Lifting the federal cap on tax-exempt private activity bonds, a key wish of transportation, public-private partnership and municipal market advocates, would be granted under a bipartisan Senate bill that would also expand the financing tool to more infrastructure projects.
Sens. Tammy Duckworth, D-Ill., and Dave McCormick, R-Pa., introduced the Transit for Urban Renewal and Business Opportunities Act, or
PABs are a key financing tool for transportation projects structured as public-private partnerships. They were first authorized by Congress in 2005 with a $15 billion national cap.
The current five-year transportation law, the Infrastructure Investment and Jobs Act, doubled the limit to $30 billion. The TURBO Act would raise the ceiling to $45 billion.
The legislation comes as Congress is in the midst of crafting a surface transportation reauthorization for the next five years. Neither the House or Senate have addressed the PABs cap yet.
The U.S. Department of Transportation
Lifting the cap is a priority for many transportation advocates and lawmakers from both sides of the aisle. The Trump administration
The TURBO Act would expand eligibility of "mass commuting facility bonds" to cover the acquisition of rolling stock like buses and railcars. It would also lower the speed threshold for high-speed intercity rail facilities to 110 miles per hour from 150 miles per hour. That would open up PABs financing to a "far wider range of passenger rail investments, including projects that operate on shared rights-of-way with freight railroads," the senators said in a statement.
"Our bipartisan bill would help state and local governments supercharge their infrastructure financing—enabling them to deliver faster on projects, replace old buses, improve inter-city passenger rail and more," Duckworth said. "It's critical we build on the incredible progress of the Bipartisan Infrastructure Law, and this commonsense legislation would help us do just that."
The American Association of State Highway and Transportation Officials supports the bill, said director of policy and government relations Susan Howard. "These tax-exempt bonds are a key tool used by state departments of transportation to finance P3 projects," Howard said in an email.
Some P3 advocates say the cap should be eliminated completely. "When the original legislation was enacted in 2005, PABs were seen as an experiment, and it took 16 years before the original $15 billion cap was reached," said Reason Foundation in a
There is another category of private activity bonds for non-transportation related projects like housing, which is subject to state-based volume cap and is separate from the DOT's PABs cap.
