A successful US infrastructure policy would require project assessments as a condition for federal funding, support bankable revenue streams and improve existing grant and loan programmes, according to the New York City Bar Association.
The association’s report, submitted last week as a memo to the Trump administration, highlighted ways to prioritise schemes that are needed rather than focusing on shovel-ready projects. Availability payments could help foster P3s, the report continued.
“This structure not only enables the private sector to finance construction,” said the memo, drafted by the association’s Construction Law, Transportation and Project Finance committees. “But it also presents a very desirable allocation of risk and reward from the perspective of the public sector partner.”
Federal programmes like Build America Bonds, the TIGER Discretionary Grant Program and TIFIA should be continued and strengthened, the memo said, while tax exemption on bond debt should also be maintained. Additionally, requiring grant applicants to demonstrate that their service delivery method is the most cost-effective would be beneficial.
George Miller, a partner at law firm Mayer Brown and a contributor to the team drafting the memo, said there is a large appetite for private sector investment under the right circumstances.
“It is mostly a matter of using federal financial support to encourage states to seriously consider private investment alternatives,” Miller told Infrastructure Investor. “They're not going to work for every project, but they've been shown to be the best means of delivery for some projects and should be taken advantage of.”
In October, Trump policy advisors Wilbur Ross and Peter Navarro issued a paper calling for an 82 percent federal tax credit for private infrastructure investors. Miller said that such credits could be helpful but may not be needed.
“I don't think the problem has been as much availability of private capital as the fact that not all states have even adopted P3 statutes to begin with,” Miller said. “So there's still some political resistance. That's probably more the issue than taxation at this point.”
Reforming NEPA
The memo also recommended streamlining the environmental review process. The National Environmental Policy Act has become “vulnerable to misuse” by project opponents, the report said.
Another policy paper released last week – this one by the American Action Forum, a centre-right think tank – focused on the NEPA process and its impact on private investment in transportation and energy. The report said the process often dragged out for years, driving up project costs.
“The NEPA review process does not contain any deadlines for completion, and the redundancy between agencies results in drawn-out completion times,” the AAF paper stated, concluding that there is room to improve the process.
Citing numbers from the Federal Highway Administration and Department of Energy, the AAF said more than 40 energy projects and 100 transit schemes are currently stuck in the review process, with median wait times of 4.5 and 5.2 years, respectively, for each sector’s outstanding projects.
“The longer it takes projects to complete the review process, the more projects will end up costing,” the report noted.
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