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Now that infrastructure modernization is top of mind in Washington, the next step is taking action and turning it from talk into construction (pun intended).
President Donald Trump wants $1.5 trillion in new investment for infrastructure. Part of that comes from $200 billion in new federal dollars, with the rest expected to come from other sources.
“A long-term federal infrastructure modernization program, followed by greater investment by state, local, and private stakeholders, can engender the partnership necessary to ensure our nation has a 21st-century infrastructure network,” Ed Mortimer, executive director of Transportation Infrastructure for the U.S. Chamber, told a House Transportation and Infrastructure Subcommittee. “But without a serious commitment from federal lawmakers, it’s going to be difficult to make the kind of progress demanded by the challenges we’re facing.”
Mortimer noted the U.S. Chamber’s proposal for a “modest increase in the federal motor vehicle fuel user fee” as a source of funding.
Private investment will also play an important role.
“Outside of direct federal funding, the Chamber believes there is a great opportunity to encourage more successful private investment… For now, we need to better leverage the tools that we have as we get down to business and develop policies that get this kind of equity off the sideline,” Mortimer told lawmakers.
How can we encourage private investment in infrastructure projects? Infrastructure investors took on this question recently at the U.S. Chamber’s Invest in America! Summit.
A hunger to invest in infrastructure
Are the investment dollars there? The answer is absolutely, “Yes.”
Mark O’Connell, CEO OCO Global said, "There's no shortage of international appetite for investing in infrastructure in the states."
“The only viable path forward I see for closing the U.S. infrastructure investment gap is one that involves multiple funding sources including where appropriate the private sector," added Tom Osbourne, Executive Director – Infrastructure for IFM Investors.
Osbourne sees an effective strategy as being, "Take a limited amount of federal capital and use that as incentive for the state and local governments to explore new ways of bringing in new revenue streams." Those streams can include Public-Private Partnerships (PPP).
Infrastructure is more than roads and bridges
When thinking about infrastructure, since our 21st century economy is more than moving goods by road or water, it’s best to see beyond roads, bridges, and ports.
"Broadband has been a very major infrastructure item. Data centers has been very important," said Rick Niu, President and CEO, Starr Strategic Holdings. "Infrastructure like that is not just a job creator it's not just a good political thing to do it's fundamentally helpful to the economy."
Add to that list water treatment, waste management, parking lots, and schools. Broadening what falls under the infrastructure label opens the door for more investor interest, said Niu.
Breaking the permitting barrier
Unfortunately often lengthy delays in government agencies issuing permits for projects is a major barrier to private investment.
"For folks like us that are looking to invest in the U.S. that lack of clarity, that lack of certainty about the approvals process is one of the major impediments," said Osbourne.
The Trump administration is making headway in tearing down those barriers.
"There are some encouraging noises being made around having a federal agency take the initiative to shepherd the regulatory rules process on behalf of individual projects," Osbourne added. "There's good intent in streamlining regulatory approvals."
With infrastructure modernization in focus failing to act will hurt our country’s competitiveness in the long run, and be something we will later regret.
"If America doesn't upgrade and modernize its infrastructure [we are] going to be left behind from other nations that have modernized," warned O’Connell.