Volume 7, Issue 43 - February 10, 2016
A 'Silver Tsunami' is looming
Mary Scott Nabers, President/CEO, Strategic Partnerships, Inc.
Workers in the United States are aging ... and aging so quickly it frightens most employers. The U.S. Census Bureau estimates that 10,000 Baby Boomers will celebrate a 65th birthday every single day between now and 2030. For perspective, the largest stadium in the NFL - MetLife Stadium in New Jersey - holds more than 82,000 people. To contain all the workers reaching retirement age in just one month, it would be necessary to find a stadium three times that large.

This phenomenon has created lots of news coverage, but it has primarily been related to private-sector companies, universal health care issues and individual retirement savings. But, there's another looming issue as well. Government, at every level and jurisdiction, is primed to take a huge direct hit.

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Obama proposes $4.1 trillion budget in final effort
President requests infrastructure spending, advocates for P3s
President Barack Obama yesterday released his proposed budget for the Fiscal Year 2017. The $4.1 trillion proposal won't be passed as is, but it serves as a signpost of the Obama Administration's preferences and goals going forward beyond his time in office.

"The budget that we're releasing today reflects my priorities and the priorities that I believe will help advance security and prosperity in America for many years to come," Obama said of the announcement. "It drives down the deficit. It includes smart savings on health care, immigration, tax reform."

Only about one-fourth of the total amount is discretionary spending for domestic and military programs, which the president and Congress are able to negotiate. The remainder is made up of already-committed money, primarily interest on the federal debt and benefits paid out through programs like Social Security, Medicare and Medicaid. The discretionary spending that is included in the president's budget is divided fairly equally between domestic programs and military spending.

Among the big-ticket items is $19 billion geared toward cybersecurity programs. That request is a 35 percent increase - about $5 billion - above the current year's allocation. It establishes a $3.1 billion revolving fund, the Information Technology Modernization Fund (ITMF), that would be used to overhaul what the White House's announcement itself calls the federal government's "antiquated IT systems." The president also announced the formation of a commission to examine the state of cybersecurity in the nation. It will deliver its report not long before he leaves office next year.

The White House budget proposal also includes about $1 billion directed toward the so-called "moonshot initiative" that the president spoke about in his State of the Union address. That includes $195 million in new cancer research efforts at the National Institutes of Health (NIH) to be included in the current year's budget and $755 million in mandatory funds for new cancer-related research activities at both NIH and the Food and Drug Administration (FDA) for Fiscal Year 2017.

In terms of infrastructure spending, one of Obama's most controversial proposals - a $10.25 per barrel tax on oil - would create a transportation infrastructure fund. That would raise more than $300 billion over a decade that would go to pay for infrastructure improvements and innovations in green-energy vehicle technology. In terms of the next fiscal year, the budget proposes a $44 billion investment in the nation's highway and bridge systems, money was authorized by the 2015 transportation bill, the FAST Act.

The president's 21st Century Clean Transportation Plan would create a federal credit program to support public-private partnerships (P3s) within the Department of the Treasury. Called the Financing America's Infrastructure Renewal (FAIR) program, it would provide direct loans to infrastructure projects developed through P3s. It also would create a low-cost infrastructure bond called a Qualified Public Infrastructure Bond (QPIB), which would be available to public-private partnerships involved with airport, port, mass transit, solid waste disposal, water and surface transportation projects.

The current budget runs through the end of September. The president's proposal already has been met with strong opposition from Republicans in Congress.

Bill proposes to privatize air traffic control system
Proposal would replace tax revenue with user fees as primary funding source
Congressional Republicans are proposing to privatize the national air traffic control (ATC) system. Rep. Bill Schuster's bill is called the "Aviation, Innovation, Reform and Reauthorization Act," and it would move operation of the national air traffic control system from the Federal Aviation Administration (FAA) to a new independent public agency and transfer ATC funding from the federal budget to user fees.

"Our system is incredibly inefficient, and it will only get worse as passenger levels grow and as the FAA falls further behind in modernizing the system," said Shuster, who chairs the House Transportation and Infrastructure Committee.

