Summer 2009
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A sure sign of an economic crisis is the selling off of landmarks and infrastructure. Reading recent news, one can see that the fire sale has begun in the United States. Privatizing infrastructure, which is commonplace in Europe, has been gaining ground in this country for years. The current economic crisis seems to be putting a few more headline-worthy projects on the market. Truthfully, those outside the construction industry only hear about privatization when a structural star is for sale or sold.
For example, making the nightly news rounds in March and April were stories about the sale of Chicago’s iconic Sears Tower and the John Hancock Tower in Boston. The John Hancock Tower sold in a foreclosure auction for $660 million, about half what the sellers paid three years ago. The building was bought by a group of investors who had previously snapped up distressed loans on the property. The Sears Tower was purchased by a London-based insurance company and is actually being renamed Willis Tower. Needless to say, some people, especially Chicagoans, are publicly up in arms over renaming the building. But honestly, what’s in a name? The building isn’t being torn down; that would truly be a tragedy. Plus, Sears lost naming rights when it vacated the building in the 1990s.
What doesn’t seem to make headlines outside of local or regional coverage are deals privatizing major roads and bridges, such as the Chicago Skyway (circa 2005), when the city leased the toll road to an international consortium for 99 years. Sure, the city made a quick and arguably much-needed $1.8 billion on the deal, but taxpayer money built the skyway – that’s the rub for a lot of people. Critics of this deal and other privatization deals in places such as Denver, Minneapolis and Tacoma argue that cities are being short-sighted and risk public safety, because corporations are not subject to the same scrutiny as state DOTs. The counter-argument is that the needs of our infrastructure are far greater than state agencies can handle or afford. And this inability to modernize, or at the very least, repair, our transportation system puts people at risk.
In regards to skyscrapers and other commercial infrastructure, the facts are simple: Delinquency rates for U.S. commercial properties, which stand between 1.2 percent and 1.8 percent, could rise between 3.5 percent and 5 percent by the end of 2009, according to forecasters. The default rate is expected to top that next year. And we all know that America’s roads and bridges are in a sad state of disrepair. The American Society of Civil Engineers’ latest study gives our transportation system a grade of D, and the organization says the real cost of modernizing our roads and bridges is more than $2 trillion! If this estimate is anywhere close to accurate, even the Obama administration’s $100-billion infrastructure overhaul plan is an elastic bandage placed over an arterial bleed.
Personally, I have some concerns over privitizing our infrastructure. As taxpayers, Americans actually can claim part ownership in the roads, bridges and many stadiums or arenas in our cities and states. In many instances, a local vote is needed to fund these projects. The same cannot be said of America’s iconic buildings such as the Sears Willis Tower. These landmarks always have been owned by corporations. All of this leaves me wondering what parts of our country – what sections of America’s infrastructure – will actually continue to belong to America? Where will it end?
