WASHINGTON – The municipal market is hoping for a new infrastructure voice inside the White House who supports traditional financing tools following the announced departure of President Trump’s infrastructure czar, D.J. Gribbin.
Gribbin’s departure was announced by White House officials Tuesday night, just under two months after the unveiling of the White House’s plan to use $200 billion of federal funds to leverage $1.5 trillion in infrastructure investment, mostly through local and private funding.
Gribbin, a former managing director at financial services company Macquarie Capital and a past general counsel at the Department of Transportation, was special assistant to the president for infrastructure and did much of the heavy-lifting in the plan’s development. An advocate of public-private partnerships, his effort was somewhat hamstrung by the President’s doubts about whether P3s work. The plan encouraged private investment but did not mention P3s specifically.
There is little consensus among lawmakers on how to pay for an ambitious infrastructure plan, and resignation that Congress probably won't take up any infrastructure legislation this year. A presidential advisory council on infrastructure was dissolved abruptly in August last year after Trump made controversial remarks about the incident in Charlottesville, Va. -- a development that many industry observers downplayed in part because Gribbin and former economic advisor and investment banker Gary Cohn appeared to be the real engines driving infrastructure planning in the White House.
Gribbin’s resignation, which followed Cohn's by about a month and was so that he could reportedly to pursue new opportunities, is being taken more seriously.
“Given the importance of the administration’s efforts on infrastructure, the Bond Dealers of America encourages the White House to fill the role left open by Mr. Gribbin with someone who supports traditional infrastructure financing tools, like municipal bonds and who understands the importance of the need for both financing and funding mechanisms,” BDA chief executive officer Mike Nicholas said. “We would like to see a greater dialogue among the state and local government groups, regional broker dealers, the White House and Congress to ensure that Main Street projects are included to further develop the Trump Administration's infrastructure plan. Ultimately, the BDA supports efforts to enable state and local governments to finance critical infrastructure as the most efficient, proven and lowest cost to taxpayers, including the ability for these entities to advance refund their outstanding bonds.”
Chris Hamel, former head of municipals at RBC Capital Markets who retired in February, said it is “disappointing” to see Gribbin leave and that the White House needs to make replacing him a high priority.
“I hope the administration steps up with an appropriate appointment,” Hamel said. “I think it’s important for the president to quickly fill this gap in his administration.”
Hamel said that the federal funding level in Trump’s plan was “sorely inadequate,” but consistent with the Obama administration’s concepts in attempting to create a hybrid model fusing federal dollars with local money borrowed at low cost and private capital. Hamel said he expects that path to continue in spite of setbacks.
“However long it takes, I think that’s where we’ll all end up,” he said.
“As DJ Gribbin leaves the White House, AASHTO acknowledges his efforts to make transportation infrastructure a top administration priority," said Bud Wright, executive director of the American Association of State Highway and Transportation Officials. "It is now up to Congress to keep the issue moving forward because the Congressional Budget Office estimates that the Highway Trust Fund will need a $138 billion cash infusion through 2027, just to maintain current spending levels plus inflation. Closing this enormous funding gap will require bipartisan leadership and support and AASHTO is anxious to work with members of Congress and the Administration to find a long-term sustainable solution, before time runs out on the Highway Trust Fund.”
Gribbin had some critics. Ohio real estate developer Dan Slane, who helped compile a list of of top 50 Emergency & National Security Projects for the White House only to see it largely abandoned later, was critical of what he saw as Gribbin's emphasis on P3s. Slane told The Bond Buyer earlier this year that traditional bond financing made more sense for some projects. Also rural states complained that P3s wouldn't work for them.
Rep. Bill Shuster, R-Pa., who chairs the House Transportation and Infrastructure Committee did not respond to a request for comment on Gribbin’s departure. But said in a Washington Times op-ed late last month that the president has a responsibility to lead on infrastructure.