Infrastructure opportunities in the US

Infrastructure opportunities in the US

June 05, 2018 | By Douglas Fried in New York

The Trump administration is moving forward with efforts to rebuild US infrastructure. A group of panelists talked about the outlook and timetable for the Trump infrastructure plan and then had a wide-ranging discussion about other current topics and potential growth areas for new infrastructure investment at a breakfast roundtable hosted by Norton Rose Fulbright and Inframation in late April in New York. The growth areas include such things as expanding broadband to cover rural areas and the large number of new transportation projects that will be needed to honor a promise by Los Angeles that spectators at the 2028 summer Olympics will be able to move easily in an area that has legendary traffic congestion.

The panelists are Jim Ray, senior advisor for infrastructure to the US secretary of transportation, Colin Peppard, senior director in the office of extraordinary innovation at the Los Angeles Metro, Jane Garvey, North American chairman of Meridiam, Christophe Martin, CEO of North America at VINCI Concessions, Tom Rousakis, senior managing director at Ernst & Young Infrastructure Advisors, and Tom Mulvihill, managing director and head of infrastructure for KeyBanc Capital Markets. The moderator is Doug Fried with Norton Rose Fulbright in New York.

Trump infrastructure plan

MR. FRIED: President Trump unveiled an infrastructure plan in February that involves spending $200 billion in federal dollars to generate at least $1.5 trillion in total new infrastructure investments over 10 years .

Jim Ray, what can you tell us about the plan that might not be evident just by looking at it, and how much private investment do you think $200 billion in federal seed capital will bring?

MR. RAY: The administration’s efforts are much broader than just this plan. They fall generally into two buckets. One bucket is the things that we need Congress for. An example is the $1.5 trillion plan that you mentioned.

The other bucket is things that we can do ourselves. The executive order that was signed last week directing federal agencies involved in environmental permitting to streamline the process is an example. We are fundamentally changing the way Washington coordinates itself on permitting.

There are also opportunities within existing programs. During the Bush administration, we put out a program called the “congestion initiative” with about $1.5 to $2 billion of “found” money. It makes sense to look under the sofa cushions in Washington. There are usually a few dollars lying around. We used some money we found to help make variably priced toll lanes more palatable as we think they will help ease traffic congestion.

We are looking for ways to transform federal programs to draw in more non-federal dollars. Congress has given us discretionary grant dollars that we can use for this purpose. These are all part of a broader package on infrastructure.

Returning to the new $200 billion of federal spending that we are proposing to Congress, we intend that $100 billion of that will be awarded as incentives. The money will go to projects where states and cities are willing to throw in more of their own money or money they can raise.

It is perfectly fine with us how the state or city chooses to raise its share, whether it means increasing the gas tax or doing some sort of hotel tax or another type of user fee increase. If another state or city wants to embrace public-private partnerships and have toll lanes on highways, that is also fine with us. We do not view it as the federal role to dictate what the new source of revenue is, but we want more skin in the game from other participants.

Fifty of the $200 billion will go to a new rural program. A lot of good can be done in what I still think is a core federal interest, which is farm-to-market roads and similar rural infrastructure.

MR. FRIED: Colin Peppard, this infrastructure plan asks cities and states to develop their own funding sources so that they can pitch in more money. Are they prepared to assume these types of responsibilities?

MR. PEPPARD: I think it cuts two ways. In Los Angeles, we have been fortunate that the voters have consistently been willing to invest dedicated tax dollars in infrastructure. We have a broad enough tax base that we are able to do that.

Other cities, especially some of the more distressed areas in the upper Midwest and the Southeast, will have a harder time doing that. The point that Jim Ray made about not being too prescriptive about where that money comes from is important. It may be fine to require these areas to pitch in, but it is important to recognize that different areas have different capacities and they can contribute in different ways.

A new $100 billion carrot is a great incentive for areas like Los Angeles to invest. The move to update procurement processes and rethink technologies is equally important.

I moved from the federal to the local level. Seeing how the thicket of procurement rules weighs down these projects and makes them less attractive to outside investment was a real eye opener. I would not underestimate the importance of these provisions as part of the overall package.

