Building the future

NRCA advocates for inclusion of a robust buildings component in infrastructure legislation

Congress currently is considering comprehensive infrastructure legislation that would likely invest in U.S. transportation, water and energy infrastructure needs. On April 4, Roofing Day in D.C. 2019 participants visited legislators' offices on Capitol Hill to ask that a robust buildings component be considered for inclusion in the broader infrastructure funding package.

A growing problem

One of the most effective catalysts for sustained economic growth is investment in U.S. public infrastructure, which helps create family-sustaining jobs, supports safety and security, and improves the movement of commerce. Although surface transportation, ports and other forms of infrastructure have been prioritized in previous infrastructure debates, it is important the built environment, which includes elements critical to communities such as schools, airports, hospitals and other public buildings, be given parity in funding and incentives as a broader infrastructure package is considered. Such infrastructure investments should be evaluated based on a life-cycle cost-effectiveness analysis and ensure best practices and consensus building codes and standards are implemented to deliver maximum value to taxpayers.

An example highlighting the need for investment in the built environment is the condition of many public school buildings in the U.S. These structures are on average at least 40 years old, and the current backlog of maintenance and capital projects they require adds up to a $45 billion funding gap annually. The upgrades schools and other public buildings need are not being fulfilled, and Congress must take action to address the problem.

A proposed solution

To address ongoing infrastructure deficiencies, some congressional leaders have suggested public-private partnerships as a financing tool. Although public-private partnerships have been used in many areas of infrastructure, they have not been used in public buildings largely because of the lack of incentives for the private sector to invest capital.

Through the Public Buildings Renewal Act (H.R. 1251 and S. 932), introduced by Reps. Earl Blumenauer (D-Ore.) and Mike Kelly (R-Pa.) and Sens. Todd Young (R-Ind.), Catherine Cortez Masto (D-Nev.), Tim Scott (R-S.C.) and Michael Bennet (D-Colo.), public-private partnerships could be used to fund public building projects and maintenance. The Public Buildings Renewal Act would create incentives for increased use of public-private partnerships by making private investment in public buildings more attractive. The legislation is a more fiscally responsible approach to public buildings infrastructure in the short term with a relatively low cost to the federal government.

In addition, the public-private partnership model could provide attractive long-term savings. According to an October 2017 Beacon Hill Institute study, "The Impact of Tax Exempt Financing on Public-Private Partnerships: A Dynamic Analysis," public-private partnerships offer cost savings of nearly 25% during the life of a project compared with traditional building methods. The study also suggested expanding public-private partnerships to 20% of all government buildings during the next 10 years would generate $85.9 billion worth of new buildings, increase the GDP by $243.8 billion, create 1.28 million jobs, and increase federal and state income tax receipts by almost $25.7 billion. The Public Buildings Renewal Act is a unique opportunity for legislators to include a strong building component for the roofing industry in a larger infrastructure bill.

How do public-private partnerships work within the Public Buildings Renewal Act framework? In short, the legislation would provide tax incentives in the form of private activity bonds to attract private entities' investment in the construction and maintenance of schools and other public buildings at the state and local levels. Under the legislation, a private consortium could enter into a contract with a government to plan, build and maintain a public building.

Historically, tax exempt private activity bonds have not been available to attract funding for public buildings. With tax exemption extended to include public buildings, private capital gains new incentives to invest in public sector projects. Through the extended tax incentive in the short-term and the reliability of performance payments over the life of a public project, public-private partnerships would work to provide private capital for public buildings infrastructure. Using this method, projects are more likely to be performed on-time and on budget without deferred maintenance.

Ongoing effort

As the infrastructure debate continues in Congress, NRCA's Washington, D.C., office will continue building on the contacts made with lawmakers during Roofing Day in D.C. 2019 and working with allies to advocate for inclusion of the Public Buildings Renewal Act in an infrastructure package that will benefit the roofing industry.

Nathan Pick is NRCA's director of advocacy and political affairs in Washington, D.C.

This column is part of Rules + Regs. Click here to read additional stories from this section.



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