Private-sector role in U.S. infrastructure continues to expand and evolve

October 2012 » Departments » COMMENT
Bob Drake

Public-sector infrastructure owners are seeking funding for construction, operations, and maintenance like never before. Diminished revenues from taxes and increasing needs for maintenance, replacement, and expansion keep transportation agencies, city and county public works departments, and utilities scrambling to cut costs and meet budgets. While economic recovery may gradually increase some funding, it is not likely to alleviate the financial crunch.

For decades, private-sector companies have owned and operated water/wastewater and other utilities – where steady revenue streams offer reliable returns on investment – as well as some tolled transportation infrastructure such as bridges and tunnels. But increasingly, public-sector owners of infrastructure ranging from water/wastewater systems to highways, bridges, tunnels, railways, transit systems, stormwater systems, airports, ports, and more are turning to the private sector for help through creative public-private partnerships (P3), design-build-operate (DBO) agreements, and lease arrangements.

Virginia established an Office of Transportation Public-Private Partnerships (www.vappta.org) to develop and implement P3 projects across all modes of transportation statewide. The Texas Department of Transportation's (TxDOT) Strategic Projects Division oversees procurement policies, right of way acquisition, and support activities for P3 agreements. In its newest project, TxDOT recently announced that it is partnering with a private company to design and construct an expansion of I-35W in Fort Worth. The agreement also provides operations and maintenance until 2061.

Other states have and will follow these examples. In 2006, Indiana leased its Toll Road for $3.8 billion. Ohio currently is studying the potential and pitfalls of leasing the Ohio Turnpike. Also check out this year's "Water Projects Pipeline" article (page 18) for some examples of P3 and DBO projects.

The U.S. Army Corps of Engineers (Corps) is the latest public agency considering a greater role for the private sector in its mission. A recent report from the National Research Council, sponsored by the Corps, suggests "strengthening partnerships among the private and public sectors as options to manage the Corps' aging water infrastructure." That infrastructure includes approximately 700 dams, 14,000 miles of federal levees, and 12,000 miles of river navigation channel and control structures.

"Today, the Corps focuses mainly on sustaining its existing structures, some of which are in states of significant deterioration and disrepair," said David Dzombak, chair of the committee that wrote the report and professor in the department of civil and environmental engineering and director of the Steinbrenner Institute of Environmental Education and Research at Carnegie Mellon University. "Funding for maintenance and rehabilitation of Corps water resources infrastructure – which includes navigation locks and dams, flood management levees and dams, and other facilities – has been inadequate for decades. We now have a scenario where the water infrastructure is wearing out faster than it is being replaced or rehabilitated."

Report authors said that partnerships with states, communities, and the private sector could yield new resources and more efficient methods, especially in hydropower generation, flood risk management, and port and harbor maintenance.

The long history of private-sector civil engineers' involvement with public-sector infrastructure projects in the United States is definitely taking on new dimensions.

Bob Drake
bdrake@zweigwhite.com


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