Brookings: Experts - Robert Puentes

Strengthening the Federal/State Partnership on Passenger Rail

Robert Puentes — Tue, 21 May 2013 00:00:00 -0400

Robert Puentes presented this testimony before the House of Representatives Subcommittee on Railroads, Pipelines, and Hazardous Materials and the Committee on Transportation and Infrastructure in advance of the expiration of the Passenger Rail Investment and Improvement Act, which emphasized better rail performance and demanded a commitment from Amtrak's state partners. He discussed Amtrak's performance and the partnerships between the federal government, Amtrak, and the states, highlighting the ways in which states have provided lessons the nation should build on going forward. Read the full testimony here (PDF).

Downloads

Read the Testimony

Authors

Robert Puentes

State and Local Leaders Double Down on Infrastructure

Robert Puentes — Tue, 16 Apr 2013 10:35:00 -0400

Cautious optimism followed President Obama's FY2014 budget request to rebuild and reinvest in America's infrastructure.

The proposal highlighted infrastructure as a fundamental driver of the nation's economy and critical asset for its long-term recovery. Specifically, the request reiterates the determined proposals to create a national infrastructure bank, build-out an American high-speed rail system, invest in clean energy, modernize the air traffic control network and the electrical grid, and reinvest in state-of-good repair projects, among other things.

The president's infrastructure package has a lot of good ideas. What it does not have is a lot of money.

Undaunted, state and metropolitan leaders are coming to Washington this week with their own ambitious and creative strategies to make their infrastructure goals a reality and looking to the federal government to engage in new partnerships with government, labor, and institutional investors to accelerate the construction and deployment of new infrastructure.

In many ways, Washington is acknowledging this renaissance and moving to embrace it. Also included in the president's request are plans to cut regulatory red tape in order to prioritize projects and enable better use of public/private partnerships. These are welcome acknowledgments of the principal role state and local leaders play in selecting, financing, and building infrastructure and, given their miniscule price tag, ought to be legislative slam dunks.

Without a doubt, unfunded pension obligations and other debt burdens facing state and municipal governments limit the availability of public funds to pay for necessary infrastructure. And though interest rates remain at historically low levels, the ability of many governments to borrow from the capital markets is limited by debt caps and weak credit ratings.

So states and metros are looking beyond traditional municipal debt markets to find new lower cost, lower risk, and higher impact ways to pay for essential infrastructure projects:

Increasingly, public infrastructure investment occurs through state revolving loan funds and so-called "infrastructure banks." These institutions fund and finance a broad array of projects, ranging from local road maintenance and highway construction (e.g., Florida’s State Infrastructure Bank) to essential water infrastructure (e.g., New York’s state revolving funds) to energy efficiency (e.g., Connecticut's green bank.) While they are not for-profit institutions in the traditional banking context, they rely on principal repayments, bonds, interest and fees to, ideally, re-capitalize and replenish the fund as a perpetual source of debt financing. The model has also gained traction at the sub-state level in Chicago and in the District of Columbia.

At the same time, state officials are also working to design innovative governance and institutional tools capable of overcoming the bureaucratic and technical barriers that can slow or even derail projects. These efforts are clearing the way for new infusions of private capital and streamlined project delivery. States like Virginia, Michigan, Colorado, and Georgia have new offices designed to tackle bottlenecks in public/private partnerships, develop innovative project ideas, and protect the public interest.

To develop consistent and predictable deal flow and ensure private investors’ continued engagement with U.S. infrastructure markets, stakeholders from California, Oregon, Washington State, and British Columbia created the West Coast Infrastructure Exchange (WCX.) The WCX seeks to establish a common market for infrastructure projects on the West Coast by coordinating cross-border infrastructure investments, facilitating procurements, and creating a project clearinghouse for regional infrastructure investments. WCX aims to create a robust market for the nearly $1 trillion in infrastructure projects that the region needs to develop.

Such efforts can be replicated elsewhere around the country. One common thread to the flurry of activity is the idea that stakeholders from all levels of government and the private sector (plus bi-partisan campaigns like Building America's Future and innovative collaboratives like Living Cities) can catalyze a new field of practice, get states ready for new kinds of investment, and explicitly connect long-term economic strategies with infrastructure planning and prioritization.

Our competitors, in mature and emerging economies alike, are in the process of making these kinds of investments and, by so doing, catalyzing productive and sustainable growth. In the United States, it looks like we are finally ready to start moving.

