[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                       USING INNOVATIVE FINANCING
                TO DELIVER HIGHWAY AND TRANSIT PROJECTS

=======================================================================


                               (111-101)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             April 14, 2010

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure




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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
    Vice Chair                       DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
    Columbia                         VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi                 Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York              Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           ROBERT E. LATTA, Ohio
CHRISTOPHER P. CARNEY, Pennsylvania  BRETT GUTHRIE, Kentucky
JOHN J. HALL, New York               ANH ``JOSEPH'' CAO, Louisiana
STEVE KAGEN, Wisconsin               AARON SCHOCK, Illinois
STEVE COHEN, Tennessee               PETE OLSON, Texas
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
VACANCY
                  SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

                   PETER A. DeFAZIO, Oregon, Chairman
NICK J. RAHALL II, West Virginia     JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             DON YOUNG, Alaska
BOB FILNER, California               THOMAS E. PETRI, Wisconsin
TIM HOLDEN, Pennsylvania             HOWARD COBLE, North Carolina
BRIAN BAIRD, Washington              JERRY MORAN, Kansas
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
TIMOTHY H. BISHOP, New York          HENRY E. BROWN, Jr., South 
MICHAEL H. MICHAUD, Maine                Carolina
BRIAN HIGGINS, New York              TIMOTHY V. JOHNSON, Illinois
GRACE F. NAPOLITANO, California      TODD RUSSELL PLATTS, Pennsylvania
DANIEL LIPINSKI, Illinois            BILL SHUSTER, Pennsylvania
MAZIE K. HIRONO, Hawaii              JOHN BOOZMAN, Arkansas
JASON ALTMIRE, Pennsylvania          SHELLEY MOORE CAPITO, West 
TIMOTHY J. WALZ, Minnesota               Virginia
HEATH SHULER, North Carolina         JIM GERLACH, Pennsylvania
MICHAEL A ARCURI, New York           MARIO DIAZ-BALART, Florida
HARRY E. MITCHELL, Arizona           CHARLES W. DENT, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  CONNIE MACK, Florida
STEVE COHEN, Tennessee               JEAN SCHMIDT, Ohio
LAURA A. RICHARDSON, California      CANDICE S. MILLER, Michigan
ALBIO SIRES, New Jersey              MARY FALLIN, Oklahoma
DONNA F. EDWARDS, Maryland           VERN BUCHANAN, Florida
GENE TAYLOR, Mississippi             ROBERT E. LATTA, Ohio
LEONARD L. BOSWELL, Iowa             AARON SCHOCK, Illinois
RICK LARSEN, Washington
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan, Vice 
    Chair
BETSY MARKEY, Colorado
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Bertram, Honorable Chris, Assistant Secretary for Budget and 
  Programs and Chief Financial Officer, United States Department 
  of Transportation..............................................     3
Conti, Honorable Eugene A., Secretary, North Carolina Department 
  of Transportation..............................................     3
Leahy, Arthur T., Chief Executive Officer, Los Angeles County 
  Metropolitan Transportation Authority..........................     3
Parker, Jeffrey A., President, Jeffrey A. Parker & Associates, 
  Inc............................................................     3
Washington, Phillip A., General Manager and Chief Executive 
  Officer, Regional Transportation District, Denver, Colorado....     3

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Cohen, Hon. Steve, of Tennessee..................................    51
DeFazio, Hon. Peter A., of Oregon................................    52
Duncan, Hon. John J., of Tennessee...............................    54
Mitchell, Hon. Harry, of Arizona.................................    60
Oberstar, Hon. James L., of Minnesota............................    61

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Bertram, Hon. Chris..............................................    65
Conti, Hon. Eugene A.............................................    82
Leahy, Arthur T..................................................    91
Parker, Jeffrey A................................................   105
Washington, Phillip A............................................   134

                       SUBMISSIONS FOR THE RECORD

Bertram, Honorable Chris, Assistant Secretary for Budget and 
  Programs and Chief Financial Officer, United States Department 
  of Transportation:
    Response to request for information from Hon. Richardson, a 
      Representative in Congress from the State of California....    32
    Response to request for information from the Subcommittee....    71
Conti, Honorable Eugene A., Secretary, North Carolina Department 
  of Transportation, response to request for information from the 
  Subcommittee...................................................    88
Leahy, Arthur T., Chief Executive Officer, Los Angeles County 
  Metropolitan Transportation Authority, response to request for 
  information from the Subcommittee..............................    99
Napolitano, Hon. Grace, a Representative from the State of 
  California, letter from Gateway Cities Council of Governments..    16
Parker, Jeffrey A., President, Jeffrey A. Parker & Associates, 
  Inc., response to request for information from the Subcommittee   113
Washington, Phillip A., General Manager and Chief Executive 
  Officer, Regional Transportation District, Denver, Colorado, 
  response to request for information from the Subcommittee......   147

                        ADDITIONS TO THE RECORD

American Road and Transportation Builders Association, written 
  testimony......................................................   188
High Desert Corridor Joint Powers Authority, written testimony...   191
San Bernardino Associated Governments, written testimony.........   209
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   USING INNOVATIVE FINANCING TO DELIVER HIGHWAY AND TRANSIT PROJECTS

