WASHINGTON — A high-level Department of Transportation official told lawmakers yesterday that the Obama administration will support “ambitious local initiatives” for large-scale projects, such as a 12-line transit project in Los Angeles.
But a city official, speaking at a hearing held by the Senate Environment and Public Works Committee, argued for more direct assistance from the federal government.
The Los Angeles proposal would accelerate the construction of 12 new mass-transit lines so that they can be built over the next 10 years.
But the city’s long-range plan is as much as $8.8 billion short of funding, Mayor Antonio Villaraigosa said at the hearing on federal, state and local transportation partnerships.
Build America Bonds and the Transportation Infrastructure Finance and Innovation Act program that offers federal credit may be helpful tools in financing the transit projects, according to Villaraigosa, vice president of the U.S. Conference of Mayors.
“A national infrastructure bank also could be helpful. But the federal government can and should do more, especially for cities and regions that are coming to the table with money in hand to create a true federal-local partnership,” the mayor said.
The DOT is open to bolstering its assistance to cities, Roy Kienitz, undersecretary for policy, told the hearing.
He provided no specifics or promises about the administration’s forthcoming principles for a multi-year transportation bill, but offered a glimpse into the White House’s transportation financing priorities.
Transportation Secretary Ray LaHood said recently that Kienitz is putting together the legislative principles and that they will be released in the next three months.
Kienitz said the New Starts program — the main federal discretionary transit capital program — “could be adapted to evaluate and fund a system of projects in an integrated way” similar to Los Angeles’ 12-project initiative.
The administration wants to “make sure” that TIFIA “is multimodal in practice,” he added. The program has funded a large proportion of highway-related projects, many backed by user fees, or tolls.
“For transit projects, sales tax and-or other revenue streams related to transit-oriented development can be leveraged to repay project financing sources,” Kienitz said.
The Transbay Transit Center in California recently was granted a TIFIA loan for $171 million to supplement other federal dollars, $460 million of state funds, and almost $500 million of local and regional funds.
The TIFIA loan will be repaid mainly with real estate tax-increment revenue. That loan “represents a milestone in the program’s development,” Kienitz said.
The TIFIA program became wildly popular as the credit market constricted in recent years, because it provides an interest rate pegged to the Treasury rate.
The program was so popular that it had to stop taking new applications March 1 for this fiscal year.
Before the cut-off date, the program received 39 letters of interest for almost $13 billion of TIFIA funds, much more than were available; most were for highway and bridge projects.
Even so, TIFIA should be revised to better suit transportation investment, Max I. Inman, senior adviser of Mercator Advisors LLC and member of the Transportation Research Board’s taxation and finance committee, told committee members.
Inman said the DOT should increase the credit provided to 50% from 33% of the project cost. The department should also consider pulling a provision from the TIFIA law that automatically makes the loan senior to other debt in the event of bankruptcy, he said.
