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OCR for page 84
72 T R A N S P O RTAT I O N F I N A N C E transportation (task force chair); administrator of the actively participating in this new "cooperative spirit" Environmental Protection Agency; and the chairs of the among the agencies, I believe many of us fully under- Council on Environmental Quality and the Advisory stand why the administration thought it necessary to Council on Historic Preservation. issue an executive order. Furthermore, an important issue to be resolved is Perhaps most important with respect to expediting how the USDOT modal administrations respond to the projects that make use of innovative financing, Section presidential initiative to expedite high-priority projects. 2(a) of Executive Order 13274 requires the secretary of Many believe that FHWA and Federal Transit Admin- transportation to "designate . . . a list of high priority istration (FTA) staff typically bend over backwards to transportation infrastructure projects that should receive cooperate with the resource agencies, despite what expedited agency reviews, and . . . amend such list from sometimes seems like an intent by many midlevel time to time as the Secretary deems appropriate." For staffers within these agencies to slow the environmen- projects on the secretary's list, "agencies shall to the max- tal review process. Much of the delay encountered with imum extent practicable expedite their reviews for rele- respect to highway projects, in particular, results from vant permits or other approvals, and take related actions deliberate inaction by resource agency staff, who allow as necessary, consistent with available resources and project approvals to languish and then request the opin- applicable laws." ion of those close to the situation concerning "addi- Over the past several years, many of us here have tional time" for review or ask for lengthy written been working with various members of Congress and responses from project sponsors to nonpertinent or the Clinton and Bush administrations to develop a redundant questions. process designating projects as high priority. Such prior- The USDOT policies must change to reflect a more itization is particularly important with respect to pro- proactive approach in dealing with sister agencies, despite jects in which development risk is shifted wholly or the commendable efforts of many in FHWA and FTA to partially to the private sector or in which financing is cooperate in interagency reviews and appropriate plan- being arranged nontraditionally through project financ- ning processes in accordance with the Section 1309 man- ing or a capital markets approach. Section 2(a) of the date. The good news is that many in the government executive order appears to respond to that body of sector appear to be gaining understanding of the critical requests by giving discretionary authority to the secre- differences in the degree of certainty and expediency nec- tary to designate projects of his choosing for such prior- essary for projects that make use of financing mechanisms itization, with no particular criteria for "discretion" other than traditional federal grants and pay-as-you-go provided in the executive order. While the concept of approaches. It will be our job to further this educational streamlining the environmental approval process is cer- process if we are to continue to benefit from existing and tainly not new, the president's declaration is the first new programs to better find and leverage sources of funds time that a special class of "environmentally expedited" for transportation projects. projects has been provided for by law or executive order. Over the next few months, USDOT will develop gen- One might imagine a typical question among attendees eral guidelines, criteria, and rules for projects to be des- at next year's transportation finance conference to be, ignated in the high-priority list as provided in the "Where is your project on the 2(a) list?" executive order. This sounds like a marvelous opportu- Despite the obvious intention of Executive Order nity for some modest lobbying by those of us within the 13274, it remains to be seen how well certain of the fed- innovative finance community. eral resource agencies--notably the U.S. Environmental Protection Agency--will respond to the order's intent, or whether such agencies will continue to do environ- POLITICAL AND INSTITUTIONAL FACTORS mental business as usual, particularly in the review and approval process for projects designated "high prior- There is a clear and unequivocal rule of public works: ity" by the secretary of transportation. You may recall large-scale projects that are nontraditional in virtually that some years ago, Section 1309 of the TEA-21 legis- any respect--technologically, institutionally, or finan- lation also called for significant environmental stream- cially--gain significant exposure in the political arena. lining and laid out an extensive process by which a (This could be considered the infrastructure corollary to "coordinated environmental review process" would Tip O'Neill's long-standing observation that "all poli- expedite review of federal highway and transit projects. tics is local.") In some cases, of course, such exposure is A detailed memorandum of understanding was entered helpful to project development, while in other cases into by the transportation and resource agencies, and political forces are highly destructive to infrastructure there was much excited talk about finally clearing the delivery. Often, however, infrastructure projects are logjam from the clearance process. After watching and delayed, maimed, and occasionally killed by political
