growth & infrastructure consortium

Growth & Infrastructure Consortium

Infrastructure: So Commonplace, We Take it for Granted

Growth & Infrastructure Consortium National Conference

Scottsdale, Arizona

Luncheon Speech

October 3, 2013 – 12:30 – 2:30 p.m.

Robert W. Burchell, Ph.D., Rutgers University

Christian Mercado, M.C.R.P. Candidate, Rutgers University

Theo M. Pollack, Esq., M.C.R.P., Rutgers University

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Growth & Infrastructure Consortium Infrastructure:

So Commonplace, We Take it for Granted

Definition – The basic capital facilities and structures needed for the functioning of an enterprise, community, or society. Function – Infrastructure provides facilities that assist in the production and distribution of goods and services to economic markets. It also provides structures of social reform services such as public and higher education, health, and incarceration. Type – Hard infrastructure encompasses the large physical networks that are necessary for the functioning of a modern, industrial nation. Capital assets that serve the conveyance of people, utilities, fluids, energy, or information, as well as fixed assets such as control systems and software.

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Infrastructure – Definition, Function, Type



Council of State Planning Agencies (10) – Roads; bridges; water/sewer systems; airports; ports; public buildings; schools; health facilities; jails; recreation facilities; electric power production; public safety; solid waste disposal; telecommunications. CBO (Congressional Budget Office) (7) – Highways; public transit systems; wastewater treatment works; water resources; air traffic control; airports; managed water supply. National Council on Public Works Improvements (9) – Highways, streets, roads and bridges; airports and airways; public transit; intermodal transportation (interface); water supply; wastewater treatment; water resources; solid waste; hazardous waste services. National Research Council (9) – Highways, streets, roads and bridges; mass transit; airports and airways; water supply and water resources; wastewater management; solid waste treatment and disposal; electrical power generation and transmission; telecommunications; hazardous waste management. ASCE (16) – Transportation (airports, bridges, and roads); ports and inland waterways; rail, other transit; water and environment (dams, levees); solid waste, hazardous waste; energy; public parks and recreation; schools.

Components of Infrastructure – Evolution in Definition



What do we now agree on as components of infrastructure?

Transportation (6) – Airports and ports; bridges and roads; intercity rail and other transit.

Water and the Environment (5) – Water and wastewater; dams and levees; inland waterways.

Waste (2) – Solid and hazardous waste.

Land (1) – Public parks and recreation.

Energy (1) – Energy production (power generation and transmission); telecommunications.

Schools (1) – K-12 public schools.

Total – 16 categories – ASCE

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Infrastructure condition (Quantitative) Airports; drinking water; inland waterways; solid waste; other transit; wastewater. Bridges; rail; solid waste. Dams; energy; hazardous waste; levees; public parks/recreation; roads; schools. Ports (new category). Overall (All 16 categories)

What has happened? Negative over time (C- to D) Positive over time(C- to C+) Unchanged over time (D to D) Unmeasurable (C) Negative Over Time (C to D+)

Analysis – Infrastructure conditions are below average to bad – and getting worse.

Trends in Condition of Infrastructure



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Report Card for America's Infrastructure, 1988-2013

Category 1988 1998 2001 2003 2005 2009 2013 Total Direction

Aviation B- C- D No Change D+ D D B- to D Negative

Bridges — C- C Failing C C C+ C- to C+ Positive

Dams — D D Failing D+ D D D to D Unchanged

Drinking Water B- D D Failing D- D- D B- to D Negative

Energy — — D+ Failing D D+ D+ D+ to D+ Unchanged

Hazardous Waste D D- D+ No Change D D D D to D Unchanged

Inland Waterways B- — D+ Failing D- D- D- B- to D- Negative

Levees — — — — — D- D- D- to D- Unchanged

Ports — — — — — — C - to C N/A

Public Parks and Recreation

— — — — C- C- C- C- to C- Unchanged

Rail — — — — C- C- C+ C- to C+ Positive

Roads C+ D- D+ Failing D D- D C+ to D Negative

Schools D F D- No Change D D D D to D Unchanged

Solid Waste C- C- C+ No Change C+ C+ B- C- to B- Positive

Transit C- C- C- Failing D+ D D C- to D Negative

Wastewater C D+ D Failing D- D- D C to D Negative

Overall GPA C D D+ No Change D D D+ C to D+ Negative

Trends in Infrastructure Condition (16 Categories)



Airports – Commercial flights were 33 million higher in 2011 versus 2000, despite having one half of the period as a recession. Ports – Port Authorities will spend $46B in capital improvements over the next three years. Landside freight and navigable waterways funding has declined. Roads – 42% of America’s urban highways remain congested, costing the economy $101B per year in wasted time and fuel. Bridges – 1 in 9 of the nation’s 607,380 bridges are rated as structurally deficient; their average age is 42 years. Rail –Both freight and intercity rail have grown in ridership. However, railroads face unprecedented amounts of congestion, costing the nation upwards of $200 billion. Other Transit – Despite a continued desire for public transportation expansion, nearly half of Americans lack access to public transit. Dams – The average age of American dams is 52 years. These dams may not survive given predicted stronger natural disasters. Levees – The majority of levees are owned by local entities, and have fallen into states of unacceptable repair. Half of the nation lives in a county with a levee.

