A recent study by the Urban Land Institute and Ernst & Young concluded that the United States suffers from relatively low investment in virtually all aspects of transportation infrastructure – including airports, public transit, railway systems, roads and bridges – all of which is contributing to an “emerging crisis.”
In its analysis of the compelling need to revitalize America’s transportation infrastructure, a recent transportation conference recommended that “Public private partnerships need to emerge from the laboratory of pilot programs to play a much larger role as a core element of America’s transport investment strategy.” Organizations, such as the Company, are accordingly poised to play a significant role in the redevelopment and improvement of the nation’s transportation infrastructure.
The same transportation conference also noted that, “Lacking a coherent vision for our transportation future and chronically short of resources, we defer new investments, fail to plan, and allow existing systems to fall into disrepair. This shortsightedness and underinvestment—at the planning level and on our nation’s roads, rails, airports and waterways—costs the country dearly. It compromises our productivity and ability to compete internationally; transportation users pay for the system’s inefficiencies in lost time, money and safety. Rural areas are cut off from economic opportunities and even urbanites suffer from inadequate public transportation options. Meanwhile, transportation-related pollution exacts a heavy toll on our environment and public health.”
A recent transportation conference report is equally as insistent on the need for private sector funding. In “Recommendation 8: Connecting the Dots,” the co-chairs wrote: “Resolving the controversy over private equity contributions to the transport system is essential to meet the nation’s pressing transportation challenges, as is recognizing the appropriate role of public-private partnerships (PPPs) in taking on those challenges.” They added, “PPPs need to emerge from the laboratory of pilot programs to play a much larger role as a core element of America’s transport investment strategy.”
The Company believes that most experts in the transportation field now agree that public-private cooperation is vital. Says Dale Ann Reiss, global director of real estate at Ernst & Young, “One thing that is crystal clear is that the private sector is going to play an increasingly important role in the effective and efficient development of infrastructure … Public-private partnerships are here to stay and may well be the only viable way for governments to reach their infrastructure development goals.”
The Company believes that the transportation infrastructure crisis facing America is two-fold. In the first instance, the existing infrastructure lacks modernity and has rendered the same incapable of meeting the nation’s transportation needs. In the second instance, the funding to address this problem is currently beyond the reach of the federal, state, regional, and municipal governments.
To resolve this crisis will require a massive infusion of capital. The National Surface Transportation Infrastructure Financing Commission, in its 2009 report Paying Our Way estimates the total shortfall between what is required and what is available, at all levels of government, just for maintaining the current system range from $134 billion to $194 billion per year for the period 2008 to 2035. If the goal is to improve existing transportation systems, the shortfall is even larger: $189–$262 billion per year over the same time period.
The main problem is that the funds to either maintain or improve existing transportation systems are simply not available from traditional sources. Taxpayers at all levels of government are loath to support any tax increases for infrastructure projects. Exacerbating the crisis further, Transportation Secretary Ray LaHood had notified the recalcitrant governors that federal money earmarked for high-speed rail will be withheld unless used for that specific purpose.
To support the Company’s business plan, the United States Census Bureau predicts that the American population will reach 420 million by 2050, a trend that will overwhelm our nation’s transportation infrastructure.
Current estimates suggest that overall freight demand will double over the next 40 years from 15 billion tons today to 30 billion tons. The number of trucks on the road is also expected to double. Already under unsustainable strain, the nation’s freight transportation infrastructure and highways will face even greater challenges as the total volume of freight increases.
Extensive infrastructure expansion, such as new ports, trade corridors and high-speed rail (HSR), is critical if rail and road transportation is to help mitigate problems associated with rising fuel costs, crowded highways, and greenhouse gas emissions. Population growth and development in the U.S. have made our nation increasingly reliant on rail and highway infrastructure to transport people and freight.
Clearly, a strong, efficient freight transportation system is vital to the nation’s economy. Our already-strained and outdated railways must be upgraded to handle the projected increases in freight shipping to relieve congestion on our highways. New trade corridors are needed to support the changes in marine shipping that will need new ports and infrastructure. Equally, new high speed rail routes are needed to increase connectivity between US cities and support the emerging new economy, and reduce auto emissions.
The nonprofits and certain affiliate entities collectively have identified projects worth five hundred and six billion dollars and therefore have master bond indentures available for funding government, civilian and commercial end user projects.
The Company is facing a $57 Trillion Dollar Infrastructure Market as identified in McKinsey’s report, the need and demand for alternative transportation such as, high speed rail, sea ports, intermodal ports and toll roads. The Boeing reports and Society of Civil Engineers reports identify the need for more efficient port operations and infrastructure projects to be completed to satisfy the demands and growth of the United States. It is increasingly important as the United States adopts policies to attempt to reduce its dependency on fossil fuels and to improve its infrastructure and transportation systems for global competiveness. The Company’s intention is to profit from such opportunities and has structured itself to be the leading provider of such services in the United States and globally.