Army Corps of Engineers exploring new ways to finance missions

Army Corps of Engineers faces billions of dollars in backlogged projects. With little hope of additional funding from Congress, officials are looking for altern...

The Army Corps of Engineers says the massive nationwide inventory of civil works infrastructure it’s charged with managing is rapidly deteriorating. With insufficient funding coming from Congress to fix the problems, the Corps is looking for new ways to pay for the work it needs to do.

Lt. Gen. Thomas Bostick, the commanding general of the Army Corps of Engineers (USACE), said the problems are symptomatic of a more general, multi-decade decline in public infrastructure spending. While politicians have spent some time focusing on roads and bridges, that’s less true for the sorts of things the Army Corps handles, most of which are focused on water infrastructure.

In a 2013 assessment, the American Society of Civil Engineers graded the condition of the 15,000 miles of the country’s levees as a D-. The nation’s inland waterways, most of which are managed by USACE, received the same grade. Dams, 707 of which the Corps runs, didn’t do much better with a grade of a D. Ports fared a little better, with a C grade.

“We’re seeing this every day in the execution of our mission. The infrastructure is slipping in its ability to deliver consistent and reliable services,” Bostick told reporters Thursday. “Since 2000, we’ve had a 50 percent increase in the downtime of our hydroelectric equipment. Since 2009, delays and interruptions have more than doubled on our inland waterway locks and dams. And 16 percent of our dams are categorized as ‘extremely’ or ‘very high’ risk, which increases the urgency for dam safety work.”

$23 billion shortfall

Bostick said the Corps is upgrading and repairing its aging infrastructure, but it’s also clear that its appropriations won’t be enough to get the job done.

A 2013 review of the Corps’ capital needs found it had a backlog of $60 billion in recapitalization projects, but that the past several years’ budgets had only funded those projects at a rate of about $2 billion per year.

Bostick said the Corps is spending those limited dollars on its most urgent priorities, but even the projects it is working on this year will require another $23 billion to finish.

“That gives you some idea of how long our current projects will take at the pace we’re getting appropriations,” he said. “We can only do so much through process efficiencies. We’re going to have to work together in public-private partnerships to find some alternative financing means that come from outside the federal government.”

USACE still is in the early stages of its thinking about how to use private capital to pay for public works programs.

Private financing for public purposes is not an entirely foreign concept for the military. After Congress let DoD privatize the housing on its bases, the initiative was widely hailed as a success for having dramatically improved living conditions for service members without additional government funding. The Army Corps has had a significant role in writing contracts for the Army Energy Initiatives Task Force, under which private companies pay for the installation of renewable energy systems on Army bases.

But Bostick said Army Corps’ search for nongovernmental financing will be difficult. Some of its current operations have the potential to generate revenue for outside investors, but that’s not true across its entire portfolio of responsibilities.

For example, USACE already collects fees from shipping companies that use the harbors it maintains, but deriving income from earthen levees, which protect farmland and suburban communities from seasonal flooding, requires a bit more imagination.

“We have to find a way to monetize the things we want the private sector to invest in,” Bostick said. “At the end of the day, they need to make a profit, and we have to find ways to set up long-term contracts that will allow them to accrue benefits based on the investments they make.”

Bostick also suggested his agency would like Congress to let it keep more of the revenue it already generates. Each year, USACE collects tens of millions of dollars in recreational fees from boaters, campers and picnickers who visit lakes and other public lands the Army Corps manages. As of now, most of that money goes directly to the Treasury, he said.

“Could the Corps of Engineers keep some of that money? Could we work as partners with the marinas and small businesses in our recreation areas? Those are the kinds of questions we’re asking, but we’re in the early stages of it,” Bostick said.

A more holistic management view

To take another example, shipping companies pay roughly $1.5 billion each year into a fund that is supposed to be dedicated to managing and improving the nation’s sea and inland ports. Congress routinely siphons off about half that fund each year to pay for general government expenses.

The picture improved slightly this year, when Congress let the Army Corps retain about $1 billion of the fees it will collect.

Beyond seeking more money, Bostick said the Army Corps needs to better coordinate the limited funds it has today. The agency, he said, is moving to a model in which it will manage entire watersheds with a more holistic view than it’s taken in the past.

USACE did not operate under that philosophy during the years leading up to Hurricane Katrina in 2005. The levees that failed and inundated the city with floodwaters had been under construction since 1965 with a slow trickle of funding and had been built in an ad-hoc fashion.

“It was a system in name only, and by 2005, it was only about 50 percent complete,” he said.

Once disaster struck though, Congress opened its checkbook and directed $14.5 billion for the Corps of Engineers to shore up the levees around New Orleans.

“When there’s a crisis, the priority is clear,” Bostick said. “In six years, we did what we couldn’t do in 50 years, because we had the money up front and it was a priority. We all worked together within the interagency and local level. There, you can see what a true system does.”

The Corps of Engineers believes it’s proven its ability to respond to emergencies, as it did again last year when Congress appropriated an additional $5 billion in emergency funding to deal with the aftermath of Hurricane Sandy.

But the agency would clearly prefer that its primary mission not be relegated to disaster response. In its official literature, it likes to point out that every dollar it uses to build and maintain long-term infrastructure avoids about $8 in spending on disaster response.


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