As Congress begins to tackle what many hope will be a robust, multi-year surface transportation bill, unlikely allies have come together in support of a proposal that builds on Los Angeles’ 30/10 transportation plan. And while many thought that hell would freeze over well before something like this would happen, Senator Barbara Boxer (D-CA), Representative John Mica (R-FL), U.S. Chamber of Commerce President Thomas Donohue, and AFL-CIO President Richard Trumka recently held a press conference in Washington to promote the new national transportation initiative they’re calling America Fast Forward (AFF).
The proposal, which Los Angeles Mayor Antonio Villaraigosa has been pushing for some time now, is a program that would leverage funds created through local sales and gas taxes dedicated for transportation with low interest federal loans to jump start projects that already have a substantial part paid for at the local level. According to Villaraigosa and other supporters (including over 100 mayors), the plan will incentivize cities like Los Angeles to invest in transportation infrastructure without pushing the federal deficit. An added benefit, they contend, will be that communities won’t be forced to compete with one another for limited federal funding. Specifically, the plan contains two primary investment mechanisms to accomplish this goal:
(1) AFF would amend the Internal Revenue Code to establish a new class of qualified tax credit bonds, Qualified Transportation Improvement Bonds (QTIBs), that state and local governments can issue. Qualified tax credit bonds are taxable bonds issued by state, local or other eligible issuers where the federal government subsidizes most or all of the interest cost through granting investors annual tax credits in lieu of interest. As proposed, QTIBs would allow issuers to finance more capital improvements than is possible with traditional tax-exempt bonds for any given annual revenue stream, as well as take pressure off of the conventional federal grant programs.
(2) The plan also calls for increasing the size and scope of the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. The TIFIA program provides federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance. TIFIA can help advance large-scale projects that otherwise might be delayed or deferred by providing improved access to capital markets, flexible repayment terms, and potentially more favorable interest rates than can be found in private capital markets.
With regard to changes to the program, AFF proposes increasing the maximum percentage of the funding allotment that TIFIA can finance, permitting the Department of Transportation (DOT) to approve multiple related projects at the same time, allowing DOT to grant up-front credits to projects, and authorizing DOT to lock-in interest rates for approved projects.
In a climate where everyone on Capitol Hill is looking for ways to stretch limited transportation funding as far as possible, this idea of the federal government as a lender and not just a spender has been widely supported thus far. At the press conference earlier this month, Senator Boxer, who heads the Senate Environment and Public Works Committee, said “As Congress moves forward with a surface transportation bill this year, we need to look at ways to leverage federal funding. America Fast Forward is a model for the nation, and it is the kind of initiative that I believe the House and Senate can work together on.”
Learn more about America Fast Forward: http://goo.gl/VZsZt
James Alfano is an Editor at The FundBook, a free monthly publication that provides unique monitoring, analysis, and assessment of federal funding opportunities for city and county decision makers across the country. Subscribe for free at www.fundbook.org and read our current issue here http://goo.gl/MZD99