Matthew Chudoba is a strategic communications professional who works for a Norwalk-based communications firm. He graduated from the University of Connecticut in 2009 with a degree in Journalism.

Infrastructure in the words of a person who knows the topic better than anyone

Norman Anderson, Chairman and CEO of CG/LA Infrastructure, sits down for an exclusive interview to discuss CT2030, user fees, alternative funding sources and more

Norman Anderson (R) with General David Petraeus, Partner at KKR and member of CG/LA-developed National Infrastructure Performance Council

Since the Lamont administration came into office in January, it has made investing in our deteriorating infrastructure (rated a “C-” by the American Society of Civil Engineers) a fundamental priority.

Over the past eleven months, we have seen ideas flown around from both sides on how to get it down – some realistic, other pure gimmicks (like relying on funds from legalized marijuana or sports betting). The only idea in which we have seen that makes total sense and will truly lead to improving the economic vibrancy in Connecticut and the health and mobility of Nutmeggers are user fees like tolls.

To help provide more clarity on infrastructure and the important role it has in revitalizing and solidifying a society for years to come, I sat down with Norman Anderson, Chairman and CEO of CG/LA Infrastructure (“CG/LA), an authority on infrastructure strategy and project development. Norman has spent almost his entire distinguished career involved in infrastructure in some capacity, and served as a Peace Corps volunteer in Paraguay prior to that. He has a graduate degree from Harvard University and an undergraduate degree from the University of Virginia.

At CG/LA, the firm he founded over 30 years ago, he focuses on infrastructure project creation, aimed at increasing the level of infrastructure investment, and the performance of existing infrastructure

stocks, in developed and developing countries alike. He leads the CG/LA team that develops infrastructure projects globally; and provides high-level strategy assessment for the public (cities, states, countries) and private (finance, E&C, equipment/technology) sectors. He is a visiting professor in the Politecnico de Madrid, a regular contributor to AmericaEconomia, and the World Economic Forum’s Global Agenda Council on the Future of Sustainable Construction. He is also an Advisory Board Member of The Center for Transformation and Strategic Initiatives (London/Washington).

What follows is a Q&A as a result of our conversation. It has been edited for length, style and clarity.

You’ve been involved in the planning and coordination of some of the most complex infrastructure improvement projects around the world. Tell us why investing in infrastructure is so important and how it unlocks economic growth.

It’s unbelievable. It underlies everything that we do – mobility, health and a strong tax base. There’s two other pieces that I think are really important. One, we all compete for investments. If you look at where investment is going in the U.S. in terms of manufacturing, 95 percent of it is going to the South for all sorts of different reasons, but one of them is because the infrastructure is better and is newer. So if you’re going to try to attract real investment, you better have top quality infrastructure. The second piece of course, is it’s a quality of life issue. Not only can you think about starting a business when you have reliable electricity and good water, you can attract employees because they like to live in places where they can get around and are reasonable in terms of cost. If a place is falling apart, you can’t do that.

We call it strategic infrastructure. If you look at most of what you see in terms of the public apparatus in the U.S., there’s public works committees, Senates and Houses of Representatives. Nobody thinks of infrastructure as strategic—or at least if people do—the public sector hasn’t caught up with that yet. Infrastructure is absolutely strategic and the decisions you make now determine how people are going to live for the next 30 or 40 years, so they are really, really important decisions.

How did the governments at home and abroad react to people who thought infrastructure spending was a waste of money or too expensive in your experience?

There’s always push back. There's all sorts of reasons, but it's an interesting phenomenon because there's a giant asymmetry. You can have, for instance, 98 percent of the people who support a project, and 2 percent can stop the project in its tracks especially if there's private investment involved. They can kill the project, because, for the public sector it takes an average of nine-and-a-half years to get a project approved. The public sector at some level doesn't care. This is sort of free money. For the private sector, that’s theft. If you take nine-and-a-half years, somebody's going to go away. They're not going to do that project and the next person isn't even going to think about getting involved in that project. So you have a real issue and we see that everywhere, where the power of minorities to stop projects is just extraordinarily large.

Just to give you a sense of how weak the federal government's role in infrastructure is now, in 1980, in transportation, 80 percent of infrastructure projects in the U.S. happened because of the federal governments’ transfer of funds. Now it's only 30 percent, so it's almost completely reversed and the real weight of investment sits on states and municipalities, who are least able to defend themselves and also don't have that sort of—I'll use the term—strategic power of helping people understand this is actually critical for the country. This is a public good. This is a common good. It is not some sort of narrow individual good. So that's where I see a huge problem. And I think what we have to do is start a conversation in this country about infrastructure, what we really want to see and how we all benefit from it. On one hand, everybody gets pretty angry when small groups of people block a project that can help a large number of people. But on the other hand, everybody has to have a voice in this conversation. And if they don't feel like they have a voice, they're going to block a project. So we need to change how we think about infrastructure. We need to change the way our democracy deals with the issue of infrastructure.

