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Contractors Confident Trump Will Sell Infrastructure Deal
By Sam Skolnik

Dec. 12 -- Construction contractors are gearing up for a revitalized business landscape under a Trump presidency, trade groups and their big-firm attorneys say.

Rebuilding the nation's infrastructure--highways, bridges, airports and the like--was prominent on both Donald Trump's and Hillary Clinton's agendas. But Trump, a Republican, should have an easier time getting his trillion-dollar plan through a GOP-dominated Congress, they say.

"We are very optimistic," Brian Turmail, a spokesman for The Associated General Contractors of America, a trade association for the construction industry, told Bloomberg BNA. "I don't know what the exact odds are" that an infrastructure plan will pass Congress, he said, "but they are good."

And the timing is excellent, proponents said, given that the industry has been in a slump in recent years.

'Increased Opportunities.'

An increase in infrastructure spending is likely under Trump, and the new White House will be "good news" for the contracting community, said Robert Burton, a Washington-based partner at Crowell & Moring, during a Dec. 1 webinar featuring several of the firm's attorneys.

"I think it's inevitable that [the Office of Management and Budget] will adjust the budget to put more money into infrastructure projects," he said. "And that's going to lead to increased opportunities for construction contractors in particular and other service providers in this field."

Burton predicted Trump's policies would promote less regulatory burden on contractors, produce more contracting opportunities and increase outsourcing of government work.

"That's nothing but good news for the acquisition community," Burton said.

Risk and Profit

Trump's plans have focused not just on the need for a range of different types of new infrastructure, but on the ways he wants to pay for them--including tax credits and public-private partnerships.

Trump's plan will feature a "major private sector, revenue-neutral option," according to a paper released in October by senior Trump campaign policy advisers Wilbur Ross and Peter Navarro.

The backbone of the 10-year plan would be a tax credit sufficient to reduce the cost of financing the project by 18 percent to 20 percent.

At the same time, the Trump plan would encourage public-private partnerships, typically long-term contracts between private businesses and government agencies in which private parties bear financial risk but also expect to profit from the arrangement.

Critics, including progressive think tanks, pounced on the plan as a regressive tax to be paid in the form of high-cost commuter tolls and other fees to repay exorbitant demands of equity investors.

"No rhetorical bluster or sleight of hand can obscure the fact that the Trump plan shovels money at wealthy investors instead of solving real infrastructure challenges," wrote Kevin DeGood, the director of infrastructure policy with the Center for American Progress, in a Dec. 1 post.

For a plan to succeed over the long haul, "you need a sustainable, long-term way to pay for these projects," Turmail said. Historically, he said, that has included taxes on gasoline, commercial vehicle tires and other items.

Bipartisan Support

Before contractors can benefit, Trump and the Congress will need to come to terms on a plan.

Turmail lists several reasons why that could happen--soon. There's been a history of bipartisan congressional support for major infrastructure projects, he said--most recently, the Fixing America's Surface Transportation (FAST) Act, signed into law one year ago. Furthermore, Trump will be looking for a big, early success, and infrastructure might fit the bill.

The fact that Elaine Chao, Trump's transportation secretary nominee, has already served in a president's Cabinet and happens to be the wife of Senate Majority Leader Mitch McConnell (R-Ky.), means she might be one of the first nominees confirmed, allowing her to push Trump's transportation-related plans sooner than perhaps other priorities, Turmail said.

However, Pete Dungan, counsel with Hogan Lovells in Washington, argues a different point. Trump has marketed himself as a deal-maker. Infrastructure presents a good, early chance for him to flex his deal-making muscles, he said.

"It's really up to Congress," Dungan told Bloomberg BNA. "They don't have a good track record. But we have a unique personality in the White House, so we'll have to wait and see."

To contact the reporter on this story: Sam Skolnik in Washington at sskolnik@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com
December 16, 2016

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