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A C C E L E R AT I N G P R O J E C T D E V E L O P M E N T 73 issues only tangentially related to the project's attrib- consortium. Orange County political leadership was utes with respect to improving mobility and safety with muted and ambivalent as long as employees were will- minimum impact on the environment. ing to make the trek and punch their employers' time Political and institutional factors in infrastructure clocks at appointed hours. development often appear most acute for transportation We all know the resolution of this classic political projects and stem, of course, from the very nature of dilemma: the Orange County Transportation Authority transportation. Unlike most other public works pro- has agreed to purchase the SR-91 express lanes facility grams, transportation projects generally transcend polit- from its private owners by repayment of equity to the ical and jurisdictional lines, often at multiple levels express lanes' owners and a takeout using tax-exempt involving local governments, regional authorities, and bonds. In effect, to solve the political disagreement (at state and federal districts. In those frequent cases when least perceptually and perhaps only temporarily), the adjacent local governments or political districts differ taxpayers are paying additional costs by subsidizing with respect to any of a host of growth, development, and tax-exempt bonds, and the users will still pay tolls to a environmental issues, expediting the delivery of trans- newly created public authority. portation infrastructure often bears the brunt of the Party politics also plays an occasionally significant role debate. in creating impediments to project delivery. Interestingly, Thus, regardless of the degree of innovation planned it seems that there is often no real philosophical difference for funding and financing such projects, expediting between Democrats and Republicans with respect to infra- them becomes futile--even if the financing scheme was structure development, but merely a contest to determine brilliantly conceived and effectively communicated by which party--and which party leadership--can appear to people in this very room. This combination of factors, be more "in touch" with constituencies. Populism is in coupled with the inability of most transportation pro- vogue, regardless of affiliation. jects to cover their costs through project-generated rev- One would expect, for example, that the Republican enues, makes for an environment hostile to the Party would typically be more prone than the encouragement of private-sector investment. If privati- Democratic Party to favor elements of privatization in zation is sought, it is often with a "runt of the litter" the delivery and provision of public works projects. mentality whereby low-risk projects that generate Many will recall, however, the acclaimed Washington higher revenues are kept (and sometimes brought back) State program for transportation partnerships, which within the public domain while the high-risk runts that succeeded in encouraging the expenditure of millions of generate low or uncertain revenues are made available dollars by a number of engineering, construction, and for private-sector investment. banking organizations in the pursuit of a series of pro- An excellent example of difficulties created by polit- jects of statewide significance. Unfortunately, infra- ical and institutional factors was recently demonstrated structure projects generally extend across the terms of with the SR-91 express lanes project--the only elected representatives. As the state legislature turned California AB 680 toll revenue project in operation of from a Democratic majority (that clearly endorsed the the four originally franchised by the state. Perhaps the program for utilization of private investment) to a best demonstration of the efficacy of the high-occu- Republican majority, the legislature effectively vetoed pancy toll lane concept--under which users pay vari- the program. What remains of the multiproject pro- able tolls to use reserved lanes as congestion waxes and gram that would have brought billions of dollars of pri- wanes on the mainline facility--SR-91 bisects the vate capital into Washington State is the Tacoma Orange CountyRiverside County line in Southern Narrows Bridge, which will now be done as a tax- California. Orange County has jobs, wealth, and a exempt project using certain financial innovations but vibrant economy; Riverside County has massive tracts without the financial involvement of the private sector. of reasonably affordable homes occupied by young Unfortunately, there is no executive order in the works families struggling to make mortgage payments. Owing for "institutional streamlining." Regional politics will to the demographics, the SR-91 corridor experiences need eventually to come to the realization that internecine massive traffic demand and a classic peak-hour direc- conflict is not good for project delivery. Particularly in tionality. However, it is the employees in Riverside cases like SR-91, where each affected political subdivision County who pay the $5.00+ one-way toll every day, not recognizes and supports the immediate need for increased the employers in Orange County. Thus, the local politi- travel capacity, perhaps it would be advantageous to cians in Riverside County supported their constituents implement an ombudsman concept under which arbitra- and sought a way to create free adjacent capacity. The tion by neutral third parties could facilitate political com- private owners of the express lanes pointed to the "non- promise without local officials appearing to either win or compete" clause in the franchise agreement that was lose. When infrastructure projects become the prize in a necessary to ensure private financing, initially by a bank political test of wills, the ability to bring the stability nec-