Picking Partners

Should the building of vital infrastructure be left to big business or big government?
February 2006
Alex Marshall
By Alex Marshall  |  Columnist
Senior Fellow at The Regional Plan Association in New York City

Take a pick ax to an older street in New York City, and underneath it you'll find gas, water, sewer, steam, phone and other lines and conduits--some active, some long abandoned--strewn around in what looks like a mess. Take a pick ax to a street in Paris, and underneath it you'll find bell-shaped brick sewers with water and various telecommunication lines housed in neat rows on the ceiling.

Why is the underground infrastructure in New York such a mess and that in Paris so orderly? The difference comes down to private versus public responsiblity for building infrastructure and the related efficiencies of each.

Throughout its history, New York, like most cities and states in this country, has encouraged, through direct funding and the consignment of rights of way, private companies to compete to build vital infrastructure. It's a habit we copied from our British parent.

Paris follows a different tradition. In France, the state usually takes the lead in designing, building and maintaining infrastructure. Baron Haussmann, the famous 19th-century civil administrator, built the spacious sewers, and in the modern era, state-trained engineers install in them new conveniences, such as fiber-optic lines. Repair and maintenance is relatively simple: The overall system is comprehensive and was designed with a mapping of responsibilities.

In contrast, repairing and maintaining infrastructure in this country is often expensive and time-consuming because it involves coordinating for-profit companies that own private lines under public streets. The systems are also vulnerable--remember the big blackout in 2003?-- because they are fragmented and less comprehensive.

What does this have to do with transportation? Roads, rails and airports also confront public officials with similar choices. As with other infrastructure, we have often chosen the private model over a public one. Private railroads--armed with government powers, money and land grants--developed the nation's rail system. The system was great in many ways, but it included deficiencies that we're still struggling to rectify. For example, the two biggest train stations in Manhattan, Grand Central and Penn Station, were each built a century ago with large amounts of public funding. But they don't connect to each other because their original private owners had no interest in making it easy to ride the competitor's trains. Now government is studying ways to connect them, at a cost of billions of dollars.

In the development of light and heavy rail systems, one of the current buzzwords is DBOM, which means having a private company design, build, operate and maintain a system. But a 15-year DBOM contract could leave a city vulnerable to paying high prices down the road for proprietary equipment. And it raises the question of whether the development of future lines will have to be with the same company so that systems can mesh.

The nation's road and highway system, built almost entirely by local, state and federal government, has been the big exception to private development. Before 1900, developing roads was primarily a county responsibility, but the federal government got involved early, leapfrogging over state governments. Since the 1890s, the federal government has helped fund and set standards for the

American road system. This resulted in the U.S. numbered highway system in the 1920s and the Interstate system in the 1950s, as well as in less obvious advantages, such as the development and dissemination of paving techniques.

The history of our nation's road system is ironic to me. Some influential commentators see it as a triumph of American individualism. In actuality, it's a product of big government.

But maybe not for long. Lately, states and cities have been turning to private development or operation as a way to save or earn money. Texas, where a belief in the efficiencies of the marketplace runs high, is asking a consortium of private companies to design and build an Interstate-style highway. Chicago has leased its "Skyway" highway to a private company for $1 billion. These experiments are not necessarily bad, but it's important that public officials pursue such plans with an eye on long-range costs and consequences: how a private road will be maintained; what paving techniques will be used; what condition a leased road will be in when returned to the government in 50 years; and what happens if a private company should go broke.

As to pricing on private roads, a policy being discussed involves using technology to charge drivers for the roads they use. Will this technology be proprietary and fractured among competing companies or open-sourced and available to all? That's a subject for another column.

Alex Marshall
Alex Marshall | Columnist | alex@rpa.org