A Smart Infrastructure Agenda for the 21 st Century

Transcription

1 A Smart Infrastructure Agenda for the 21 st Century Robert Puentes Grand Valley Metropolitan Council Growing Communities Conference Grand Rapids, Michigan June 14, 2007

2 Preface: How you grow physically affects how you grow economically Bottom line is that it matters very much WHERE you build WHAT you build and HOW you build it

3 Infrastructure in this context focuses mostly on surface transportation, water/sewer, housing, and other elements of the built environment. According to a recent Brookings report*, the Grand Rapids metropolitan area: Had about 430,000 housing units in To accommodate growth, it is projected to need to build 266,000 more by 2030; It will need to double its existing commercial and office space; And only 9 metros are projected to need to build more new industrial square feet. Where and how will all this new infrastructure be accommodated? * SOURCE: Toward a New Metropolis: The Opportunity To Rebuild America, Brookings, 2004

4 A Smart Infrastructure Agenda for the 21st Century I II The context for the discussion about infrastructure Nationally, major infrastructure challenges still exist III Infrastructure finance is a real and growing concern IV The policy problem V Towards a smart infrastructure agenda.

5 Profound demographic, economic, social, and cultural forces are reshaping the nation Demographically, the country is growing, aging, and diversifying. Economically, the nation is being transformed by globalization, deindustrialization, and technological innovation. Culturally, the nation is changing its attitude towards cities and suburban living. Context

6 These changes are presenting new opportunities for cities and older, established suburbs Young professionals Childless couples New immigrants Empty nesters Elderly individuals Families with children Context

7 Townhomes Single detached Apartments for rent This growing and diverse population demands a range of choices in housing Accessory dwellings Assisted living Modern condos Context

8 Urban Mixed use a range of choices in neighborhoods Single family Town centers Context

9 Downtown Main street a range of choices for shopping Shopping mall Big box Context

10 Non-motorized Automobile and a range of choices for transportation. Rail Bus Paratransit Context

11 The problem is that many places are not equipped to respond to these changes Lack of housing types Separated land use Uneven metro growth Automobile dominated Declining commercial corridors

12 Cities and suburbs need to plan for change and rethink their attitudes toward several key issues: DENSITY DESIGN Today s demographic and market changes favor more housing choices and quality development More and more emphasis is being put on the value of place. The infrastructure is the connective tissue. DIVERSITY Tolerant, inclusive places are highly sought-after and are able to respond more quickly to pressing challenges Context

13 Metropolitan areas with a range of options have an opportunity to attract and retain young professionals, childless couples, baby boomers, new immigrants and the assets of the knowledge economy. Context

14 A Smart Infrastructure Agenda for the 21st Century I II The context for the discussion about infrastructure Nationally, major infrastructure challenges still exist III Infrastructure finance is a real and growing concern IV The policy problem V Towards a smart infrastructure agenda.

15 Congestion Substandard transit Crumbling water/sewer Climate change Job access Severe challenges related to infrastructure continue to plague the largest metros

16 Congestion costs the American economy about $200 billion/year The total cost to the Grand Rapids area in 2003 was $99 million in wasted time and fuel. 10,000 New York Los Angeles 9,000 Urban Area Population (in 000) 8,000 7,000 6,000 5,000 4,000 3,000 GRAND RAPIDS Philadelphia Miami Detroit Chicago There is a fairly direct correlation between metro area size and congestion Washington San Francisco Atlanta 2,000 Cleveland Pittsburgh 1, Annual Hours of Delay Per Traveler Source: Texas Transportation Institute Challenges

17 On some level, the reason congestion is so pervasive is due to dependence on the automobile. Conditions underlying growth in congestion 40% 35% 30% Percentage Increase 25% 20% 15% 10% 5% 0% Source:Federal Highway Administration Highway Statistics Series Source: Texas Transportation Institute Challenges

18 In the 100 largest metro areas nearly half do not have any rail service and also have a bus volume per capita ratio lower than the national average. Grand Rapids exemplifies this trend. It is a major metro area but with less transit service than Davenport or Orlando. Amtrak ridership is very low in and around Grand Rapids: fewer boardings than Whitefish, Montana. NO SERVICE Source: Brookings analysis of FTA data Challenges

19 Next is that water and sewer infrastructure is outdated and outmoded According to the EPA, Michigan's drinking and waste water infrastructure needs $8 and $4 billion, over the next 20 years. Sewer separation work is ongoing. But the beaches still close a few times each year because of sewage overflows. "We had two lake communities recently decline to build sorely-needed sewers because the cost of providing them was well over $10,000 per household, and whose rates, even with low-interest financing was over $100/month. We need to do a better job of either communicating to people the benefits or give them enough funding." - Grand Rapids civil engineer Source: EPA Clean Water Needs and ASCE Infrastructure Report Card Challenges

20 Climate change and greeenhouse gases are a growing concern Source: Center for Neighborhood Technology Challenges

21 As economies and opportunities decentralize a spatial mismatch has arisen in many metros Muskegon Kent Muskegon Percent of nonwhite residents, 2000 Ottawa Allegan 0-15% 15-30% 30-45% 45-60% 60-75% More than 75% Grand Rapids Only one-quarter of the metro area s jobs are within 3 miles of the urban core Challenges

22 A Smart Infrastructure Agenda for the 21st Century I II The context for the discussion about infrastructure Nationally, major infrastructure challenges still exist III Infrastructure finance is a real and growing concern IV The policy problem V Towards a smart infrastructure agenda.