                              ----------                              


                       Wednesday, April 14, 2010

                  House of Representatives,
              Subcommittee on Highways and Transit,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Peter 
A. DeFazio [Chairman of the Subcommittee] presiding.
    Mr. DeFazio. The Highways and Transit Subcommittee will 
come to order.
    Today's subject is to discuss, or the formal title is Using 
Innovative Financing to Deliver Highway and Transit Projects.
    I am not going to revisit all of the statistics regarding 
the miserable condition of the Nation's infrastructure. Suffice 
it to say that the United States used to lead the world in 
transportation infrastructure. For some time I have been saying 
we are losing so much ground we are falling toward third-world 
status, until one of my colleagues pointed out that most third-
world nations invest a larger percentage of their GDP in 
transportation infrastructure than we do. So I have taken to 
calling it fourth-world; that is, formerly first world, now 
vaulting over the third-world backwards.
    Transportation investment is critical to the efficient 
movement of our people, our goods, our competitiveness 
internationally, and to our fuel efficiency. So many things go 
to it. We are trying to write a long-term bill to rectify these 
problems. The Administration is scared to death that we might 
actually make additional investments, so they don't want to 
talk about it. And we, therefore, turn to this panel to talk 
about some other ways we might be able to increase investments 
without using the dreaded T word, and begin to address the 
Nation's infrastructure investment deficit.
    I have read all the testimony. I assume other Members of 
the Committee have. So we would appreciate it if you, when you 
speak, you either summarize your most cogent points or respond 
to someone else on the panel if you have disagreements, and 
then we will go and move quickly into questions. I found some 
of the testimony very helpful and we will want to build on that 
as we go through the hearing.
    With that, I would turn to the gentleman from Tennessee, 
Mr. Duncan.
    Mr. Duncan. Well, thank you very much, Mr. Chairman, for 
calling this hearing on using innovative financing practices to 
deliver our surface transportation projects. I also want to 
thank all of our witnesses for attending this hearing. Some of 
them have come from very long distances to be here and I look 
forward to hearing their testimony, because this is a very 
important hearing. The reauthorization of the highway and 
transit and safety programs has been stalled for almost a year 
now, and that is largely due to the fact that we are unable to 
agree on how we will fund all of these programs and projects in 
the future; and, of course, that is the mega-billion question 
that we are all facing, particularly on this Subcommittee.
    Tax revenues are declining for all levels of Government and 
everyone is being asked to do more with less. As a result, 
innovative financing methods will play a bigger role in the 
next surface transportation reauthorization bill, a bigger role 
than they ever have before.
    In the past, innovative financing has been associated 
primarily with toll road projects but, in recent years, transit 
projects and highway projects that do not include tolls have 
benefitted from innovative financing.
    Today we will hear about Denver's Union Station project, 
which will utilize two USDOT loan programs, and we will hear 
about a tunnel project in Miami that uses innovative financing 
but does not include tolls.
    As the number of transportation projects that are financed 
with loans, bonding, or with private sector funding grow, there 
are important policy issues that must be addressed. One is my 
concern that we need to make sure that today's governors and, 
in some cases, mayors do not leverage so much of their future 
Federal funding that future governors do not have any Federal 
money available to address the problems they will face and will 
be left holding the bag, so to speak.
    At the same time, we do not want to give the Federal 
Government absolute veto power over every financing decision 
made by a State DOT or a local transit agency, because we need 
to have flexibility.
    It will be difficult to strike the right balance between 
these two perspectives, but I believe that the witnesses today 
can provide us with valuable information that will help us move 
in the right direction.
    Thank you, Mr. Chairman, for calling this hearing, and I 
look forward to hearing the testimony of the witnesses.
    Mr. DeFazio. I thank the gentleman.
    We will move now to the witnesses, and the first will be 
The Honorable Chris Bertram, Assistant Secretary for Budget and 
Programs, Chief Financial Officer, United States Department of 
Transportation.
    Mr. Secretary.

 TESTIMONY OF THE HONORABLE CHRIS BERTRAM, ASSISTANT SECRETARY 
  FOR BUDGET AND PROGRAMS AND CHIEF FINANCIAL OFFICER, UNITED 
 STATES DEPARTMENT OF TRANSPORTATION; THE HONORABLE EUGENE A. 
CONTI, SECRETARY, NORTH CAROLINA DEPARTMENT OF TRANSPORTATION; 
  PHILLIP A. WASHINGTON, GENERAL MANAGER AND CHIEF EXECUTIVE 
 OFFICER, REGIONAL TRANSPORTATION DISTRICT, DENVER, CO; ARTHUR 
     T. LEAHY, CHIEF EXECUTIVE OFFICER, LOS ANGELES COUNTY 
 METROPOLITAN TRANSPORTATION AUTHORITY; AND JEFFREY A. PARKER, 
        PRESIDENT, JEFFREY A. PARKER & ASSOCIATES, INC.

