inertia of many state and local governments that are slow to adopt new ways of doing business. But another major factor is federal obstacles to this kind of private capital investment in state and local infrastructure. … There is no lack of candidate projects. … This report identifies the principal federal barriers. …

Guide: Understanding and Evaluating Infrastructure Public-Private Partnerships (P3s)

Source: In the Public Interest, January 24, 2017

Many local and state governments are looking at new financing arrangements—public-private partnerships (known as “P3s”) that use private capital to finance public projects—to help rebuild America’s infrastructure. But inserting private interests into the development of public infrastructure has proven to be difficult and even counterproductive when equity considerations and standards aren’t included and adequate care isn’t taken to protect the public interest. Unfortunately, many proposed P3 projects are not structured as win-win-win propositions. Understanding and Evaluating Infrastructure Public-Private Partnerships aims to help advocates, policymakers, and other stakeholders better understand and analyze infrastructure project proposals, contracts, and related legislation. We describe critical issues and include a list of key questions stakeholders can raise to ensure that a given project advances the public good. While this is not an exhaustive list of questions, it provides a useful framework to examine P3 deals. …

The Perils of Privatization (Podcast)

Source: Building Local Power, Institute for Local Self-Reliance, January 12, 2017

In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews David Morris, a co-founder of the Institute for Local Self-Reliance and the director of the Public Good initiative. The two discuss the climate surrounding privatization in our economy and how the incoming Trump administration will bolster these efforts nationwide. Morris delves deep into the history of public infrastructure including explanations of how our language around the subject has changed over the years, privatization in other countries, and hope for the future.

[Ed. Note: A full transcript of the audio is also available from the source.]

Alaska Employees Union Files Class-Action Grievance Over Governor’s Plan to Privatize

Source: SitNews, December 29, 2016

An Alaska State Employees association filed a class-action grievance Tuesday against Governor Walker and his Administration on behalf of Alaska Department of Transportation & Public Facilities construction design employees, whose duties will be privatized under Gov. Walker’s proposed FY2018 Operating Budget. The grievance was filed by ASEA/AFSCME Local 52 headquartered in Anchorage. ASEA/AFSCME Local 52 represents more than 8,000 state and municipal employees across Alaska. In addition to cutting hundreds of positions to bridge Alaska’s fiscal gap, Governor Walker’s budget includes plans to privatize construction design work in the Department of Transportation & Public Facilities without performing a feasibility study or providing an opportunity for the Union to submit alternate proposals to retain State employees, as is required under the Collective Bargaining Agreement negotiated by the State of Alaska and ASEA. …

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State employees union files grievance over Governor Walker’s plan to privatize DOT jobs
Source: Daniella Rivera, KTVA, December 27, 2016

Gov. Bill Walker is facing more pushback over his proposed budget for next year, this time in the form of a grievance a state employees union has filed. Staff members of the Alaska Department of Transportation and Public Facilities’ design department are responsible for designing construction projects like roads and intersections. Part of Walker’s fiscal plan is letting 76 of those employees go in 2018 and up to 300 more in the future, as well as outsourcing jobs. His fiscal year 2018 Budget Review says, “Outsourcing design has the added advantage of bolstering the private sector economy while maximizing the number of projects completed with the available transportation funding.” … The Collective Bargaining Agreement (CBA) between the ASEA, American Federation of State, County and Municipal Employees Local 52 and the State of Alaska — which took effect in July — states in Article 13, “Decisions to contract out shall be made only after the affected agency has conducted a written feasibility study determining the potential costs and benefits that would result from contracting out the work in question. The study shall include all costs associated with contracting out the work in question including, but not limited to, wages, benefits, administrative costs, agency overhead, program supervision, and audits.” Duncan said that study hasn’t been done, and the governor’s plan breaches the contract. The grievance claims the governor and the state have “failed to consider the intent behind the agreement regarding privatization” by acting outside the CBA’s guidelines. Because of that, ASEA claims the governor and state are in violation of Article 13 and wants them to immediately stop contracting out members’ work and follow the CBA’s rules regarding privatization. Duncan said roughly 50 percent of design work is currently outsourced. …

Oklahoma proposes privatizing power plants to pay for budget gap

Source: Jonathan Baker, HPPR, December 22, 2016

Oklahoma’s budget gap next year could amount to well over half a billion dollars. To plug the hole, lawmakers in Oklahoma City are discussing selling some of the state’s power plants. … Lawmakers plan to soon introduce a plan to sell the Dam Authority. If the plan is approved, the power plants would be given over to private enterprises. The GRDA’s sale could be worth more than a billion dollars. The Grand River Dam Authority is currently a state-owned, non-appropriated, non-profit utility. This isn’t the first time the sale of the GRDA has been floated, but the bills always failed in the past.

Brindisi takes DOT to task for job outsourcing

Source: Rome Sentinel, November 28, 2016

Assemblyman Anthony Brindisi is taking the New York State Department of Transportation and other state agencies to task for allegedly outsourcing work on the “I Love NY” signs to a company in Arkansas. Brindisi recently wrote a letter to the DOT asking that they and other state organizations change contract requirements for similar projects, according to an announcment from his office. Brindisi said that he wants to ensure that companies in the state and their workers receive priority when work contracts are awarded. … Media reports state that placards on several dozen ‘I Love NY’ signs that promote Taste NY, The Path Through History and other programs were printed by Interstate Sign Ways of Arkansas. Brindisi said other sign painting was done by Hermosa Corporation in New York Mills and Elderlee, Inc., in Ontario County. “I find it ironic that a company from Arkansas was paid to work on a project helping to promote New York State products,” Brindisi said. …