Trends in Selected Infrastructure Condition Infrastructure Condition (Qualitative) What is wrong?



Inland Waterways – Economic growth is curbed by a dependency on outdated locks that cause major delays for barges shipping goods on our nation’s rivers. Drinking Water – Drinking water infrastructure is nearing the end of its useful life. Average age is in excess of 100 years; 240,000 water main breaks per year. Sanitary and Wastewater – Combined sanitary and sewer overflows have required $15 billion in investments over the last five years. Solid Waste – While Americans recycle/compost more often than ever, the size of landfills continue to rise and fail to take advantage of waste-to-energy technology. Hazardous Waste – The Environmental Protection Agency estimates that one in four Americans lives within three miles of a hazardous waste site. Public Parks and Recreation – Growth of new areas and routine maintenance for old areas declined from 2007 to 2013. Energy – Alternative energy systems growth is one-half of the previous five years. Schools – Almost half of all schools in the United States were built to educate the Baby Boom generation, thus almost half of our nation’s schools are outdated.

Trends in Selected Infrastructure Condition Infrastructure Condition (Qualitative) What is wrong?



How Much Curative Money is Needed?

$3.6 Trillion by 2020

Surface Transportation - $1.7 Mil. (almost 50%)

Funding is $2.0 Trillion

Gap is $1.6 Trillion



2001

2005

2009

2013

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

$1.3 Trillion $1.6 Trillion $2.2 Trillion $3.6 Trillion

Cost to Improve American Infrastructure, 2001-2013

Increasing Infrastructure Costs to Cure



America’s Infrastructure Investment Needs – To the Year 2020 – 2010$ (M)

Infrastructure Systems Total Needs Estimated Funding

Funding Gap

Surface Transportation $1,723 $877 $846 Water/Wastewater Infrastructure $126 $42 $84 Electricity $736 $629 $107 Airports $134 $95 $39 Inland Waterways & Marine Ports $30 $14 $16 Dams $21 $6 $15 Hazardous & Solid Waste $56 $10 $46 Levees $80 $8 $72 Public Parks & Recreation $238 $134 $104 Rail $100 $89 $11 Schools $391 $120 $271 TOTALS $3,635 $2,024 $1,611 Yearly Investment Needed $454 $253 $201



Larger Effects of Infrastructure Investment – Positive

Public capital investment can expand productivity. Highway investment allows for faster/shorter trips than back roads

Less wages for drivers Less wear and tear on trucks

Highway investment allows private companies to produce products at lower costs

Public capital investment can have a large impact on productivity. $1.00 increase in capital produces a $0.60 increase in productivity Increases in GNP from public infrastructure investment exceed

those from private industry by 2 to 5 times Public capital enhances the productivity of private capital Public capital investment has a positive correlation with employment growth



Larger Effects of Infrastructure Investment – Negative

Focus – As the geographic focus of infrastructure shifts (from federal to state to local), the impacts of funding decrease almost proportionally.

Range of Impacts – There is a wide range of estimated coefficients of impacts; this dilutes the feeling of significant impact.

Direction of Causation – Causation could be in opposite direction: private expansion demands public infrastructure investment.

Period of Effects – Effects are difficult to gauge because it takes time for the effects to emerge; this also dilutes impact.

Cost Versus Revenues – The cost of infrastructure investment is not worth the income of the jobs provided.



Infrastructure Investment– Related to Economic Expansion

Periods of U.S. economic expansion related to transportation infrastructure investment: Railroad infrastructure investment from the 1850s to the 1880s lead to

economic expansion of 1900-1930. Invention of the automobile and consequent highway expansion in the

1920s to the 1930s lead to economic expansion of the 1940s-1950s. State and toll road expansion of the 1960s continued economic expansion

of the early 1960s. Completion of the Interstate System in the 1960s through the 1970s

sparked the economic growth of the South and West in the 1970s/ 1980s. Reinvigoration of transit in certain locations lead to economic expansions

of the 1980s and 1990s. No new transportation investment of the level of prior investment is

currently in the planning stages. This will effect future productivity.