    Mr. Bertram. Chairman DeFazio, Ranking Member Duncan, 
Members of the Subcommittee, I am pleased to appear today to 
discuss the Department of Transportation's efforts to use 
innovative financing techniques for surface transportation. My 
written testimony outlines the Department's programs in this 
area. Let me just make a couple of observations.
    First, innovative financing is a response to the difficulty 
State and local governments face in funding major projects of 
regional or national significance through traditional grant 
programs on a pay-as-you-go basis. Today, such projects are 
rarely fully financed from just one source of funds; it is much 
more likely that a project sponsor will draw in multiple 
sources of revenue to move a project forward.
    The Denver RTD, which you will hear from today, is a good 
example of this approach. The Department is participating with 
the RTD through the Transit New Starts program, the TIFIA 
program, and the RRIF program; and we are also in discussions 
with Denver RTD about the use of private activity bonds.
    The Department has also begun discussions with Los Angeles 
about their 30-in-10 program, which envisions accelerating 
multiple projects by leveraging the sales tax revenue dedicated 
to transit.
    My second point: innovative financing is broader than just 
highway projects. There is heightened interest among transit 
and rail project sponsors in innovative financing. Although 
transit is traditionally less reliant on user fees, transit 
projects can leverage sales taxes and other revenue streams to 
repay project financing costs. For example, the Department 
recently provided a $171 million TIFIA loan for the Transbay 
Transit Center in San Francisco, a major transportation hub 
costing over $1.2 billion. The loan will be repaid by dedicated 
real estate tax increment revenues resulting from the economic 
benefits of the overall project.
    Thirdly, interest by State and local governments in such 
programs appears to be higher than ever. Last winter, the 
Department published a Notice of Funding Availability for the 
TIFIA program, with a deadline of March 1st, for letters of 
interest from project sponsors. Project sponsors submitted 39 
letters of interest for almost $13 billion in credit assistance 
to support over $41 billion in total project costs. These 
letters of interest represent a range of different project 
types, including transit, highway, bridge, and freight 
intermodal projects. However, due to the limited funds 
available to the Department, we will only be able to provide 
loans to a fraction of these requests.
    Finally, allow me to briefly discuss the proposal in the 
President's budget to provide $25 billion over five years for a 
new Infrastructure Fund. This Fund would allow the Department 
to select major projects from around the Country and provide a 
variety of financial products--grants, loans, or a 
combination--to best fit a project's needs. This proposal 
reflects an acknowledgment that the Federal Government needs to 
take a more active role in supporting major transportation 
infrastructure projects with targeted grants and credit 
assistance.
    I would be pleased to answer any questions you may have.
    Mr. DeFazio. I thank the gentleman.
    We turn, then, to the next witness, who would be The 
Honorable Eugene A. Conti, Secretary, North Carolina Department 
of Transportation.
    Mr. Duncan, would you care----
    Mr. Duncan. Well, Mr. Chairman, I was going to mention I 
think our Committee Member, Mr. Coble, might like to introduce 
this witness from his home State.
    Mr. DeFazio. That would be great.
    Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman, Mr. Duncan. I am indeed 
pleased to recognize Secretary Conti. Mr. Chairman, I am 
scheduled to manage a bill on the Floor, so I may have to 
depart before I hear all the testimony, but Secretary Conti is 
no stranger to Capitol Hill; he served a good period of time 
here as the chief of staff for Congressman David Price.
    Gene, were you with any other Member besides David?
    Mr. Conti. [Remarks off microphone.]
    Mr. Coble. I thought there was another stint.
    But, Mr. Chairman and Mr. Duncan, Secretary Conti has 
served with distinction as the Secretary of the North Carolina 
Department of Transportation and I am indeed pleased to welcome 
him here, and thank you for letting me introduce Mr. Conti. 
Thank you. Yield back.
    Mr. DeFazio. Proceed.
    Mr. Conti. Thank you, Mr. Chairman and Mr. Duncan. I 
certainly appreciate Mr. Coble's kind comments.
    We fully support the use of these innovative financing 
programs, and I am going to talk a little bit in detail about 
some of our uses in North Carolina, a range of programs made 
available over the last 10 to 15 years and, as Secretary 
Bertram said, becoming increasingly important to the States as 
we seek to build on the basic user fee-based financing that 
comes through our Federal grant programs for both highway and 
transit. But we have found the need to supplement that grant 
program grant approach with these innovative financing tools.
    In North Carolina, as in many States, our traditional 
sources of financing are heavily constrained by gas tax revenue 
shortfalls and DMV fees and those kinds of things, so we have 
had to look at a number of these programs to move forward, and 
let me just tick a few of those off.
    One, we have used the Value Engineering Project Clustering 
approach and we are very successful in replacing seven bridges 
on our Outer Banks in a 75-day period, something that, if we 
had taken the traditional approach, may have taken several 
years to do and probably would have cost us significant amounts 
of money, more than we actually ended up spending. So taking 
that approach was very important to getting it done.
    We have also gotten into the Design-Build and Design-Build 
Finance area. We have used those approaches on more than 25 
projects around the State and we have saved significant time in 
getting those projects done and also significant dollar savings 
