Cities: here is an alternative funding source for infrastructure upgrades (with related video)
Editor’s note: President Obama’s proposed budget for fiscal year 2015 calls for spending about $302 billion over the coming four years on infrastructure projects, including highway and bridge construction. In addition, about $91 billion in the budget is earmarked for mandatory and discretionary fundng for transportation. This is a $14 billion increase from last year’s request.
There has been a lot of speculation on the chances that Congress will approve the transportation infrastructure funding proposal. Former U.S. Transportation Secretary James Burnley offers his views here. Federal transportation funding expert June DeHart weighs in here.
Frank Chechile, CEO of Jacksonville, Fla.-based Parallel Infrastructure, offers a different take on the proposed transportation infrastructure spending program. In this posting he outlines his view is on the need for municipalities to consider an alternative, supplemental funding source that does not have to rely on the passage of the federal transportation-spending proposal. Below are the views of Frank Chechile.
The budget announcement clearly shows the administration recognizes the role transportation plays in strengthening our economy. Regardless of what policies are eventually adopted, infrastructure investment requirements will continue to increase, and many different approaches will be needed to generate the necessary funding. While state and local officials await news of what piece of the pie they will see from the federal program, there is another approach they can also take to raise needed capital to develop their own infrastructures.
By tapping into the value of existing, underutilized assets such as real estate holdings, city and state governments can uncover a new source of financing for intercity passenger rail systems. Our company, Parallel Infrastructure, has used this model successfully to establish asset development agreements with 31 freight railroads, with more than 2,000 miles of railway, as well as with Allegheny County in Pennsylvania. We manage more than 5,000 lease agreements and hundreds of separate land parcels, including some with existing buildings or structures, sized from one to more than 300 acres that are mostly adjacent to or near the right of way (ROW).
The opportunity to fully earn revenues from ROW real estate in our country is vast. There are more than one million miles of transportation corridors in the United States, owned principally by state Departments of Transportation, local governments and private railroads. To provide a sense of scale, assuming that these ROW owners could earn just $1,000 per mile from the types of revenue-generating activities we undertake, the million miles of transportation corridor in the U.S. would generate $1 billion.
By aggressively monetizing ancillary assets in this collaborative manner, intercity passenger systems will be financially stronger, more viable, and better positioned to leverage steady revenue streams, revive dormant assets, and ultimately thrive in ways that have not been accomplished in the last 50 years.
Parallel Infrastructure delivers right-of-way management solutions that maximize income for business and government real estate owners, while developing infrastructure that benefits customers across the telecommunications, outdoor advertising and energy industries.
In this video, Subcommittee Chairman Jeff Denham (R-Calif.) presides over a House Transportation & Infrastructure Committee hearing to evaluate the role of innovative finance in intercity passenger rail. Frank Chechile and other officials offer their views at the hearing.