Authors

Robert Puentes

Expand State Partnerships for Passenger Rail

Robert Puentes and Joseph Kane — Wed, 13 Mar 2013 18:39:00 -0400

As passenger rail ridership grows nationwide, Amtrak and some states are engaging in innovative new partnerships to foster this demand. To comply with the Passenger Rail Investment and Improvement Act (PRIIA) that passed in 2008, federal and state policymakers will not only need to focus on the financial and operational performance of short-distance routes, where over 80 percent of the system’s ridership occurs, but also on the future of long-distance routes.

Of course, more federal support would help. But with additional federal funding unlikely and state budgets significantly pared, policymakers will need to consider more sustainable ways to finance the nation’s increasingly intermodal transportation network. Passenger rail, in particular, has shown the importance of states stepping up and taking action.

And several states have already seized the opportunity. Before PRIIA passed, 15 states paid at least a portion of the operating expenses for 21 different routes, affirming their commitment to passenger rail and placing them in a better position to target future spending. Oklahoma and Texas, for example, have jointly financed the Heartland Flyer and contributed more than $17 million combined from 2007 to 2011. Collectively, the 15 states have allocated almost $850 million during the same span.

Some states have also invested in rolling stock and other capital improvements that have furthered economic development along different corridors. North Carolina, for instance, has actively supported the Carolinian and Piedmont by rehabilitating stations and upgrading state-owned tracks. California has continued to invest in the Pacific Surfliner, the Capitol Corridor, and the San Joaquin, all of which rank among the 10 busiest routes nationally.

By prioritizing passenger rail, states are investing in a mode that has appealed to more travelers and strengthened the economic linkages between metro areas. But as states assume greater responsibility for passenger rail, they should be given greater flexibility in how they manage routes. While a dedicated source of funding, such as a ticket tax, would certainly help, states and metropolitan planning organizations (MPOs) could also benefit from having the ability to transfer federal funds to support intercity passenger rail, as they currently can between highway and transit programs.

Still, even with this flexibility, Amtrak and the states will need to address both short-distance and long-distance routes. Although PRIIA requires states to operationally support short-distance routes only, long-distance routes should not be exempt from this requirement. Amtrak and the states need to carefully weigh the benefits—geographically and otherwise—that these routes provide relative to their high operating costs.

The goal here is not to eliminate these routes but to strengthen the federal-state partnership. Expanding PRIIA in this way should be seen as an opportunity to innovate and collaborate, allowing Amtrak and the states to shape the future of passenger rail in response to local demands and a clear national plan. If states feel that certain long-distance routes are not worth supporting, then they should be scaled back, as has already been debated for routes such as the Pennsylvanian. If anything, though, states should feel confident and emboldened in this task based on their ability to coordinate other cross-border infrastructure investments. States should lead with greater decisiveness and action.

Indeed, supporting passenger rail comes down to a simple choice for federal and state policymakers: In the long run, is it wiser to invest $6 million to construct one mile of a new 4-lane highway, or to spend that same $6 million to cover the operating expenses for a passenger rail route spanning 300 miles?

Authors

Robert Puentes
Joseph Kane

A New Alignment: Strengthening America's Commitment to Passenger Rail

Robert Puentes, Adie Tomer and Joseph Kane — Fri, 01 Mar 2013 00:00:00 -0500

American passenger rail is in the midst of a renaissance. Ridership on Amtrak—the primary U.S. carrier—is now at record levels and growing fast. This research shows that the country’s 100 largest metropolitan areas are primarily behind this trend, especially ten major metros responsible for nearly two-thirds of total ridership.

Driving the connection between these metropolitan areas are short-distance corridors, or routes traveling less than 400 miles, that carry 83 percent of all Amtrak passengers. States now have formalized relationships with Amtrak to upgrade tracks, operate routes, and redevelop stations. The result is a new federalist partnership where Amtrak, the federal government, and states share responsibility for the network’s successes and failures.

This report is the first analysis to focus on metropolitan area statistics for passenger rail rather than individual stations or cities. Its findings will help policymakers and state leaders better understand the location dynamics of Amtrak: where it works well, and the areas poised to benefit from new and expanded services.

Findings:

Amtrak ridership grew by 55 percent since 1997, faster than other major travel modes, and now carries over 31 million riders annually, an all-time high.
The 100 largest metropolitan areas generate nearly 90 percent of Amtrak's ridership, especially those in the Northeast and West.
Only ten metropolitan areas are responsible for almost two-thirds of Amtrak ridership.
The short distance routes consistently dominate Amtrak ridership share and captured nearly all of Amtrak's recent growth.
Combined, Amtrak's short-distance corridors generated a positive operating balance in 2011—while corridors over 400 miles returned a negative operating balance.

