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Welcome! I am very pleased that you are participating in this Infrastructure Summit. The Summit represents an opportunity for all of us to share thoughts and expertise concerning the building and rehabilitation of critical facilities that are crucial to our economic growth.
As we all know, investments in infrastructure result in job creation across the board. From direct employment on public works to the manufacturing of the provisions needed to complete the work, employment opportunities abound if infrastructure investment is managed properly.
With unemployment in Pennsylvania now at 8.3 percent and the national economy recovering slowly, we must do all that we can to put people to work immediately. Investing significant dollars in rebuilding our infrastructure is a meaningful way to ignite economic development and reverse a sagging economy.
Today’s panels cover transportation, utilities and information technology, public buildings and educational institutions, and housing and economic development. The panels include important leaders in academia, public service, labor, business, community and economic development, from across the region and nation.
The viewpoints we share and the information we convey in our discussions today will strengthen our resolve to make dramatic investments in our region. I am honored that you have decided to spend time today helping make this Infrastructure Summit a success.
Democratic Appropriations Committee
August County Unemployment Rates, Seasonally Adjusted
September 27, 2011
Comparison of August and July County Unemployment Rates, Seasonally Adjusted
September 27, 2011
Comparison of August 2011 County & State Unemployment Rates, Seasonally Adjusted
September 27, 2011
- Pennsylvania’s highway network is comprised of 40,000 state and 76,000 local miles and ranks as fifth largest in the nation for the number of state-owned highways. International
Roughness Index statistics show that 38 percent of Pennsylvania’s roads are rated fair or poor.
- According to a 2010 report on Pennsylvania’s infrastructure completed by the American
Society of Civil Engineers, Pennsylvania has approximately 22,280 bridges, 27% (approximately 5,205) of which are considered structurally deficient and 17% of which are deemed functionally obsolete.
- Despite increased use of mass transit systems, the infrastructure supporting mass transit systems is aged and will continue to age. There are approximately 37 mass transit systems
serving all 67 counties in Pennsylvania
- Pennsylvania has the fifth largest rail system in the U.S with approximately 5,145 routemiles
of freight railroad operated and 66 freight railroads.
- Pennsylvania’s ports do not have a direct funding stream which has lead to thedeterioration of the port’s infrastructure. Port cargoes and the activities they generate are responsible for thousands of direct and indirect jobs throughout the state. Pennsylvania needs to adopt a reliable and sustainable funding source for our ports.
Pennsylvania’s highway network is comprised of 40,000 state and 76,000 local miles and ranks as fifth largest in the nation for the number of state-owned highways. A national measure of road conditions called the International Roughness Index show that 38 percent of Pennsylvania’s roads are rated fair or poor. Truck traffic on Pennsylvania’s 1,754 miles of interstate roads, including the Turnpike, is more than double the national average and many of the state’s roads are at or have exceeded their design capacity. For FY 2011-12, $890 million is budgeted for repair, resurfacing, and reconstruction of Pennsylvania highways.
In 2010, the Pennsylvania State Transportation Advisory Committee issued a report that identified approximately $3.5 billion in annual need for Pennsylvania’s transportation systems, including over $2.5 billion for state highways and bridges and approximately $432 million for local roads and bridges. In 2011, Governor Corbett’s Transportation Funding Advisory Committee (TAC) estimated that the gap between funding and needs will continue to grow. It is estimated that $7.2 billion will be needed annually in 10 years if no action is taken.
Recent legislative enactments, including Act 44 of 2007 and the federal American Recovery and Reinvestment Act of 2009 (ARRA) were designed to provide funding for our transportation needs, but did not adequately address the problem. Act 44 created a funding stream that included borrowing by the Pennsylvania Turnpike Commission and the tolling of Interstate 80. However, because tolling Interstate 80 was contingent upon federal approval, the federal government’s rejection of the Commonwealth’s application to implement the tolls reduced the state’s transportation funding budget by $450 million annually. In addition, while ARRA provided more than $600 million for road projects in Pennsylvania, this one-time funding allocation was not designed to be a permanent solution. When ARRA funding was combined with Act 44 dollars, Pennsylvania was still far short of the estimated $2.5 billion needed annually to maintain our state’s roads.
Earlier this year, Governor Tom Corbett’s panel released a proposal (see Appendix) to generate revenues from a number of sources to begin rebuilding our transportation infrastructure. This includes increasing the Oil Franchise Tax among other proposals.
Under the proposal, funding for state and local highways and bridges would increase gradually over 5 years, beginning with an estimated $720 million generated in the first year. This revenue increases to $2.5 billion in aggregated available revenues by the end of the fifth year. The revenue is generated mainly through user fees.
While Governor Corbett has expressed concerns about some aspects of the recommendations, in late October, Senate Appropriations Committee Chairman Jake Corman (R-Centre) announced his intention to jumpstart the transportation funding debate by introducing legislation largely reflecting the proposal. With a limited number of session days remaining in 2011, it is likely that transportation funding will not be addressed until 2012.
Aside from funding proposals, the General Assembly has also looked at other possible avenues to address our transportation funding needs. For example, SB 344 and HB 3, which authorize the use of “public-private partnerships” to fund transportation projects, are currently under consideration in the Senate and House. These bills, sponsored by Senate Transportation Committee Chairman John Rafferty (R-Montgomery) and House Transportation Committee Chairman Rick Geist (R-Blair), have been under discussion for the past few legislative sessions. Legislation like this, if done correctly, can be a useful tool in addressing our transportation needs.
Our failing network of roads negatively impacts both our economy and environment. Investment in rebuilding that network would not only create jobs, but spur private sector job creation by building a first-class transportation network in Pennsylvania. Transportation funding needs to be a priority for the governor and the General Assembly.
