CNBC interviewed Dana Levenson, Chicago's former Chief Financial Officer and now with RBS North America Infrastructure. They discussed President Obama's infrastructure initiative. I offer the following summary of his remarks:
America's infrastructure needs are great. It will take an estimated $2 trillion to upgrade the country's infrastructure from "D" to "B" grade.
Government is a critical player, but it doesn't have the resources to do the job alone. Private capital is needed.
The $50 billion must be levered to have an impact. $50 billion in direct spending will fall far short.
Public facility bonds are good, but it will take more than this program to solve the problem.There are 45-50 projects that are accretive to the economy. The list includes new roads and funding for these projects is $200 billion.
The press release on Levenson's RBS hiring stated:
Levenson led the $1.83 billion sale of the Chicago Skyway and the $563 million sale of the Chicago Downtown Parking System to private investors. These landmark transactions, to monetise municipally-owned toll road and parking assets, represent the first of their kind in the United States.Chicago leased its parking meter concession for $1.15 billion in 2009. What happened to the money? Much of it has been spent. SunTimes reported:
The city will have just $76 million left from the 75-year, $1.15 billion deal that privatized Chicago parking meters. There will be $500 million remaining from the $1.83 billion deal that privatized the skyway for 99 years.
Chicago will have spent nearly $3 billion of the total $3.5 billion in infrastructure proceeds or 85% of 75-99 year money. That's front-loaded infrastructure spending.
Chicago's next Mayor will need to sell more public assets.
Asked what his successor should do with reserves largely depleted, Daley talked about reviving the $2.5 billion deal to privatize Midway Airport that collapsed in April, 2009 for lack of financing.
“You have the Midway Airfield deal very close, could be closed …. That’s a big asset, infrastructure [funding] coming into the city. ... It’s very close. That’s what we think the next mayor should do,” he said.
Rahm Emanuel is the perfect hawker for the job.
Update: WSJ did a piece on public infrastructure sales.