MS. GARVEY: I applaud the administration for rethinking how incentives can help Congress reach consensus regarding federal spending in this area.

Setting aside the dollar figure, the whole idea of matching and trying to figure out ways to incentivize local communities is a terrific idea. Even the Brookings Institution, which is considered left of center on policy issues, has put out papers calling for use of federal dollars as incentives to bring in other capital.

Some of the city organizations, like the Urban League and the US Council of Mayors, are focused on this part of the bill. This is a terrific opportunity to make some real links to those groups.

MR. RAY: A lot of people have faulted us for not coming out with legislative language. We are not so naïve as to think that the ideas that we put forward will just be enacted as proposed. There has to be a dialog. We have heard pushback on the dollar figure as well as other items. We are more than open to discussion.

There are other things that were contemplated that are not yet fleshed out. Some of that is because we have had a robust conversation with leadership in Congress who said to leave the drafting to Congress, so we tried to be respectful and play the role that we are meant to play.

Doug, you asked whether state and local governments can afford to contribute more money. The proposal sits on top of an existing program. We are not talking about changing the way the formula is done underneath. This is an opportunity for projects to secure additional federal money beyond what they might already receive. Even with our discretionary grant programs, the vast majority of the money goes out by formula.

MR. FRIED: Jane Garvey, what odds do you give that the Trump infrastructure plan will clear Congress?

MS. GARVEY: I do not think it will be enacted this year. We are dealing with a short legislative calendar in 2018. Congress must pass a bill reauthorizing the Federal Aviation Administration this year. There is talk about a separate bill reauthorizing federal water programs. There is no time to do much more than that. We might see within the FAA or water bill the opportunity for a targeted piece of the Trump plan to happen.

But I would go back to Jim Ray’s point. We still have tools without waiting for Congress. We have a terrific TIFIA program. Funding has increased for it. There are some wonderful things happening at the state level. Let’s think more about the cities. I think there are opportunities.

It is also the beginning of the dialog. This is a process. All of us need to be involved. Compromises will be worked out. Something will emerge in the end that reflects a collective effort.

MR. RAY: I think we, the American public, like to see things really neat, to fit within a 20-second news segment. But that is not how our founders set up Washington. I think the plan will move in pieces. We will chip away at this piece and then that piece until the remaining package really has its day in the sun.


MR. FRIED: Tom Mulvihill, what parts of the infrastructure plan would most help P3s?

MR. MULVIHILL: The P3 market has not had the desired deal flow. I have always felt that the problem has been lack of funding. The fact that the president has identified funding as an issue and has proposed using federal dollars as an incentive for local governments to pitch in more hopefully will unlock a large pipeline of deals going forward.

I am encouraged about the funding. I think you are right there will be plenty of discussion, but I think that we will have that discussion is a good development.

Getting into the financial aspects of the plan, I think the proposed improvements to various existing programs — TIFIA, WIFIA, RIFF and private activity bonds — are fantastic.

I am encouraged by things like the streamlining process. Trying to shorten the time from the drawing board to shovels in the ground is very important. Having been a consultant to governments on infrastructure projects for many years, I have seen firsthand how the process works and how things get studied and then restudied. There is always concern about litigation, so it is studied again.

MR. FRIED: Christophe Martin, what does the infrastructure plan say to foreign companies about the future of the US P3 market?

MR. MARTIN: We do not consider ourselves a foreign company. We are present in North America through incorporated local companies, and we are based in Miami. Most of our staff, the engineers on the different sites as well as our partners, our subs and our supervisors, are American.

MR. FRIED: Point taken.

MR. MARTIN: There is no doubt there are huge infrastructure needs in the US. We consider Trump’s plan a positive sign and maybe a commitment to allow the private sector to play a major role. From our perspective, it is a fantastic opportunity to bring in more expertise and investment and take advantage of our worldwide concessions experience.

MR. FRIED: Tom Rousakis, the infrastructure plan proposes to expand existing credit-assistance programs like TIFIA, WIFIA and private activity bonds. How necessary is this expansion for growth of the P3 market in the US? [Editor’s note: The federal government makes low-cost loans to transportation and water projects under TIFIA and WIFIA. Private activity bonds, or PABs, are tax-exempt bonds issued by state and local governments to finance 15 types of projects that may be privately owned or put to other private business use, but that are considered to benefit the public.]

