WASHINGTON — Congress is unlikely to authorize the creation of a national infrastructure bank before next summer, despite its potential to spur more private investment in transportation, water, and energy projects, transportation stakeholders from the public and private sectors said yesterday.
Speakers at an event sponsored by the U.S. Chamber of Commerce said that, even after multiple attempts by members of Congress and the Obama administration to create a national infrastructure bank, it has yet to move beyond the theoretical.
Pennsylvania Gov. Edward G. Rendell was upbeat about the creation of a bank, saying that one would help with the $2.2 trillion of infrastructure financing needs in the U.S. and that such a bank could be created as soon as next June. He added that he wants to be part of its creation even after leaving office as governor.
Projects are burdened by a lack of federally supported financing vehicles for regional transportation projects — such as high-speed rail — and a national infrastructure bank could help plug that hole, he said. Most federal grants for surface transportation go to states or metropolitan areas, though some programs are designed to support regional or multi-state projects.
Other speakers and audience members were less optimistic than Rendell. They worried about the lack of concrete presidential recommendations on how to design the bank.
“The administration has not followed through with any kind of specific proposal” for a national infrastructure bank, said Jack Basso, director of program finance and management for the American Association of State Highway and Transportation Officials.
Speakers proposed a variety of ideas for the bank, including the amount of initial capital it should receive, whether it should provide loans and grants, whether it should lend to state infrastructure banks, as well as the type of projects its investments should target. The varying proposals underscored the lack of consensus in the many blueprints for the bank that members of Congress have proposed over the years.
Some of the speakers also worried that overly ambitious plans for a bank, such as capitalizing it at $400 billion or more and allowing it to provide funding for all infrastructure sectors, could negatively affect the development of a six-year surface transportation bill. The current six-year bill pending since last summer in the House is expected to eventually include a national infrastructure bank, but that portion of the legislation is still in the works.
If the bank covers the entire universe of infrastructure sectors, it may be difficult to assemble all the experts necessary to run them, said Jeff Murphy, managing director of infrastructure investments for Ullico. But the bank should not be limited to transportation, he said.
But Basso said the bank should start with just one sector, to avoid running into competing sector-specific desires of Congress members and committees.
The bank should be designed with existing programs in mind, said Susan Warner-Dooley, who leads the aviation strategic, business, and financial planning team at HNTB. She worried that a national infrastructure bank could be detrimental to airports, which straddle the line between public and private ownership and rely on a mosaic of aviation financing and funding tools.
“Please don’t cannibalize our existing funding sources,” she said.
Speakers noted that there already exists a patchwork of smaller infrastructure banks, the successes and limitations of which could help guide the development of a national fund. Infrastructure banks currently exist in 34 states, and those that have financed projects have boasted financially healthy track records with good revenue streams, Basso said.
However, “insufficient capitalization, lack of state-enabling legislation, and limited marketing activities” caused the banks to fail to reach their full potential, according to a 2002 U.S. Department of Transportation study referenced by an audience member. The study was conducted five years after the State Infrastructure Bank pilot program was launched.
Even the states whose banks got off the ground did not see uniform results, the survey said. Five years into the program, more than 90% of the SIB lending activity for the country was occurring in only six states, and only two states had issued SIB bonds.
South Carolina had disbursed $510 million through five agreements, supporting a total of about $1.5 billion of infrastructure investment. Arizona, Florida, Missouri, Ohio, and Texas also used their SIBs to support a total of 132 loan agreements, or $1 billion of disbursements to support $2.6 billion of investment.
