FAST Act: A Short Term Solution to a Long Term Problem

Today I participated in a webinar hosted by Transportation for America (T4A). The goal of the organization is shed light on not only the growing need for transportation funding, but also feasible solutions for future needs.

Some of the main talking points today revolved around the notion that, “A trust fund for transportation, funded by users of the system, is dead.” The federal gas tax of 18.4 cents per gallon, imposed in 1993, is not able to support the growing infrastructure needs of this country.

The FAST Act, adopted at the end of 2015 to replace MAP-21 largely grants block funding to individual states for them to control. While I think this is generally a good idea, it seems to me that there needs to be some performance measures in place to ensure state DOT’s are using the money wisely. Additionally, FAST Act takes care of needs for the next five years, but does nothing to implement new measure to guarantee solvency on a long-term basis. In fact, the funds allocated by the program do not even cover the current backlog of necessary projects.

The landscape is changing rapidly. Some of the figures presented today by T4A show that Millennials now make up the largest share of the work force, and that as a group they largely choose where they want to live before finding jobs. This has forced many large employers to find solutions to attract young talent by “urbanizing”. The new generation isn’t going to spend two hours a day commuting. They want sustainable solutions that allow them to utilize alternative modes of transportation such as light rail and bikes.

636018194384422244-709906410_mmmmmmmmmm

This all comes full circle and highlights the fact that (not so) future generations are going to make it impossible for this country to rely on traditional methods of funding for infrastructure improvements.

Now go enjoy the day.

Advertisements

Seattle: Moves to Envy

In November, 2015 Seattle voters approved the 9 year, $930 million Move Seattle levy, which will replace the Bridging the Gap levy, a $365 million measure which voters approved in 2006. Bridging the Gap funded nearly 25% of Seattle DOT’s work and a replacement measure was critical to meeting future needs.

The money will be used for safety improvements such as sidewalks and enhanced school zones (warning lights, crosswalks, etc.). In addition, the funds will allow Seattle to add bike lanes and transit corridors with the hope of relieving some of the traffic that keeps Seattle in the top 5 nationally for the worst congestion year after year.

ltms_overviewnumbers

With transportation funding at the center of many debates it is great to see a major city’s voters step up and commit to improving local infrastructure. As the federal government struggles to keep up with the nation’s demand for road, bridge, and transit projects it is going to become more and more necessary.   And the cost? A whopping $23 per month increase in property taxes for the median Seattle household.

Moving forward, I am hopeful that more and more municipalities will continue to find creative and affordable solutions to supplementing federal transportation dollars in order to continue moving toward safer, less congested roads.

Now go enjoy the day.

Plug and Play

While electric vehicle (EV) owners are able to avoid the federally mandated gas tax, more and more states are making a move toward increased registration fees for EV’s. Eleven states currently assess fees in lieu of traditional fuel taxes. Some critics have warned that these additional fees will discourage drivers from purchasing electric vehicles, although with a federal tax credit of $2,500-7,500, depending on battery capacity, the math still works for many consumers.

US_PEV_SalesThe average American driver burns roughly 400 gallons of gasoline annually. Because we rely on the gas tax to fund highway projects (among other things) it is a necessary evil that we charge additional fees for EV’s. Regardless of whether or not they are burning gas, EV’s put just as much strain on our roads and bridges as cars with combustion engines. Every mile travelled adds to the cost of maintenance, repairs, and replacement of our aging infrastructure.

According to www.governing.com, “The federal government’s 18.4 cent gasoline tax brought in a fifth less, in inflation adjusted dollars, in 2013 than in its first year at that level.” Because of growing mass transit usage, better fuel efficiency in newer cars, and efforts to conserve, the gas tax is not generating revenue to the levels Congress originally intended. Because of this, federal and state governments are going to continue to impose fees and taxes where they can. While this may not seem fair to electric vehicle owners, it is important to remember that despite their efforts to save our planet, they are not doing much to save our highway system.

Now go enjoy the day.

Hidden Costs of Mother Nature’s Fury

On June 23rd, 2016, West Virginia received over 8 inches of rain in less than half a day, resulting in severe flooding and at least 23 deaths. Storms like this are not only devastating to people’s lives and homes, but roads and bridges as well.

As the floodwaters receded in West Virginia, the full extent of the damage (tens of millions of dollars) became apparent. Multiple sections of Interstate 79 were shut down due to mudslides and high water. In addition, sections of US 60 in Greenbrier County were completely washed out and will need to be repaired or rebuilt. DOT inspections also revealed that seven bridges had suffered severe damage and would need to be replaced.

While the damage to physical structures can’t be ignored, a lot of times major events have an even greater economic impact. Hurricane Katrina did $1 billion in damage to Louisiana and Mississippi bridges alone. The Bush administration estimated total damage at $105 billion. However, one study by Micheal J. Hicks and Mark Burton estimated the total economic impact to be in excess of $150 billion, a lot of which had to do with the lack of oil production from the Gulf of Mexico and the loss of the massive tourism industry in cities like New Orleans and Biloxi.

KATRINA US90 1 KB
US Highway 90 bridge connecting Biloxi, Miss to Ocean Springs

 

Now go enjoy the day.