MR. ROUSAKIS: I want to combine that with the discussion of the plan in general.

TIFIA has played a tremendous role in the expansion of P3 projects and projects in general. Programs like it can help projects get over the finish line, reduce public subsidies and make or break a project. The market expects these programs to remain in place.

What would be most interesting is expansion of PABs to other asset classes, especially social infrastructure. We are seeing tremendous natural growth in interest in P3s for social infrastructure at the smaller city scale. Many less sophisticated public agencies are being pitched these ideas. The taxable versus tax-exempt debt issue is a big hurdle for them. If Congress were to allow PABs for social infrastructure, that would send an important signal. It is kind of psychological.

The decision to do a P3 is a local one. PABs, TIFIA and WIFIA are tools that help demonstrate to local governments how these projects can be more cost-effective.

Whether the Trump plan will move the needle massively in core areas like transportation, leading to more deal flow, is an open question.

MR. FRIED: You have a point about the psychological aspect. When the people in this room talk about P3s, we talk about risk transfer, life-cycle management and benefits like that. However, when it gets to the decision makers, they look at the coupon, right? They say risk transfer is nice, but show me the money.

MR. ROUSAKIS: That’s right, but we have come a long way. I have a lot fewer of those conversations today.

Public officials also ask why they should lock into a long-term contract with a private party. They want flexibility. Public leaders are really sticking their necks out when signing long-term deals. P3s are all about fiscal sustainability and the long-term condition of assets. People still get elected to build things.

MR. MULVIHILL: It is hard to get away from the tax-exempt debt discussion. When you tell public officials that a P3 might cost 100 basis points more, but they will get risk transfer, they do not hear the risk transfer part. The fact that the debt will be at tax-exempt rates is a big psychological benefit.

MS. GARVEY: Tying this to incentives, maybe the politicians will feel they get more if you can demonstrate a commitment to long-term maintenance and a commitment to life-cycle costs. That can become part of the incentive program and one way to shift the narrative.

MR. FRIED: We have been talking about educating government officials since the P3 market started in the US. Tom Rousakis, you advise a lot of government agencies. Do you feel that we have made significant progress?

MR. ROUSAKIS: Even though the deal pipeline is not massive, it is diversifying. Clearly something is happening across the country. Progress is made by word of mouth. Someone tries something, someone learns a lesson, and so on. Eventually those lessons get widely disseminated. We still spend a lot of time holding our clients’ hands and explaining things, but there has been progress.

MR. MULVIHILL: Public officials are not paid to be risk takers. What is their upside if they try a new tool and it works well? Maybe they get a pat on the back. There is no monetary incentive. If things do not go well, bad things can happen to them, including losing their jobs and possibly their pensions.

MR. FRIED: Yet one of the biggest changes in the last 12 to 18 months is we are seeing P3s applied to a broader range of assets.

MR. MULVIHILL: You still need a champion. You need someone who is willing take the risk.


MR. FRIED: Tom Rousakis, in what states do you expect the most opportunity for P3s?

MR. ROUSAKIS: The pendulum swings back and forth. We are not talking about Texas these days. There has been a real pushback in Texas.

Maryland is exciting. Its HOT lanes could be a massive project. It would be a natural extension of what Virginia has already done on its half of the Capital Beltway.

California and Los Angeles are also exciting. Who would have thought three or four years ago that this would be the epicenter of P3 transactions? It is not just the current projects, but more is also coming. LAX airport still has the consolidated rental car facility — or ConRAC — project to do. The Los Angeles Civic Center project may happen as well.

New York is another. The governor here wants to do more projects.

Those are the really exciting areas. We are not talking about Texas and Florida like we did five to 10 years ago.

MS. GARVEY: Energy is a new area at which we are taking a close look. Water is another. Some places that have done P3s like Miami or Florida are now looking at different sectors for P3s.

One of the great challenges as we look at new markets is the notion of risk transfer. We are learning a lot as we think about new potential uses of P3s. For example, use of P3s for street lighting and other areas of technology that are likely to change quickly is interesting but challenging. Maybe these ends up with shorter-term P3 concessions. Maybe there is a new P3 model for these deals.

