WASHINGTON, DC–That was fast. In July President Donald Trump formed a Presidential Advisory Council on Infrastructure that was to be composed of private sector appointees. They were to make recommendations on a wide range of infrastructure issues and help with the details of President Trump's $1 trillion infrastructure investment plan, which is expected to feature the use of Public Private Partnerships with the private sector. That council was disbanded last week before it was even formed along with two other CEO Councils, following the controversy over the president's remarks about horrific events in Charlottesville.

Now the question is what will become of the $1 trillion infrastructure initiative, which is perhaps the only major proposal by the administration that has bipartisan approval.

Of course, the infrastructure council is not essential to the investment initiative, which the White House said earlier this year that it would be releasing the details by the end of this summer. It should also be stated that while Congress as a whole approves of the idea of infrastructure investment, the question of how to pay for it and how it will be structured has become yet another source of discord between the Republicans and Democrats.

For that reason and because of Trump's own difficulties the prognosis for a federal measure is now grim.

“The chances for a large infrastructure investment initiative is low,” Peter Muoio, chief economist of Ten-X, tells GlobeSt.com. “The administration so far has proven unable to push its legislative agenda, of which infrastructure has not appeared to be a primary focus, with healthcare and tax reform clearly being of higher priority.”

Debt Ceiling, The Tax Bill And Other Considerations

Muoio adds that with reports that House Republicans remain divided over whether or not to demand spending cuts in conjunction for raising the debt ceiling, a big spending package seems unlikely.

Another challenge is that the infrastructure initiative is also tied to the tax bill, which either has to be passed first or concurrently with an infrastructure spending bill, at least at the magnitude that Trump has discussed, says William Eliopoulos, who is based in the Northern California office of the law firm Rutan & Tucker and who has worked on some significant infrastructure projects in the state as well as in other regions across the US.

“Given that Congress was unable to pass healthcare legislation recently, it is very unclear whether it can pass a major tax bill when it reconvenes in the fall,” he tells GlobeSt.com. “Thus, it appears unlikely that we will see significant infrastructure spending/funding legislation passed in 2017 in connection with the President's $1 trillion infrastructure plan.”

But politics is not always so cut-and-dried; emotions have been running high since Trump's election and the Republicans are acutely aware that they needs to prove that they can govern.

“Infrastructure is one of Trump's few agenda items that enjoys bipartisan support so it remains possible the GOP will pursue infrastructure precisely as a way to avoid” being seen as a failure, says Eliopoulos.

A Dire Situation

Then there is the obvious fact that the need for investment is so very great.

Any number of studies have highlighted how dire the need is right now, Eliopoulos says.

In March of this year the Infrastructure Report of the American Society of Civil Engineers said that it would take $4.5 trillion over a 10-year period to bring roadways and other public works up to a B grade. Other reports by various industry-specific groups have come to similar conclusions. “Most recently, just a few weeks ago, the Judicial Council of California's Court Facilities Advisory Committee issued a warning about the need for repairs and new construction of courthouses throughout California,” according to Eliopoulos.

And perhaps it is still too soon to write off Trump and his efforts. Trump, after all, has a background in real estate development and has said a number of times that infrastructure investment was a subject near and dear to his heart.

Over the months he has taken steps that have heartened the development community. In late February 2017, for instance, the president hired DJ Gribbin as Special Assistant to the President for Infrastructure, Eliopoulos points out. “Gribbin is very experienced in large P3 Projects, from the private sector, and this hiring generated some positive anticipation in the construction and P3 industries.”

And the same week that he disbanded the infrastructure council, Trump did also sign an executive order to accelerate the review and permitting process for major construction projects.

Pillsbury partner Nick Sarad points out that even with all the legislative obstacles that currently exist, President Trump still has the power to kick-start infrastructure activity via executive order, an approach the administration has already begun to utilize. “Calls for improved bridge safety or new DOT initiatives to better maintain highways would represent smaller but still positive steps,” Sarad says.

The US States Take the Lead

But all the talk about Trump and what he can and cannot do threatens to eclipse the important fact that the US states have the majority of control over US infrastructure projects.

Much of what will happen in terms of infrastructure investment will be with or without input from the feds, Sarad says. “I was pleased to see Secretary of Transportation Elaine Chao come out strongly in favor of P3s. P3s help take a lot of the pressure off states by making the private sector bear the big risks — including risks of cost overruns.”

Federal support of these arrangements, which help US states avoid writing big checks to cover increasing material and labor expenses, could make a very big difference in the United States' ability to launch and maintain a persistent infrastructure development program, Sarad said.

In fact, whether or not the Congress enacts a massive infrastructure investment initiative at the federal level there is a good chance that infrastructure investment will pick up pace at the state and local levels.

“The federal government is not as big an actual player in public infrastructure as commonly thought,” says John Brown Miller, a former professor of construction management and civil and environmental engineering at MIT and author of two textbooks in infrastructure delivery and finance.

Instead of the “investment” coming as federal grants to states or local governments, and then to projects, the “investment” will have to come directly from states and municipalities, he tells GlobeSt.com.

“State and local governments will need to open up procurement systems in order to respond more flexibly to critical deferred maintenance and to infrastructure at the end of its life,” he says. “To expand the range of options to solve these problems, states and local government will find P3 arrangements attractive in some — but not all — cases.”

The P3 alternative made sense because it preserved other public resources for other pressing infrastructure needs, Miller emphasizes. “For very complex, large projects, state and local governments will provide detailed level of service and maintenance requirements, and then compete to transfer the risk of producing to long-term concession contractors. These projects can be financed over 30-35 years, through fixed 'availability' payments — much like a home mortgage.”

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Time To Write Off President Trump's $1T Infrastructure Initiative?

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