According to a 2010 report on Pennsylvania’s infrastructure completed by the American Society of Civil Engineers, Pennsylvania has approximately 22,280 bridges, 27 percent (approximately 5,205) of which are considered structurally deficient and 17 percent of which are deemed functionally obsolete. Pennsylvania’s numbers in these areas are above the national average of 12 and 13 percent respectively. An October 2011 study by the Washington D.C. — based organization Transportation for America revealed that the Pittsburgh metropolitan region, at 30.4 percent, has the highest percentage of structurally deficient bridges in the nation.
Pennsylvania’s bridges, on average, are 50 years old. While the bridge inventory continues to age, PennDOT has focused on its accelerated bridge program. The Accelerated Bridge Program was instituted in 2008 to address the worsening conditions of Pennsylvania bridges. PennDOT developed a list of 1,145 structurally deficient bridges that need to be rehabilitated or replaced between 2008 and 2010. With the receipt of ARRA funds in 2009, Pennsylvania was able to dedicate approximately $390 million of that funding to bridges. For FY 2011-12, approximately $200 million has been appropriated to continue the Accelerated Bridge Program.
Governor Corbett’s TAC estimated Pennsylvania’s bridge funding needs at $370 million in 2010, increasing to $1.29 billion by 2020. Local bridge needs were included in an estimate of local highway and bridge additional needs of $250 million in 2010, increasing to $388 billion in 2020. Funding for these projects was included in the governor’s TAC that calls for generating up to $2.5 billion in new revenue by the fifth year of implementation.
The General Assembly and governor have in the past directed attention and funding to resolve a large backlog of bridge maintenance needs. PennDOT is anticipating being able to replace approximately 300 structurally deficient bridges in FY 2011-12, a reduction from 340 in the FY 2010-11 and 658 in the FY 2009-10. Also down significantly is the number of bridges per year that can be preserved. The department is anticipating preserving 210 bridges in FY 2011-12, down from 569 in FY 2009-10. According to Governor Corbett’s TAC, 300 structurally deficient bridges must be fixed each year or the structurally deficient bridge count continues to increase.
Promoting mass transit use has many positive effects, including decreasing traffic congestion, delaying wear and tear on our road and bridge network, and increasing air quality. In addition, state-supported transit providers and the extensive network of suppliers to the transit industry employ over 15,000 people.
There are approximately 37 mass transit systems serving all 67 counties in Pennsylvania. Pennsylvania’s transit agencies spend over $1 billion annually for operating expenses and approximately $500 million for capital costs.
According to a 2010 Transportation Funding Advisory Committee report, mass transit, at the time, faced an estimated, annual shortfall of $484 million. Without action, that shortfall was projected to increase to over $1.3 billion by 2020 and $3 billion by 2030. In 2009, transit agencies were provided a one-time infusion of revenue through ARRA as Pennsylvania received approximately $347M in federal stimulus funding for transit. However, transit funding remains a problem that cannot be ignored.
With the passage of Act 44 of 2007, the General Assembly dedicated dollars specifically for mass transit systems, including operating and capital costs. Under the law, mass transit systems were to receive $250 million initially, growing to $400 million with a 2.5 percent increase each year. Act 44 created a funding stream that included borrowing by the Pennsylvania Turnpike Commission and the tolling of Interstate 80. However, because tolling Interstate 80 was contingent upon federal approval, the federal government’s rejection of the Commonwealth’s application to implement the tolls reduced the state’s transportation funding budget by $450 million annually and reduced the funding available for transit significantly.
SEPTA, which serves the Philadelphia region, is the fifth largest transit system in the nation. SEPTA controls approximately 397 miles of track, including 31 miles of elevated track and 58 miles of underground track. It maintains approximately 304 bridges and tunnels with an average age of more than 80 years. SEPTA’s estimated capital improvement needs exceed $4 billion.
D. Freight Rail
Pennsylvania has the fifth largest rail system in the U.S with approximately 5,145 route miles of freight railroad operated and 66 freight railroads. The state has four Class I railroads—CSX, Norfolk Southern, Canadian Pacific, and Bessemer and Lake Erie Railroad Company(owned by Canadian National); two Class II railroads—Buffalo and Pittsburgh Railroad and Wheeling and Lake Erie Railroad; 36 Class III railroads, also known as short-line or local-linehaul railroads; and 24 local switching and terminal railroads.
In 2007, 201.6 million tons of freight passed through Pennsylvania. By 2035, that value is expected to increase to 246 million tons. Freight rail demand is growing and railroad traffic is steadily approaching WWII-era levels. Plus, drillers accessing natural gas in the Marcellus Shale have used rail to move heavy commodities and will likely need more capacity in years to come.
Pennsylvania’s rail freight system is generally in good condition. However, additional investment in rail infrastructure will be needed to meet growing demands. Most, if not all, infrastructure is privately owned. Therefore, many railroads, especially smaller railroads, lack the financial wherewithal to undertake infrastructure upgrades such as fixing and maintaining ties, track, bridges, switches and other assets.
According to the American Society of Civil Engineers report, projects that could be undertaken to address those needs total $280 million, while just the annual state of good repair track and bridge expenditures for all railroad classes within the state are projected to be approximately $560 million.
Since the Rail Freight Preservation and Improvement Act passed in 1984, the two main sources of funding for rail have been through the Rail Freight Assistance Program and the Capital Budget Transportation Assistance Program. After being removed from the FY 2010-11 budget, money for the Rail Freight Assistance program was restored for the FY 2011-12 budget. Pennsylvania needs to continue its commitment to rail freight improvements and continue to explore innovative funding options, including public-private partnerships.