Infrastructure Investment as a Percentage of GDP

Infrastructure investment as a percentage of GDP declined 20% in the generally

good times from 1960 to 2007 – 3.0% ($1.17/capita) to 2.4% ($0.85/capita).

Infrastructure investment as a percent of GDP declined 25% in generally hard times

from 2007 to 2013 – 2.4% ($0.85/capita) to 1.7% ($0.55/capita).

Local government spending on capital goods went from 60% of total expenditures

to 30% of total expenditures from 1960-2013.

Capital Spending by Local Government, 1960-2013.

1960 2007 2013

Capital 60% 45% 30%

O&M 40% 55% 70%



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Infrastructure Investment and Job Growth

$1 billion in highway investment supports X jobs (direct/indirect).

FHWA 15,000 jobs (direct/indirect)

10,300 construction jobs

4,700 transportation, other jobs

BLS 11,265 jobs (direct/indirect)

BEA RIMS II 9,000-15,000 jobs (direct/indirect)

(See following chart)

Differences relate to specific industry mix of state. One state varies from the next due to its capacity to supply the intermediate goods to carry out construction. If it has more capacity, more jobs will be created.



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State Alabama

Number of jobs 14,674

State Montana

Number of Jobs 14,328

Alaska 9,169 Nebraska 11,929

Arizona 11,718 Nevada 9,727

Arkansas 13,662 New Hampshire 10,914

California 10,185 New Jersey 9,263

Colorado 11,643 New Mexico 12,908

Connecticut 8,929 New York 8,804

Delaware 9,102 North Carolina 14,181

District of Columbia 1,562 North Dakota 10,880

Florida 12,889 Ohio 12,971

Georgia 13,857 Oklahoma 14,104

Hawaii 9,762 Oregon 12,200

Idaho 13,956 Pennsylvania 11,663

Illinois 10,257 Rhode Island 10,036

Indiana 12,477 South Carolina 14,550

Iowa 12,373 South Dakota 13,110

Kansas 11,589 Tennescsee 13,340

Kentucky 13,605 Texas 12,692

Louisiana 12,229 Utah 14,018

Maine 14,427 Vermont 13,579

Maryland 9,526 Virginia 11,385

Massachusetts 9,057 Washington 11,015

Michigan 12,416 West Virginia 12,061

Minnesota 11,549 Wisconsin 12,108

Mississippi 13,904 Wyoming 10,773

Missouri 11,780 Source: Prepared by CRS from RIMS II estimates supplied by the BEA Regional Product Division, September 20 II.



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Surface Transportation

(Need $1723B; Funding $877B; Gap $846B)

Roads – Double ($170B) the amount currently invested ($91B) is needed to significantly improve conditions. Direct additional revenue streams to the Highway Trust Fund

Federal, state, county, local governments must raise an additional $30B each

Bridges – Increase funding by two thirds (to $20.5B) the amount currently invested ($12.8B) in order to eliminate the backlog in 15 years (by 2028). The $8B additional investment per year would address deficiencies

in all identified bridges in the U.S. (20% of which are structurally deficient or obsolete).

Infrastructure – What Needs to be Done?



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Airports & Ports


Airports – The gap in funding between 2012 and 2020 is $4.3B annually (AIP + Next Gen). Achieve a dedicated source for Next Gen; remove the cap on

passenger facilities charges

Manage well and improve the Airport and Airway Trust Fund

Ports – U.S. ports plan to spend $45B over the next five years, or $9.0B annually. An additional $1-1.5B annually is available for dredging from the

Harbor Maintenance Trust Fund.

Develop a National Freight Plan; create a Port Infrastructure Development Program at the federal level.




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Public Transit (Need $100B; Funding $89B; Gap $11B) Rail – Rail freight spends $20 billion per year maintaining

and modernizing the freight network. Passenger rail is supported by $2 billion in revenues per year, including government and fare box support. Improve passenger intercity rail service in dense urban corridor

markets. Initiate passenger rail service linking cities in developing markets.

Transit – FTA estimates a maintenance of backlog of nearly $80 billion per year bringing transit systems to a good state of repair. A funding gap of $25 billion exists (2010); this could grow to $35 billion by 2040. Increase access to transit. Adequately fund transit. Include transit in local project development processes.




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Water


Drinking Water – 25 years of investment would require $1T; annual investment would need to more than double (from $13B) to meet the need (to $30B). Needs could be met with higher water bills – about $1000 per

person, per year.

Infrastructure Bank would access funds from U.S. Treasury at Treasury rate.

