The challenge reassessed

“I think the general frame is that while America’s infrastructure crisis is well known – the 63,000 bridges that are structurally deficient, the water main breaks that happen each year, the lack of connection between low-income households and economic opportunity – the way we’ve been thinking about fixing them is wrong,” Robert Puentes, senior fellow with Brookings’ Metropolitan Policy Programme told Infrastructure Investor in a recent interview.

Puentes’ comments were made on the occasion of a new white paper released by the Washington DC-based think tank in collaboration with private equity firm Kohlberg Kravis Roberts & Co (KKR) last month.

The Way Forward: A New Economic Vision for America’s Infrastructure, which Puentes co-authored, examines the challenges facing the US and its infrastructure needs and seeks to provide solutions and new perspectives on how these challenges are addressed.

Getting specific

One way to do that, according to KKR’s North American head of Infrastructure and one of the report’s co-authors Raj Agrawal, is to move away from a ‘top-down’ approach.

“Let’s move from a federal government ‘infrastructure is good, let’s support it’ approach to a very specific metro leader-oriented approach: ‘In this city this is what we’re trying to achieve and here are the constraints so we need more investment in ports, we need more investment in freight, we need water to keep up with the citizenry given all the growth we have’ – whatever it is that’s ‘bottom up’,” Agrawal said.

The next step then is to come up with the solutions that arise from a ‘bottom-up’ perspective, which, according to examples presented in the report, could include relaxing restrictions on passenger facility charges at airports or allowing states to toll the interstate.

“So our suggestion would be […] let each locality figure out what makes sense that’s pro-growth in that area and then let’s do what we can at a regional, federal, state level to facilitate what makes sense at the metro level,” Agrawal noted.

Moving the discussion on from the general to the specific means understanding that different sub-sectors of infrastructure – such as transportation, water, energy, and telecommunications – are governed, financed and delivered differently.

According to the report, the pursuit of silver-bullet policies that has occurred until now – and which has not taken into consideration the different characteristics and needs of infrastructure’s sub-sectors – has prevented the US from developing customised solutions to distinctive challenges.

“The challenge we’ve had on the national level is that we’ve talked about infrastructure in the abstract and it’s resulted in things like the National Infrastructure Bank, which is fine and we definitely think it has a role to play, but it’s almost a cartoon-y approach to infrastructure,” Puentes said.

Simply saying that infrastructure is connected to the economy is too abstract, according to Puentes. Instead it needs to be directly linked to a clear economic objective. He cites President Barack Obama’s export agenda as an example.

“He [President Obama] said we want to double exports in five years – that was a big economic goal they wanted to set out – perfect. That should have then led the administration to infrastructure projects designed to achieve that goal – freight projects, for example,” Puentes said.

The report showcases certain examples of what it claims are successful case studies, such as Virginia’s Rosslyn air rights project; a public-private partnership (PPP;P3) project between KKR and the Bayonne Municipal Utilities Authority; and the West Coast Infrastructure Exchange.

“As a country, we should endeavor to move beyond simplistic notions of ‘privatization’ to a future of infrastructure with true partnerships between government agencies, private firms, financiers, and the general public,” the authors wrote.

“This is how many nations successfully develop infrastructure around the world today.”