Ports play an essential role in Pennsylvania’s economy. According to the American Society of Civil Engineers, the Port of Pittsburgh is the third busiest inland port in the nation and the 19th busiest port of any kind. At 38 million tons of cargo per year, it processes more tonnage than either the port of Philadelphia or St. Louis. The Pittsburgh port district encompasses a 12-county area in southwestern Pennsylvania and supports more than 200 river terminals and barge industry service suppliers. The port moves more than 38 million tons of cargo annually, which equates to $800 million in benefits to the region. More than $9 billion worth of goods moves along the waterways yearly through the Port of Pittsburgh District and 45,000 jobs in southwestern Pennsylvania are dependent upon the waterway transportation system.
The Philadelphia Regional Port Authority (PRPA) is an independent agency of the Commonwealth of Pennsylvania charged with the management, maintenance, marketing, and promotion of publicly owned port facilities along the Delaware River in Philadelphia, as well as strategic planning throughout the port district. PRPA works with its terminal operators to modernize, expand, and improve its facilities, and to market those facilities to prospective port users. Port cargoes and the activities they generate are responsible for thousands of direct and indirect jobs in the Philadelphia area and throughout the state.
PRPA recently commissioned a Strategic Facilities Assessment (SFA), which has become the centerpiece of a 10-year capital plan. According to PRPA, with the SFA recommending $300 million worth of facility improvements to enhance safety, cargo-handling efficiency and future cargo trends, the first phase of PRPA’s capital plan is now underway at the port. Pennsylvania is currently investing $85 million in the port’s facilities to assure that Philadelphia’s maritime industry will continue to be a major contributor to Pennsylvania’s economy.
Other notable projects being undertaken by PRPA include:
- Numerous landside and waterside improvements and repairs at Packer Avenue Marine
Terminal (PAMT), Tioga Marine Terminal (TMT), Pier 80 and Pier 82.
- Sprinkler system enhancements at both PAMT and TMT.
- Upgrading of sprinklers and fire alarms at Pier 82.
- Pier replacements at TMT.
These projects will not only result in more cargo-related jobs in the future, but will also immediately create many construction jobs.
Finally, perhaps the most notable project being undertaken is the Delaware River Main Channel-Deepening Project. This project began in March 2010 and will deepen the Delaware River from 40 to 45 feet to permit larger, more modern vessels with their increased loads of containers to travel to and from the Port of Philadelphia. One estimate says the deepening of the river channel will create more than 8,000 to 12,000 direct jobs, and indirectly contribute to another 38,000. On September 21, 2011, Governor Corbett released $15 million in state funding to continue the project.
Despite the investments noted above, the infrastructure supporting Pennsylvania’s ports is still severely deteriorated. For example, according to the governor’s transportation panel, in Pittsburgh 66 percent of the navigation structures (i.e., locks) have exceeded their design life of 50 years, with approximately 45 percent of those structures older than 75 years. The fact that ports do not have a dedicated funding stream contributes to this problem. Pennsylvania needs to adopt a reliable and sustainable funding source for our ports to update aging infrastructure.
PUBLIC UTILITIES / PUBLIC WORKS
Flood Control/High Hazard Dams
Public Utilities/Public Works Overview
- There is currently no dedicated funding source for the operation and maintenance of existing
storm water management systems, which will require $43.5 billion over the next 20 years.
- About 39 percent (302) of the state’s “high hazard” dams are considered deficient. Theestimated cost to repair all Pennsylvania dams is more than $1.4 billion over the next 5 years.
- To date, the CFA has approved almost $730 million for flood control and high hazard dam
projects across the Pennsylvania.
- It will be necessary to build new lines to maintain reliable and affordable electric service.
- There are roughly 12,000 miles of old cast iron-bare steel pipelines across the state. In Philadelphia, PGW has the sole responsibility for approximately 6,000 miles of gas pipeline that services 500,000 customers.
- The cost of replacing the aging natural gas pipeline system in Pennsylvania on anaccelerated basis would be around $12.5 to $15 billion.
A.Water and Sewer
Pennsylvania’s water management systems are aging and in desperate need of repair, as evidenced by the American Society of Civil Engineers’ 2010 Report Card which gave Pennsylvania an average grade of a “D” for its water-related infrastructure. It is projected that the state will face an unmet need of $15.5 billion over the next 20 years for its drinking water systems and an unmet need of more than $28 billion over the same period of time for its waste water systems, which discharge billions of gallons of untreated sewage into surface waters each year.
The American Recovery and Reinvestment Act (ARRA) of FY 2009-10 combined with PENNVEST funding resulted in grant and loan awards for waste water and drinking water projects amounting to $221 million dollars. The ARRA funding, coupled with the $800 million dollar H20 Pennsylvania grant program was a significant increase over 2008. However, this was a one-time infusion of funds. Despite this infusion of dollars, Pennsylvania will fall short of meeting its annual funding needs for drinking water and waste water systems.
If Pennsylvania fails to meet its investment needs of the next 20 years, it risks reversing the public health, environmental and economic gains of the past three decades. Funding research into new wastewater treatment technology and reducing water waste and consumption will help reduce costs, but construction and repair of drinking water and waste water facilities will require a steady source of funding.
Storm water infrastructure is vital to providing and maintaining safe drinking water supplies and a healthy environment. Approximately 84 percent of Pennsylvania’s population relies on surface water for their drinking water supply. Chemical and biological contamination from storm water runoff can endanger this. The primary obstacles to improving the state’s storm water infrastructure are that there is no dedicated funding source for investigation, operation and maintenance of existing systems; no funding for taking the next step to improve water quality as well as manage water quantity; and little to no regulatory oversight of storm water systems.