MR. FRIED: Tom Mulvihill, Jane Garvey mentioned the energy industry. The Ohio State University energy transaction reached financial close in the summer of 2017. Why hasn’t that model taken off and been applied by other universities?

MR. MULVIHILL: Ohio State has been a leader in P3s, first with a transaction around its parking facilities and then with the energy utility deal. A few other universities have looked into emulating the parking deal, but we have not seen that take off.

Universities are conservative by nature. They see big numbers that are startling. That scares them more than incentivizes them to pursue some of these deals, because they fear the risks that usually come along with big numbers.

Universities run like small cities. They must provide heating, cooling and power throughout a campus that has maybe 20,000 to 50,000 students and faculty.

Providing those services is not core to their missions, so the services wind up being more of a headache for them. They have to spend a lot of time at the executive level that they would rather spend on academic services. Fundamentally, I believe many universities would be delighted for someone to take utilities off their hands.

There is a gradual trend toward it, but some sectors move more slowly than others.

MR. FRIED: Christophe Martin, Tom Rousakis mentioned the potential $7 billion HOT lanes deal in Maryland. Is it feasible to do that large a project or is it better to break it into smaller pieces?

MR. MARTIN: We believe this type of project has to be split into two or three sections because of its size. Imagine for a second what would happen if there were a problem with a concessionaire or a contractor. This is a risk. Splitting the project will provide security for all of the parties.

LA Metro

MR. FRIED: Colin Peppard, why has LA Metro relied on unsolicited proposals over solicited? Will that continue?

MR. PEPPARD: We expect to continue using unsolicited proposals. Phil Washington, our CEO, has had a lot of success with unsolicited proposals, and he feels that the model allows the private sector to see our blind spots in ways that are helpful to us. To presume that we know everything about our needs and the best approaches for addressing them is just wrong.

Entertaining unsolicited proposals does not require a tremendous amount of work. The work to submit them is not insubstantial, but the amount of work to submit is manageable for a conceptual proposal. The proposal is really an abstract of a vision about what could be possible.

Unsolicited proposals have yielded tremendous creative thinking within our agency . We have also leaned on unsolicited proposals because our experience defining where P3s would work best has, frankly, not been particularly good. Unsolicited proposals have helped us to see potential P3s that we would not have spotted on our own.

We are still developing and screening our own projects internally, doing our own P3 assessment and doing the types of due diligence that you need to do to understand the best procurement model across the range from design-build to a full concession. But with the $120-billion program and 60 or so projects that we have, identifying potential win-win situations for both LA Metro and the private sector quickly, without a big screening effort and a lot of politics, is incredibly valuable.

MR. FRIED: You have currently in pre-procurement the Sepulveda Pass transit corridor project, the West Santa Ana transit corridor project, the Vermont Avenue bus rapid transit project, and the Orange Line project. Will any of these advance as P3s?

MR. PEPPARD: The Sepulveda Pass transit corridor project and the West Santa Ana transit corridor project are both moving forward as P3s. We are doing additional due diligence and building business cases for both. The Sepulveda Pass project will likely have a preliminary development agreement in some form, and the West Santa Ana project will likely be a hard bid, potentially with a variable scope. We will see how that bears out depending on the business cases that we develop.

The Vermont Avenue BRT project is a possible technology project. The bus service itself is likely to be retained by Metro, but there are so many new technologies that can facilitate the type of reliable, consistent, high-quality bus rapid transit service that you need to drive ridership. The idea of Metro procuring and integrating all those technology components is really challenging. We are trying to think about this project in new ways, including as a potential P3 with risk transfer.

The Orange Line is likely to remain with Metro. We will have to reassess when we get closer. The planned conversion to light rail is not until 2051 or something like that, so the light rail unsolicited proposal we received was a little bit early.

There is also the San Fernando Valley light-rail line, for which the locally preferred alternative will be identified in the next couple months. That project was identified internally, not through an unsolicited proposal, and shows a great deal of promise as a P3 as well.

MR. FRIED: Are there any other projects about which you are thinking that you could share with this group?