That point about making the system more modern is one of the primary reasons proponents of privatization give for the effort. The federal transition to the Next Generation Air Transportation System (NextGen) has happened much too slowly according to many critics. President Obama's proposed 2017 budget (see above) directs nearly $1 billion toward the transition. The NextGen system includes changes like the implementation of satellite-based surveillance capabilities and increased automation of processes that are designed to improve the efficiency and effectiveness of air traffic management and reduce errors.

Another idea behind the move, as with most efforts to privatize public services, is to increase efficiency and decrease costs. The new private nonprofit corporation that would manage the system would be governed by an 11-member board made up of four directors representing commercial airlines, two appointed by the secretary of transportation, two appointed by general aviation interests, one representing ATC controllers, one representing airline pilots and the corporation's CEO. The bill models the privatized system on those of other countries like Canada and Great Britain.

The bill proposes a three-year transition from government to private control. Congressional officials have said that it is expected to reduce annual federal FAA spending from $14 billion to $3 billion.

While a major air traffic controllers union has come out in favor of the move, congressional Democrats oppose privatization. A commercial airline pilots' union has also expressed opposition to the bill, and Delta Airlines publicly voiced disagreement, saying that such a move would increase costs for passengers.

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Honolulu rail agency to move forward with rail project
The Honolulu Authority for Rapid Transportation (HART) will continue to receive a 0.5 percent surcharge on the state's 4 percent general excise tax until 2027 after Honolulu Mayor Kirk Caldwell signed an extension last week. The extension will allow HART to issue requests for bids for the final construction contracts for the city's rail transit project. It is expected to bring in between $1.2 billion and $1.8 billion for the rail project, as well as enable the transportation authority to receive funds from the Federal Transit Administration (FTA). The FTA has been reserving $250 million for the project until the city extended the surcharge, in order to ensure the project had sufficient funding to be completed. That money was from the 2015 budget. Another $250 million in federal funds will come from the FTA's Fiscal Year 2016 budget, provided the federal agency approves the project's financial plan, which should come in the spring. HART expects to have a final cost estimate for the last four stations near Honolulu International Airport in March and will then put the construction project out for bid.
Seattle issues RFQ for pergola restoration project
The city of Seattle has issued a request for qualifications (RFQ) seeking to identify private contractors interested in restoring the Washington Street Boat Landing pergola. The 96-year-old structure is listed in the National Register of Historic Places and has stood at the west end of South Washington Street in Pioneer Square historically. It was moved from its home, however, in 2014 during the construction of a seawall on Elliott Bay. The restoration project will take place at a terminal on property owned by the Port of Seattle. The project will be conducted through the design-build method of procurement and will restore the structure and transfer it back to Pioneer Square when both it and the seawall project are completed, by the third quarter of 2017. The project would entail a combination of steel fabrication, cast-iron restoration and large structure movement. It is expected to cost between $1.8 million to $2.3 million.
Wichita approves $33 million for library construction
The city council in Wichita, Kan., last week approved the funding of a new $33 million central library through the issuance of bonds. The city has been planning for this for about a decade and purchased land for it in 2008 at a cost of $3.69 million. The plans for the new library are to build an "advanced learning center" that will provide the community with a place to learn and to connect through technology. "Today, we have the opportunity to create an advanced learning library with technology, innovation, collaboration, public-private partnerships, education and, yes, a place for books," said Council Member Bryan Frye (pictured). Bidding on the project will be issued in the spring, and construction is expected to start this year. The library project is scheduled to be completed by 2018. The Wichita Public Library Foundation is in the middle of an $8 million capital campaign to supplement a portion of the construction costs and has raised $5.5 million toward that goal.
South Dakota voters approve school bond package
Voters in the Redfield, S.D., School District last week approved a $16 million bond issue to build a new school. The new construction will take place on the site of the existing school. The current school was built in 1917 and added onto about 20 years later. A gymnasium with a facility for shop classes was built as a separate structure about 40 years ago and does not need to be replaced. The construction project should begin in January 2017 and take about two years to complete. More than 600 students attend classes in the Redfield School District, which is located in the northeastern part of the state. The bond measure passed with more than 60 percent of the vote.
Tupelo leaders planning project to make city walkable
