Revolutionize USACE Civil Works U.S. Army Corps of Engineers February 2019

Revolutionize USACE Civil Works Overview Background on Infrastructure Initiative Describe Revolutionize USACE Civil Works USACE WIFIA Program Development Progress and Challenges Next Steps

ADMINISTRATION’S Infrastructure Initiative BACKGROUND Administration’s goal: seek and secure long-term reforms on how infrastructure projects are regulated, funded, delivered, and maintained. President has proposed a $200B federal commitment to produce a $1.5T overall investment in infrastructure. The infrastructure legislative principles were publicly released on 12 February 2018 and can be found here: https://www.whitehouse.gov/wp- content/uploads/2018/02/INFRASTRUCTUR E-211.pdf. The Administration has also asked agencies to improve infrastructure delivery by pursuing changes that do not require legislation. In 2018, the Administration released their legislative outline for infrastructure activities. The goal of the infrastructure principles is to develop long-term reforms that can improve the delivery of infrastructure. The President has proposed a $200B Federal investment that results in $1.5T in overall investment into infrastructure. The infrastructure proposals were released in February 2018 and outline a number of changes for both the Corps and other agencies. A key component is that the Administration also asked each of the agencies to improve delivery by making changes that do not require Congressional action. The Corps has been actively moving out on changes, now through the Revolutionize USACE CW initiative.

Revolutionize USACE Civil Works THREE OBJECTIVES DESIRED END STATE Accelerate Project Delivery Start and finish projects faster Transform Project Financing and Budgeting More efficient project delivery using alternative financing tools and new budgeting processes GOAL: Revolutionize how USACE Civil Works delivers infrastructure for the Nation through authorized projects and permitting for infrastructure projects. Focusing on efficient and high quality outcomes is the top USACE priority. Revolutionize USACE Civil Works is comprised of 3 objectives: Accelerate Project Delivery comprised of 81 actions with the goal to start and finish projects faster. Transform Project Financing and Budgeting comprised of 14 actions with the intent to be more efficient with our project delivery by using alternative financing tools (such as P3) and new budgeting processes. Improve Permitting and Regulation Reform comprised of 70 actions with the goal to expedite the delivery of projects by streamlining permit processes and eliminating duplicative reviews. Improve Permitting and Regulation Reform Streamlined permit processes and elimination of duplicative reviews to expedite delivery of projects

Revolutionize USACE Civil Works Transform Project Financing and Budgeting Problems to Address: Insufficient funding for the Nation’s infrastructure needs Unpredictable funding for federal projects Focus Areas: Implement Alternative Financing Tools Water Infrastructure Finance and Innovation Act (WIFIA) Loans Public-Private Partnership (P3) policy Revolutionize Civil Works Budgeting Increase Funding Flexibility

Revolutionize USACE Civil Works Transform Project Financing and Budgeting USACE WIFIA Program Development: Purpose: Accelerate non-federal investment in water resources infrastructure by providing long-term, low-cost loans to credit-worthy borrowers Initial Focus: Non-federal water resources infrastructure Estimated Need: Existing non-federal dams and levees require investment of more than $120B Infrastructure projects are delayed or never implemented due to financing market gap (high up-front capital costs & 30 + year term) USACE WIFIA will fill this market gap Benefits: Water resources infrastructure provides physical and economic security to the nation & reduces federal disaster spending Sources for $120B Estimated Need: - Non-federal Levees: 2017 Infrastructure Report Card: Levees. American Society of Civil Engineers. 2017 - Non-federal dams: The Cost of Rehabilitating Dams: A Methodology, Estimate, and Proposed Funding Mechanisms. Association of State Dam Safety Officials. Updated 2016.

Revolutionize USACE Civil Works Transform Project Financing and Budgeting WIFIA Program Development: Accomplishments to Date MOU with EPA signed Program Development Plan completed per OMB guidance Credit subsidy model (draft completed) On-going Actions: Finalize credit subsidy model Develop program structure and rules (spring 2019) Prepare to issue loans Challenges: Credit subsidy appropriation needed to issue loans

Revolutionize USACE Civil Works FURTHER INFORMATION USACE WIFIA next steps Complete development of WIFIA policies, implementation rule, and program documentation Subject to appropriations: Issue Notice of Funding Availability Position USACE to issue WIFIA loans as soon as possible USACE public website for information: http://www.usace.army.mil/Missions/Civil- Works/Infrastructure/ Direct input, feedback, or meeting requests to: CW.Infrastructure.Team@usace.army.mil

BACKUP

Revolutionize USACE Civil Works Transform Project Financing and Budgeting Challenges: P3 Call for Proposals: Inability to collect, retain and reinvest fees Inability to make commitments on future appropriations Lack of enabling framework and authorities for P3 projects WIFIA: OMB support for WIFIA in the USACE budget Credit subsidy appropriation needed to issue loans Civil Works Budgeting: Finalize multi-year budget approach Develop justification and support for new approach Develop specific actionable recommendations (internal and external) Our accomplishments to date are: P3 – We received guidance from ASA(CW) in September 2018 on the screening and selection criteria for P3s. In December 2018 we held two public webinars to provide information to non-Federal sponsors and industry. In January 2019 we issued a 60 day request for information that was posted to the Federal register. WIFIA – We have developed a program consistent with OMB circulars A-129 and A-1. We have completed a draft credit subsidy model. Civil works budgeting – we have completed an analysis on the cost of inefficient funding streams, which adds between 1-2% per year per project. This doesn’t sound like a lot but when a project is delayed 10 years the costs could be up to 20% grater than with inflation alone. We have developed a number of metrics that could be used to leverage limited Federal funding while ensuring we provide the most net benefits. We have identified way to improve flexibility in funding and to ensure that we are able to be as efficient as possible with the funding that is provided.

Revolutionize USACE Civil Works Transform Project Financing and Budgeting Key Actions In Progress: P3 Call for Proposals: Internal and external stakeholders External: Call for P3 pilot concepts in Federal Register WIFIA: Finalize credit subsidy model Development of program structure and rules (spring 2019) Credit subsidy appropriation necessary to issue loans Civil Works Budgeting: Finalize multi-year budget approach Develop justification and support for new approach Develop specific actionable recommendations (internal and external) Key activities that are in progress: P3 – the Request for information is ongoing, this is a 60-day period that will end in early March. We will take proposals and work with the proposers and the non-Federal sponsors to develop possible P3 pilots, we will follow this same process annually and will be as transparent as possible to share lessons learned and provide focus on the challenges we face. WIFIA – We will be working to finalize the credit subsidy model and determine the credit subsidy rate, we will be moving forward with development of the program rules and working with the administration to secure a credit subsidy appropriation so we are able to issue loans. Civil Works Budgeting – we are working to finalize our report that includes all aspects of the budgeting process with a focus on possible use of new metrics, this will include justification and support for the recommendations. We will be working internally with the Corps and the administration to push for changes.