Bertha Back on Track

The massive tunneling project to replace the aging Alaskan Way Viaduct in Seattle seems to be back on track. As of June 23rd, Bertha, the 57-foot diameter tunneling machine, has completed 3,088 feet of the 9,270 foot journey. With an estimated price tag of $3.1 billion, you can bet local residents are eager to see what their tax dollars have bought. However, commuters can expect to pay tolls as the Washington State Legislature mandated that $200 million be raised to meet funding goals. For more on the growing prevalence of tolls, see my June 12 post HERE

The tunnel will have two 11-foot travel lanes with an eight-foot safety shoulder and a two-foot shoulder in each direction. The growing need for an updated option through downtown Seattle became alarmingly apparent in 2001 when the Nisqually quake hit. Simulations showed that an event that was 10 miles closer, lasted 10 seconds longer, and registered 7.0 instead of 6.8 on the Richter scale could quite possibly have brought the double deck bridge, which carries over 110,000 cars per day, crumbling to the ground. WSDOT made some seismic improvements to the Viaduct, but it was ultimately decided that a permanent solution needed to be found.

tunnel1-630x421

Bertha got off to a rough start. Tunneling began in July, 2013, but was halted less than six months and 1,000 feet later when she hit a vertical pipe used to measure groundwater, damaging several cutting heads and seals. The project ground to a halt for two years while a pit was constructed to bring the cutting head to the surface for repairs. Work resumed in December of 2015 but was halted just a month later because a tethered barge in Elliott Bay damaged some piers, which opened a sinkhole in the area. After determining it was safe to continue, Bertha began digging again in April 2016 and has been making steady headway ever since. WSDOT hopes to have the project completed by 2018. 

Now go enjoy the day.

To P3 or Not To P3, That is the Question

On June 29, 2006, Mitch Daniels, the governor of Indiana, brokered a deal with a foreign consortium made up of the Spanish construction firm Cintra and the Macquarie Infrastructure Group (MIG) of Australia. The deal would give the foreign partnership operation rights to the 157-mile Indiana Toll Road for the next 75 years in exchange for $3.8 billion up front. By one calculation, the Toll Road would generate more than $11 billion over the 75-year life of the contract.

In what is known as public-private partnerships (P3’s), many states are addressing their budget crises by taking up-front payments from private entities, which, in turn, operate a stretch of road and/or bridge and recoup their investment (and then some) in the form of tolls. This practice draws massive criticism from both sides of the aisle, but it boils down to the desperate need to update this country’s infrastructure with limited resources to pay for it.

The FAST Act, passed into law late 2015, will help alleviate some of the budget woes for transportation departments across the county, but more needs to be done if we are to improve our infrastructure, not just maintain it.

Enter the P3 project. Just like a home mortgage, The People get the immediate benefit, while the deep pockets reap the rewards of long-term investment. While I can certainly understand the negative side of these types of deals (losing control of interstate system, outrageous tolls, profit vs. safety, etc.), the collective We have to shoulder some responsibility. Road and bridge projects aren’t cheap, and the gas tax doesn’t cover the tab any longer. Until we get on board with the fact that our infrastructure is an investment in our economic health, and that taxes and tolls help pay for that investment, we will continue to struggle to fund projects, and the result will be more foreign and domestic conglomerates operating more of our highway system.

Now go enjoy the day.

The Bid Process

We drive on roads and bridges everyday. Ever wonder how they got there? Here is a highly simplified breakdown of a project from conception to completion. While some of these steps can vary slightly in their specifics, this should give you enough general information to impress all your neighbors at the next block party. Assuming, of course, you live in a neighborhood full of engineers.

The Players

  • Funding Agency: the guys picking up the tab. Usually a combination of the Federal Government and a local entity (State DOT, County, City, Public Works Dept., etc).
  • Owner: who the project is being done for. Usually a State DOT or agency that is responsible for the road or bridge (maintenance, repairs, snow removal, etc.).
  • Design Group: responsible for the design of a project, including, but not limited to, running structural calculations for bridges, ensuring design is per latest version of specifications, and that project meets current federal safety standards.
  • Prime Contractor: same as a general contractor who builds houses. They are responsible for getting the project completed and turned over to the Owner for a specified contract amount
  • Sub-Contractor: hired by the Prime Contractor to complete a specific scope of work at the jobsite for a specified contract amount (paving, dirt work, bridge construction).
  • Supplier: hired by either Prime Contractor or Sub-Contractor to provide specific materials, but will not do any work at the jobsite (rebar supplier, bearing manufacturer, anchor bolt supplier).

The Bid

  • Owner will put contract out for bid (generally called a letting). Multiple Prime Contractors will review plans, visit site of proposed work, etc. to determine if they’d like to bid the job.
  • Sub-Contractors and Suppliers will also view the plans to determine if there are products or services they can provide. If so, they will put a bid together and will submit it to the Prime Contractor a few days before the bid date
  • Prime Contractors collect all bids from Sub-Contractors and Suppliers for specified bid items. Based on those bids from multiple subs and suppliers the Prime Contractors will determine a price they are willing to do the entire project for. (example of bid item list here: http://alletting.dot.state.al.us/PROPITEMS/20160624/PITEMS009.pdf
  • On bid day Prime Contractor submits their bid to the Owner. The Owner opens and reads each Prime Contractor bid publicly.
  • The low bidder is awarded the project

Once the Prime Contractor is awarded the project from the Owner they will send contracts to all Sub-Contractors and Suppliers they used in their bid to purchase materials and services in each specific scope of work. As you can imagine, one of the biggest challenges Prime Contractors face is coordinating schedules with dozens of different subs and suppliers.

Now go enjoy the day.