City officials in Tupelo, Miss., have identified a grant that they hope will fund the majority of the costs of a project that will allow pedestrians an easier time to get around the city. The total cost of the project will be about $2.1 million, and the city leaders have requested about $1.5 million of that to come from the Transportation Alternatives Program of the Mississippi Department of Transportation. The grant application proposes the construction of paved, handicapped-accessible pedestrian crossings at four railroad intersections, allowing transportation planners to link stretches of sidewalk that already exist. "This is about connectivity," said the city's director of development services, Shane Hooper. "The railroads have cut the city up into different pieces, and this project is about putting those pieces back together." The city has completed similar projects already, such as the Elvis Presley Birthplace Trail, the Music Bend Nature Trail and another project near an elementary school. It also fits within the "2025 Comprehensive Plan," which city council passed in 2008 to foster a denser, more walkable city. "Eventually, we will have a trail system that allows you to walk or bike throughout the entire city," Mayor Jason Shelton (pictured) said.
Cumberland County issues nursing home RFP
The Board of Commissioners of Cumberland County, N.C., has issued a request for proposals (RFP) to gauge interest in turning over the operations of the Claremont Nursing and Rehabilitation Center to a private company. The nursing home already is managed by a private operator, but its staff members are still county employees. "The RFP basically says, if you have a proposal, submit it for those three departments to be your employees rather than the county's employees," said Chief Clerk Larry Thomas. The RFP states that the county is looking for a company to take over the food, housekeeping and laundry departments at the county-owned nursing home. About 75 people work in those departments, but nurses and other medical staff would not be affected by the change. The 75 workers are union members, and the RFP also states that current staff levels must be maintained. If the county were to privatize those staff positions, the RFP mandates that the change have "no adverse impact on the current county employees in regards to union membership, employee status, seniority level, wage and comparable benefit and retirement packages." Proposals are due March 10.
Illinois school district considering new pool, gym
School officials in Vernon Hills, Ill., are considering the addition of a new swimming pool at Libertyville High School and a second gymnasium at Vernon Hills High. Libertyville High's current swimming pool is aging, and district officials have talked about the possibility of reconfiguring its design, in order to update it and make it more able to serve the needs of students. The Libertyville-Vernon Hills Area High School District 128 has been looking at the projects for at least two years, but uncertainty about the future of state funding has made planning for the future difficult, said Superintendent Prentiss Lea (pictured). Though school board members were not given cost estimates for the projects, Lea has said that the district can afford the pool and gym projects without raising taxes. The new swimming pool is the highest priority for district officials.
Mississippi may build new DPS headquarters
Mississippi State Sen. Dean Kirby has filed a bill to issue $30 million in bonds to build a Department of Public Safety (DPS) headquarters in Rankin County, just east of the state capital of Jackson. State officials began the process seven years ago, when they approved $3 million to begin the planning and design phase. "They need a better facility," Kirby said. "They have everything in place. They just don't have the money." The proposed headquarters facility would be constructed on state-owned land adjacent to the new Mississippi Forensics Laboratory. That facility serves as the state's crime lab and opened in 2015. The bond money would pay for the construction, furnishing and equipping of a building that would replace the current aging headquarters facility, which is located in Jackson.
Albuquerque voters OK $575 million school bond
Voters in an Albuquerque, N.M., school district last week gave their approval to proposals that will provide $575 million to upgrade the district's aging facilities. The funding will come from two ballot initiatives, a $375 million levy and a $200 million bond. The largest single project included in the proposal will allot $50 million for the construction of a school to serve kindergarten through 8th grade students and ease crowding in the northwestern area of the district. Another $100 million will pay for upgrades to the district's technology infrastructure and the acquisition of more modern equipment. "Our students are too young to vote," said Superintendent Raquel Reedy (pictured). "They rely on adults to have their best interest at heart. I want to again thank all our volunteers, teachers, students, community and business leaders and every person who voted 'yes' in this election. There will be funds for much-needed repairs and improvements in many of our schools, some of which were built in the 1950s."
FRA approves renovation of BWI rail station
The train station at Baltimore/Washington International Thurgood Marshall Airport (BWI) is one step closer to getting a new track and upgrades all around now that the Federal Railroad Administration (FRA) has given its OK for the project. The FRA last week issued a Finding of No Significant Impact (FONSI) on the project, allowing it to go forward. Though project funding has not been confirmed, FRA investigators have completed the environmental assessment and preliminary engineering, and that will allow project planners to complete the final design. Amtrak and Maryland Area Regional Commuter (MARC) trains provide service to the station, which is Amtrak's 13th-busiest station in the country. "A new BWI rail station will allow both airline and rail passengers to get to their destinations safely, reliably and efficiently," said FRA Administrator Sarah Feinberg when releasing the finding. "Today's announcement is a significant step toward achieving that goal."