MR. PEPPARD: Yes. The great thing about the way that the ballot measure M that yielded the sales tax that underpins our entire program is structured is that it has a detailed expenditure plan, or project pipeline. Voters could see that expenditure plan when voting about whether to dedicate an additional penny of sales tax in perpetuity to transportation.

So the expenditure plan is your project pipeline. There are about 40 or 50 projects on it, and they have anticipated groundbreaking and revenue service dates and the anticipated cash flows associated with them.

One key thing to understand is that it was all laid out assuming design-build construction because we needed to start somewhere. Those assumptions would obviously change if any of the projects is procured in a different method.

One project that is not on the plan is our express lanes network. We currently operate two managed variable-price toll lanes on the 110 South and the 10 East. But we have a vision for a 632-lane-mile managed-lane network throughout LA County. It is laid out in great detail in our express lane strategic plan. It is built to function as a network operationally, but also financially, with inter-fund loans and cross-collateralization of assets to enhance the credit of the network. Unfortunately, the state law allowing us to do P3s on state-owned highway facilities has expired. We are working to try to get it renewed.

The demand for freeway space and travel time in Los Angeles is nearly limitless. The willingness to pay is pretty high. The public acceptance of tolls in Los Angeles is higher than in many other places around the country, especially if we are reinvesting some of the revenue back into additional transit assets in the corridor.

Improving deal flow

MR. FRIED: Christophe Martin, a big theme has been thinking about how we might increase the deal flow in the United States. You have vast experience globally. What does the United States need to do?

MR. MARTIN: We see three issues. The first one is funding.

Beyond funding, there is room to be innovative to create more deal flow. We were talking about managed-lanes projects, but we can also talk about asset recycling. I just arrived one year ago in the US, and I was a bit disappointed by the number of brownfields that were on the table: not too many, maybe one or two every year. This is disappointing. Maybe operations and maintenance could be privatized in some states. We think that could help to increase deal flow in the market.

That said, the main issue we have to face is uncertainty. We need to address the uncertainty whether a project will go all the way to the end. Support at the highest levels of government for a project is key.

MR. FRIED: Jim Ray, Christophe mentioned recycling of assets. In the infrastructure plan, there was some mention of divesting or selling federal assets. Can you provide more color?

MR. RAY: In the last round of the TIGER discretionary grants, we included a secondary criteria that was meant to open the door to asset recycling. I don’t know how many people picked up on that. Discretionary grant programs do not provide a lot of lead time to develop projects, but you should expect to see more of that as we move forward.

We are trying to think creatively. This gets back to the issue of what can we do within the authorities that Congress has already granted us. We are looking for ways we can help asset recycling get traction in the United States.

Your other question was about federal assets. This may come as a massive surprise, but the federal government owns a heck of a lot of stuff, and not all of it, I think, is in the best hands. Not all of it needs to reside within the confines of the United States government. We have started looking broadly at assets that perhaps the federal government might be able to sell.

Does anybody here know that the federal government owns a couple of toll bridges? We have openly questioned whether the government is the best entity to own them and, if we are not, then should those assets go to the state, which can then decide what to do with them, or should the federal government go directly to the market? There are assets all over the place and that effort is afoot. I think it will be controversial.

This is something for which we will need to go to Congress, unless it fits under the rules for excess property. Some of the things we may be able to make a case for could be done on that basis. We have to get fair market value for the assets.

MR. FRIED: Are you thinking about sales or concessions, or have you not gotten that far?

MR. RAY: We are thinking about both. We see value in maintaining ownership of some assets over the long haul, but perhaps there are better options in the short and medium term. There are other assets that the United States government probably does not need to own. For example, an asset may have run its useful life. In some cases, assets are in the process of being decommissioned, meaning torn apart and destroyed, and the private sector has approached us and said it thinks there is an alternative use for that asset. That would be a case for an outright sale.

MS. GARVEY: Probably even more controversial is that there are a number of federal assets that should stay with the federal government, but they are in terrible, terrible shape. I have often thought that if we really want to promote P3 as a public policy, you could take the federal buildings, just even the ones in the Washington area, and improve them all through a P3 and, with life-cycle cost analysis built in, it could be a wonderful model.