Read the report » (PDF)
Follow the passenger rail conversation on Twitter using the hashtag #NextRail »
View our interactive application to see Amtrak route data for the largest 100 metro areas »

Downloads

Full report

Authors

Robert Puentes
Adie Tomer
Joseph Kane

Image Source: Jonathan Rissmeyer

New Partnerships for American Rail

Robert Puentes — Fri, 01 Mar 2013 11:00:00 -0500

American passenger rail is in the midst of a renaissance. Ridership grew by 55 percent since 1997 and is now at record levels, with over 31 million travelers annually. That's faster than other travel modes like aviation and far outpaces the growth in population and economic output during that time. Travel corridors like New York to Washington, Seattle to Portland, and Chicago to Milwaukee all boast higher shares of riders on rails than in the air.

Painting such a rosy picture of American rail may seem incongruous to those that like to chastise its beleaguered carrier, Amtrak, for transgressions related to food service, timeliness, and subsistence on federal subsidies. But in a new report, my colleagues Adie Tomer, Joseph Kane, and I find that Amtrak is actually finding itself well-positioned for the future. Part of this was initiated by federal lawmakers who, in 2008, gave Amtrak the kick-in-the-pants it needed by ordering the establishment of metrics and benchmarking for performance.

Smartly, federal lawmakers realized that achieving better performance—both financially and operationally—could not come without a new kind of commitment from Amtrak's partners. States now share the operating costs for short-distance rail corridors that stretch 750 miles or less from end to end. Today, these routes are Amtrak's high-performers, carrying around 85 percent of travelers.

Importantly, once they have "skin in the game," states are motivated to target investments more precisely and develop plans more comprehensively, better tailoring maintenance needs and capital improvements to local demands. Some states have already adopted such strategies and offer innovative and replicable models. North Carolina owns part of the tracks and encourages economic development along two different corridors. Virginia recently expanded service to metros lacking connections in the southwest and southeast portions of the state. Maine's Northern New England Passenger Rail Authority presents a new governance model for forging partnerships and coordinating action.

Building on this new federal-state alignment will require additional action. As the federal sequestration battle clearly illustrates, Washington isn’t putting any new money into Amtrak anytime soon. But partly because of the existing partnerships with 15 states, Amtrak has said it can weather the cuts easily enough.

So let's extend that requirement for state support to routes longer than 750 miles. After all, our research shows that the long-distance routes carried only 15 percent of the travelers in 2012 but, combined, constitute 43 percent of Amtrak's route-associated operating costs. This is not just a matter of offloading responsibility from the federal government to states. As seen in the short-distance routes that already enjoy state support, such a partnership results in a better sharing of risks and rewards.

Then, in exchange for greater responsibility from Washington, states should have added flexibility in how they allocate existing funds. For example, current federal law allows states and metro areas to transfer funds between highway and transit programs. Among other benefits, this freedom of financing greatly assists in bottom-up problem solving and gives additional consideration to alternative solutions that achieve a more balanced transportation network. States and metro areas should have the same flexibility when they support operating or capital investments for intermetropolitan passenger rail.

The goal here is to strengthen passenger rail in the United States by strengthening the federal-state partnership. While Amtrak has done a lot to remake itself in recent years, states need to reaffirm their commitment for the model to be sustainable.

Authors

Robert Puentes

Have Americans Hit Peak Travel? A Discussion of the Changes in US Driving Habits

Robert Puentes — Thu, 28 Feb 2013 00:00:00 -0500

American driving habits are changing. After decades of steady increases the growth in driving is clearly leveling off, and dropping on a per capita basis, even at a time when a vast array of public policies continue to support and encourage driving. Perhaps even more amazing are total aggregate declines in some recent years coupled with drops in licensing, trips, and vehicle purchases. These shifts have enormous implications for public policy in the US. Ample evidence shows that this phenomenon is not limited to the US, but is generally reflected in other developed countries around the world with mature transportation systems.

However, this phenomenon is still not well known. When they are recognized, these individual trends are either largely dismissed as economic factors caused by the global recession and stubbornly high unemployment rate. While there is little doubt that the sputtering US economy has major impact, emerging research suggests the changes in US driving habits are also the result of a long-term structural change reflective of a host of shifts in demographics, culture, technology, as well as settlement patterns in US metropolitan areas. A set of public policies also plays a key role.