Municipalities need to understand the existing systems and how they operate within the traditional watershed boundary by: mapping out their storm sewer systems and determining where their storm water pipes are discharging as well as the condition of their storm water system. Municipalities and watershed units need to work together to model and plan for the improvement of existing and future storm water infrastructure and determine realistic costs to implement comprehensive, watershed-based storm water management.
B. Flood Control/High Hazard Dams
Due to the establishment of the Pennsylvania Department of Environmental Protection’s Dam Safety Program in the late 1970s, Pennsylvania has remained ahead of other states in dam safety. However, about 39 percent (302) of the state’s “high hazard” dams—dams whose failure would cause probable loss of human life and substantial property damage—are considered deficient. The estimated cost to repair all Pennsylvania dams projected to be found deficient over the next five years is more than $1.4 billion. There are 64 levee systems in Pennsylvania, and the average age of those systems is 43 years.
The H2O PA Act was established by the General Assembly in July 2008 and provides single-year or multi-year grants to independent agencies, municipalities or municipal authorities via the Commonwealth Financing Authority (CFA). These funds have been approved for construction, improvement, repair or rehabilitation of flood control and high hazard dam projects. To date, the CFA has approved almost $730 million for projects across Pennsylvania.
The state’s Public Utility Code requires its public utilities to furnish adequate, efficient and safe utility service and facilities. An important component of electricity infrastructure is transmission lines that transport electricity from generating plants to the areas in which it will be used.
In areas served by organized wholesale electricity markets, such as Pennsylvania, an inadequate transmission system will lead to congestion charges that increase the price of electricity to customers, and more serious inadequacies could threaten the reliability of electricity service.
After a 20-year decline, investment in transmission has increased recently. This increase is due in part to the federal Energy Policy Act of 2005, which established financial incentives.
However, it will be necessary to build new lines to maintain reliable and affordable electric service, and the General Assembly should consider this need in establishing public policy.
There are 46,000 miles of gas pipeline in Pennsylvania. The Pennsylvania Utility Commission(PUC) Gas Safety Division is responsible for monitoring the safety of the pipeline. This division consists of eight safety inspectors who inspect the pipelines for 36 distribution utilities as well as seven intrastate pipelines. The eight safety inspectors are part of an agreement with the U.S.Department of Transportation pipeline safety program – Pipeline and Hazardous Materials Safety Administration (PHMSA) whereby the PUC assumes inspection and enforcement responsibility with respect to intrastate facilities over which it has jurisdiction under state law.
The PUC only has jurisdiction to regulate and inspect gas lines that are defined as public utility gas pipelines. The PUC does not have authority to inspect non-public utility pipelines. These pipelines are under federal jurisdiction, specifically the U.S. Department of Transportation, PHMSA.
The majority of Pennsylvania’s utility infrastructure is more than 70 years old. With respect to natural gas pipelines, there are roughly 12,000 miles of old cast iron-bare steel pipelines across the state.
In Philadelphia, the Philadelphia Gas Works (PGW) has the sole responsibility for approximately 6,000 miles of gas pipeline that services 500,000 customers. PGW has the highest percentage of cast iron mains in Pennsylvania at 52 percent. The UGI service territory has only 400 miles of cast iron pipe in the ground. The industry average in Pennsylvania is 22.46 percent cast iron.
Of the 6,000 miles of gas pipeline within Philadelphia, 1,570 miles of old cast iron-bare steel pipeline needs to be replaced. Presently PGW has been tackling this project at a rate of 18 miles per year.
Replacing public gas line infrastructure is extremely costly. The cost of replacing the aging natural gas pipeline system in Pennsylvania on an accelerated basis would be around $12.5 to $15 billion. Pennsylvania has roughly 3.2 million natural gas customers, which means this undertaking would cost ratepayers about $4,700 per household.
PUBLIC BUILDINGS / EDUCATIONAL INSTITUTIONS
Public Buildings / Educational Institutions Overview
- A 2008 state-by-state assessment on school infrastructure funding showed Pennsylvania
ranked 7th among the 50 states in terms of identified need.
- Numbers for 2008 showed a funding need of $9.26 billion.
- The average age of Philadelphia school buildings is 61.26 years and the median is 59.50 years.
- The School District of Philadelphia will be looking to sell some of its buildings, however the remaining buildings will have infrastructure needs, estimated at $1.57 billion, including new construction, major renovation, repair and modernization, and deferred maintenance.
- Since 1996, PASSHE has expended over $1 billion for renewal and construction of existing academic facilities. The state has appropriated approximately $910 million.
A recent Pennsylvania Department of Education report from the Division of School Facilities rated fewer than 6 percent of schools in poor condition, with 28% rated as fair, 36% good and 30% excellent. However, a clear picture of Pennsylvania’s school infrastructure can only emerge with greater participation in surveys. Currently only 55 percent of school districts and 44 percent of Career and Technical Centers report information to PDE.
Also, according the report:
- Among school districts, the largest amount of new construction took place when 457 buildings were constructed in the 1950-59 period and 340 buildings were constructed in
the 1960-69 period.
- Among school districts, 76 percent of 1,040 buildings have been renovated or hadmajor additions since 1990.
- 72 percent of all school buildings were constructed before 1980. Only 18 percent of all
reported buildings were constructed in 1980 or later.
Funding for school construction is provided by short-term loans, grants, and general obligation bonds managed by local districts, career/technical centers and charter schools. Not all short-term and general obligation bonds are used exclusively for building and infrastructure improvements. Additional assistance is provided by the PA State Public School Building Authority and by the Governor’s Green Government Council School Planning Grants.
A state-by-state assessment on school infrastructure funding needs entitled Building Minds, Minding Buildings – American Federation of Teachers, was completed in December 2008. Pennsylvania ranked 7th among the 50 states in terms of identified need. Numbers for 2008 showed a funding need of $9.26 billion; in 2001 the number was $8.47 billion.
