Congress Warming Up to Infrastructure Bank Idea
As the realization grows in Congress that the nation is facing a crisis in infrastructure funding, a bill that drew little interest when it was introduced in the Senate last year is now getting a second look.
Sens. Christopher Dodd (D-Conn.) and Chuck Hagel (R-Neb.) wrote the National Infrastructure Bank Act of 2007 (S. 1926) to create a new mechanism for the federal government to use in financing large infrastructure projects. Modeled after the Federal Deposit Insurance Corp., the National Infrastructure Bank would operate as an independent entity of the federal government with the mission of evaluating and financing capacity-building projects “of substantial regional and national significance.” Publicly-owned mass transit systems, housing properties, roads, bridges, drinking water systems, and wastewater systems all would be eligible for NIB funding.
Supporting the premise behind the NIB bill are a number of reports detailing declining conditions of the nation’s infrastructure. According to the American Society of Civil Engineers, the current condition of our nation’s major infrastructure system earns a grade point average of D. The average age of drinking water and wastewater systems ranges from 50 to 100 years old, according to the ASCE. The Texas Transportation Institute has found that the average traveler is delayed 51.5 hours in the nation’s 20 largest metropolitan areas. The delays range from 93 hours in Los Angeles to 14 hours in Pittsburgh. Combined, these delays waste 1.78 billion gallons of fuel each year and waste almost $50.3 billion in congestion costs.
“The 21st century holds great promise for our nation. But you can’t journey to a brighter tomorrow by relying on yesterday’s infrastructure,” Sen. Dodd said when he introduced the NIB last August. “This measure can help rebuild our roads, bridges, transit and water systems, improve our quality of life, and spur jobs and economic growth. By investing today, we can minimize costs down the road and provide a brighter, more secure future for all Americans.”
NIB Attracts Support
National Infrastructure Bank legislation was introduced in the Senate and House last year, but has yet to see a vote on the floor of either chamber. That could change, however, as pressure builds from inside and outside the government for action on the infrastructure issue.
On March 10, the Clean Water Council sent a letter to Sen. Dodd expressing support for the NIB plan and emphasizing the importance of such a mechanism to provide capital for infrastructure projects. The next day, the NIB legislation was the main topic of discussion at a hearing held by the Senate Banking, Housing and Urban Affairs Committee.
At that hearing, David Mongan, P.E., F.ASCE, president of the ASCE, testified in support of the S. 1926, estimating that an investment of $1.6 trillion is needed to improve conditions.
“Nothing approaching that level of investment has been made,” Mongan pointed out to the committee. “This nation continues to under-invest in infrastructure at the national level. The total of all federal spending for infrastructure as a share of all federal spending has steadily declined over the last 30 years, according to the Congressional Budget Office.”
Also last month, House Speaker Nancy Pelosi (D-Calif.) announced her support for legislation being drafted by Rep. Earl Blumenauer (D-Ore.) that would establish a national commission to draw up “a national vision for infrastructure investments, including specific [financing] recommendations.”
Pelosi called the Blumenauer proposal “an excellent way” to highlight the need for a renewed national commitment to increased investment in U.S. infrastructure generally.
Without committing herself to particular funding mechanisms, Rep. Pelosi said the commission may want to consider a national infrastructure bank and also said Congress may one day need to contemplate establishing a federal capital budget for all U.S. infrastructure.
More recently, Rep. Pelosi mentioned the infrastructure bank in a speech linking the current economic downturn with the infrastructure crisis.
“With the economy slowing down and job losses accelerating, we must look for opportunities to take advantage of the stimulative effect of investing in infrastructure,” Rep. Pelosi said in an April 18 speech prepared for delivery to the Regional Plan Association, a think tank. “One idea being considered is an infrastructure development bank to promote public and private investment in projects of regional and national significance. The bank would be an independent federal entity that would evaluate major infrastructure proposals and finance the best of them using a variety of financial tools.”
Rep. Blumenauer delivered the morning keynote to the RPA, addressing the current infrastructure crisis and the need to remain economically competitive, protect the environment and secure the nation.
“Investing in our infrastructure is an investment in our economy and our future,” Rep. Blumenauer said. “Poor planning and a lack of adequate funding in recent years has led to wasted resources, lost productivity as freight and commuters idle in traffic, and has led to some projects deteriorating to the point where it’s a public safety issue, as we’ve seen from levee breaches in New Orleans and the bridge collapse in Minneapolis. It is time for a national vision that prepares our transportation, water, and energy systems for the challenges of the 21st century.”
How the NIB Would Work
As written in the Dodd-Hagel Bill, a five-member board of directors, appointed by the president and confirmed by the Senate, would lead the NIB.
Infrastructure projects would be eligible for NIB funding if they involved a potential federal investment of at least $75 million. The NIB would use a sliding scale to determine the appropriate level of federal investment in each project, taking into account the type of infrastructure system or systems, project location, project cost, current and projected usage, non-Federal revenue, regional or national significance, promotion of economic growth and community development, reduction in traffic congestion, environmental benefits, land use policies that promote smart growth, and mobility improvements.
According to Dodd, once a level of investment is determined for a project, the bank would develop a financing package with full faith and credit from the federal government. The financing package could include direct subsidies, direct loan guarantees, long-term tax-credit general purpose bonds, and long-term tax-credit infrastructure project specific bonds. Under the legislation, the initial ceiling to issue bonds would be $60 billion.
The NIB would be required to report annually to Congress on the projects it reviews and finances. A public database would be created to catalog what projects were funded and what financing packages were provided.
H.R. 3401, a bill in the House of Representatives that is identical to the Dodd-Hagel legislation, currently is referred to the Subcommittee on Water Resources and Environment of the House Transportation and Infrastructure Committee. At this writing, neither S. 1926 nor H.R. 3401 has been scheduled for debate.