Trump cuts leave bridge and rail projects hanging

Hiroko Tabuchi
The Lake Pontchartrain Causeway, north of New Orleans, La., March 29, 2017. Improvements to the causeway were one item on a leaked list of the Trump Administration’s infrastructure projects wish list, though many other bridge and rail projects would be left hanging.
Edmund D. Fountain | The New York Times

When President Trump pledged during the campaign to spend $1 trillion to restore America's crumbling bridges and roads, supporters across the country cheered.

A leaked list of the Trump administration's priority projects seemed to speak to the scope of the president's ambitions: a high-speed rail line linking Houston and Dallas; a desalination plant in Orange County, Calif.; and improvements to the Lake Pontchartrain Causeway in Louisiana, the longest continuous bridge over water in the world.

Then came Mr. Trump's budget proposal, which would slash the Department of Transportation's spending by 13 percent, end subsidies for Amtrak's long-distance trains and eliminate the Obama administration's "Tiger" grant program, which has helped fund mass transit systems across the country.

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Among the potential victims of the president's proposed cutbacks: Maryland's long-awaited Purple Line, a planned 16-mile light rail system through the capital's suburbs.

Maryland had been just four days away from clinching some $900 million in federal aid in August when a federal judge ruled to temporarily invalidate environmental approvals for the project. But under President Trump's plan, projects that don't yet have complete federal funding agreements would be financed "by the localities that use and benefit from these localized projects."

Supporters of the project are devastated.

"It was on the one-yard line," said Art Guzzetti, vice president for policy at the American Public Transportation Association, a Washington-based advocacy group. The proposed budget cuts were inconsistent with the administration's overall focus on infrastructure investment, he said.

"We'd been so encouraged by all the talk of investing in infrastructure," Mr. Guzzetti said. "But the budget has been discouraging."

Elaine Chao, the transportation secretary, has sought to quell concerns. Mr. Trump remains committed to his infrastructure initiative, which he intended to announce later this year, she said last week at an event marking the Transportation Department's 50th anniversary.

"The president has consistently emphasized that one of his top priorities is modernizing our country's outdated infrastructure," she said. "The proposal will cover more than transportation infrastructure. It will include energy, water and potentially broadband and veterans hospitals, as well."

But Ms. Chao, who was labor secretary under President George W. Bush, also sounded the alarm over "saddling future generations with massive debt." Instead of depleting government coffers, she said, Mr. Trump hoped to "unleash the potential for private investment" through partnerships with the private sector. She has also suggested that funds for infrastructure improvements might come from more tolls on the country's roads.

"Investors say there is ample capital available, waiting to invest in infrastructure projects," she said. "So the problem is not money."

Still, private-public partnerships have not always been winning propositions.

In late 2015, the operator of the Indiana Toll Road — a roadway that runs from Chicago to the Ohio border, and is owned by affiliates of the Australian investment bank Macquarie Group and Ferrovial in Spain — filed for bankruptcy after rosy forecasts for rising traffic and toll revenue failed to be realized.

That came just eight years after the companies paid $3.8 billion for a 75-year lease for the toll road. Operators of toll roads in Alabama, Michigan and Virginia have also faced bankruptcy in recent years.

Chicago's lease of its parking meters to a group led by Morgan Stanley has become a prime example of privatization gone wrong. Chicago's inspector general found that the city had been paid almost $1 billion less for the lease than it would have received from its parking meters over the course of the deal, and the contract's fine print prevented the city from building parking lots and other infrastructure that might compete with the outsourced parking meters.

Donald Cohen, the executive director of In The Public Interest, a watchdog that focuses on privatization and contracting, said that toll roads and parking meters had attracted investors, since they looked like infrastructure projects with well-defined business models and predictable revenue.

"There were some rosy projections, but things didn't go well," Mr. Cohen said. "And there can be a real diversion between what's good for private investors and public interest."

Real estate executives, including Richard LeFrak, the chairman and chief executive of the LeFrak Organization, are advising President Trump on his infrastructure plans. As head of the White House's new Office of American Innovation, Mr. Trump's son-in-law, Jared Kushner, who is also a real estate developer, is expected to play a role in setting the infrastructure agenda.

Mr. Trump, together with Mr. LeFrak, Ms. Chao and a small circle of real estate and business executives, discussed infrastructure spending over lunch last month. Sean Spicer, the White House press secretary, said that the conversation had focused on identifying "regulatory roadblocks that have been killing projects before they've even begun."

Mr. LeFrak declined to be interviewed for this article, as did Ms. Chao.

Until Mr. Trump's team can deliver on the specifics, several infrastructure projects remain in limbo — even ones approved by voters. And local governments may now have to scramble to secure private investors.

In Wake County, N.C., voters passed a half-cent sales tax last fall to fund a bus rapid transit plan and commuter rail. But without federal funding, the project is unlikely to move forward. Other projects at risk include Nashville's $6 billion plan for 200 miles of pedestrian walkway improvements, light rail and bus rapid transit.

For users of the Lake Pontchartrain Causeway in New Orleans, federal funding would determine whether tolls must be raised to pay for much-needed upgrades — or whether they can remain near current levels of $3 to $5 round-trip for passenger cars.

The Greater New Orleans Expressway Commission had already rejected turning to a public-private partnership for improvements, after estimating that bringing in private investors could cause tolls to jump threefold. Repairs were needed to the 1950s-era causeway, said Carlton Dufrechou, its general manager, partly because the bridges were struggling to handle both an increase in traffic and larger cars.

Initially elated when the causeway showed up on Mr. Trump's list, Mr. Dufrechou is now waiting. "We haven't heard anything since then," he said. "Sincerely, we just don't know."