Leadership, national infra bank needed for US

The US needs “visionary” leadership and a national infrastructure bank to succeed in infrastructure upgrades and innovations.

“Visionary” leadership and a national-level financing bank are much needed to ensure the success of US infrastructure assets and investment going forward, industry participants at the CGLA conference last week said, as they put forward innovative ideas to address the country’s crumbling infrastructure.

Sustainability is the code word they used at the conference.

“It’s (sustainability) about visionary leadership in infrastructure… coming up with regional plans” for public-private partnerships and other means of participation and collaboration, said General Michael J. Walsh, vice president of water resources and coastal resiliency at Dewberry, who is the former deputy commanding general for civil and emergency operations for the US Army Corps of Engineers.

Walsh recounted an example in Denver two years ago when the Mayor referred to transportation in the city as a “regional problem” and called for a holistic regional solution.

Sustainability in infrastructure is also about “how we build it right the first time,” said Patrick J. Natale, executive director of the American Society of Civil Engineers (ASCE).

“We have a mentality in this country – to build cheap. I think it’s a major mistake – why not spend a little bit more upfront to do it right to last longer?” Natale asked.

In the meantime, setting up a national-level financing entity for all infrastructure projects is seen to be of equal importance.

“I am very encouraged by the idea by Congressman Delaney (building a national financing entity to finance infrastructure projects in the US)… I think that has a lot of potential to bring corporate funds back into the US, funding infrastructure and areas that would impact society,” said Ralph Eberts, executive vice president and managing director of water, Americas at Black & Veatch.

Congressman John Delaney introduced the Partnership to Build America Act, a bill that seeks to find alternatives to public funding for investment in infrastructure. The bill calls for the creation of a $50 billion infrastructure bank that could finance up to $750 billion in new projects. It would be capitalised upfront through the sale of 50-year bonds and US companies would be incentivised to buy these bonds by being allowed to repatriate tax-free a portion of their foreign earnings for every dollar spent on the bonds.

“We really do need to optimise the bank, enabling legislation that will allow states and localities to cooperate and participate more fully with private investors. And that would require P3 authorising legislation in many of the states; 33 states have such legislation on the books at present,” said Leanne Tobias, managing principal of Malachite LLC.

The recommendations came as a new report titled “Making The Grade” was released at the conference that outlines innovative ways to solve the problems in the US infrastructure market.

The report serves as a rallying cry in response to last year’s quadrennial report card by the American Society of Civil Engineers (ASCE), which gave America’s overall infrastructure a D+ grade.

The ASCE estimates that $3.6 trillion must be invested by 2020 to make critically needed upgrades and expansions of national infrastructure, and avoid trillions of dollars in lost business sales, exports, disposable income and GDP.

The report presents six recommendations: 1) making infrastructure a cabinet-level priority; 2) forming US infrastructure regions; 3) establishing a national infrastructure bank; 4) selling “opportunity” bonds; 5) creating a national infrastructure index, and 6) engaging the American people to build support for the importance of infrastructure policy.

“Innovation in infrastructure requires long-term effort and attention to the capabilities that must be developed among a coalition of stakeholders to achieve that goal. US infrastructure in particular is a 'wicked problem' – complex and open-ended – that requires a guiding framework and a high level of collaboration and originality for its resolution,” said John Kao, former Harvard Business School Professor and chairman at the Institute for Large Scale Innovation.