Infrastructure Report Urges Changes in Land Development Patterns


Urban areas throughout the United States – in both dry and rainy locales -- are facing growing pressures on their water infrastructure systems, necessitating both greater investments for overhaul and a change in development patterns that are more conducive to conservation, according to Infrastructure 2010: An Investment Imperative, a new publication released April 13 by the Urban Land Institute and Ernst & Young.

The report is the fourth of an annual overview series that analyzes the infrastructure needs and compares the infrastructure policies of the United States with other countries. Previous editions focused primarily on transportation systems, consistently finding that the United States continues to lag behind Asia and Europe in investments in transit systems, making its urban areas less competitive globally.

This year, the report includes a look at water infrastructure accessibility and availability, treatment and delivery and highlights water issues in 14 U.S. cities as illustrative of the problems looming throughout much of urban America. The cities are Atlanta, Boston, Chicago, Denver, Houston, Los Angeles, Miami, Minneapolis/St. Paul, New York City, Philadelphia, Phoenix, San Francisco, Seattle and Washington, D.C. These cities and surrounding metropolitan areas are expected to gain an additional 60 million residents between now and 2030, reinforcing the critical need to better coordinate land use planning with water availability.

In a Webinar for media discussing the report, Maureen Avey, Urban Land Institute executive vice president, said, "Infrastructure is the backbone of how commerce really works. We need to get on the stick on this."

The report cites four main water challenges: aging pipes, constricted supplies, contamination, and cooperation issues. Each of the challenges could be alleviated by stricter conservation, less sprawl and more compact development.

Of the 14 metro areas in the report, all but three – Minneapolis/St. Paul, Philadelphia, and Atlanta – have specific conservation programs in place. Los Angeles was the only city cited as facing all three obstacles, making its water problems particularly urgent. Infrastructure 2010 holds up Australia as a model for water conservation, stormwater capture, and recycling, as well as more condensed land development practices, using a combination of basic and sophisticated techniques that could be applied in U.S. cities and others globally. (Residents pay $3.87 per cubic meter for water in Sydney; in Los Angeles, they pay $2.21.)

Howard Roth, Ernst & Young’s Global & Americas Real Estate Leader, noted that the American Society of Civil Engineers has estimated that $2.2 trillion will be needed for all infrastructure over the next five years. He said that the United States needs to change its funding equation by adopting new user fees, higher current user fees, replace the fuel tax with a vehicle miles traveled tax, use smart meters, an infrastructure bank and public-private partnerships. "There's no free lunch. We need to think creatively and regain our global competitive position," Roth added.

According a recent financial report, there currently is about $190 billion in private capital available for infrastructure investment in the United States. Mike Lucki, Global Construction & Infrastructure Leader at Ernst & Young, explained that those funds could be leveraged to between $380 billion to $475 billion and while that amount "is small compared to the $2.2 trillion needed, it clearly would be a step in the right direction." Lucki also noted that some 27 states now have legislation that allows some form of public-private partnerships, which could accelerate infrastructure project delivery and transfer some of the associated risk from government. He also listed the potential for using private capital from pension funds, university endowments as well as private activity bonds and Build America bonds.

The report also includes a brief overview of infrastructure activity abroad – investments, major projects, and challenges:

  • China leapfrogs the rest of the world when it comes to building modern transport infrastructure, investing hundreds of billions of dollars in new roads, dams, mass transit, high-speed rail, ports and airports. The government has directed most of $600 billion in stimulus funds to large-scale infrastructure, including nearly 10,000 miles of new high-speed rail to be completed by 2020.
  • Japan has employed public works stimulus to boost its lackluster economy for two decades, building new roads and new airports, and expanding its “bullet” trains. Now it faces population losses and an aging population, leaving it with an overdeveloped infrastructure system offering more capacity than is warranted by demand.
  • South Korea – In the country’s pipeline: a 93-mile underground road network in Seoul budgeted at $9 billion, a $3 billion expansion of Incheon International Airport, $2.3 billion in green energy initiatives, and a $19 billion cleanup of major rivers, all demonstrating the country’s ongoing commitment to advancing its infrastructure systems.
  • Singapore enhances its reputation for acclaimed infrastructure with the completion of the Marina Barrage, a $170 million hydroelectric dam project that integrates flood control, green technologies and recreation features.
  • European Union provides $630 million to member nations to spend on rail links between countries, including high-speed lines. The push to create jobs advance infrastructure plans, but the short-term increased spending is likely to be followed by a slowdown to focus on the deficits created.
  • United Kingdom adopts a combination of large-scale and small-scale infrastructure initiatives to reduce congestion around London. The 73-mile Crossrail tunnel will connect Heathrow Airport to the eastern suburbs; and outside the city, the Eurostar bullet train now extends to Amsterdam
  • France injected $1.21 billion in stimulus funds into its transport sector in 2009 and moves ahead with plans to double its high-speed rail system to 2,500 miles by 2020. The government also aims to be the world leader in developing infrastructure to support use of electric and hybrid electric cars
  • A consortium of German industrial, energy and finance companies pursues a $556 billion solar energy project to transport solar-generated electricity from state-of-the-art plants in the Sahara Desert to Germany and other European countries. It could supply as much as 15 percent of Europe’s energy needs by 2050.

The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 33,000 members representing all aspects of land use.

Ernst & Young is a global leader in assurance, tax, transaction and advisory services.

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