Or you could take the facilities that the Federal Aviation Administration owns that I know need to be replaced. There are anywhere from 10 to 15 facilities that could be replaced through a P3 model. The scoring rules in the budgetary process have always been the big stumbling block. There is a way forward if you really wanted to kick start this market and show what could be done. The leader really could be the federal government.

MR. FRIED: The last infrastructure roundtable we had here at our offices was two days after the presidential election in 2016. In preparing for that roundtable, we all thought that we were going to be talking about Hillary Clinton’s policies. Donald Trump became president and the focus obviously shifted, but at that roundtable, there was a tremendous amount of optimism about infrastructure and particularly with what could be done with bipartisan support.

Looking back now a year later, do you think that optimism still exists?

MR. RAY: I am still very optimistic. There may have been people who were enthusiastic in a Pollyanna type of way in the early days, and who did not think about the system of government that our founders created and how life in Washington is hard on purpose. It is difficult to move things for reasons that I think over the last couple hundred years have proven to be valid.

I think we are moving things forward in dramatic fashion within the confines of what we can do.

In terms of the bill and bipartisanship, Washington is a difficult place. The president has already shown his ability to work with the other side as it relates to the debt ceiling. I think infrastructure is one of those items that we can pull together in the same way.

Not cementing our ideas in bill text is a sign of our willingness to shape the plan in ways that work for everybody. Somebody had to move. It was us because we established it as a priority.

I remain optimistic. Looking at the two baskets I mentioned earlier, I know one will be successful, and I have a pretty good feeling that the other one will be, too. It may just not be exactly the way that we painted it, which is okay. That is our system of government.

LA Olympics

MR. FRIED: Colin Peppard, Los Angeles will host the Olympics in 2028. What are some of the most critical infrastructure investments that Los Angeles will need for the Olympics, and what role do you think private capital can play in delivering these projects?

MR. PEPPARD: Without sounding too self-serving, it really is the transportation network. I just moved to LA two years ago, and I moved from Washington, DC which is known for its traffic congestion. I was blown away. Local streets, freeways — you try and get across town on a Saturday morning at 5:30 a.m. There is gridlock.

As a condition of getting the games in 2028, there were specific guarantees that the mayor and the bid committee made in terms of travel times, not just for athletes and support staff, but also for the real show, which is the production squads, the entertainment aspect.

We are going to have to figure out how to move people to meet those guaranteed travel times. The clock is already ticking on these projects.

MR. FRIED: But you have this room of people to help you. [Laughter]

MR. PEPPARD: Which is why it is very exciting to be here. We have a lot of opportunity, and we have a lot of political motivation. We are being asked to put together an accelerated “28 by 28” plan of the highest priority projects for acceleration by the 2028 deadline. At the same time, we need to take into account robust hiring requirements, environmental processes and fights about scope and alignment, which can take years.

We are being squeezed on both sides. It is our job to impose some discipline, including considering where the private sector can help provide bridge funding and smooth out our cash flows, especially when it comes to the spikiness of design-build project funding.

People’s expectations are high in this era of new mobility options such as Lyft and Uber. Everybody just expects travel to show up and take you away when you push a button on a phone.

It is in meeting that challenge that the people in this room and the broader marketplace can help us, including through our unsolicited proposal policy. The “28 by 28” list was approved by the board. You can find it online. It was in the Los Angeles Times.

LA County is the size of Rhode Island. Hosting the Olympic Games is going to be a real challenge if people cannot get around.

Final thoughts

MR. FRIED: Let’s get some final thoughts from the panelists. Jane Garvey, please lead us off.

MS. GARVEY: A lot of good points have been made, and I would go back to just a couple.

One is the importance of incentives. I think there is a growing consensus that incentives are important, but can we think about incentives in such a way that we advance not just P3s, but we also look at them from the perspective of the local communities?

The second is about rural infrastructure. We did not get much chance to speak about it, but if you are looking for compromises in Congress, there will have to be a merger of the big urban interests with rural interests. A number of people running for office today are talking about rural infrastructure. For example, there is a candidate for governor in Maine talking a lot about rural infrastructure and broadband.

