WASHINGTON, DC–During his State of the Union address earlier this week President Donald Trump called for a $1.5 trillion plan to “rebuild our crumbling infrastructure”.
The remarks themselves were devoid of much detail, but the outlines of the larger plan — which has been on the scene for more than a year — became clearer: federal appropriations would be “leveraged by partnering with state and local governments and, where appropriate, tapping into the private sector.”
Trump also called for a reduction of time in the building permit process.
There are still many questions about the plan including how it will be paid for. There are also skeptics on both side of the aisle arguing whether $1.5 trillion is too little or too much. Politics, too, can be expected to play a role in any negotiations.
But while the plan might have an uphill climb there are several reasons not to count it out.
For one, there is a lot of capital and appetite from the private sector, Kevin Wayer, International Director and Co-President of JLL's Public Institutions Group, tells GlobeSt.com.
Also, “we have seen really good examples of ingenuity at both the state and local level, whether it's cities or counties or even at universities, to leverage assets to get infrastructure built or renovated,” Wayer says.
There is also a track record of other federal government programs that provided either cheaper access to debt or equity financing for instructure, he continued, such as DoT's Transportation and Infrastructure Investment vehicle.
Wayer says talk on Capitol Hill points to the first half of this year as a potential time frame for getting the legislation for the funding off the ground. “I hate to predict the politics around it but it's clearly been messaged as something that is an early 2018 item,” he said.
Others have their doubts, at least about the near-term timing.
“Hypothetically, the State of the Union comments were a great start,” Chuck DiRocco, Director of Research for the Altus Group, tells GlobeSt.com. That said, the speech didn't go far enough to quiet doubts about the plan, DiRocco said. “If [Trump] can pull in a dollar for dollar exchange with public and private funding, that will obviously help. But again, these are all very big hurdles that need to be addressed.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
