New report looks at evolving market for infrastructure funding, development, management

CHICAGO—The United States’ relatively low investment in virtually all aspects of mobility-related infrastructure—airports, public transit, railway systems, roads, and bridges—is an "emerging crisis" that will compromise the ability of the nation’s cities to compete globally, according to a new report co-published by the Urban Land Institute (ULI) and Ernst & Young.

Infrastructure 2007: A Global Perspective offers a comprehensive look at the status of current and planned infrastructure investment and development in a variety of categories in countries worldwide, with a particular focus on the United States, China, Japan, India, and Europe. The first of its kind, the report discusses the evolving infrastructure market, including private and combination public-private systems for funding, construction, operations, and management.

"America is more of a follower and no longer a world leader when it comes to infrastructure," the report states. "Other countries marshal vanguard strategies and provide the contemporary lessons for developing best practices in public/private finance, intermodal transport, congestion pricing, and high-speed rail …Too often (in the U.S.), projects focus on restoration rather than rethinking the model and finding possible efficiencies … There is a tendency to invest in the infrastructure we have instead of the infrastructure we will need."

The report, first released last month at the ULI’s Spring Council Forum in Chicago, was presented to ULI members by ULI Vice Chairman Dale Ann Reiss, global director of real estate at Ernst & Young in New York City. According to Reiss, the private sector is going to play a significant role in what she predicts will be a global movement to build and modernize the world’s infrastructure. She is expecting a fundamental shift in the current business model that will change the playing field across the board. "One thing in this report that is crystal clear to a Friedmanian economist like me is that the private sector—by virtue of both the capital it controls and the skill sets it exhibits—is going to play an increasingly important role in the effective and efficient development of infrastructure here in the U.S. and abroad over the next 50 years," said Reiss. "Public-private partnerships are here to stay and may well be the only viable way for governments to reach their infrastructure development goals."

Numerous worldwide trends and issues are discussed in the report, including infrastructure as a competitive imperative, expansion of infrastructure privatization, and issues and trends specific to the United States.

The sobering outlook for U.S. infrastructure systems is reinforced by a ULI survey of 30 state transportation planning directors included in the report. Eighty-three percent said that the nation’s transportation infrastructure is not capable of meeting the nation’s needs over the next 10 years. The respondents warned that 97 percent of roads, bridges, and tunnels and 88 percent of transit/rail systems will require at least moderate improvement in the years ahead. An estimated $185 billion in additional funding will be required for road systems over the next five years alone, the report notes, stating "The state of deferred maintenance is so gargantuan nobody knows where to begin … States have been putting off these issues to fund other needs … People will still use roads until they can’t be used, and as long as the roads work they can put it off."

Solving the mobility problems in the United States will require more than a greater commitment to infrastructure repair and construction, the report notes. In addition to revamping funding mechanisms for construction and operations, long-term solutions must include rethinking land planning models so they are far less auto-dependent and offer plenty of options for getting from one place to another. If driving continues to be the only practical transportation option in many metropolitan areas, no amount of infrastructure investment will be adequate, the report contends.
The report is available at ULI’s website at www.uli.org/reports/i18.

Source: Urban Land Institute