Post on 23-Jan-2015
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USDOT “Talking Freight” Webinar—Institutional Arrangements
Establishing a National Freight Infrastructure Bank:Policy Issues & Program Design
David Seltzer
September 16, 2009
1629 Locust Street, Suite 100, Philadelphia, PA 19103 (Tel: 215-546-6801, Fax: 215-546-6803)
Background
• Outgrowth of I-95 Corridor Coalition study (December, 2008)
– Evaluate the potential benefits of creating a new special purpose entity (SPE) to help advance major freight projects.
• Recent proposals to create a national-level SPE to help finance infrastructure, including:
– National Infrastructure Bank Act of 2007 (S. 1926, “Dodd-Hagel”)– National Infrastructure Development Act of 2009 (H.R. 2521
“DeLauro”)– Build America Bonds Act of 2009 (S. 2021, “Wyden-Thune”) – President Obama’s FY2010 Budget (National Infrastructure Bank)
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How to categorize freight projects?
• HUBS: Terminals where goods are transferred-- Intermodal or Intramodal.
• CORRIDORS: Longer Surface routes linking Hubs.
• CONNECTORS: “Last Mile” surface links between Corridors and Hubs, generally in metropolitan areas.
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Why has public funding for Freight been limited?
• Much of Freight Infrastructure is privately-owned.
• Intermodal Uses straddle existing Federal programs.
• Projects often span political jurisdictions, complicating institutional structure.
• Public “spillover” nature of benefits hard to measure—or monetize.
As a result, the Constituency for Freight Projects is Narrower than for Public Works.
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What problems are we trying to fix?
• Unavailable or expensive financing for projects?– Overcome “Market failure” b y providing loans and other
financing subsidies.
• Insufficient funding for projects?– Provide a deeper subsidy to reduce revenue requirements
for major projects with public benefits.
• What is the appropriate timeframe for federal assistance?– Near-term stimulus.– Longer-term shift in federal funding role.
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Why create a new Federal program for freight--
– Assist projects whose scale and complexity exceed state/local capacity.
– Overcome gaps in federal-aid eligibility.
– Provide “One-stop Shopping” for project sponsors.
– Target projects with major economic benefits regionally & nationwide.
– Enhance project selection at the federal level (focus on outcomes, not modes).
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-- and why create a new Special Purpose Entity (SPE)?
• Autonomy & Expertise may lead to improved Project Selection.
• Align the singular mission of SPE with a dedicated revenue stream to accelerate investment.
• Offer “One-Stop Shopping” with multiple tools to project sponsors.
• Take pressure off of states’ formula-funded programs by only handling largest projects.
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Why not instead authorize states to create regional entities?
– Projects of truly national significance should have national funding responsibility.
– National scope brings economies of scale and avoids dilution of effort at regional level (SIBs).
– Allows access to direct federal credit support:• Lower-cost source of financing.• Greater budgetary efficiency through fractional “scoring.”
-- Federal Tax Subsidies
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How big a program and how should it be funded?• AASHTO Freight Authorization Policy Statement :
– $42 billion additional funding for Goods Movement Infrastructure over 6 years (in addition to existing freight-related funding):
• $21 billion in Formula Funding to States• $21 billion in Discretionary Allocations (new $3.5 billion/yr. Program)
Funded by:– Increases in existing freight-related sources such as:
• Diesel Fuel Tax• Heavy Vehicle Use Tax
– New sources of dedicated freight-related fees such as:• Customs Duties• Container Tax• Surface Freight Waybill• Other?
– General Fund?
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What organizational form should the SPE take?
Special Purpose Entity’s Relationshipto the Federal Government
GovernmentalOwned and controlled by
the public sector
PrivateOwned and controlled by
the private sector
Government Dept./Agency
Government Corporation
GovernmentSponsored Enterprise
Private Non-Profit
Corporation
Dept. of Transportation
Rural Telephone
Bank, FDIC .
Fannie MaeFreddie Mac
Transportation Finance Corp.
(proposed)
Less Federal
Funded by U.S. govt. On-budget
Governing Board Fully or partially funded by U.S. govt. May be on- or off-budget.
Shareholder-owned For-profit Implied federal backing
Membership organization Not for profit
More Federal
Why does the SPE’s organizational status matter to Federal
policymakers?
• Budgetary Scoring Treatment of NFIB’s Borrowing and Spending
• Treasury Concerns about:
– Cost-Effectiveness of Capital Raising Process
– Implied Federal Liability if SPE Issues Public Debt
– Competition with U.S. Treasury borrowing/Administrative burden
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What types of assistance should be offered?
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Formula Grants
NATIONAL FREIGHT INFRASTRUCTURE BANK
Role of National Freight Infrastructure Bank
Existing Fuel& Vehicle Fees
Increments toExisting FreightRelated Fees
Highway Trust Fund (HTF)
DISCRETIONARYGRANTS
FEDERAL CREDIT(TIFIA & RRIF)
TAX CREDIT BONDS& PAB VOLUME
State/LocalFees
UserCharges
TransportationFinance
CorporationTax Credit BondNational Issuer
HighwayAccount
TransitAccount
Freight AccountState Freight Program
FHWA
Federally CharteredPrivate Non-Profit
(Wyden-Thune)
StatesTransit
Agencies
FTA
Freight InfrastructureTrust Fund (FITF)
Projects of Nationaland Regional Significance
New DedicatedFreight-Related
Fees
Increments toExisting FreightRelated Fees
Public or Private Projects(including freight rail)
Potential Portfolio of Assistance
• The National Freight Infrastructure Bank (NFIB)– Receives $3.5 billion/year [$21 billion total] of revenues:
• ~$3.0 billion for Grants• ~$0.5 billion for Credit ~$5 billion of loans .
• NFIB selects projects > $[250] million for:– New Discretionary Grant program for projects with public benefits.– Expanded Federal Credit Program – Allocates Volume Cap under new $[25] billion Tax Credit Bond
program and expanded $[30] billion Private Activity Bond program.
---------------------------------------------------• Authorize States to establish the Transportation Finance Corporation
– Federally-chartered private non-profit corporation created to serve as nationwide non-federal issuing conduit for Tax Credit Bonds.
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Other Policy Design Issues TBD
• Multi-purpose Bank to assist Freight, Intercity Passenger Rail and other major Surface Transportation Projects?
• Consolidate existing Federal credit programs (TIFIA and RRIF)?
• Part of Reauthorization or part of new Stimulus?
• Receive General Fund contributions?
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