Wastewater – 20 year capital investment needs approach $300B. Long-term strategy is to separate and treat potable as opposed to non-potable water. More funds to State Revolving Fund under CMA

Eliminate state cap on private activity bonds for water and sewer




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Dams, Levees, Inland Waterways

(Need $116B; Funding $21B; Gap $95B) Dams – The cost to rehabilitate federal and nonfederal dams is

$57B. For the 20 most critical dams, the figure is $2B per year for 15 years. 14,000 dams – high hazard (potential loss of life)

14,000 dams – significant hazard

Reauthorize National Dam Safety Program

Establish National Dam Rehabilitation and Repair Program

Levees – 100,000 miles of levees cost $100B to repair. Damage is $5-15B per year. Establish a National Levee Safety Program; take national inventory

Inland Waterways Capital Investment needs over the next 20 years are $18B, or just under $1B per year.

Could accomplish above for $13B; half of which is available.

Increase barge fuel tax; develop a national freight strategy.




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Waste

(Need $56B; Funding $10B; Gap $46B) Solid Waste – Solid Waste costs are $55 billion annually. This is

impacted by multilayered regulations and lack of statewide and national coordination. Reduce the volume of waste landfilled; increase recycling.

EPA’s Resource Conservation Challenge: 40% recycling of municipal solid waste by 2020.

Encourage conversion of landfill gas to energy

Reduce environmental impact of waste.

Hazardous Waste– It will take $210 billion over 30 to 35 years to clean the nation’s waste sites. Reauthorize federal Superfund taxes on chemical and petroleum

corporations.

Reauthorize Brownfields revitalization and Environment Restoration Act.

Create a Brownfields Redevelopment Action Grant (BRAG).




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Public Parks and Recreation


Parks and Recreation – The unmet need reported by states for parks and recreation approached $20 billion annually in 2011. Increase parks and recreation fees at national, state, and local levels.

Renegotiate franchise fees for vendors in parks.

Fully fund the Land and Water Conservation Fund.

Increase appropriations for National Park Service and U.S. Forest Service.




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Energy (Electricity)


Energy – The total investment in electricity infrastructure is $63 billion annually. There is a $37.3 billion annual gap for transmission of energy and $57.4 billion gap for the distribution of energy. This is based on a total gap of $107 billion: Adopt a natural energy policy.

Construct additional transmission grid infrastructure.

Create incentives to promote energy conservation.




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Schools


Schools – Fifty million students attend school in 100,000 schools annually in the United States. Ten percent of schools have enrollment 25% greater than building capacity. Sixty percent of schools need to spend additional money on repairs, maintenance and modernization. Encourage school districts to adopt comprehensive major maintenance.

Encourage state and federal tax credits for school construction bonds.

Implement comprehensive preventative maintenance programs.




If the GIC has changed its name, it ought to know the basics of infrastructure.

Enhancing infrastructure longevity will reduce mankind’s impact on the biosphere.

Long life-cycle asset requires multiple intervention points: maintenance, repair, and rehabilitation.

Obsolescence means out of date—not meeting current needs.

Service or useful life of infrastructure is 30 to 70 years.

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Concepts We Should Know About



Obsolescence, or inability to perform, is caused by:

Technological change—new aircraft are no longer matched to gate or

runway dimensions.

Regulatory change—transit vehicles retrofitted for mobility-impaired

passengers.

Economic/social change—new building cycle requires upgrading old

and providing new roads.

People’s value/behavioral changes – movement to automobiles and

discarding of rail transit.

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Reliability is the staving off of obsolescence—effectiveness lasts for a design lifetime.

Costs to retain infrastructure are necessary to sustain

reliability.

Infrastructure greater than 50 years—no present worth—

effectively obsolete.

Obsolescence allows more productive and less polluting

infrastructure to be put in place.

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Difficulty of mobilizing social and political consensus for major projects is detrimental to funding new infrastructure development.

Respond to change— reserve road rights of way, second decks

on bridges.

Fully construct—ensuring that design capacity and

technological goals are met.

Monitor facilities during maintenance; increase performance,

slow degradation.

Refurbish and retrofit early—forestall obsolescence.

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Going Forward Into the Future



Set priorities—establish need estimates

1985–$45 billion spent for public works projects; should have double.

(Council on Public Works Improvement)

2013 –$3.6 billion is needed; gap is $1.6 trillion. (ASCE–2013)

Green infrastructure should play a role (ARRA—2009)

Projects with improved energy efficiency and environmental protection

will benefit the economy.

Project of these types are costly and may require skill levels that locals

no not have or for cost reasons must be purchased from overseas.

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Self-healing materials

Increase in-service life can be made using self-healing materials.

Bacteria in concrete seals concrete cracks.

Sustained high seasonal temperature seals asphalt cracks.

Infrastructure asset management

Software to implement strategies to preserve and extend service life.

GIS is used for the control and management of distanced assets.

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