This paper explores those macro forces through an analysis driving trends, a review of existing literature, and discussion what is likely behind these trends as well as implications for public policy.

Editor's Note: This discussion paper is part of an International Transport Forum series. Download the paper here.

Authors

Robert Puentes

The Innovative Metropolis: Fostering Economic Competitiveness through Sustainable Urban Design

Thu, 21 Feb 2013 09:00:00 -0500

Event Information

February 21, 2013
9:00 AM - 4:30 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Register for the Event
As global cities have embraced sustainable urban design and entrepreneurism, their strategies can serve as a source of inspiration and new knowledge to U.S. cities and beyond. By pairing best practices from international metros with their U.S. counterparts, the Sam Fox School of Design & Visual Arts at the Washington University in St. Louis has developed a series of case studies that examine the urgent challenges of an increasingly urbanized planet, focusing on the development of sustainable products, services, technology, and land use patterns following the economic recession.

On February 21, the Metropolitan Policy Program at Brookings and the Sam Fox School’s Master of Urban Design Program hosted an all-day forum which explored the intersection between sustainable urban design and economic growth while discussing the implications for design and practice. The event also highlighted policies that have enabled individual cities to become successful models of sustainability and examined specific design and policy issues through the lenses of economy, government, climate and social systems.

Mark Wrighton, chancellor of the Washington University in St. Louis, welcomed the forum participants and audience members, followed by a presentation from Ricky Burdett, professor of urban studies at the London School of Economics and Political Science. Panel discussions covered transportation; environmental and building technologies; and adaptation and renewal. The program closed with a presentation from Mohsen Mostafavi, dean and the Alexander and Victoria Wiley professor of design at Harvard University’s Graduate School of Design, followed by a reception and respondent discussion.

Download city-specific profiles

Video

Transcript

Uncorrected Transcript (.pdf)

Event Materials

Super Storm Sandy Recovery: The Case For Disaster Bonds

Robert Puentes and Patrick Sabol — Mon, 10 Dec 2012 16:00:00 -0500

Super Storm Sandy wrought havoc across the East Coast, leaving behind an estimated $10 to $20 billion dollars worth of physical damage and inflicting another $30-$50 billion in economic losses. With such a huge price tag, homeowners, private companies, insurers, and governments at all levels are struggling to figure out their financial responsibility for cleaning up the mess.

One possible solution is for the federal government to authorize the release of Sandy Disaster Bonds.

Much like private activity bonds, disaster bonds are tax-exempt debt instruments that direct private sector money into communities recovering from hurricanes, floods, or other calamities. Over the last decade, Congress authorized nearly $40 billion worth of disaster bonds for 13 states through standalone disaster relief packages as well as making program allocations in larger pieces of financial legislation. Overall, disaster bonds have a proven record of success in places like Louisiana and New York City, where they stimulated large investments in damaged communities.

Establishing a program today is likely to be challenging given the need for Congressional action. Fortunately, the process is straightforward:

First, Congress must designate an area where the bonds may be used. For example, after 9/11 Congress determined that the entire area south of Canal Street in Manhattan would be eligible for a variety of special tax and bond programs. This "Liberty Zone" became the epicenter of the federal government's recovery program. Next, Congress needs to set a cap on the total value of the bonds issued. In most cases, this is determined by using an estimate of the damages divided by the population affected. In the aftermath of Hurricane Ike in 2008, this amounted to $2,000 per resident living in the disaster area resulting in over $1.8 billion of available bonds in Texas alone. Then Congress must determine what taxes they want to waive to encourage private investment. Much like tax-exempt municipal and private activity bonds, federal taxes on interest are waived for disaster bonds. After 9/11 and Hurricane Katrina, the Alternative Minimum Tax was waived as well.

The authority to issue bonds is then passed to states and/or localities, although both private firms and local governmental units are eligible for funds. The state serves as a conduit for the debt, which passes on all the tax advantages of the disaster bond to investors, while handing over all the repayment responsibility to the recipient organization. Typical bond applicants include utility companies, hospitals, real estate firms, manufacturers, and companies in the hospitality industry.

While the general mechanics of disaster bonds are relatively constant, the specific application varies.

The most recently implemented disaster bond programs were released in quick succession after the damage caused by Hurricane Ike and the storms that swept through the Midwest in the fall of 2008. Taken together, these two programs are the largest ever approved by Congress, both in their geographic scope and in their total value. Overall, tax-exempt bonds were made available in nine states with a total value of over $16 billion. After Hurricane Katrina, $15 billion worth of Gulf Opportunity Zone Private Activity Bonds supported a range of projects from $1 billion to rebuild a Marathon Oil Company refinery facility, to a $460,000 bond to finance the construction of a commercial office building issued by the Calcasieu Parish Public Trust.

