Articles Posted in Infrastructure

The American Society of Civil Engineers (“ASCE”) has released its 2013 Report Card for America’s Infrastructure. The Report Card assigns a letter grade to sixteen major categories of infrastructure – such as bridges, dams, and roads – based on capacity, condition, funding, future need, operation and maintenance, public safety, and resilience. The individual categories ranked by the Report Card range from a high of B- for solid waste to a low of D- for inland waterways and levees. The 2013 Report Card gives the nation’s infrastructure a D+ GPA and estimates that $3.6 trillion in investment will be needed by 2020 to maintain a state of good repair.

The D+ rating is up only slightly from the D GPA given by the ASCE’s last Report Card in 2009. And the study is replete with grim statements. For example, it notes that, “much of our drinking water infrastructure is nearing the end of its useful life,” “one in nine of the nation’s bridges are rated as structurally deficient,” and “[f]orty-two percent of America’s major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually.”

The ASCE’s President, Gregory E. DiLoreto, notes that much of the nation’s infrastructure was put into place over fifty years ago and is simply “overwhelmed or worn out.” Mr. DiLoreto notes the current backlog of infrastructure projects and deferred maintenance, and he stresses the need for innovative solutions and increased investment. According to Mr. DiLoreto, failure to address these projects will cost American families an estimated $3,100 per year in personal disposable income.

So how does America improve these abysmal grades? According to the ASCE, the solution is simple – “when investments are made and projects move forward, the grades rise.” With many cash-strapped states now looking to public-private partnerships to address their infrastructure needs, perhaps the 2017 Report Card will be an improvement.

On July 6, the California State Senate narrowly approved the use of $4.5 billion in proceeds from state Proposition 1A bonds for transportation projects. Governor Jerry Brown is expected to sign the bill into law. Full text of the bill can be found here. Senate Bill 1029 is intended to preserve California’s rights to about $3.3 billion of federal American Recovery and Reinvestment Act (ARRA) funds for the long-awaited California High Speed Rail.

About $2.6 billion of the state bond proceeds is now dedicated to High Speed Rail, intended to match the $3.3 billion of ARRA funds for a total of about $5.9 billion in funding for the early rail projects. (The remaining $1.9 billion is earmarked for local transit improvements, such as $140 million for new BART cars, $705 million for Caltrain electrification, $61 million for the SF Muni Central Subway, and $500 million for Metrolink and related systems.)

The early High Speed Rail funding focus is on the Initial Operating Section (IOS), which runs down the Central Valley from Merced to the San Fernando Valley (about 130 miles of initial segments and about 300 miles in total). Design-build package HSR11-16 has already been shortlisted to five bidders; this is for 23-29 miles of infrastructure around Fresno (including a major river crossing and many grade crossings) and is estimated at $1.2-1.8 billion. According to the Request for Proposal, award is scheduled for December of this year.

Further design-build packages for infrastructure connecting Fresno with Bakersfield, and for stations and track along all of these segments, would be expected to follow. There would also be associated architect/engineer and construction management contracts, and two design-bid-build contracts for multiple-use crossings. Additional design-build packages for infrastructure, stations and track connecting Merced with Fresno, and Bakersfield with the San Fernando Valley, are expected in the future. A procurement package for the trains would then ensue.

The contracts for these later segments face some additional significant hurdles. They are conditioned on additional agency signoffs, completion of the environmental impact review process, and negotiations with scores of landowners, cities and counties. Furthermore, more funds would have to be released by state and federal legislators. US congressmen have already announced their intention to audit how the High Speed Rail Authority has spent existing funds, and it is possible that Congress will limit or defer funding for the future segments. Some observers remain doubtful that all of these approvals will be obtained (let alone obtained on schedule).

All of the initial packages are expected to make use of public funds. Opportunities for public-private partnerships (PPPs), such as DBFOM contracts and concessions, are expected to be available for the urban sections closer to San Francisco, LA and San Diego, and for operating phases. However, the High Speed Rail Authority says unsolicited proposals for private financing may be considered.