getting them done earlier. For example, we are completing the 
Charlotte Loop project, which has been 20 years in the making. 
We are going to complete it five years earlier by using Design-
Build Finance.
    We have gotten into the GARVEE Bond program very 
significantly, $530 million covering over 42 projects, and we 
have set that up to be kind of a revolving fund for us to keep 
those dollars flowing back into projects as we repay those 
GARVEE Bonds.
    We have also gotten into the tolling business. We have 
closed our financing on Triangle Expressway in the Raleigh area 
using a combination of Build America Bonds, Toll Revenue bonds, 
and a TIFIA loan. We will have that project as the first 
cashless electronic toll road in the Country. Starting 
cashless; I know a lot of places are converting to cashless.
    We are also working with a private sector partner on the 
Mid-Currituck Bridge that is on the Outer Banks of North 
Carolina, a project that we wouldn't do with public dollars 
alone, but we do have private sector interest in sharing the 
development costs and also sharing in the revenue stream after 
we get that built.
    We had a great example in Charlotte of a public-public 
partnership, if you will, the State, the Federal Government, 
and the local governments coming together to build a very 
successful light rail project in Charlotte.
    We are also moving forward with a public-private 
partnership in Charlotte built around a new inner city 
passenger rail station which will also service local buses and 
have mixed use development around it as well.
    Finally, we are working under the Value Pricing program to 
look at tolling all or parts of I-95, which is the main street 
of the East Coast; runs right through our eastern part of our 
State.
    A couple of areas where we have some questions and we would 
love to have some conversation today is about the TIFIA credit 
program. Again, we have used it; we intend to use it in the 
future, but there are a couple of concerns.
    One is the approach of requiring up-front payments for 
TIFIA, and North Carolina, I think was either the first or 
second to have to go through that experience. Coming up with 
that $10 million up-front payment did complicate the financing 
of our project and certainly would complicate the financing of 
our additional projects that we have put in for. Finally, we 
need much more clarification about some of the new features 
that the Administration has introduced around livability and 
sustainability, and how that applies to TIFIA projects. So we 
would like more definition around that.
    Finally, on the I-95 issue, we are working very hard to 
develop the alternatives, kind of similar to what Maryland did 
on I-95 north of Baltimore, where they developed about five or 
six different approaches in terms of pricing and financing, and 
then moved forward with the Express Lanes approach. So within a 
year or so we will have that study done; we will have those 
alternatives outlined. There is a lot of public involvement we 
are doing to make sure that our citizens understand what the 
options are and what the impacts might be.
    Thank you again, Mr. Chairman and Members of the Committee, 
for giving me the opportunity to be here today. I would be 
happy to answer questions.
    Mr. DeFazio. Okay. Thank you.
    Next we will have Mr. Phillip A. Washington, General 
Manager and Chief Executive Officer of the Regional 
Transportation District, Denver, Colorado.
    Mr. Washington, thank you for being here.
    Mr. Washington. Chairman DeFazio, Ranking Member Duncan, 
Members of the Committee, thank you for having me here. I also 
want to acknowledge my Colorado delegation representative--she 
is not here--Betsy Markey, who has been wonderful in helping 
our transit agency doing the projects that we are doing.
    The innovative financing tools that we have employed at RTD 
are very, very important. We encourage Congress to implement 
TIFIA, PABs, the things that we will talk about today. They 
have been very, very critical for us. We would not have been 
able to implement the projects or go down the road of 
implementation of the single, really, largest voter-approved 
transit expansion program in the Country without these 
innovative financing tools that we are talking about today.
    We are implementing the full load, as Secretary Bertram 
mentioned. The public-private partnership, which today, 
incidentally, the concessionaire teams that will be bidding on 
this Eagle P3 Project, which consists of two and a half rail 
lines--commuter rail, maintenance facilities--those bids are 
due in today. So this is very, very timely that we talk about 
this.
    Private activity bonds, we are implementing TIFIA, railroad 
rehabilitation and improvement financing, and a lot of 
interagency cooperation and coordination with our State DOT and 
the Transit Agency.
    Also, there was some discussion about the livability 
cooperation between DOT, EPA, and HUD. We, of course, have a 
regional partnership and we are exercising that. We also, 
understanding this is a financing or innovative financing 
discussion, but there is some great innovative workforce 
initiatives that we are doing out in Denver, too, with this 
transportation investment program as an impetus.
    So, again, thank you for having me here. I look forward to 
the questions.
    Mr. DeFazio. Thank you.
    Mr. Arthur T. Leahy, Chief Executive Officer--oh, wait. 
Excuse me. Mrs. Napolitano would like to introduce the next 
witness.
    Mrs. Napolitano. Thank you, Mr. Chair, and it is very 
brief. Just to welcome Mr. Leahy again to the Subcommittee. He 
has been before us several times, formerly with the Orange 
County Transit, now with the Low Angeles, and we welcome him 
with open arms because he brings a new face, new ideas, and 
certainly a lot of brain thrust that we have sorely needed in 
the LA region. The only thing I have to say is that we put in 
that there is 10 million people in LA. There are more like 13 
million just in the county alone. And that is a big job. So we 
welcome you and look forward to your testimony, sir.
