Consultant Roundtable: Industry Remains On Edge, Sees Encouraging Future

Posted on June 17, 2010 by Alex Roman, Managing Editor

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Rich Amodei-Sr. VP/Chief Strategic Growth Officer

STV Incorporated

METRO: How has the lack of a new transportation bill impacted your business and the industry?

Amodei: We know that, eventually, a new transportation bill will be authorized, however, until then the industry remains on edge, not knowing the exact commitment from the federal government for the next five-year period for transportation investments. This is exacerbated by the continued lull in the economy, where many public transportation agencies are cutting service, increasing fares and cutting their capital programs, given the lack of sustained local and state funding.

A long-term transportation bill will create, support and sustain jobs in the public transportation industry and serve as an economic engine for the nation's continued recovery. APTA estimates that for every $1 billion of investment in public transportation - 36,000 jobs are created, and this is one of the best reasons for reauthorization sooner than later.

What impact has the new administration had on the industry?

The administration has had a very positive effect on the industry with the influx of ARRA funding, including high-speed rail funding that for the first time looks at a nationwide rail transportation plan with funding to get the ball rolling. The focus on high-speed rail and the current plan is sowing the seeds for an improved and world-class national rail infrastructure program, similar to the way the national interstate program began more than 50 years ago.

Additionally, although the economy is still struggling, I believe the administrations' focus on transportation infrastructure, via ARRA, has bolstered the confidence of agencies and owners nationwide, as we have noticed a significantly increased activity level for new projects and opportunities nationwide, with numerous RFQ and RFP requests to a level that we have not seen in quite a while.

What is your outlook for the future of public transportation?

I believe the overall future for the public transportation industry has a very bright outlook over the long haul. There will be bumps along the way, but as a nation we have no choice but to continue to embrace and grow public transportation to efficiently transport the general public for both work and recreations. Although oil prices have been stable in the recent past, they will most definitely increase as we move forward. The high price of fuel will be considered by the public and one of their choices must be public transportation. We must also consider the environment and the benefits that using public transportation has.

Discuss growing industry trends.

We are seeing a real trend for LEED-certified design in many of our projects, including stations, intermodal centers and maintenance facilities for public transportation projects. We are also seeing a trend to the increased use of innovative project delivery, such as design/build and design/build/operate/maintain, for major and less complex infrastructure projects, where agencies are looking at all angles for productivity and efficiencies in design, construction and operation of new systems and infrastructure.

Jeffrey Boothe-Partner

Holland & Knight LLP

Are we any closer to getting a new transportation bill in place?

Boothe: At the earliest, SAFTEA-LU is extended until the end of the calendar year, but even then there doesn't seem to be any concerted effort by Congress or the Obama administration to get it done quicker than that - and there seems to be little or no momentum toward getting a long-term bill done. It's getting frustrating.

What impact has the Obama administration had on the industry?

The administration has done a lot of pretty innovative things that, at a policy level, have begun to point America toward the future, which is a decided shift in focus from the last 50 years. We've seen its commitment to high-speed rail, seeing it as the next technology to start moving us forward to being competitive with the rest of the world. At this point, the U.S. and Canada are the only two industrialized countries that don't have a high-speed rail network. It's important that they are moving us toward that future.

Secondly, this administration also recognizes that it's important to invest in metropolitan areas, since that's where the significant majority of the population lives, it is where the greatest challenge regarding congestion issues occur, where jobs are, and where housing is. The focus of investing in the metro areas, combined with a real commitment to livability and sustainability is defined by encouraging alternate forms of transportation to provide folks the opportunity to walk and bike to transit and be able to find an alternative to the automobile that is reasonably available.

What are the challenges to finding a funding source for the bill?

Let's just say, we've run out of our ability to do what we've done in the past. We haven't raised the gas tax since 1993. We've spent down the Highway Trust Fund balances. We've come up with every gimmick possible to justify the forwarding of the general fund monies into the Highway Trust Fund.

Frankly, the last effort by Congress, which was to transfer $20 billion from the General Fund into the Highway Trust Fund to sustain it, helps address the short-term issue of ensuring a flow of money. However, it also raises a long-term issue, which is the whole notion that the surface transportation program is sustained by user-fees now undermined, which is a good or a bad thing depending on how you want to look at it. The American public has been sold on the notion that the Highway Trust Fund, which is funded by the gasoline tax, pays for the system and it's apparent now that it doesn't. Consequently, the problem now is that surface transportation must compete with all the other functions of government, which are also funded out of the General Funds and in the current economy that means the ability to provide a lot of general funding to the program is constrained by the overall state of the economy. Without a dedicated funding source, it now has to compete with all other government priorities and that makes it really hard to provide the kind of investment that many advocates in the surface transportation industry feel are necessary to really invest in the nation's future.

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