With the passage of Act 25 0f 2011, almost all costs of school construction projects are subject to referendum approval by the voters, assuming the costs of such construction would require property taxes to be raised above the set index for that year. School construction projects are often controversial at the local level. Eliminating the reasonable exception for construction contained in Act 1 of 2006 will undoubtedly make it more difficult for school districts to build or renovate their physical plants.
School District of Philadelphia
The School District of Philadelphia released a report in 2008 which looked at supply and demand – seats and students – using data from the 2008-09 school year and projecting to the 2013-14 school year; the purpose of this report was to provide background information for effective facilities planning.
The School District of Philadelphia is currently engaging in a comprehensive facilities master planning process titled, “Imagine Great Schools.” This critical initiative is a key component of the District’s five-year strategic plan, Imagine 2014, and was created to provide a roadmap for the District to review its education offerings and facilities to determine necessary right-sizing adjustments and help guide where future investments need to be made.
The average age of Philadelphia schools is 61.26 years and the median is 59.50 years. the National Center for Education Statistics listed the following industry standards in an overview of the age of schools: At 20 to 30 years, frequent replacement of equipment is needed in schools; at 30 to 40 years, original equipment should have been replaced, including the roof and electrical equipment; between 40 and 60 years, a school building deteriorates rapidly; once they reach 60 years of age, most schools are abandoned.
Overall, the School District of Philadelphia has more school capacity than participating students. It currently has an excess of approximately 40,000 seats, and this excess is expected to grow. As a result, the District is in the process of consolidating its school buildings.Although the District will be looking to sell some of its buildings, certainly the remaining buildings will have infrastructure needs, estimated at $1.57 billion, including new construction, major renovation, repair and modernization, and deferred maintenance.
B. State System of Higher Education
The Pennsylvania State System of Higher Education (PASSHE) comprises 14 universities with nearly 120,000 students. Enrollment has increased steadily every year for more than a decade and is at historically high levels. PASSHE receives approximately one-third of its annual operating budget through a state appropriation and the remaining two-thirds from tuition, fees and other sources.
PASSHE’s capital budget is funded from two main sources: Commonwealth funds and university funds. Currently, Pennsylvania provides $130 million annually toward capital construction and improvements for academic facilities. The universities’ contributions vary annually depending on needs and available funds. Since 1996, PASSHE has expended over $1 billion for renewal and construction of existing academic facilities. The state has appropriated approximately $910 million.
Act 45 of 1999 – known as the Uniform Construction Code (UCC) – provides for a set of standards by which new building construction, safety and maintenance are measured. Specific areas of regulation include, but are not limited to: permits, fire safety, utilities, accessibility for the physically and mentally disabled and energy use.
According to the Pennsylvania Department of Labor and Industry, of the 2,652 municipalities in Pennsylvania, over 90 percent have elected to locally administer the regulations of the UCC. The department is responsible for those municipalities that opt-out of local enforcement. Regardless of the status of local enforcement, municipalities are required to make copies of their building plans and review documents available to the department for its consideration.
The Pennsylvania Department of Community and Economic Development’s Infrastructure and Facilities Improvement program offers local authorities and partnerships help to offset infrastructure, maintenance and improvement costs associated with the construction of facilities such as hospitals, convention centers or other constructions. These projects fall under the purview of the municipality or a partnership in which the municipality is involved. The FY 2011-12 budget appropriated $19.4 million to the Department of Community and Economic Development for Infrastructure and Facilities Improvement Grants. This represents a 28.8 percent decrease from the previous fiscal year’s appropriation.
The Department of General Services oversees the maintenance and construction contracts for Commonwealth-owned and leased buildings. The Department includes a division for Property and Assets Management that oversees the maintenance of properties and facilities, including government buildings. To implement these operations and the associated contracts, the FY 2011-12 budget allocated approximately $68.7 million to “General Government Operations” (a 2.7% reduction from the previous year) and approximately $25.9 million to cover utility costs (a 3.7% reduction from the previous year).
In 2000, United States Green Building Council released a set of standards by which the
environmental sustainability and efficiency of buildings could be measured. The Leadership in Energy and Environmental Design (LEED) program established a rating system for the construction of both commercial and residential buildings. This LEED system measures aspects such as water use, air quality, materials and resources used, indoor air quality and more. Pennsylvania has made a push to encourage businesses, government entities and educational institutions to become greener and achieve LEED certification in Pennsylvania.
Data from November 2009 reports that there were 586 buildings in Pennsylvania that have
been registered with the LEED program. Additionally another 182 buildings have received a
LEED certification or have been given bronze, silver or platinum LEED distinctions to recognize their excellence in sustainable, green design.
Pennsylvania has been setting the example for green government for several years prior to
the establishment of the LEED program. In 1998, Governor Tom Ridge issued an Executive
Order establishing the Governor’s Green Government Council, which was charged with seeking ways to make the function and facilities of Pennsylvania’s government greener. That same year, the first state building identified as “green” – the Department of Environmental Protection’s Southeast Regional Office building – was dedicated. Since then, the state has taken further steps to encourage its operations to become greener, including establishing a green procurement program in the Department of General Services. The green procurement program is aimed at providing Pennsylvania with sourcing options and vendors that are committed to environmental sustainability and energy efficiency.
Changing the ways we design, build and operate buildings throughout Pennsylvania is one of the most significant ways to impact both the energy and environmental challenges facing the entire state and municipal governments. Research has shown that green buildings not only improve human health and productivity, but also promote economic benefits and job creation. The broader challenge, however, is to ensure that regulatory, management and funding institutions work in concert to promote the use of green building infrastructure.