News about public-private partnerships (P3s)

GSA issues RFP for FBI HQ outside of D.C.
The federal General Services Administration (GSA) has released a request for proposals (RFP) to the four developers that have made the shortlist of firms to build the Federal Bureau of Investigation (FBI) a new headquarters building outside of Washington, D.C. Six firms had expressed interest in the project. There are three sites under consideration, two in Maryland and one in Virginia. The selected developer will construct the new headquarters facility in exchange for ownership of the FBI's current head office, which is in the District of Columbia proper. The new 2.1-million-square-foot facility will consolidate the bureau's 14 Washington-area offices and accommodate 11,000 employees. The four shortlisted firms must now respond to the RFP with bids for both the current headquarters property and for the construction of the new one. They also need to specify if they will choose to bid on one or all three of the potential locations. Responses are due June 22.
40 firms bid for Chicago Smart Street Lighting project
In September 2015, the Chicago Infrastructure Trust and the city of Chicago released a request for information (RFI) to identify private companies interested in developing the city's Smart Street Lighting program through a public-private partnership (P3). The deadline to respond came at the end of January, and 40 responses were filed. Taking advantage of the drop in prices for LED lighting, the project will create an energy-efficient street, alley, viaduct and pathway lighting grid and lighting control network using a design, build and finance method of procurement. City officials are also considering the use of existing lighting infrastructure for other services, such as the expansion of the city's wireless Internet system or for emergency services applications. The Infrastructure Trust's Board of Directors now will decide on potential partners and what steps to take next.
UMass Boston selects developer for student housing P3
Leaders of the University of Massachusetts (UMass) Boston have selected a private partner to finance and construct a new 1,000-bed dormitory. Under the public-private partnership (P3) agreement, the UMass Building Authority (UMBA) will lease the campus property to the developer, who will construct the $120 million housing complex, which will be owned and operated by a nonprofit management company. This will be the first on-campus housing facility for UMass Boston and the first P3 the UMass System has used to build student housing. "This is a major milestone in the history of UMass Boston and a significant accomplishment for the university as a whole," UMass System President Marty Meehan said. "UMass Boston is the most diverse campus of its size in New England, and we know there is a direct connection between on-campus housing and academic success."
Four responses for Miami Dade College development
Miami Dade College last year received an unsolicited proposal to redevelop a surface parking lot at its Wolfson Campus in the city's downtown. College officials liked the idea enough to solicit further bids for the project and have now received four proposals. The request for proposals (RFP) mandated that each developer interested in winning the project include in its plans a cultural center with a 1,600-seat performing arts theater, a conference center that can serve 3,000 people, a museum measuring at least 100,000 square feet and parking. The college had made a similar attempt at developing the property in 2007 but had to back away from those plans amid the recession. This plan came about when a local developer and art collector offered to donate to the college $60 million from his collection to be housed at a museum his team would build, along with the theater, conference center, parking garage and two residential towers. The school's Board of Trustees will make the final decision in choosing a development team.
Illinois governor, legislature working toward I-55 P3
Illinois Gov. Bruce Rauner (pictured) wants to build toll lanes on Interstate 55, also called the Stevenson Expressway, using a public-private partnership (P3). "By using existing resources to leverage private investment, we can build the type of infrastructure that allows Illinois to better compete in the 21st century," Rauner said. "This is an innovative project that will create jobs, improve the region's quality of life and show that Illinois is open for business." The project would add at least one lane in each direction between Interstate 355 and Interstate 90/94. According to state officials, that 25-mile portion of the interstate serves about 170,000 vehicles a day. The project may include tolled lanes, untolled carpool lanes and/or express tolling lanes. The legislature still needs to pass a resolution introduced last week before the state can embark upon a P3. The governor and the other proponents of the project hope to begin construction by the end of the year, which would allow for the project's completion by 2019.
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