WASHINGTON – Sens. Mark Warner and Roy Blunt have reintroduced a bipartisan bill to create a financing authority that would provide loans and loan guarantees to help states and localities better leverage private funds to repair, maintain and build the nation’s infrastructure.
The Building and Renewing Infrastructure for Development and Growth in Employment (BRIDGE) Act also would raise the volume cap to $16 billion from $15 billion for private activity bonds used to finance highway and freight transfer projects.
“As we mark the 5th annual Infrastructure Week, we must think boldly and make real investments in our nation’s infrastructure rather than kick the can down the road with short-term fixes,” said Warner, D-Va. “The BRIDGE Act offers a bold, bipartisan solution to help address our infrastructure needs by incentivizing private investment and pairing it with public resources.”
The bill, which besides Warner and Blunt, R-Mo. has seven co-sponsors and is virtually the same as measures introduced in 2015 and 2013, would create a government-owned but independent Infrastructure Financing Authority (IFA) that would receive initial funding of $10 billion from the federal government to incentivize private investment and provide $300 billion or more in total project investments over time. The IFA would eventually become self-sufficient.
“Global pension funds, private equity funds, mutual funds, and sovereign wealth funds are looking to invest hundreds of billions of dollars in high-quality, low-risk infrastructure projects,” the senators said in a release. “Unfortunately, those investments are currently not taking place in the United States, where the private sector provides only six percent of the nation’s infrastructure funding. The BRIDGE Act will change that.”
The IFA would be led by a CEO and board of directors, consisting of seven voting members, no more than four of which could be from the same political party. The board and CEO would be appointed by the president and one board member would be designated as chairperson, with the candidates confirmed by the Senate.
Eligible projects must be at least $50 million and be of national or regional significance to qualify. They could include transportation, water, wastewater, rail, port, and energy infrastructure, with the latter in transmission, distribution and storage sectors.
Five percent of IFA’s funding would be dedicated to rural projects and they would only have to be $10 million in size.
The CEO and professional staff would review and prepare eligible project applications, which the board would approve or disapprove.
All projects would have to go through a rigorous analysis, according to a summary of the bill. They would have to show clear public benefit and meet economic, technical and environmental standards. The projects would also have to be backed by a dedicated revenue source.
Loans issued by the IFA would use about the same interest rate as similar-length U.S. Treasury securities and would have to have long maturity terms of up to 35 years. The IFA could finance no more than 49% of the total costs of a project, in order to avoid crowding out private capital.
Funding would be subject to the Federal Credit Reform Act, but would be exempted from the requirement that appropriations are needed for subsequent loans and loan guarantees.
Groups that have voiced support for the legislation, include the American Society of Civil Engineers, which gave U.S. infrastructure a grade of D+ in its report card this year, the Transportation Construction Coalition, the Bipartisan Policy Center, Building America’s Future, Transportation for America, Meridiam Infrastructure, Transurban Group, and many others.