Funding Green Buildings
Pennsylvania has introduced a number of grants and incentives to encourage green building in the commercial and residential sectors. Some incentives are awarded at the state level, and others apply to specific counties or municipalities. Opportunities for green builders in Pennsylvania include monetary grants, utility rebates and density bonuses.
The Department of Community and Economic Development offers state-level grant programs for green projects, including the High Performance Building Incentives Program. This program is available for residential and commercial buildings and awards funding up to $500,000 for energy efficient new construction or building renovations. The projects must be LEED-certified.
Pennsylvania’s Green Building Alliance (GBA) awards micro-grants through its JumpStart Program. Funding of up to $9,000 can be awarded to help businesses explore green-building alternatives and research how they can contribute and be a part of green initiatives. The GBA’s Product Innovation Grants are larger awards that fund companies that want to create greenbuilding products. The purpose of the funding is to take green-building products from the concept stage to the market. There are also grants available through the Sustainable Energy Fund for local companies looking to increase energy efficiency in certain municipalities and regions of Pennsylvania.
Regional and Municipal Grants
Pittsburgh has developed a unique green-building initiative called Sustainable Development Bonuses. These bonuses are allowed under a revision to city development codes. The bonuses permit increased floor area and allow for relaxed restrictions on building height for developers with LEED-certified projects. There are also grants available through the Sustainable Energy Fund for local companies looking to increase energy efficiency in certain municipalities and regions of Pennsylvania.
Utility grants and rebates are common in Pennsylvania, and there are several initiatives in place to help green builders. The LEED Certification Partnership Program, put forth by PPL Electric Utilities, helps builders pay for the costs of LEED certification. Several power companies also award grants to homeowners who complete renovations to make their homes more energy-efficient.
Pennsylvania is also challenged by historical patterns of funding water management that have prioritized wastewater treatment and drinking water delivery over stormwater management.
Traditionally, funding has also favored hard structural solutions to management rather than nonstructural or “green” practices that address the problems associated with runoff at its source.
According to a report issued by Green Rivers on Green Infrastructure in Pennsylvania, cities around the country, with Philadelphia leading the way, are integrating green infrastructure into city planning to reduce combined sewer overflows and stormwater pollution and increase green space.
Housing Trust Fund
- The September HUD Census Report showed a 4.9 percent growth in housing unitauthorizations from August to September in the Northeast Region.
- The PHFA has created key programs that facilitate the rehabilitation of existing properties that are either not suitable to be sold or do not meet certain codified standards for dwellings.
- Pennsylvania and the federal government provide multiple incentives for Pennsylvanians to make their homes and lives more energy efficient.
- The Housing Trust Fund provides a mechanism for county commissioners in 66 of the 67 counties (all except Philadelphia County) to provide assistance on a more local basis.
A. New Housing
On October 19, the US Department of Housing and Urban Development and the US Department of Census released the September new residential construction statistics. The report divides the country into four regions – Northeast, Midwest, South and West – and measures the new building permits authorized as well as housing starts and completions.
In September, the Northeast region (which includes Pennsylvania) had 64,000 total housing unit authorizations, which represents a 4.9 percent growth from the previous month. Of those permits, 62,000 housing units began the construction process, a 12.7 percent rise from August. Additionally, there are 88,000 units currently under construction (a 4.3 percent decline from August) and 131,000 total housing units were completed in September.
Nationally, September saw modest growth in the housing market. This can be attributed to the lower cost of goods and borrowing capital. The national number of building permits is approximately 5 percent lower than in August, but 5.7 percent higher than in September 2010. National housing starts and completions have also risen in comparison to both August 2011’s and September 2010’s figures. The Northeast region’s permitting and new home construction completion figures grew the most in September 2011; however, its housing starts lagged behind the South and West.
While the figures on new housing show some promise in economic recovery, it is important to contrast this with comparative foreclosure rates. According to RealtyTrac, a site dedicated to monitoring foreclosure rates and sales trends, when compared to the South and West, the Northeast has fared better as a region with regard to foreclosures. Pennsylvania currently ranks 14th in the country in foreclosures, with one in every 1,869 housing units receiving a foreclosure notice in September 2011 (2,953 total foreclosure notices). Within the state, the southeast region has seen the highest foreclosure rate. Philadelphia County ranks the highest in foreclosures with 597 notices; Delaware County ranks second with 350; and Montgomery County ranks third with 217. The City of
Pittsburgh had 99 foreclosed properties and the City of Harrisburg had 124 foreclosed properties.
The Pennsylvania Housing and Finance Agency (PHFA) not only focuses on homeowner aid through mortgage support and housing location services, but it also has created key programs that facilitate the rehabilitation of existing properties that are either not suitable to be sold or do not meet certain codified standards for dwellings. The Homeowner Choice Programs (HCP) provide individuals and business entities with capital to rehabilitate homes and mixed use facilities. Within these programs is the Neighborhood Revitalization Initiative, which is intended to encourage municipalities to rehabilitate vacant residences within urban centers. While not for use to create rental properties or for current homeowners to renovate their homes, this program has aided in the rehabilitation of homes since its inception in 2004.
The Mixed Use Facility Financing Initiative began in 2003 to provide assistance in the redevelopment of vacant storefronts in urban centers. Through this program, the Initiative provided assistance to rehabilitate upper floors of those buildings for residential use. In addition to the HCP, the PHFA also implemented the Commonwealth Cornerstone Group (CCG), a not-for profit entity that provides loans to rehabilitate real estate in high-impact areas. From 2008-2010, the CCG helped finance over $97 million in projects, including mixed-use properties. During the first seven years of the HCP, $72 million in PHFA investments have translated to $462 million in the development/ improvement of residential properties and infrastructure needs, while bolstering economic development in Pennsylvania.