Unlike GO Zone Bonds, Liberty Bonds issued after 9/11 included a more rigorous set of targeted sectors and a more complicated management structure for the $8 billion allocation. Congress evenly split the issuing authority for the bonds between the governor and the mayor. Furthermore, different pots of money were set up to encourage different types of projects, including retail, residential, and utility projects in areas directly impacted by the terrorist attack.

Questions remain about the fairness and overall execution of disaster bond programs. Criticisms include lack of transparency, limited public involvement, questionable project selections, and the burden they can place on already stressed bureaucracies.

In the wake of Super Storm Sandy, any new disaster bond program needs to avoid these shortcomings. Sandy Disaster Bonds should be targeted, to aim the funds towards the geographic areas and industries that are face the largest challenges; flexible to adapt their funding criteria to match communities evolving needs by engaging with city governments, local businesses, and non-profits; and transparent to ensure the taxpayer subsidies are appropriately allocated.

Disaster bonds are not a panacea for damaged communities. Sound governance, public involvement, long term infrastructure planning, and emergency response teams are all important to ensuring the recovery of our damaged communities. Nevertheless, innovative financing techniques, like disaster bonds, are an important part of America's policy toolkit that can help the public and private sectors share the costs and responsibilities of rebuilding.

Authors

Robert Puentes
Patrick Sabol

Publication: The Avenue, The New Republic

Image Source: MIKE SEGAR

Cut to Invest: Exempt Private Activity Bonds from the Alternative Minimum Tax

Robert Puentes and Joseph Kane — Tue, 13 Nov 2012 00:00:00 -0500

To attract additional private-sector investment in infrastructure and heighten the ability of municipalities to carry out future projects, the Metropolitan Policy Program at Brookings recommends the exemption of Private Activity Bonds from the Alternative Minimum Tax. Tax exemptions on PABs will reduce the cost of borrowing for issuers and give them added flexibility to make targeted investments in those projects that promise the greatest impact on the area economy.

Exempting PABs from the AMT would:

Help boost private-sector investment in infrastructure, spurring the development of projects throughout the nation

Lower existing costs of PABs for state and local governments faced with declining revenues and restricted by tight budgets

Facilitate investment in infrastructure projects with a clear public benefit, including capital improvement projects at airports that connect metropolitan areas and foster trade

Build on the success of the previous exemption under ARRA, providing greater financial clarity and regulatory certainty for investors in the long term

In this way, by promoting favorable regulation on bonds, the federal government can encourage private- and public-sector infrastructure investment and streamline the delivery of necessary infrastructure projects.

Download the paper » (PDF)
Download the press release » (PDF)

Downloads

Authors

Robert Puentes
Joseph Kane

Strengthen Federalism: Establish a National PPP Unit to Support Bottom-Up Infrastructure Investment

Robert Puentes — Tue, 13 Nov 2012 00:00:00 -0500

In a time of constrained public budgets, leveraging private-sector financial resources and expertise to deliver a range of infrastructure projects has growing appeal. However, these public/private partnerships (PPPs) often entail complicated contracts that differ significantly from project to project and from place to place.

To address this problem, countries, states, and provinces around the world have created specialized institutional entities—called PPP units—to fulfill different functions such as quality control, policy formulation, and technical advice. The federal government should establish a dedicated PPP unit to tackle bottlenecks in the PPP process, protect the public interest, and provide technical assistance to states and other public entities that cannot develop the internal capacity necessary to deal with the projects themselves.

Creating a federal PPP unit would:

Provide states, cities, and metropolitan actors with the support and technical assistance needed from the procurement stage through long-term management of the projects by helping public actors determine the best Value for Money investment, assess long-term economic benefits of projects, and increase capacity to deal with contract changes over the life of the PPP

Create a more attractive, open, and robust environment that encourages private investment by creating predictability in the procurement process and demonstrating that the government actors involved want to “do business”

Serve as the first step in creating an integrated national infrastructure agenda, given that PPPs are integral to the overall capital investment and infrastructure strategy of the nation. Establishing a more uniform PPP process across all 50 U.S. states necessitates creating a broad strategy for national infrastructure development in the future

Download the paper » (PDF)
Download the press release » (PDF)

Downloads

Authors

Robert Puentes