[IMAGE]consult.jpg[/IMAGE]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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The new guard

"I would have never expected to see the president, vice president and secretary of transportation together announcing a nationwide high-speed rail network," says Mike Schneider, partner at InfraConsult LLC of the impact of the new administration. "Suffice it to say we're far more encouraged then we've been in recent years."

Adds Sharon Greene, principal, of Sharon Greene and Associates: "There's been a real reinvigoration at FTA, and we're looking for the new leadership to continue making that impact."

One major eye opener that has made the entire industry realize this administration's dedication to public transportation was President Obama's high-speed rail (HSR) funding plan, which identified the $8 billion already provided in ARRA as well as $1 billion a year for five years that will be requested in the federal budget. The funds will be used for a world-class high-speed rail system like the kind found in Europe and Japan and making train service along existing rail lines incrementally faster. The strategic plan will be followed by detailed guidance for state and local applicants.

"In addition to all of the arguments for the system itself - environmental, public safety, economic - HSR will also provide a huge stimulus to transit because local and regional systems will be the feeders to and distributors from the HSR network," says PB's Pierson about HSR's benefits. "Although this is a new mode for the U.S. outside of Amtrak's Northeast Corridor, it is well proven around the world. Yet, it will do for the U.S. what it has done for these other nations: transform travel and provide a huge boost to the U.S. economy and to economic productivity in a sustainable way."

While there were many corridors identified, California would seemingly have a leg up on the competition thanks to the November ballot measure that sinks $9.95 billion - about one-third of the projected cost - into an HSR system. However, AECOM's Premo suggests that with HSR now becoming "big business," - close to $25 billion taking into account ARRA, Obama's separate funding plan and monies from last fall's federal Amtrak bill - now is the time to leap forward with several HSR projects.

Says Bill Stout, PE, chairman of the board/CEO at Gannett Fleming: "The incorporation of funding for high-speed rail in [ARRA] also is an indication of the priority that the administration places on mass transit. It only makes sense that a president who comes from a city that operates one of the nation's largest rail transit agencies would favor this form of transportation. It's been a while since we've had a president that has experienced the benefits of mass transit up close and personal."

Ready for authorization

Although the consultant industry, in general, and public transportation advocates, specifically, say that there are many items that need to be addressed by the new authorization bill, most seem confident that items such as clarifying the New Starts/Small Starts process will definitely be adjusted with positive outcomes. But, with funding being a major reason why transit agencies throughout the nation are being forced to downsize its workforce, cut services, and/or raise fares, all the industries with a vested interest in mass transportation say that how we fund the next authorization bill will be vital.

"We as an industry need to be a bigger program in order to meet all the demands that our systems have. And, the big question, once we come up with a big-size program we think would be adequate to meet our needs, is going to be where that money is going to come from because the Highway Trust Fund in this current state is not going to do it," says Connor.

Holland & Knight's Boothe explains that much like ISTEA began to level the field for transportation flexibility as a whole rather than focusing solely on the U.S. highway system, this newest bill must set the tone for the long-term needs of a functional and useful U.S. transportation network. "We're very hopeful that action will be taken sooner rather than later on authorization, as it's important given the expiration of the bill at the end of the fiscal year," he says, "however, I do hope that in the desire to get it done quickly that we do it with a focus on the fact that we're creating a system that will really begin to shape the next 50 years."

Boothe adds that what must be taken into account to do this is to address issues such as population growth - many cities predict their populations will double in the next 20-plus years - energy security and greenhouse gas emissions.

With the U.S. still trying to pull itself out of a recession, the battle that many public services face in trying to secure the scant amount of monies available year after year has only intensified. With the gas tax shriveling as gas prices soar and people look for more transit options, a major hurdle that must be jumped to continue the present era of good feelings in the transit industry is finding a way to fund the authorization bill.

"The most immediate means to secure more federal funding for transit is to increase the motor fuels tax," says Stout. "This tax should be increased as soon as possible and then augmented or replaced with user fees that send the right pricing signals. These user fees would most likely be charged by state and local agencies that operate and maintain the related infrastructure system."

With many groups, such as APTA and Transportation For America creating reports that address what is needed in the next authorization bill, which includes suggestions for ways to fund it, the ball will soon be in the hands of the feds, who will need to figure out what ideas could be most effective.

"Certainly, if the recommendations of some of the commissions that have been convened by Congress and the administration and various non- and partisan-groups are followed, there are numerous ways of recognizing a more direct connection between travel - whatever the mode - and user fees blended with general taxes," says Schneider. "Secondly, we have to get away from the modal divide that has been structured and built into the U.S. DOT and has been carried through state DOTs, regional governments, Municipal Planning Organizations and transit agencies."

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Public-Private Partnerships

One possible source consultants say could help supplement transportation funding is the use of public-private partnerships (PPPs), which have been used successfully throughout the world but, with the exception of a handful of projects, have failed to take off in the U.S. "Our European and Asian counterparts have developed highly advanced transit systems to provide [funding] alternatives and have done so using public-private partnerships," says HNTB's Rao. "The transit industry must grow our experience in transit public-private partnerships as a way to reduce project costs through value engineering approaches and efficient project delivery."

Many consultants as well as individuals in the transportation industry, though, are quick to point out that they are not an all-out solution and may not be right for every transportation project that needs dollars.        

"It's one of the tools that can be considered for particular types of projects and programs but its not the solution to all needs, and the approach now being taken toward PPPs is putting this issue in perspective, which I think is healthy," explains Greene. "There is no one form of PPP, there are many forms, and finding what might be appropriate for a particular application is what is important. Not trying to take an application and fit it to a particular project."

InfraConsult's Schneider explains that a question he is commonly asked is if the reason there are more PPPs in Europe, Australia and Asia than there are in the U.S. is because the private sector here is more risk averse. "The answer is absolutely not," he says. "The real answer is that those companies provide far more governmental support for transportation as a function of real dollars and percentage of GDP than the U.S. So, the extent to which there is increased government funding primarily for public transport, the more that we can use PPPs to leverage that funding to go a longer way through a variety of mechanisms that the private sector has available."

Looking up

With transit agencies continuing to tighten their belts in 2009 and economic reports saying that our current growth is flat, nobody is quite sure what to expect in 2010. One important thing to the consultant industry, though, is that the federal funds continue to flow, which will help provide agencies with the ability to resume some projects that have been delayed because of a lack of funds and budget deficits. HNTB's Rao says that it's important to continue pushing the positive impact that mass transportation can have on the U.S.

"It is important that the consultant industry, working together with its transit agency partners, articulate a common transit message," she says. "That message should convey the importance of investing in a network of transit improvements that provide sustainable, cost-effective transportation alternatives for the public and that it is critical that an increase in the level of transit funding is needed if the U.S. is going to remain globally competitive in the future."    

Overall, consultants agree with Rao's sentiment that now is the time for major changes and forward thought in the ways mass transportation is viewed both microcosmically and on the larger national scale.

"We will continue to directly advocate for mass transit funding wherever we have access as well as support associations such as APTA in their efforts," says Stout. 

STV's Amodei is optimistic that with the renewed vigor in the industry business opportunities will continue to grow.

"We are optimistic that the rest of 2009 and 2010 will see more growth in the transportation industry," he says. "It is a competitive industry, which is evident in the increase of bidders on new and recurring procurements. In some cases, the number of bidders has doubled and tripled from years past. We expect this trend to continue for the foreseeable future."

 

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