    Mr. Leahy. Thank you, Congresswoman.
    Mrs. Napolitano. Thank you, Mr. Chair.
    Mr. Leahy. Mr. Chair, Mr. Duncan, Members, I am pleased to 
be here with you. Los Angeles is what we call in California a 
self-help county. What that means is that there are three one-
half penny sales tax measures--voter approved--the last one 
measure approved by a 68 percent level. Those funds generate 
about $1.5 billion annually, which are used to pay for transit 
highway operations and capital. We very much look forward to 
working with you as partners using those funds as a basis for 
transportation development and economic development in Los 
Angeles and Southern California.
    My testimony cited a number of projects: the Alameda 
Corridor, using Federal loan guarantees guaranteed by container 
fees, a very successful project; the SR-91, an Orange County 
project, one of the best examples in the world of congestion 
pricing. Under that program, Orange County has now achieved, 
using transponders to collect the fares, the highest levels of 
speeds, revenues, passenger volumes, and average vehicle 
occupancy in the history of that road, a very successful model 
with no public money in the road; it is paid for exclusively by 
tolls.
    I will note also that our joint development projects in Los 
Angeles generate around $17 million per year in revenue.
    Measure R was passed in 2008. It generates about $30 
billion over a 30-year period. It is going to be used to pay 
for highway and transit projects. The mayor of Los Angeles has 
recently advanced a notion of a so-called 30/10 program in 
which we would seek Federal loan guarantees and assistance to 
advance the 30-year program to be done in a 10-year period of 
time, the objective being to achieve the benefits from those 
projects, but also to stimulate the economy. The LA Economic 
Development Corporation estimates this would create about 
500,000 jobs during the course of the project.
    We look forward to working with you on such things as a 
National Transportation Investment Finance Fund, Build America 
Fund, the Metropolitan Mobility Access Fund. Using the monies, 
the revenue stream that we have coming in Los Angeles to do 
transit and highways, we think that we can accomplish some 
wonderful things for Southern California, indeed.
    So we appreciate being here with you and look forward to 
working together in the future.
    Mr. DeFazio. Thank you.
    Then, finally, Mr. Jeffrey A. Parker, President of Jeffrey 
Parker & Associates, Inc. Mr. Parker. Make sure your mic is on 
there, Mr. Parker.
    Mr. Parker. Thank you very much, Mr. Chairman. It is an 
honor for me to be here today with such a distinguished panel. 
You have my testimony and we refer to a number of projects that 
we have worked on which I think demonstrate some innovation. 
Our company advises public agencies on innovative finance, and 
I must say that I share your interest in finding other ways 
beyond the T word to generate the revenues that we need to get 
the job done in this Country. We have been looking for it for 
30 years; we haven't found it yet.
    What we have found are ways to stretch the dollars that we 
do have available to get some better outcomes, to get more 
product for those dollars. The loan programs, the grant 
programs at the Federal level have been essential to advancing 
the edge of innovation in this area. Sometimes we fall off the 
edge a little bit, but hopefully we correct and we come back to 
where we need to be.
    I think the opportunities in front of us are significant, 
but so are the challenges during these difficult economic 
times, and I look forward to any questions that you may have. 
Thank you.
    Mr. DeFazio. I thank all the panel members, and hopefully 
now we can get into a little more interesting and thoughtful 
discussion among the members of the panel and the members who 
are here today. We have some pretty good participation.
    I would start with Secretary Bertram. You know, TIFIA 
suffers perhaps from being too successful; that is, you 
mentioned an extraordinary amount of potential demand and you 
are only going to be able to meet a fraction of that. Yet, at 
the same time the Administration is proposing this new I Fund. 
I mean, we have a plethora of programs.
    One question would be you have TIFIA, you have RRIF, you 
get PABs, you get BABs, you got GARVEEs, on and on and on, and 
now you want to have an I Fund. I mean, the question is at some 
point do we want to look at some sort of centralized 
clearinghouse that perhaps deals in different instruments which 
have different benefits? Because if you have a tax-exempt or 
not tax-exempt issuance, there are different markets for that. 
Some agencies have more capability of repayment than others, so 
that goes to what sort of financing they can access.
    I mean, do we really need to create a new I Fund, when we 
have something very successful like TIFIA, which is over-
subscribed? Would it be better to put that money into TIFIA so 
that we can meet some of that already known demand? I am a 
little puzzled by--are we going to bring in some sort of 
rationalization to this process?
    Mr. Bertram. I think you are exactly correct. One of the 
points of having the Infrastructure Fund, is that you would 
have one entity within the Department of Transportation that a 
project sponsor could go to for loans, loan guarantees, grants, 
or a combination thereof. The vision of the Department is that 
TIFIA, RRIF, and other programs would eventually get folded 
into the Infrastructure Fund, so you wouldn't be going to the 
Federal Transit Administration just to deal with New Starts and 
Federal Highways for TIFIA, but you would have sort of a 
central entity that people could go to that would provide 
planning and develop projects. Your point is exactly what we 
are trying to do.
    Mr. DeFazio. Now, we tend to have stovepipes, many 
stovepipes, and, again, we just talked about that briefly, but 
RRIF is way under-subscribed and TIFIA is over-subscribed.
    Mr. Bertram. Right. You know, it is interesting because the 
RRIF program started out really as a method of credit 
