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Infrastructure Week 2017

[ May 20, 2017   //   ]

May 16-18, 2017 marked the 5th annual Washington, D.C. Infrastructure Week when thousands of stakeholders highlight the critical importance of investing in and modernizing America’s infrastructure. U.S. Secretary of Transportation Elaine L. Chao provided remarks as part of the kickoff. Here’s a few highlights of what she said:
“(President Trump) has made revitalizing, repairing and rebuilding our country’s infrastructure one of his top priorities.
“The Administration will share its vision of what the infrastructure plan will look like soon, which will kick off our collaboration with Congress. To put the proposal together, the White House launched a wide-ranging consultation process.  This has included establishing an interagency task force consisting of 16 different federal government department and agencies, including Transportation, OMB, Treasury, Commerce, Interior, EPA, Agriculture, Labor, Energy, the Department of Defense, Veterans Affairs, the Council of Environmental Quality, the Education department and others. And meeting and consulting with many governors, mayors, state and local leaders, and private sector stakeholders, as well. It’s important to hear from a myriad of stakeholders and not repeat the mistakes of the past.
“As OMB Director Mulvaney recently announced, the new infrastructure plan will include $200 billion in direct federal funds.  These funds will be used to leverage $1 trillion in infrastructure investment over ten years. OMB is identifying offsets, in order to avoid saddling future generations with more debt.  That’s why a key feature of the infrastructure plan will be unleashing the billions of dollars in private capital available for investment in infrastructure.
“During the consultation process, investors told us again and again that there is ample capital available, waiting to invest in infrastructure. A major problem is the delays caused by government permitting and approval processes, which hold up projects for years, even decades. These delays increase the risk, adding uncertainty and billions of dollars to project costs. That’s why another key part of this Administration’s infrastructure plan will include common-sense regulatory, administrative, organizational, and policy changes to speed project delivery and reduce uncertainty. Many of the departments and agencies mentioned in the interagency task force will have a role in addressing these issues.
“The Department of Transportation has already initiated an internal regulatory review process.  The Federal Highway Administration, for example, has taken first steps to reduce the regulatory burden, and is looking for more ways to speed things up.
“A Task Force on Regulatory Reform at the Department of Transportation has been assembled that has identified many additional legislative and regulatory changes that could streamline project approval.  Streamlining the regulatory process not only cuts costs. It can improve environmental outcomes by delivering infrastructure improvements more quickly, and spending resources on actual environmental mitigation, rather than stacks of paperwork.”
“As we begin to implement this Administration’s infrastructure reforms, a new paradigm will hopefully be created. This paradigm will shift the focus beyond what is being built, to how projects are being funded and financed. For example, states and localities that have secured some funding or financing of their own for infrastructure projects will be given higher priority access to new federal funds. The goal is to use federal funds as an incentive to get projects underway and built more quickly, with greater participation by state, local and private partners.
“This approach is in line with studies that show federal spending often substitutes for, rather than augments, state and local funding on infrastructure. That was the conclusion of a 2004 GAO report on highway spending. It found that the states and localities studied used federal dollars to replace, rather than supplement, what they would otherwise have spent.  The Administration would like to avoid that outcome.  Currently, less than one-fifth of all infrastructure spending is federal.  The rest comes from state, local and private sources.  This Administration wants to retain the primacy of state and local spending, and use federal funds as leverage to increase the total amount of funding available for infrastructure.
“At the same time, everyone recognizes there is no one-size-fits-all revenue model for infrastructure projects.  Toll roads, for example, may work well in urban areas, where they generate consistent revenue because of high demand. But lower demand on rural roads may not generate enough revenue to repay private investment. This Administration is committed to an infrastructure package that addresses the needs of the entire country, urban and rural.
“Availability payments, for example, are one of the most widely used alternative financing methods for infrastructure in the world.  In this model, a government entity contracts with the private sector to build, operate and maintain a piece of infrastructure. In return, the contractor receives payments from the government over a specified period of time, provided certain milestones and targets are met.  Using this approach, the government doesn’t have to bear the full cost of infrastructure up front, and the risk to both the private and public sectors is mitigated.  So there are many creative models out there to be considered.
“The administration’s definition of infrastructure is broad and inclusive.  It not only recognizes traditional infrastructure such as roads, bridges, railroads, inland waterways and ports.  It may also potentially include energy, water, broadband and veteran hospitals, as well.  That’s why there are 16 different departments and agencies working to put together this initiative.  In addition, a few special projects that are not candidates for private investment will likely be identified and funded directly.  Candidates for this special category may include projects that have the potential to significantly increase GDP growth, or to lift the American spirit.
“Incentivizing local, state and private sector investment—as well as streamlining permitting processes– will have the biggest impact on future infrastructure development.  But in the process of revitalizing our country’s infrastructure, we are also looking at ways to revitalize our country’s workforce.”

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