As the year draws to a close, a lot of wheels are turning – or merely spinning – in the Midwest. Of them, which are likely to grain greater traction next year and which could become mired in reversal? We've compiled a preliminary “watch list” of regional issues we'll be addressing in the Jan. 27 edition of ENR Midwest.
Herewith, a preview:
P3s – Illiana Expressway – Illinois and Indiana are actively soliciting private investors to construct a $1.5 billion, 47-mile tollway linking the two states. A similar roadway near Austin, Texas, failed to attract drivers, prompting Moody's Investors Service to lower its rating on the tollway company from B1 to Caa3: junk. Assuming planners have done their homework, “Illiana” could serve as a model for P3s in the region. If poorly executed, it could put the brakes on major P3 initiatives for years to come.
Natural Gas/Fracking – For all the attention that hydraulic fracturing – or fracking – has garnered, it's unclear whether the practice will succeed in the region. In Ohio, jobs haven't materialized in the numbers originally projected, leaving voters to ponder whether the economic gains are sufficient to outweigh the environmental concerns that surround fracking. Illinois has proposed “the toughest standards in the nation,” but environmentalists say they don't go far enough. Likewise, fracking may fall short as a business proposition. In October, soon-to-retire Shell CEO Peter Voser said the biggest regret of his tenure was the decision to invest $24 billion in North American shale beds. (Last summer, Shell took a sizable write down on the investment and slashed production targets.) Meantime, a newly issued Goldman Sachs report suggests that, even at favorable prices, shale gas will provide only a “modest boost” to the U.S. economy.
Detroit – As early as next week, U.S. Bankruptcy Judge Steven Rhodes will rule whether the City of Detroit is eligible for Chapter 9 bankruptcy. Assuming it is – and indications suggest it will be – the City will propose a "plan of adjustment" by Dec. 31 to cut $18 billion in debt and restructure operations. City Emergency Manager Kevyn Orr says the sale of city assets isn't currently up for discussion, but he hasn't ruled it out either. Even before Chapter 9, Orr floated the idea of selling Detroit's Water and Sewerage Department to a private entity to contend with Detroit's mounting debt. More recently, he offered surrounding suburbs greater control of the department for $9 billion – funds that could help bankroll a restructuring plan. Meantime, Rhodes is allowing Detroit to execute $1.25 billion in infrastructure upgrades with funds that derive from city casinos. What remains to be seen is whether Detroit can create a climate conducive to private investment as well.
Studio Gang Architects – How do you follow up the most acclaimed tower to join Chicago's skyline in a generation? If you're Jeanne Gang, principal with Studio Gang Architects and designer of the undulating Aqua Tower, a residential high rise on Chicago's Gold Coast, you accept a commission to transform an electrical power plant to a recreation center. In October, Beloit, Wis-based Beloit College commissioned Gang to convert a 100-year-old plant into a showcase for sustainable design and a boon for surrounding riverfront. Closer to home, preliminary site work has begun on a $148-million residential complex Studio Gang designed for University of Chicago. As with Aqua, Gang sculpts with concrete, in this instance to “distill” UC's neo-Gothic forms “and find out what they mean now,” as Gang told Chicago Tribune architectural critic Blair Kamin.
Illinois Transportation Boom – Although a steep drop in public spending is squeezing U.S. highway contractors, pushing some out of business and others into alternative sectors, Illinois has launched a transportation program of near unprecedented breadth, funded by combinations of toll hikes and sin taxes, among other sources. In addition to a four-year, $475-million makeover of Chicago's Circle Interchange, the nation's worst bottleneck for trucks and automobiles, the state is proceeding with $2.2-billion project to rebuild the Jane Addams Memorial Tollway (I-90), a northwest-to-southeast artery linking Wisconsin and Indiana, in addition to the new $3.4-billion Elgin O’Hare bypass, a project intended to improve access to O'Hare International Airport. Since assuming office, Illinois Gov. Pat Quinn has launched numerous transportation and infrastructure projects to jolt the state out of its economic doldrums. Now that this hugely unpopular politician is facing re-election next November, look for more projects – and construction jobs – to come on line.
EPA's “War on Coal” – Last fall, the U.S. Environmental Protection Agency proposed new standards for pollution emitted by new power plants. Next year, the agency will propose standards for existing facilities. Known as “The Coal Miner's Slaughter,” caps on new plants would effectively ban the construction of coal-fired power plants unless they incorporate carbon capture and sequestration technologies that don't exist, according to industry members. EPA's response: Industry will need to develop newer and more efficient technology. Natural gas, anyone? Stay tuned.