assistance for small, short-line railroads after the 
deregulation of the railroad industry. The last highway bill, 
SAFETEA-LU, made a number of changes to the RRIF program, 
expanded the eligibility, expanded the amount of credit it 
could give, and the RRIF program is actually changing. We see a 
lot more demand for that. We actually are currently negotiating 
with the Port Authority of New York on----
    Mr. DeFazio. With what? I'm sorry.
    Mr. Bertram. Port Authority of New York and New Jersey for 
a potential loan to buy new commuter railcars, which would be a 
loan of almost half a billion dollars. So you are right, 
currently TIFIA seems over-subscribed, RRIF seems under-
subscribed, but the amount of interest we are, all of a sudden, 
getting in the RRIF program over the last year is really quite 
amazing. I think we will see the Department making many more 
RRIF loans not just for freight railroads, but also for 
commuter rail and possibly passenger rail.
    Mr. DeFazio. Okay. There was in the press--and Mr. Conti 
mentioned this, it was in his testimony, the first time I had 
seen it. They essentially had to pay points for their TIFIA 
loan. What was it called? It had a special name. It was some 
kind of fee. What did you call that?
    Mr. Conti. While some of our folks called it an extortion 
fee, but----
    [Laughter.]
    Mr. Conti.--that is not the official name of it. In fact, I 
don't know exactly what----
    Mr. DeFazio. Okay. I don't remember either, but, Mr. 
Bertram, would you care to comment on the extortion fee and why 
they were subjected to it, how it is going to be applied, what 
is the consistency of it? Because one concern I have about 
TIFIA is it seems like we have treated everybody the same. Are 
we now going to treat people differently; that is, say, well, 
you have more capabilities, therefore, we are going to charge 
you an up-front fee? And is the up-front fee limited? This one 
seems to have been about three percent of the value. Can you 
comment on that?
    Mr. Bertram. Sure. Let me comment on that. It is something 
that happened before I got to the Department, but basically 
because TIFIA is so over-subscribed, the Department, sometime 
last year or the year before, made a decision that they had a 
number of applicants for TIFIA loans and they had a limited 
amount of credit subsidy that they got from the highway bill, 
and they made a number of allocations that were essentially 
capped. So North Carolina got an allocation of $20 million for 
the credit fee.
    As the project developed and as the Department worked on 
calculating what the credit costs would be, that ended up being 
more than the $20 million. However, there was no additional 
credit subsidy because it had been allocated to other programs 
who also received a capped amount. So, as the loan went to 
closing, my understanding was that North Carolina paid more and 
then the Department also increased its cap by some amount, I 
forget how much that was.
    But it is really due to the fact that the program is over-
subscribed.
    Mr. DeFazio. Right. But, is this going to be consistently 
applied in the future? Is it going to be applied only to 
certain people? I see it as a way of extending the program; I 
understand that part. But the question is, is it a set 
percentage fee? In what circumstances might it be assessed? If 
one area is economically depressed and another is doing very 
well, will one fee be applied consistently? I mean, we weren't 
trying to facilitate the 30/10 plan in LA, that is going to be 
a big use potentially of funds. How are you going to apply it?
    Mr. Bertram. I don't know how we are going to apply that 
prospectively; we just got, as I mentioned, the 39 letters of 
interest. We are going to start working through those; look at 
the eligibility, look at the credit worthiness. I don't know if 
this Secretary will want to apply a similar policy or not in 
order to stretch those TIFIA dollars. We only have about $108 
million for 2010.
    Mr. DeFazio. How much for 2010?
    Mr. Bertram. About $108 million in contract----
    Mr. DeFazio. But the total--okay, let's just parse through 
this real quickly, then I want to get to other members of the 
panel. But your total requested amount is? You threw out that 
number.
    Mr. Bertram. Was $13 billion in loans.
    Mr. DeFazio. Okay. And what percent of that--I mean, what 
would be the credit part of that?
    Mr. Bertram. The rule of thumb is maybe 10 percent credit 
subsidy.
    Mr. DeFazio. Okay.
    Mr. Bertram. So that would be $1.3 billion.
    Mr. DeFazio. Okay. And you have how much?
    Mr. Bertram. One hundred eight.
    Mr. DeFazio. Okay, 108 or 80?
    Mr. Bertram. Eight.
    Mr. DeFazio. Eight. Okay. So you have somewhere about 12 
percent of the demand.
    Mr. Bertram. Yes.
    Mr. DeFazio. That is kind of pathetic. Don't you think we 
should be looking at somehow trying to increase the scope of 
that? Because, there is very little cost here to the Federal 
Government compared to the traditional program, and yet the 
economic returns, the investment returns are phenomenal.
    Mr. Bertram. Right.
    Mr. DeFazio. So you are asking for $4 billion in the 
President's budget for the I Fund.
    Mr. Bertram. Right.
    Mr. DeFazio. If we had that $4 billion to apply to credit, 
we could more than cover those loans and cover the 30/10 plan, 
probably.
    Mr. Bertram. Absolutely, and of the $4 billion we would 
envision that some part of it would go to TIFIA types of loans.
    Mr. DeFazio. Well, maybe all of it should just go into 
TIFIA right now, and then we work toward consolidation.
    With that, I turn to Mr. Duncan. Mr. Duncan.
    Mr. Duncan. Well, thank you, Mr. Chairman.
    Secretary Bertram, you mention in your testimony this 
National Infrastructure Innovation and Finance. How is this 
different from TIFIA or other things that we already have in 
existence?
    Mr. Bertram. As I mentioned earlier, it is different in 
that it would be broader than just TIFIA loans. We know TIFIA 
is capped at a third of the overall project cost. The I Fund 
