Frustrated with what he characterized as the unwillingness of Republicans in Congress to advance a long-term funding plan for surface transportation programs, President Barack Obama on Thursday said his administration is moving to empower states and localities to find private-sector partners for needed infrastructure projects.
Obama announced the Build America Investment Initiative at the Port of Wilmington, Del., in front of the I-495 bridge that is shut down for repair, but his speech was overshadowed by news earlier in the day that a Malaysian Airlines jet had been shot down in Ukraine. He said deferring maintenance and enhancements of highways, bridges and rail systems is a drag on the economy, noting that construction will create good middle class jobs now, and future growth will come from companies that take advantage of efficient transportation and hire more. The White House underscored that point by releasing a report outlining the economic impact of transportation infrastructure investment
The Build America Investment Initiative is a government-wide effort to increase infrastructure investment by encouraging greater collaboration between the public and private sectors, expand the market for private infrastructure financing, and better utilize federal credit programs.
The President said a key part of the initiative is the creation of the Build America Transportation Center
at the Department of Transportation to serve as "a one-stop shop" that matches cities and states with private developers and investors; provides guidance on how to structure deals involving private financing; and improves access to federal credit programs, such as TIFIA, private-activity bonds, and Railroad Rehabilitation and Improvement Financing loans. RRIF's complex bureaucratic requirements, for example, have dissuaded many railroads and shippers from taking advantage of the loan program.
Institutional investors are sitting on hundreds of billions of dollars and have expressed great interest in building, maintaining and operating infrastructure in exchange for collecting revenue from users or payments from public entities. But the political and legal framework for long-term leases of public infrastructure is not as mature in the United States as it is in other countries. Obama's initiative is designed to make it easier and more appealing for the private sector to get involved in public-private projects.
The DOT said its investment center will offer hands-on support for states and local governments trying to access federal programs and assemble public-private funding packages, as well as tools and resources for interested private partners. It also serves as a clearinghouse for best practices from states that have experience with private investment in public assets.
The action builds on previous steps the administration has taken on infrastructure such as speeding up the permitting process for large projects. The new investment center will coordinate with the permitting center to ensure projects are designed and financed to move quickly through the permitting process.
The administration also announced the formation of the Build America Interagency Working Group, co-chaired by Treasury Secretary Jack Lew and Transportation Secretary Anthony Foxx, which will address barriers to private investments and partnerships across all infrastructure classes, including ports, by bringing better coordination among all parties to accelerate projects of national significance, particularly those that cross state boundaries.
The Treasury Department will host an Infrastructure Investment Summit on Sept. 9 to highlight innovative public-private partnership approaches and the federal government's resources.
A White House fact sheet pointed to the $1.1 billion Port of Miami tunnel project as a successful example of leveraging private financing and expertise to build an asset that would have taken much longer for local governments to complete on their own, or been unaffordable.
Obama said he supported legislation working its way through Congress that would prop up the depleted Highway Trust Fund for nine months, but said short-term fixes aren't conducive to infrastructure because projects have long lead times and require funding certainty.
"To call this a Band-Aid is an insult to a Band-Aid," he said, crediting Delaware Gov. Jack Markell for the line.
He blamed Congress for refusing to act on his his four-year, $302 billion transportation proposal this spring, which would be funded in large part by a plan to reform corporate taxes and encourage companies parking profits overseas bring them home and pay a lower tax that would go to transportation. Not mentioned, however, is the fact that the tax-reform idea would provide a one-time windfall rather than a sustainable source of revenue.
The White House infrastructure report said 65 percent of major roads are rated in poor condition and 25 percent of bridges require significant repair or can't handle current volume.