Federal loans available for infrastructure
CHARLOTTE, N.C. - The Department of Transportation is looking to infuse billions of dollars into infrastructure development as the industry continues to struggle with unknowns in federal policy.
New developments in federal transportation policy were discussed during a panel at the Bond Buyer’s Transportation/P3 Conference here on Tuesday.
Among the speakers was Duane Callender, director of the Credit Programs Office at the U.S. Department of Transportation’s Build America Bureau.
Callender said that federal loan programs have billions of dollars of authority available and are working to expend these funds as efficiently as possible to make money to finance innovative infrastructure programs more of a “known” than an “unknown.”
The bureau was set up last year and manages the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program and the Railroad Rehabilitation & Improvement Financing (RRIF) loan program among others.
Under the Fixing America's Surface Transportation (FAST) Act signed into law by Barack Obama in December 2015, TIFIA has about $300 million of loan authority available per year through 2020. The RRIF program was granted $35 billion of authority.
Callender said TIFIA has about a dozen projects in the pipeline set to close in the next fiscal year, with another 20 or so in the due diligence phase.
“We have more than enough to cover those,” he said.
Callender added that the nature of the RRIF program is beginning to change, shifting from loans as small as $55,000 to include more loans that look like TIFIA-type projects. RRIF funds can be used to acquire, improve, or rehabilitate intermodal or rail equipment and facilities, refinance outstanding debt incurred for those purposes, and develop or establish new intermodal or railroad facilities. Callender said the DOT has worked to improve its efficiency, acknowledging that the TIFIA process has not always been swift and smooth.
“We have been under-utilized,” he said.
Other panelists were complimentary of the Build America Bureau, saying they have seen a real improvement in engagement with the federal government over the past year. But panelists also agreed that there is anxiety over the uncertainty of federal policy and that the DOT could be doing more to help educate state and local governments about innovative finance such as public-private partnerships (P3s).
Among the unknowns is Donald Trump’s promised $1 trillion infrastructure plan, details of which are still unclear. Although it was originally assumed to rely heavily on P3s, the president has informally backed away from that position following his remark to a group of lawmakers in September that P3s “don’t work.”
Thomas Madison, executive director at the Cornell University Program in Infrastructure Policy, said there is “frustration” over how to overcome persistent funding challenges in infrastructure.
“There’s real concern over uncertainty,” he said, adding that the federal government has the platform to be able to educate state and local governments and should be doing more of it.
Stephanie Wagner, a partner at Mayer Brown, said that some state DOT’s are keyed-in and will be “repeat players” in the P3 market, but other states might have only rare projects that are revenue-producing and fit into a P3 model. Some states still lack statutory authority to enter into P3s at all, she said.
In a later luncheon speech, the bureau's former executive director Martin Klepper said he is growing "increasingly concerned" about the fate of the trillion-dollar infrastructure plan due to the administration's mixed signals.
Trump's comment about P3s not working could imply a lack of White House support for P3s, he said, adding he now doubts whether local governments will see increases in federal investment in the near future. Even if a new infrastructure bill were to pass a year or so from now, he said, it would take six months to a year for the agencies to implement new programs.
"We're really looking at two years from now," he said.
The conference began Monday evening and concludes on Wednesday.