SIFMA Infrastructure Update

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July 8, 2010

In the News

NYU's Institute for Public Knowledge Highlights NIB

New York University’s Institute for Public Knowledge (IPK) released a publication titled Reinvesting in America, which highlights the concept of a National Infrastructure Bank (NIB). IPK’s Senior Fellow and NYU Director, Center on Law & Public Finance, Michael Likosky interviews Rep. Rosa DeLauro (D-CT), who introduced a bill (H.R. 2521) last year that would create an NIB.

“If our nation is to remain competitive in the global economy, it is clear that a strong national infrastructure policy that includes a National Infrastructure Development Bank is needed now more than ever,” Kikosky said. “One of the main purposes of an Infrastructure Bank is to take advantage of a very strong interest in the US market among central banks, sovereign wealth funds, pension funds, and insurance companies. It is a way of stimulating investment in our public works and creating jobs in a time of severe budgetary constraints,” Likosky added, asking Delauro how the federal government can ensure that private participation forms a “genuine partnership.”

“In my view, the central function of [an NIB] would be to issue federal bonds allowing these investors to invest in projects through the bank,” DeLauro said. “… a public-private partnership involves the private sector investing in bonds to help pay for the infrastructure project, but not taking ownership of or privatizing a project. Of course there are other types of public-private partnerships that the bank can facilitate. For any project, in my proposed legislation the bank is explicitly directed to ensure that we are engaged in projects that maximize the level of private investment while providing the greatest public benefit.”

The Obama Administration included NIB proposals in both its fiscal 2010 and 2011 budget proposals, though the fiscal 2011 budget proposed establishing a National Infrastructure Fund with $4 billion of seed money to create a “National Infrastructure Innovation and Finance Fund [NIIFF] to invest in projects of regional or national significance.” The NIIFF, essentially a hybrid of other national infrastructure bank proposals, would be established as a new operational unit within the Department of Transportation, and would direct resources for projects through grants, loans, or a blend of both. The fund would encourage collaboration among non-Federal stakeholders including states, municipalities, and private investors, and also promote coordination with investments in other infrastructure sectors.

In his fiscal 2010 budget proposal, Obama suggested a five-year, $25 billion NIB, though that proposal was never acted on.

IPK also offered five recommendations to policymakers on how to create the bank, which suggest that the bank should:

offer capacity-building to low- and medium-income cities and states as a cost-effective way of improving decision-making. Provide assistance to public pension fund fiduciaries seeking investments within the US;
ensure a multi-sectored bank including traditional infrastructures and alternative energy and broadband, and tie sectors together;
establish mechanisms for citizen participation in the project decision-making;
consolidate federal innovative financing programs and administer them through the bank to leverage the bank. Include key American Recovery and Reinvestment Act (ARRA) bond programs and explore ways in which the bank can issue its own bonds; and,
look to international examples and best practices in infrastructure bank design and public-private partnerships when creating an NIB.

A $1 Trillion Jobs, Infrastructure Program?

Bernard L. Schwartz, chairman and CEO of BLS Investments, told CNBC that the Obama Administration should create a $1 trillion public-private investment program to fund the nation’s crumbling infrastructure.

Schwartz appeared on CNBC with Maria Bartiromo on July 6, during which he called on the administration to create the program, which will cost the federal government $400 billion over a five-year period.

“We’re talking about getting people back to work and addressing one of the great deficiencies in America,” Schwartz said.

The trillion dollar investment would be financed through public and private partnerships and would cost the federal government less than $400 billion over a five-year period, Schwartz said.

"We can afford to have a multi-year program that allows people to go back immediately to work and that will create wealth in the future," he said. "That’s how America was built.”

DOT, FTA Announce $300 Billion in Transit Grants

The Federal Transit Administration (FTA) and Department of Transportation (DOT) announced they have distributed nearly $300 million of competitive grants to localities for 53 transit proposals for new streetcars, buses and transit facilities.

The grants are part of the Obama Administration’s “livability initiative” to better coordinate transportation, housing and commercial development investments. It is being made through two competitive grant programs, the Urban Circulator Grant Program and the Bus Livability Grant Program.

“This investment by the Obama Administration in our nation’s communities will create jobs, boost economic development and recovery, and further reduce our dependence on oil,” DOT Secretary Ray LaHood said in a release. “Our goals are to provide cleaner, safer, and more efficient ways to get around.”

LaHood and Federal Transit Administrator Peter Rogoff announced the winners of the two competitive grant programs during a press conference call in Washington. Six new streetcar and bus rapid transit projects will be funded with $130 million from the FTA's Urban Circulator Program, and 47 additional projects that will upgrade bus services and facilities will receive more than $163 million from the FTA's Bus and Bus Livability Program.

“Streetcars are making a comeback because cities across America are recognizing that they can restore economic development downtown – giving citizens the choice to move between home, shopping and entertainment without ever looking for a parking space,” FTA Administrator Rogoff said.

The six cities that submitted successful Urban Circulator proposals include: Dallas and Fort Worth, Texas; Chicago; St. Louis, Mo.; Charlotte, N.C.; and Cincinnati, Ohio. The six projects were selected from 65 applications totaling more than $1 billion in requests. Construction of bus facilities and new bus and bus-related purchases will move forward in the 31 states where 47 Bus and Bus Livability projects are located. These projects were selected from 281 applications totaling over $2 billion in funding requests.

A complete list of the winning projects can be found here.

The Weeks Ahead