could do more than that. It also would have grants that could 
be combined with loans or loan guarantees.
    It would also allow a project sponsor to come to one entity 
within the Department of Transportation and try to get a 
financing project as opposed to currently having to go to 
Federal Highways for a TIFIA loan and perhaps having to go to 
the Federal Railroad Administration for a RRIF loan and the 
Office of the Secretary to get a private activity bond. So it 
would be a consolidated place where people could apply.
    Mr. Duncan. Let me ask you another thing. In SAFETEA-LU we 
expanded the Railroad Rehabilitation and Improvement Financing 
program. There have been 24 loans made under that program for 
$851 million, but that is only a tiny fraction of the 
authorization.
    Mr. Bertram. That is correct.
    Mr. Duncan. Why is that? Is there just not that much demand 
or is there a problem of some type?
    Mr. Bertram. No, the demand is changing, as I mentioned 
earlier to Congressman DeFazio. We have a lot more interest in 
the RRIF program. The eligibility was changed in SAFETEA-LU, as 
well, and people are starting to understand that they can use 
RRIF loans. With Denver RTD, we are currently in discussions to 
do a RRIF loan for Denver Union Station, which is sort of their 
downtown transit hub, which would be combined with a TIFIA 
loan. So we actually are moving forward with the RRIF program, 
trying to find new innovative ways to use it not just for 
freight railroads or short lines, but actually using it to do 
transit and commuter rail projects.
    Mr. Duncan. Let me ask you this. The Administration earlier 
asked for an 18-month extension and we didn't go quite that 
far. Does the Administration want to see a highway bill passed 
this year? Is that a goal of the Administration?
    Mr. Bertram. Secretary LaHood has said he wants to work on 
a highway bill. I don't know exactly what the timing will be. 
We have until this December with the latest extension, as you 
know, and he is working internally on some proposals and some 
principles for the highway and surface reauthorization.
    Mr. Duncan. And without--I know you wouldn't want to--you 
couldn't come out in favor of it, I suppose, but do you think 
that, from what you have read and heard and so forth, do you 
think that most experts feel that there needs to be a--who have 
looked at this, feel that there needs to be an increase in the 
gas tax?
    Mr. Bertram. I think the Administration has been pretty 
clear that in this economic climate we don't think a gas tax 
increase is appropriate. We do support extra investment in 
infrastructure; that is why we included the Infrastructure Fund 
in the President's budget request.
    Mr. Duncan. Well, I wasn't asking you if the Administration 
favored it; I am just asking if you think, from what you have 
read and heard, that most people feel that, most of the people 
who have studied this, feel that there needs to be an increase 
in the gas tax. It is a little bit of a different question.
    Mr. Bertram. Yes, it is a different question. I don't know 
if the majority of people who have studied this feel there 
should be an increase. I know there are people who have studied 
transportation that believe that there should be an increase in 
the gas tax, that is correct.
    Mr. DeFazio. If the gentleman would yield for just a second 
on that.
    But every study and every analyst who is credible out there 
has said we need additional investment and funding.
    Mr. Bertram. Right.
    Mr. DeFazio. There is not agreement on the form of it.
    Mr. Bertram. That is correct.
    Mr. DeFazio. But there is--we can quantify the deficit as 
being huge in terms of annual investment.
    Mr. Bertram. Right.
    Mr. DeFazio. Okay. I just wanted to clarify that. Thank 
you.
    Mr. Duncan. Well, I know you have done a lot of different 
things and you worked for this Committee for a while, and you 
also worked for the Senate Commerce Committee, I understand. I 
am tempted to ask you which you liked better, working for the 
House or Senate?
    [Laughter.]
    Mr. Bertram. They were both great experiences.
    Mr. Duncan. Secretary Conti, have you studied the proposed 
bill that we have in this Committee, the reauthorization bill? 
And what I am getting at, have you looked or consider what 
effect this proposed Office of Public Benefit would have on the 
projects that you have worked on in North Carolina?
    Mr. Conti. Well, I think what we are concerned about in 
terms of the authorities in the outline that was put out is it 
seems to reduce a lot of the authorities that exist now, some 
of the things that I talked about that we are using or 
attempting to use. I think it would be useful to have some 
centralized evaluation process for how these tools work and 
which projects are creditworthy and all that, so I am not 
opposed to an Office of Public Benefit, but I think without 
having the Federal tools available to us, it would be very 
difficult to work in that structure.
    Mr. Duncan. All right, thank you.
    Mr. Washington, this Denver Gold Line and these corridor 
projects, $2.5 billion, how long did it take you to work that 
out from conception to actually starting on the project?
    Mr. Washington. I would think it took us about two years or 
so in various phases. The procurement phase, which we are in 
right now, as I mentioned, the technical bids are due back 
today. So I would say about two and a half years to put this 
together; dealing with the industry, dealing with the Federal 
Transit Administration, who has been great partners with us. 
Putting this design-build-finance-operate-maintain public-
private partnership together has been very, very huge.
    As we move forward through this--and one of the lines that 
you mentioned includes the airport line. I was talking to some 
aviation friends of mine and we were talking about that Denver 
International Airport is the fifth busiest airport in the 
Nation, but the only one with no train from it to the downtown 
area. So this construction build-out, which will take about 