The rail projects receiving ARRA funds are subject to the Buy America mandates of 49 U.S.C. 24405(a), requiring steel, iron and manufactured components to be of US origin. http://www.fra.dot.gov/Pages/11.shtml Bidders have already been warned that no waivers should be assumed (see page 13 of the RFP).

This legislation is intended to preserve California’s claim on the ARRA funds, and indicates a significant step forward for initial segments of High Speed Rail. Because more approvals and money are required for the overall project (now estimated to cost $69 billion in 2011 dollars), stakeholders will have to make many more strides before opening day.

Perhaps they saw that Scott Walker defeated a recall attempt in Wisconsin and decided that momentum is moving against organized labor. Whatever the thought process, a log jam has been removed and a major project can move forward. On Wednesday, June 6, the Metropolitan Washington Airport Authority (WMAA) agreed that Phase II of the Dulles Rail Project (extending the commuter rail line from Wiehle Avenue in Reston to Dulles Airport) can proceed without the pro-labor provision that has jeopardized project funding. The provision at issue would have awarded points to potential bidders that promised to use union labor on the project. Contractor bids are evaluated by WMAA, at least in part, on points awarded for any variety of factors, such as prior project experience and the strength of the contractor’s technical proposal. Thus, award of the project might not necessarily have gone to the lowest bidding contractor. For more than a year the debate raged, even reaching the floor of the Virginia Assembly. Virginia, a right to work state, threatened to withhold its share of project funding if MWAA insisted on the pro-labor provision. Already, Governor McDonnell has pledged $150 million from Virginia at the start of 2013 now that the pro-labor provision has been taken off the table. Those that applaud MWAA’s decision point out that the project costs will likely be lower, leading to lower costs both for taxpayers and commuters.

With this hurdle aside, the path is cleared to extend the Silver Line to Dulles Airport. The Loudoun County Board of Supervisors has yet to approve its portion of funding to carry the Silver Line past Dulles and into Loudoun County.

California’s ambitious plan to build a high-speed rail system linking San Francisco and Los Angeles has been getting quite a lot of attention lately. Although the plan has some high-powered supporters in Secretary of Transportation Ray LaHood and California Governor Jerry Brown, the level of enthusiasm in Congress has been mixed, as reported by the San Francisco Chronicle’s Carolyn Lochhead.

Earlier this month the California High Speed Rail Authority approved a revised business plan, slashing its previous $98.5 billion estimate by nearly a third to $68.4 billion, with much of the savings coming from “blended infrastructure.” Translation: rather than construct new track for the entire route, the CHSRA’s revised plan now includes upgrades to existing track at the San Francisco and Los Angeles ends of the route.

Despite these budget reductions, the California Legislative Analyst’s office recommended that the California Legislature not approve Governor Brown’s proposals for $5.9 billion in additional funding for the project, including $2.6 billion in bond funds and $3.3 billion in matching funds from the federal government. The Legislative Analyst’s recommendation was based in part on the fact that only $11.5 billion in funding has currently been committed, and that about $39 billion of an assumed $42 billion to be funded by the federal government has yet to be secured.

Earlier this year, the CHSRA released the shortlist of design-build companies that will be allowed to bid on the first segment in the Central Valley once the RFP is released. The RFP was scheduled to be released this past March, but while the terms and conditions have been approved, the RFP remains unissued. Since the funding is still in a state of flux, this is not altogether surprising.

The design-build companies can perhaps take heart from one segment of the Legislative Analyst’s report, however. Recognizing that the Legislature might want to approve some funding to keep the project moving, the Legislative Analyst suggested that in that case the Legislature could approve funding for the first contract (estimated at $1.5 to $2 billion) and scheduled for award this December.

As someone who has spent many, many hours of my life on Interstate 5 between those two cities, and waiting in one airport when my flights to the other have been delayed, I will continue to follow this project with more than casual interest. If the final product even comes close to the statutorily mandated 2 hour and 40 minute non-stop between Los Angeles and San Francisco, that would beat my average driving time by more than half, and could be a genuine competitor for me with air travel.