The final point is the importance of the champion. Especially when thinking about new markets or new geographies, there has to be a local champion. I have never seen a complicated, difficult public works project that has succeeded without a local champion.

MR. MARTIN: Vinci will be proud to help advance Trump’s plan. We are fully aware as a concessionaire that our fate is closely linked to the economic development of the country. Our revenue is strongly dependent on the economic momentum of the country. We are confident about the outlook for both the US economy and P3s.          

If properly developed, a P3 can drive strong political and community concessions.

MR. MULVIHILL: I am excited about where this market is headed. This already feels like a good year. I think certainly by the second half of the year, we will see some big deals closing. This could be a breakout year for P3s in everything from very large airport-related projects to small courthouses to technology. The market has diversified, and it is digging more deeply into the municipal levels.

We are reaching the point where people do not have to bid every deal like it is the last one they will see. I think people can start to pick their spots, which is good.

I think 2019 will be another great year. I feel like there are enough procurements starting now that will not get done this year. That is all right because we need deals next year, too. I am very encouraged about the market and that a compromise can be struck at the federal level. Bring in some of the proposed funding, bring in some of the streamlining and we can continue to grow the market.

MR. ROUSAKIS: One state I left out earlier was Georgia. In terms of the near-term pipeline of possible P3s, there are major availability-payment transactions there.

Also on the theme of diversification are broadband projects. We are working on such projects with Pennsylvania and Georgia, and other states are starting to look at broadband.

We think broadband will be a big opportunity that will happen fairly quickly because there is new value in the fiber that has already been laid with the advent of 5G networks. The question will be whether our clients can reach their social goals and maybe make some money off the rights-of-way that they have. These projects tie into automated vehicles, they tie into ITS, they tie into all sorts of social needs.

MR. PEPPARD: Something that Jim Ray said was important. He thought he understood how the federal transportation programs worked, and then he realized he didn’t when he switched from the federal government to the private sector. Having helped to write parts of the federal program, I feel the same way. Things that I drafted look totally different on the other side.

I thought we were drafting a series of policies. At the local level, however, we are looking for a package of solutions to really big problems. Politicians can be petty and self-serving, but they are ultimately trying to look out for the public interest.

My closing comment would be to ask, as somebody who is trying to build what could be the biggest P3 market in North America if we are successful, not to look at this as a series of deals, but to look at it as a series of solutions. Let’s not focus solely on the next closing, but put in place a model that works for the long term. These solutions need to bear out, they need to show value. We talk about value for money. They need to demonstrate that, not just on paper, but in real life. We all have a responsibility to make that happen.

MR. RAY: I can’t speak for how other administrations approached things, but I know from my time during the Bush administration that we took a lot of things as they were. I liken it to walking into a professionally staged house. You may be out shopping and the couch is there, and there is a table, and a vase is there, and the TV is on that wall. Everything is just perfect. I think that when most people buy that house and move their own furniture in, a lot of it goes in the same spot because that is their mental image of how that room is supposed to look.

What has been really energizing about working where I work now is that this White House will not allow that type of assumption to be made. You question everything. In so doing, you run down some rabbit holes, and you find there was a good reason for why somebody put that existing policy in that place.

And then you go down other holes and you find no one recalls why a particular decision was made or why those rules were in place. I have brought back to Washington with me the lessons learned over the last eight years of working on deals, shoulder to shoulder with a lot of really thoughtful, committed people in the industry.

Colin Peppard said earlier about unsolicited proposals that you should not look at LA Metro as though it knows all the answers. Don’t look at the administration as though we know all the answers. Look at us as people who are there for the right reasons and are absolutely committed –– to the point of tremendous self-sacrifice –– to doing the right thing and finding a better mousetrap. But we will not be able to do it without you.

Regardless of who you are or what your perspective is, your opinion is really valued by us. Before complaining about the marketplace, call me first and tell me what we can do differently.

Please, if you think that we have the opportunity to include something in the FAA or water reauthorization, or you think we have the opportunity to change a piece of the infrastructure package, or you think that we have the possibility not to make a mistake tomorrow, call us. You are going to find a receptive listener. I cannot promise we will do what you ask, but we will evaluate your request and hopefully at the other side of it come out with a better program.