Federally, the U.S. Department of Housing and Urban Development’s 203k Rehab Program provides further assistance to rehabilitate homes. The 203k Rehab Program can be used in conjunction with other state and local assistance organizations.
C. Energy Efficiency
To offset the rising costs of energy and reduce overall consumption, Pennsylvania and the federal government provide several incentives for Pennsylvanians to make their homes and lives more energy efficient. Programs range from alternative energy production incentives for businesses, to tax rebates for the purchase of energy efficient appliances, to loan programs for energy improvement projects. The U.S. Department of Energy provides incentives for improvements to both the interior and exterior of the home. Eligible improvements include windows, doors, skylights, roofs, insulation, water heaters, HVAC, geothermal heat pumps, solar panels, wind energy systems, biomass stoves and plug-in electric vehicles.
Pennsylvania offers many incentives to residents looking to reduce their consumption and
increase efficiency – most notably, the Department of Community and Economic Development’s Alternative and Clean Energy Program. This provides loans and grants to businesses, political subdivisions and economic development organizations to build, improve or renovate existing properties to increase energy efficiency and construct new clean energy and conservation projects. Eligible projects include facilities and components that use biomass, wind, geothermal and alternative fuels; energy efficient lighting in municipal buildings, schools and traffic lights; as well as finding other ways to increase the efficiency of energy use in municipalities and businesses across the state. Grants of up to $2 million and loan/loan guarantees up to $5 million can be awarded to eligible entities’ projects. DCED also oversees separate Solar Energy and Wind and Geothermal grant/loan programs.
A major source of financial assistance for residents and businesses to improve their energy efficiency is through the Energy Works program. This program partners with the Pennsylvania Department of Environmental Protection, the PHFA and the Pennsylvania Treasury to provide Pennsylvanians with secured and unsecured loans to improve their energy efficiency. Eligible improvements include upgrades to the entire facility such as air sealing and insulation, and alternative energy source implementation.
D. Housing Trust Fund
In response to the increasing need for safe, affordable housing for low income individuals and families, the Pennsylvania legislature passed, and Governor Edward G. Rendell signed, Act 105 of 2010, known as the Housing Trust Fund. The Housing Trust Fund was set up to provide funding in 66 of the 67 counties, all except Philadelphia County, which has its own separate Housing Trust Fund. However, the Housing Trust Fund has yet to be capitalized.
The benefits of capitalizing the Housing Trust Fund can be seen in what was accomplished when a version of the Fund was enacted by the General Assembly and Governor Robert P. Casey in Act 137 of 1992 that was subsequently repealed in 2005. According to the Pennsylvania Housing Finance Agency, which oversees the Housing Trust Fund, over half of Pennsylvania’s counties had raised more than $125 million to implement the fund’s goals. The Housing Trust Fund’s components included home rehabilitation projects, first time home buyer initiatives, housing counseling programs, emergency repair, closing cost assistance, bridge loans and rent assistance. Additionally, some counties had allocated Housing Trust Fund resources to senior and disabled citizens’ housing assistance, Habitat for Humanity projects, domestic violence victim housing and transitional housing.
The U.S. Department of Housing and Urban Development established a national Housing Trust Fund as a component of the 2008 Economic Recovery Act. For FY 2011, the Department has requested an allocation of $1 billion, with 80 percent of the budget to be used for rent assistance. These funds are to be provided to state and state-run entities to aid in their quest to provide safe and affordable housing to low-income people. The federal program’s focuses include providing equity investments, loans or advances (interest bearing and non-interest bearing), financing costs, operating costs for rental units and demolition.
ECONOMIC DEVELOPMENT INVESTMENTS
Economic Stimulus Package
A $2 billion economic development program that created the Commonwealth Financing Authority to oversee numerous economic development programs, including Business In Our Sites (site development), First Industries (Agriculture and Tourism), and Venture Capital and Venture Guarantee Programs.
With the legalization of slot machines in 2004 and table games in 2010, the Pennsylvania’s gaming industry has created tens of thousands of jobs directly and indirectly related to the gaming industry, including thousands of construction jobs.
Gaming tax revenues dedicated to economic development leveraged over $1 billion in investment in Philadelphia and Allegheny counties, including expansion of the Philadelphia Convention Center and the construction of the Pittsburgh Penguins arena. Gaming tax revenues returned to host counties and municipalities provided millions in investment at the local level.
Growing Greener II
A $625 million bond issue for environmental initiatives has provided substantial investment in protecting our environment.
Act 44 of 2007 (Transportation Funding)
Act 44 has provided over $1.5 billion in investment in road, bridges and mass transit since its
inception. However, because the federal government has rejected the state’s application to toll Interstate 80, a funding gap of pproximately $450 million exists in the original Act 44 funding plan.
H2O PA re-directed gaming revenues for debt service related to an $800 million water and sewer bond issue for projects throughout the Commonwealth (excluding Philadelphia and Allegheny County).
Act 1 of 2008 (Alternative Energy Investment Act)
Act 1 provided for a $500 million bond issue for alternative energy projects, including solar, wind, green buildings and other alternative energy projects.
by Ben Franklin Technology Partners
Next Generation Infrastructure
and the Commonwealth of Pennsylvania
Pennsylvania is uniquely positioned to be a leader in infrastructure technology development and commercialization. We have the inherent assets including our research universities and large anchor companies. We have legacy programs managed by DCED, DEP and PennDot that can provide much needed capital and services within the industry. This is an opportunity for PA to once again be an industry leader by seizing and opportunity to promote funding and environment for infrastructure technology companies. These companies will assist the industry in stronger, better and longer lasting materials and systems for infrastructure.
