Senators renew effort for infrastructure bank
Sens. Mark Warner, D-Va., and Roy Blunt, R-Mo., on Thursday offered legislation to create an infrastructure bank designed to help states and localities attract private capital for building and maintaining the structural systems for transportation, water and wastewater, and energy networks.
The BRIDGE Act (Building and Renewing Infrastructure for Development and Growth in Employment Act) would establish an independent financing authority capitalized at the start with $10 billion to provide loans and loan guarantees to help fund the most economically viable road, bridge, rail, port, water, sewer and other infrastructure projects. Seed money from the infrastructure bank could support up to $300 billion in total project investment when contributions by state, local and private sector partners are combined, according to bill sponsors.
U.S. investment in infrastructure is about 2 percent of Gross Domestic Product, half as much as it was 50 years ago, and experts say the nation is jeopardizing its economic competitiveness compared to other countries that are modernizing their economic foundations, especially in transportation. The United States ranks 19th among 148 developed countries in overall infrastructure, according to the World Economic Forum. Europe spends about 5 percent of GDP on infrastructure and China invests 9 percent of its output on physical structures that enable society to function.
Congress has been unable to agree on a long-term funding solution for highway and transit programs as fuel-tax receipts level off at the same time congestion is worsening and facilities are exceeding their designed lifespans. The lack of a sustainable revenue stream has forced Congress to pump in $50 billion to the Highway Trust Fund from the Treasury to keep up with aid commitments to states in recent years. Meanwhile, port maintenance is underfunded because half of user fees for dredging are siphoned off by Congress to pay for unrelated activity and new port deepening projects can take almost two decades to get approved, funded and completed.
The BRIDGE Act has support from eight other senators and many outside parties, including the American Association of Port Authorities, the American Trucking Associations, the American Society of Civil Engineers and the Bipartisan Policy Center.
The legislation "is not a 'silver bullet' to magically close America's infrastructure gap, but this bipartisan proposal creates smart new tools to help our states and localities unlock billions of dollars in additional private investments at a time of very favorable interest rates," Warner said in a statement.
Projects would have to be at least $50 million in size and be of national or regional significance to qualify for financing. Five percent of the authority's overall funding would be dedicated to projects in rural areas, and those projects would need to be $10 million in size.
Freight industry stakeholders have lamented that the 2012 MAP-21 surface transportation bill continued to authorize the Projects of National and Regional Significance program for $500 million but didn't provide any funding. The program provides competitive grant funding for high-cost surface transportation projects with broad economic benefit, many of which are freight related.
The BRIDGE Act would finance no more than 49 percent of the total cost of a project to avoid crowding out private capital. Loans and loan guarantees would be subject to modest additional fees, which would allow the authority to quickly become self-sustaining over time, according to the bill.
It also attempts to remove political calculations from project funding by creating an in-house team of finance experts to ensure that projects are selected based on economic merits and the best return on investment. The Infrastructure Financing Authority would operate independently from any federal agencies, be led by a seven-member board and a chief executive officer, all of whom would be required to demonstrate proven expertise in financial management and be confirmed by the Senate.
President Obama has previously endorsed a $10 million infrastructure bank as part of his economic agenda and Sen. Jay Rockefeller, chairman of the Senate Commerce, Science and Transportation Committee, made a similar proposal in February.
Rockefeller's bill would create a $5 billion fund over two years to finance large-scale transportation projects - including airports, transit and bridges - by partnering with state, local and private sector investors. The fund would be established by the Department of Transportation, overseen by a board and executive director and be assisted by an advisory committee of experts. A provision allows for the fund to be expanded to cover telecommunications, energy and water infrastructure.