In your opinion, what are the best methods for implementing a dedicated and reliable source of funding for infrastructure?

What's fascinating about the U.S. is in 1956, we invented the gas tax, which has essentially given us “free infrastructure.” At least that's the way we think about it. But now, we haven’t raised the gas tax since 1992, so whereas before the gas tax would essentially cover 100 percent of our transportation needs, it now covers only about 30 percent. I was speaking at a trucker’s event in July and one of their top lobbyists got up said that their number one priority was to raise the gas tax. I got up after him and said that's not going to happen and asked him what was his plan B because we aren’t raising the gas tax.

I think we need to be a lot more creative than just raising the gas tax. If you think about it, [the millennial] generation is going to have to pay for about $30 trillion in the debt that my generation has bequeathed to it. And if you're not going to get any more money coming from the public sector, it has to come from the private sector in all sorts of creative ways. Think about this: there's $24 trillion in U.S. pension fund money and in U.S. life insurance money. Easily, 10 percent of that could go toward infrastructure ($2.4 trillion over the next 10 years). That would start to move us in the right direction and it also attracts all sorts of creativity in terms of people's ideas.

Look, there are probably eight-to-10 different ways to bring private investment into infrastructure and we always get caught up on P3s [public-private partnership]. Well, there hasn't been a P3 launched in the U.S. this year. That model is not going to work here in its best year. In the U.K., who invented P3s, they did about 10 percent of investment through P3s. If you look at our backlog and do the math, it would take us, I think, 563 years to address our infrastructure backlog through P3s. That's not going to happen. We have to use all sorts of different ways of thinking from performance contracts, to land and air rights value capture, user fees make a huge amount of sense, long term concessions, all sorts of things make sense depending upon the kind of project. But, I think if I were to encapsulate what I'm trying to get across here is the U.S. has not been resource constrained in terms of infrastructure investment since 1956 and now we're terribly resource constrained. All of a sudden, we have to learn all of these tricks that the rest of the world learned over the last 50 years and it takes us awhile because it's a pretty significant transition from simply figuring out how to spend public funds through the gas tax to figuring out how to attract, and do it in a responsible quick intelligent way, private resources.

What are your thoughts on user fees, such as tolls? There has been a lot of pushback against the Lamont administration for implementing them as one of the primary funding mechanisms in his latest transportation plan, dubbed CT2030.

Well, I think, Connecticut better get going. I don't see any other solution right now and letting politicians off the hook by kicking the can down the road makes no sense. If they do that, what ends up happening is everything gets to be more and more and more expensive. My guess would be that in Connecticut - - I'll give you another figure. In 1956, the ratio between new investment versus spend on operation and maintenance was 90/10. In other words, what we spent on infrastructure then, 90 percent was on building new stuff, while 10 percent was on operations and maintenance. Now, it's 80/20, and I bet Connecticut is almost spending 90 percent on operations and maintenance just taking care of old stuff and just 10 percent in terms of new stuff. I have to tell you, that is a giant problem and it's a huge generational failure. And think about this: we're moving into a whole new era of a different kind of infrastructure in terms of driverless vehicles and smart cities. So your focus on an inability to pay for the basic stuff that we have to have without even thinking about the giant transformation that's coming with 5G technology is absolutely crazy. The level of investment that's going to be required for the U.S. to move into this next 10-to-15 years of infrastructure spend and actually compete with countries around the world is extraordinary. And that's where the conversation needs to be had. The idea that we're so stuck in the past that we can’t even do a simple thing efficiently like putting tolls on highways that are deeply in need of maintenance is insane. It’s absolutely insane.

It makes me think back to a few weeks ago when I was on my way to a meeting with Secretary of Transportation Elaine Chao. I started chatting with a gentleman who was in charge of operations and maintenance for the DC Metro. He told me he spends all his time fixing 40-year-old stuff that has a 30 year lifespan. That's what we're doing all over the country because we refuse to recognize that our

parents and grandparents paid for stuff that we don't want to pay for. We need to pay for it. It's just a different way of paying for it.

Your experience makes you highly qualified to weigh in on CT2030. What are your initial thoughts on it? How does it compare to some of the other plans you have seen?

