July 2009

Consultant Industry Keeps Eye on Federal Funding Stream

by Alex Roman, Managing Editor

Despite escalating gas prices and a new global awareness to "go green," - resulting in record ridership numbers almost across the board - the transit industry has historically been vastly underfunded. Enter President Barack Obama, his administration and a reconstituted Congress, which have made a new and almost unheard of dedication to funding mass transportation, including making it part of his stimulus package, dubbed the American Recovery and Reinvestment Act of 2009 (ARRA), to help create jobs and boost the U.S. economy.

The impact of this new federal zeal is also being felt beyond just mass transit agencies/authorities; this revival is also having an impact on the consultant industry, who has been vital in aiding their clients to become aware of the ins and outs of ARRA to meet the necessary criteria and deadlines to receive funding.

"First of all, we participated in FTA ARRA discussions, so we would have the latest, most up to date information," says Marlene B. Connor, director of public transportation, bus and paratransit, at Wilbur Smith Associates, about her firm's involvement. "We then got in touch with our clients and made sure they were aware of the program, knew what they were going to need to do to get funds, and how the funds could be used on current and proposed projects that they are working on."

Like Wilbur Smith, many consultants have also set up special programs to help their clients, including educational workshops that build knowledge about ARRA funding. "Two of our most senior executives, Jeff Morales and Mort Downey, were on President Obama's transportation transition team, so we had pretty deep insight into where the incoming administration was going with respect to transportation investments," says George Pierson, COO, Americas operations, at Parsons Brinckerhoff (PB). "Once the bill was enacted, we created a Website, pbstimulus.com, to aid our clients and others in the industry even further."

Despite the immediate financial impact, not necessarily being felt throughout the consultant industry yet, the boost in funds and transit focus shared by the new administration has brought significant optimism that today's boost will be tomorrow's boon, especially with the impending transportation reauthorization on the horizon.

"Although business is not as robust as in previous years, we are seeing signs that we are moving in the right direction. And, while federal stimulus funding has been appropriated for 'shovel-ready' projects, these funds have energized other new projects as well," says Richard Amodei, sr. vice president at STV Inc.

Recovery and reinvestment

President Obama signed ARRA into law on February 17, less than one month after taking office, and, less than two weeks later, the President, Vice President Joe Biden and Secretary of Transportation Ray LaHood released the first funding to the states and localities for highways, roads and bridge projects. That release of funds came eight days earlier than required by law. Only six weeks after approving the first project, ARRA funded its 2,000th, and transit agencies have seemingly shared their good news on a near daily basis.

While being careful not to knock the new investment, many insiders and the consultant industry itself point out that ARRA has been funding more capital expenditures than supplying dollars to build.

"The articulated goal was to create jobs and it has done that," says Holland & Knight LLP's Principal Jeff Boothe. "We'll look to other bills to create the legacy investments that will stand the test of time down the road, but the focus here was on creating jobs and it seems to have done that in terms of certain sectors of the industry."

Adds Jerry Premo, sr. vice president for AECOM: "Short term improvements can be achieved by exercising options for existing contracts and, in particular, our associates who make vehicles have seen an uptick in their business." Premo feels, though, that these purchases today will help free up expected dollars for more construction projects down the road. However, he is cautious that projects built with ARRA dollars will be too shortsighted.

"One of my concerns is that projects in the pipeline that are nearly shovel ready will in fact be put under contract, but if we exclusively see money spent just on that stuff, what about the next wave of projects?" he asks. "It's important to see some of the money from ARRA being spent to ensure development of the next wave of projects."

Although not a consultant, Holland & Knight's Boothe is a lawyer experienced in representing public transit properties seeking federal appropriations, project authorization, and federal approvals to build and operate bus and rail systems. He concurs with Premo that it is important to make this boost of funds count toward making a lasting impact.

"Judged in history, I do wonder what will be the legacy in terms of projects that we'll recall being built with this infusion that will define these stimulus monies and create a set of investments, which when we look back we can point to and say 'that's a product of the stimulus bill,'" he says. Boothe says that this fact is important, since the last time the U.S. focused heavily on transportation infrastructure was with the New Deal following the Great Depression, which helped fund projects that have continued to leave a lasting mark on this country, including the New York subway system.

Wilbur Smith's Connor agrees that ARRA funding was a much-needed shot in the arm to an industry that has been so grossly underfunded and, therefore, unable to come up with the necessary funds to replace or replenish their fleets or make other significant capital improvements. She adds, though, that it could be even more beneficial if stimulus funding could have been used to help fill the budgeting gap that many agencies are facing due to shrinking resources and expanding ridership. "When we are thinking as an industry about how we can increase jobs, you need to try and reconcile that with maintaining services," Connor says. "So, in a perfect world having some of those resources available for operating would have been a good idea."

Despite its shortfalls, which most consultants admit could just be nitpicking, the transit industry has benefitted greatly from ARRA funding and many in the consultant industry are hopeful that those monies being spent today will help open up new avenues tomorrow.

"The ARRA program is a good first step in working toward funding the necessary state-of-good repair transit infrastructure improvements," says Liz Rao, HNTB's chair, transit services. "We believe that the benefits of these capital improvements in terms of jobs created and overall public accountability in the project delivery will create momentum in the next authorization for continued public support and funding of these important investments."

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  • Robert Buchanan[ August 13th, 2009 @ 8:20am ]

    Our future legislation must make the financial condition of the Transit Systems a key priority, as pointed out by Connor. The whole proces and future success evolves around solutions to meeting the financial challenges of the Transit Systems. We have learned our lessons from the past that huge operating deficits directly impact on the growth of the system, and fare increased, Service cuts, and lay-offs are defeating strategies.


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