23 There is a pervasive desire to invest in transportation infrastructure but little understanding of national needs ? What should the national priorities be? What should the state priorities be? What should the metropolitan priorities be? Finance

24 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, On the transportation side, the federal spending is outstripping revenues REVENUES Year OUTLAYS BALANCE Average estimates from CBO and USDOT in billions Source: Table FE-210 Finance

25 By not raising the federal gas tax even to keep pace with inflation receipts will continue to decline Adjusted federal gas tax rate and revenues $30,000,000 $25,000,000 Fed (Real) Revenue (1,000) Adjusted Tax Rate (per gallon) $0.30 $0.25 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $ Adjusted Revenue ($1,000) $0.20 $0.15 $0.10 $0.05 $0.00 Source: IRS, 2006; Puentes & Prince, Brookings, 2003 Finance

26 And on the state level, real state gas tax receipts are again leveling off. Adjusted state gas tax rate and revenues $40,000,000 Adjusted Total Revenue ($1,000) $0.55 Adjusted revenue ($1,000) $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Adjusted Average Tax Rate (per gallon) $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $ $0.00 Source: FHWA, 2006; Puentes & Prince, Brookings, 2003 Finance

27 The gas tax still provides the vast amount of revenues for roads 70,000,000 60,000,000 Fuel taxes, 31.1% 50,000,000 40,000,000 Revenue sources for highways and change from ,000,000 Vehicle taxes and fees, (-9.8%) 20,000,000 10,000,000 General fund 8.5% Other taxes, 14.8% Bond Proceeds, 34.4% Property taxes, 22.1% Tolls, 34.0% Source: FHWA and Puentes, Brookings, forthcoming Finance

28 The share of state spending on transportation decreased more than an other major category from % Change in share of total % -0.8% -0.8% -0.7% -0.4% -0.4% All Other Transportation Corrections Source: Nat l Association of State Budget Officers Higher Education Elem-Sec Education Public Assistance Medicaid Finance

29 The cost of construction materials is likely to continue to skyrocket Price index for construction and others Consumer price Index for all Urban Customers Finished Goods Highway & Street Other heavy construction Source: Simonson, Testimony to National Surface Transportation and Policy Revenue Study Commission Finance

30 A Smart Infrastructure Agenda for the 21st Century I II The context for the discussion about infrastructure Nationally, major infrastructure challenges still exist III Infrastructure finance is a real and growing concern IV The policy problem V Towards a smart infrastructure agenda.

31 The federal government does not target high priority projects Location of transportation earmarks from SAFETEA- LU, 2005 Policies

32 In many states the politics around infrastructure are fundamentally broken 1. No emphasis on better as opposed to more spending. Very little emphasis on reform. 2. No targeting of spending to critical areas. In a fiscally restrained climate infrastructure investments should be prioritized. Too often they re politicized. 3. No recognition of the primacy of metropolitan areas. Many states spend money disproportionately outside of metros. 4. No attention to reducing demand for spending. Few rewards for reducing land consumption. Investments are made on metropolitan plans that might be undesirable. 5. No leadership for making hard revenue raising decisions. Policy makers are fixated on safe alternatives to the gas tax Policies

33 On the metropolitan level, infrastructure is too fragmented and compartmentalized In transportation, the states run the show, the localities control land use, regional and local bodies govern transit. Inadequate capacity on the metro level. Housing programs are state run or devolved to local public housing authorities. No metro focus and little attention given to the infrastructure needed to support it. Economic development subsidies are all over the map and mostly go out, not in. Policies

34 The public is often suspicious about new spending for infrastructure Public trust in infrastructure policies and decision making is uneven. Both spending and problems are increasing while most systems are not transparent, accountable, or accessible. The public wants to know what they get in return for their investment and policy makers need to explain their vision clearly. Policies

35 A Smart Infrastructure Agenda for the 21st Century I II The context for the discussion about infrastructure Nationally, major infrastructure challenges still exist III Infrastructure finance is a real and growing concern IV The policy problem V Towards a smart infrastructure agenda.

36 A smart infrastructure agenda (at any level of government) would be one that: Targets spending Rebuilds public trust Links priorities to funding Provides options Connects related policies

37 Virginia The focus DOT s is on: Dashboard project makes project updates available and updated. Allows the public to track a project from advertisement through construction. Rebuilds public trust Agenda

38 Maryland The focus denies is on: the state s entire menu of infrastructure and economic development incentives to companies that want to build beyond existing water and sewer lines. Targets The focus is on: spending A range of housing styles Sense of community Street and sidewalk network Amenities and civic assets Traffic calming Agenda

39 FasTracks The focus is the is on: Denver region s plan to build over 100 miles of rail service, 18 miles of bus rapid transit, and accommodate massive increases in density around the stations. Provides options Agenda

40 A new Illinois law makes it the The first focus state is to on: intentionally link economic development subsidies to jobs close to affordable housing or transit in order to avoid costly new infrastructure expenses. Connects related policies Agenda

41 California s Infrastructure The focus is State on: Revolving Fund gives priority to projects that are in existing underserved areas, have a housing plan, revitalize downtowns, and stimulate job growth. Links priorities to funding Agenda

42 Targets spending Links priorities to funding Rebuilds public trust Connects places Connects housing econ development A Smart Infrastructure Agenda for the 21st Century