Well the way I think about it is, Connecticut and the states in the Northeast have specific problems where you have much older infrastructure than everywhere else. To answer your question, the plan looks like it's the only plan that makes sense so people need to figure out how to swallow their bile and get on with it. Otherwise, the region is simply not going to grow and it's simply not going to be able to attract the kind of investment that it needs to attract. That's a big problem with all the states in the Northeast.

There’s lots of suspicion and mistrust over how the revenue collected from tolls would be used. A large part of it stems from prior – as well as the current – administrations tapping into funds earmarked toward transportation to balance the budget. Have any administrations you worked with encountered something similar, and if so, what did they do to regain trust?

Nobody trusts infrastructure. Nobody even knows what infrastructure is. This is where this,” let's have a big time conversation about it” comes in. This is where we have to measure and advertise the specific benefits of infrastructure and also show people what tolling, for instance, will do for increasing general well-being in a community. This is the infrastructure equation: A.) people don't really know what you're talking about. B.) they have no idea whether it’s going to be helpful for them or not. Even if they have a thin idea, it still really doesn't really fill up an equation. And, C.) they have a sense that whatever money is spent isn't going to be spent well. I mean that's true everywhere I go. Everybody's trying to figure out how to change how people think about infrastructure and also give people a sense that it's good for them.

I'm a more cut-and-dry kind of person. I think what's happened in the U.S. is that we have limited resources and we've just forgotten that you have to pick winners and losers. You have to figure out where you're going to put money and which companies and communities are going to benefit and everybody else gets to compete. If you're just going to sit around and pretend that you're going to solve every problem with limited resources, you're not going to make anybody happy over the long term. And so that's a big part of what's happened with infrastructure.

A few years ago, our firm, CG/LA, ran some numbers and found that we build about 50 percent of the mileage per dollar in highways than the Europeans and it's about one-tenth what the Chinese build. A lot of this is because of bureaucracy and what we have to pay in terms of regulatory, fees and such so there's just a whole series of issues that need to be addressed. So we’re left with answering what infrastructure means for us. We asked average people this question, and I figured the big numbers would be around highways and bridges and tunnels. Turns out that that was about 4 percent and 2 percent were airports/ports. The real big numbers were as it related to health (37 percent) and mobility (36 percent). So when you ask this question, you really need to ask what infrastructure means for you and your family. That’s the conversation we need to bring up at the community level and we've forgotten how to do that. You can't appeal to everybody’s self-interest. You really have to appeal to the community and bring up the impact it’ll have on their health. You have to think about how to create a great community or a great state and it has to start by everybody pitching in.

What advice would you give the Lamont administration to help increase their chances of getting this approved?

Well, it's really interesting. I mean, I think what you have to do is you have to show the benefits. You have to show the projected benefits and get everybody involved in that conversation and do it as quickly as possible. I mentioned this at one of our Leadership Forums asking why don’t Secretaries of Transportation and Governors do real big time public relations campaigns about this. Think of what Nike does or what Apple does. They make people want their products. The Secretary of Transportation for Virginia got up and said they were not allowed to do that as it's prohibited by statute. If you're not even allowed to talk about the benefits of your product, but you want everybody

to buy it, you’ve got to figure out how to completely change the narrative around infrastructure. To do that, we're really going to have to invest in understanding and bringing people up to speed in terms of what that investment means for people and their communities.

I'll give you another example. A couple years ago, I'm not going to mention the state, but I was talking to the head of private investment for a state. He said, “Look, my biggest problem is that every quarter, the company that operates a particular highway on a 30-year concession announces how much money it made on that highway and everybody goes nuts because they are paying the tolls and don’t understand how they are benefiting.” My response to him was that we should create an index where we show the benefits in terms of less wait times, higher revenue base, increases in jobs and wages, better health, etc. He thought it was a great idea. He ended up calling up the concessionaire who told him it wasn’t in their contract so they couldn’t help. That kind of narrow mindedness is what I see almost everywhere when it comes to infrastructure. That's where leadership has to get up in the morning and paint a big, colorful picture of what the future is going to look like with all of us making reasonable investments.

Now there is talk of scrapping tolls in favor of legalizing marijuana and sports betting. Can you provide your thoughts on that strategy?

I hate those ideas. I think those are the stupidest ideas in the world. I’ve always hated those ideas. You know, I studied a little bit at Harvard and people always talked about how could you use lottery money to pay for this stuff. I just think that if you're going to pay for something, pay for it. Don’t trick people. These are aggressive things anyway that you're talking about. That's the dumbest thing I've ever heard. User fees make a huge amount of sense as users are the ones who use the roads. This oblique, “let's trick people into paying for stuff,” it doesn't work anyway because it doesn’t become a reliable, dedicated resource. So it's just dumb. There couldn't be anything more dumb that than that.