United States Infrastructure Report Q4 2009

Following decades of underinvestment, the federal stimulus plan and the pressing need for new infrastructure facilities in transport, energy and utilities have revived the dormant infrastructure sector in the United States, and the country is fast emerging as the new frontier market for public-private partnerships (PPPs), high-speed rail and renewable energy projects, to name but a few.

The proliferation of PPP schemes and infrastructure investments in the United States has undoubtedly accelerated in the past two years. This has prompted BMI's Infrastructure team to expand its coverage of the sector to capture aspects of the US infrastructure sector – such as the stimulus plan or state-specific regulations – that will provide a more thorough analysis of the industry.

New features include: a chapter examining the transport PPP market in three different states and one region through analysing existing legislation and case studies; a chapter on Federal Loan Guarantees for the energy sector; and four new company profiles: Skanska US, Balfour Beatty US, Global Infrastructure Partners (GIP) and TransCanada.

Volume I of the report encompasses the regulatory, business environment/investment environment, political and economic analysis, and the company profiles. Volume II is solely dedicated to major infrastructure developments and key projects in the transport, energy and utilities and construction sectors.

In BMI's United States Q409 Infrastructure Report we are forecasting the US construction industry to contract by 12.6% year-on-year in 2009, to reach a value of US$503.24bn.

Data for the construction industry's real growth in 2008 were released in late April 2009, and showed a 5.6% contraction in the industry, aligning almost perfectly with BMI's forecast for a 5.5% contraction in 2008. This confirms four years of year-on-year contraction in the US construction industry, which BMI believes will reach its deepest point in 2009.

The US infrastructure sector showed signs of optimism over the past quarter, hinting that perhaps the worst is behind it. In the transport sector, the PPP market showed stability, a change from the turbulence that defined last quarter.

Two toll road projects in Texas – both conditionally awarded in Q109 to a joint venture formed from the same two companies, Cintra and Meridiam Infrastructure – signed comprehensive development agreements (CDAs),, which officially awards the contracts, somewhat akin to a commercial close. In June 2009, a CDA was signed for the North Tarrant Expressway project. However, reaching that stage was not a smooth road, with political and legal obstacles delaying the signing of the CDA. Initially BMI noted that this might spell bad news for the LBJ Freeway, the second PPP awarded to the companies. However, we were pleasantly surprised when, in September 2009, a CDA was signed for this contract too, with little evidence of difficulty. This signals good news for the PPP market, in Texas at least, and has reinstalled some confidence in the process, which had been knocked following failures of high-profile projects over the past year, such as the Midway Airport in Chicago, the Pennsylvania Turnpike and the Alligator Alley toll road in Florida.

Further progress was made on the privatisation front for the Port of Virginia, with two more bids submitted for leasing and operating the cargo facilities. One of the bids came from private equity firm the Carlyle Group, which proposes a joint investment with the Virginia Port Authority, according to the Virginia Examiner. The other new bid came from a partnership between investment bank Goldman Sachs and Carrix Inc., which is 49% owned by Goldman Sachs Infrastructure Partners and is the parent company of stevedore SSA Marine. These join the original, unsolicited bid from CenterPoint Properties, which was submitted in March 2009.

In the utilities sector news has been dominated by renewables projects. The development of new wind and solar power capacity illustrates the growing market for renewables in the US, where companies have been attracted by incentives such as federal loan guarantees. In September the US Department of Energy (DOE), along with the US Treasury, handed out the first round of grants for renewable energy projects under the American Recovery and Reinvestment Act (Recovery Act). The DOE has awarded US$502mn to 12 renewable energy projects, all of which use either wind or solar power. The grants were approved under section 1603 of the Recovery Act, which provides financial support for clean energy projects in the form of direct payments in lieu of tax credits. The projects approved in the first round are estimated to provide 2,000 jobs and generate 850MW of clean electricity.

Despite activity in the sector, data released by the commerce department in June show that compared with April 2008, construction spending was down 10.7%, which illustrates continued difficulties in both private and public sector investment into the industry. The former is stifled by the limited access to financing, which has been a key stumbling block in infrastructure projects, and is putting companies off getting involved in tenders. On the other hand, public sector investments, led by the stimulus package funds, are likely to take time to filter through, as regulations to disperse the funds are put in place, and states submit potential projects. As of June, for example, just 1.2% of the stimulus funds for transport had gone through, according to the Transportation Department's weekly progress report. In addition, the time lag between the funds being deployed and jobs on the ground is substantial unless projects are what is known as 'shovel ready'. However, if the public sector can push the funds through it will present an upside risk to our forecasts for 2009 and 2010.

• Executive Summary
• Market Overview
• US
• Special Focus: Will The Stimulus Package Be Enough To Help Fix America's D-Grade Infrastructure?
• Global Overview
• Governments To The Rescue: The Global Surge In Infrastructure Spending
• SWOT Analysis
• United States Infrastructure Industry SWOT
• United States Political SWOT
• United States Economic SWOT
• United States Business Environment SWOT
• Major Infrastructure Developments And Key Projects
• Transport Infrastructure Overview
• New And Ongoing Projects
• Airports
• Ports
• Road Networks
• Rail Networks
• Energy And Utilities Infrastructure Overview
• New And Ongoing Projects
• Power Plants And Transmission Grids
• Pipelines
• Water
• Construction Overview
• New And Ongoing Projects
• Residential Construction
• Commercial Construction
• Industrial Construction
• Tourism Construction
• Industry Forecast Scenario
• Business Environment: US Overview
• PPPs: An Emerging Market
• Virginia
• Case Study: Capital Beltway (I-495)/HOT Lanes
• Florida
• Case Study: Port of Miami Tunnel
• Case Study: I-595 Corridor Improvement project
• Texas
• Case Study: North Tarrant Express
• The North East – Playing Catch Up: New York, Pennsylvania And Massachusetts
• Massachusetts
• New York
• Pennsylvania
• Financing Clean Energy: Understanding Federal Loan Guarantees
• Nuclear Energy Projects
• Renewable Energy Projects
• Business Environment Ratings
• Regional Overview – Americas
• Limits Of Potential Returns
• Risks To Realisation Of Returns
• Project Finance Ratings: Outlook For The Americas
• Macroeconomic Outlook
• Political Outlook
• Domestic Politics
• Foreign Policy
• Company Monitor
• Bechtel
• Balfour Beatty US
• KBR
• Skanska US
• Global Infrastructure Partners
• TransCanada Corporation
• List of Tables
  • Table: Still Flunking – American Society Of Civil Engineers Report Card For US Infrastructure
  • Table: Highlights Of The US$787bn Stimulus Package
  • Table: Infrastructure Stimulus Plans List
  • Table: Uniting The States Via Rail – The 10 Proposed High Speed Rail Corridors
  • Table: Major Projects – Transport
  • Table: Renewable Targets By State - US States With Renewables Power Targets
  • Table: Major Projects – Energy And Utilities
  • Table: Major Projects – Construction
  • Table: Construction industry
  • Table: List Of Highway PPP Projects In The State Of Virginia
  • Table: List Of Highway PPP Projects In The State Of Florida
  • Table: List Of Highway PPP Projects In The State Of Texas
  • Table: Projects That Received First-Round Rewards
  • Table: Americas Regional Infrastructure Business Environment Ratings
  • Table: Design And Construction Rating
  • Table: Commissioning and Operating Rating
  • Table: Overall Project Finance Rating
  • Table: United States – Economic Activity