The Problem – and the Opportunity
The general state of infrastructure in the U.S. is frequently described as a crisis. Periodic high-profile tragedies such as the August, 2007 Interstate 35 bridge collapse in Minneapolis, but attention typically soon wanes. The deterioration of our infrastructure (whether from a capacity viewpoint or a physical one) threatens the country’s economic competitiveness and quality of life.
The magnitude of the problem is staggering. The American Society of Civil Engineers estimates that corrective action would require $1.6 trillion over five years. Selected other measures include (from ASCE’s Infrastructure Report Card 2005):
- 27% (70,000) of the nation’s bridges were structurally deficient or functionally obsolete; in
Pennsylvania, the figure is 39%;
- 3,500 “unsafe” dams, 725 of which are in Pennsylvania; Given the Commonwealth’s history
(e.g. Johnstown, 1889 and Austin, 1911) this issue has a particular poignancy;
- Highway congestion costs the nation $67.5 billion annually in lost productivity and wasted fuel (pro-rata to PA is $2.8 billion);
- The nation’s 16,000 wastewater treatment systems; older generation systems date from earlier in the 20th Century, and many-more recently constructed are over 30 years old. The EPS estimates a required investment of $390 billion over the next 20 years to replace and
Technologies and Infrastructure
While much of physical infrastructure is thought to be “low-tech”, civil and structural engineering have historically sought to deploy technological advances in materials and design.Technological advances in the last quarter-century have created a new layer of components that are becoming ever more critical.
Technologies for Next-Generation Infrastructure tend to fall into two broad categories: those applicable to directly improving the characteristics, longevity, and performance of the infrastructure (e.g. materials) itself and those that help monitor, detect, inspect, and evaluate
(e.g. sensors). Some examples of specific technologies include:
- Traffic monitoring and flow control technologies (intelligent transportation systems)
- Sensors— Load, stress, acceleration, displacement, and vibration detection & monitoring;
Crack detection and monitoring; Seismic
- Wastewater and hazardous waste treatment technologies (including nanotechnologies)
- 3D imaging, laser scanning, ultrasonic testing, infrared detection/sensor systems
- Tracking technologies (especially in materials supply chain)
- Materials— Analysis; Extended-life and increased functional capabilities
- Geospatial Information Technologies
- Power Grid monitoring software and hardware
- Security Applications
Pennsylvania Assets & Strengths
Pennsylvania assets include a number of university-based research and development centers dedicated to not only traditional civil engineering, but also the development of applicable technologies. These centers would serve as a critical underpinning of development and commercialization of next-generation infrastructure technologies. PA also had a continuum of capital and services as these technologies grow to viable companies. Programs managed by DCED, DEP and PennDot help companies and technologies develop in PA.
The Ben Franklin Technology Partners already support many companies all over the state that are commercializing infrastructure technologies.
A number of larger companies headquartered in Pennsylvania are directly involved in developing and applying advanced infrastructure capabilities (e.g. Bentley, High Concrete Group, Total Transit Systems/Bombardier Transp, Modjeski & Masters, US Steel, Boeing Phantom Works, Gannett Fleming, Air Products). Many of the larger companies with operations in Pennsylvania are already affiliated with the Pennsylvania Infrastructure Technology Alliance (PITA).The Pennsylvania Infrastructure Technology Alliance (PITA), a partnership of Institute for Complex Engineered Systems (ICES) at Carnegie Mellon University, the ATLSS Center at Lehigh University, and DCED, also includes other universities and private sector interests on a range of projects. Whether replicated, expanded, or serving as a central asset among many in the Commonwealth’s approach to next-generation infrastructure, PITA demonstrates that a degree of organizational capacity already exists and may form the nucleus of a broader statewide effort.PITA’s sole mission is to develop and commercialize technologies in the infrastructure market.
Entrepreneurial Opportunities and Capabilities
Similar to any other market and/or technological base, Next-Generation Infrastructure affords the Commonwealth a myriad of opportunities to nurture and showcase growing small and medium-sized companies.
Entrepreneurs and small companies are often the link between translational research and development, and by definition are a key component to commercialization of technologies emanating from the universities – and sometimes spinning out from larger companies.
The Commonwealth supports a comprehensive system of economic development organizations that provide a spectrum of services, assistance, and investment. These systemic capabilities, combined with the Department’s focus on Advanced Manufacturing and Materials, Next Generation Electronics, and the Energy Independence Initiative, Rebuild PA clearly show the potential for synergies among and between various Commonwealth programs and initiatives, various research assets, and the private sector.
Furthermore, the unique, signifying aspect of next-generation infrastructure development (as opposed to most other “high-tech” initiatives) may well be the potential for the Commonwealth’s own infrastructure problems to provide virtually countless opportunities to be a test-bed for newer infrastructure technologies.
- Infrastructure is an emerging crisis that will cost many billions of dollars to rectify
- The condition of a state’s infrastructure may well become a deciding economic development differentiator extending well into the 21st Century
- Pennsylvania, given the age of its infrastructure and its topographic characteristics, will likely even have more severe problems over the next 20 years than the national “average”
- Next-Generation Infrastructure, using existing and to-be-developed technologies, will help extend the life, minimize costs, and develop better-performing and more economical replacements or enhancements to the existing infrastructures
- The Commonwealth has an opportunity to take advantage of the economic development potential associated with developing Next-Generation Infrastructure, as it possesses a wealth of assets including:
— Major universities and research centers in engineering and IT
— Legacy large-companies already working in the field
— Other industrial assets that provide unique capabilities
— Entrepreneurial infrastructure, via DCED, BFTDA, BFTP programs, IRCs, Business
assistance programs and cross agency cooperation with DEP and PennDot – that is
unique in the nation
- Pennsylvania’s aging infrastructure affords the opportunity to be a test-bed for new technologies, as well as an “early adaptor” of those technologies.