Infrastructure Bank and PAB Bill Introduced in Senate

warner-mark-blmg-0909.jpg

WASHINGTON - Sen. Mark Warner, D-Va., has introduced legislation to create a national infrastructure bank that could provide direct loans and loan guarantees to help finance infrastructure projects of regional or national significance.

The bill would also increase the national volume cap for tax-exempt private-activity bonds for qualified highway or surface freight transfer facilities to $16 billion from $15 billion. The national limitation had been established by a highway bill enacted in 2005, and as of May 12, about $11 billion of the cap had been allocated, according to the Federal Highway Administration.

The bill - S. 1589: the Building and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act - has been referred to the Senate Finance Committee. It was introduced on June 16 and is cosponsored by a bipartisan group of 10 senators, including Sen. Roy Blunt, R-Mo.

The legislation was introduced as Congress continues to debate infrastructure funding and financing methods. The current extension of spending from the Highway Trust Fund expires July 31 and the fund's highway account is expected to have a shortfall as early as August.

"The BRIDGE Act will create jobs, keep American businesses competitive, and expand U.S. commerce and trade," Warner said in a news release. "At a time when Congress has once again kicked the can down the road - passing 33 short-term patches instead of a long-term surface transportation bill - this legislation demonstrates that there is a real willingness to work together in a responsible, bipartisan way to get moving on important investment priorities."

The bill would create an entity called the Infrastructure Financing Authority which could provide financial assistance for transportation, water and energy transmission projects. The IFA would be independent of existing federal agencies.

To be eligible for financial assistance from the IFA, a project would have to have a public benefit. Also, a project's expected costs would need to be at least $50 million, though a rural infrastructure project's anticipated cost would only need to be at least $10 million.

The chief executive officer of the IFA would create and manage an Office of Technical and Rural Assistance within the authority to help identify projects that could receive financing and serve as a resource to states, localities and parties in a public-private partnership.

A loan or loan guarantee made by the IFA could be no more than the lesser of 49% of expected project costs or the amount of the project's senior obligations if the loan or loan guarantee doesn't receive an investment-grade rating.

The total amount of loans and loan guarantees made by the IFA could not be more than $10 billion per year for the first two fiscal years of its operations, $20 billion per year for fiscal years three through nine, and $50 billion for any fiscal year after that.

The legislation would streamline the permitting process for projects that are approved for IFA loans and loan guarantees by instructing the president to convene a meeting of representatives of permitting agencies to establish a permitting timetable and to coordinate concurrent permitting reviews.

The IFA would initially be appropriated as much as $10 billion, which could make $300 billion or more in total project investment possible, according to Warner's office. Five percent of the IFA's funding would have to be used for rural projects. Fees associated with the loans and loan guarantees would be used to make the IFA self-sustaining over time.

Warner introduced a similar bill in the last Congress which had similar bipartisan support but did not include an increase in the volume cap for highway and freight transfer PABs.

For reprint and licensing requests for this article, click here.
Infrastructure Tax
MORE FROM BOND BUYER