four years, and then the operation and maintenance piece of 
this that will be operated by the private sector for a 40-plus 
year period is huge.
    We have significant control, as the public sponsor, to 
include setting the fares, setting performance measures, the 
opportunity for liquidated damages if performances are not met. 
We believe that this PPP in transit, where the private equity 
partner is bringing up to $1 billion to the table up front and 
where we will pay back through availability payments, is really 
a model for the Country in transit in terms of public-private 
partnerships. So it took us a while to get to this point in 
working with FTA and our elected officials.
    And I see Congresswoman Markey has come in. Thank you for 
all your work helping with us.
    But it took us a while, but we are----
    Mr. Duncan. What was the most difficult part to work out?
    Mr. Washington. I think the risk allocation piece, looking 
at the risk allocation and how much risk the public sector or 
the public agency takes on versus the concessionaire team was 
probably the most significant piece.
    Mr. Duncan. All right. Thank you.
    Mr. Leahy, I am very impressed that you got a 68 percent 
vote in favor of a tax increase. Somebody did a pretty good 
sales job, I would say. But you describe this SR-91 express 
lane toll road as the most successful toll road project, did 
you say, in the world?
    Mr. Leahy. Sir, I think I referenced congestion pricing, 
one of the most successful congestion pricing models in the 
world.
    Mr. Duncan. I see. And the tolls run as high as $9.50 at 
times?
    Mr. Leahy. Yes, sir.
    Mr. Duncan. And that is to go 10 miles?
    Mr. Leahy. Yes, sir.
    Mr. Duncan. But did you also say that the tolls are higher 
not only at peak times, but they pay more the faster, the more 
speed there is?
    Mr. Leahy. Yes, sir. If I might describe how the OCTA 
approached this.
    Mr. Duncan. Go ahead.
    Mr. Leahy. We purchased the road from a private firm who 
had developed the project under a State franchise for a variety 
of reasons, fundamentally, a non-compete protection they 
enjoyed. It was very controversial. The OCTA sought to purchase 
the road, which we did, and negotiated price, and at the time 
we sought State authority for charging a toll because the 
purchase was going to be paid for out of tolls.
    Once we purchased, took possession of the road about six 
years ago, we then developed a tolling policy in which we 
looked at what the customers wanted, which was speed, that is, 
therefore, time. We then looked at traffic volumes and we 
discerned that when volumes--since two lanes in each direction 
came to 3200 cars per hour, speeds became unstable, radically 
unstable; they would go from 60 or 70 down to 15. As a 
consequence, we developed a tolling policy which sets tolls by 
hour of day, by direction, and day of week. As a consequence, 
the tolls are very high.
    Let's say, Thursday afternoon at 5:00 there might be $9.50. 
Friday morning, in the opposite or in that same direction it 
might be $1.5 to go the same trip. So what happens is the 
users, the customers, who use it voluntarily--remembering there 
is no taxpayer money in those lanes--manage their trip times 
around when the tolls are highest. So, as a consequence, the 
p.m. peaks became wider. So under this process we achieved the 
highest speeds, the highest volumes, the highest revenue, and 
because of the discount to car pools, the highest average 
vehicle occupancies in the history of that road.
    And, I guess to cap this off, I would note it took the 
profits, which are substantial, and used those profits to pay 
for improvements in the parallel free lanes, and Orange County 
paid for improvements in Riverside using the profits from the 
toll lanes.
    Mr. Duncan. Approximately how much profit are you making 
off that? You said the profits are substantial.
    Mr. Leahy. Yes. The last year I was there, the last full 
year I was there for this, there were revenues of around $50 
million and total expenses of around $30 million.
    Mr. Duncan. All right. I have some other questions, but the 
Chairman has asked me to go to other members, so we will save 
those for later. Thank you.
    Mr. DeFazio. Yes, we will have an opportunity for a second 
round. I would just like to, since there are a number of 
Members here, move along.
    Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair.
    I certainly find great interest in the information you have 
in your testimony, Mr. Bertram, and I certainly would hope, as 
you mentioned the 30/10 for Southern California, that you don't 
forget that that is the mayor's plan, not the county's plan, 
nor MTA's plan, nor the city's plan. And they have to be taken 
into consideration when taking a look at the progress that it 
is making or not making.
    One of the major focuses of the mayor is to finish his lane 
to the sea, which is for tourism. We need mass transit, and the 
completion of the Santa Ana Freeway, the I-5. So, you know, 
there are things that need to be considered. And one of the 
reasons I believe that Mr. Leahy's description of the passage 
of Measure R was because it was dedicated funding to 
transportation. The only problem was there wasn't any defined--
how would I say?--of who was going to benefit, what areas, 
whether it was bus transit or rail transit or highway building.
    I would love to have a letter into the record, Mr. Chair, 
from Gateway Cities, representing 20 cities. These are elected 
officials, Gateway COG, kind of outlining some of the concerns 
they have with the 30/10 plan. It is ambitious and it is a very 
good plan except if they take and build it out to the sea, it 
is already probably--how would I say?--over budget in planning, 
which will mean there won't be very much funding left for any 
of the other projects, and that is some of the concerns that 
the cities have.
    We look forward to being able to have more assistance to 
the communities themselves, who can determine what their needs 
are, rather than the State or the county, and direct ability 
for them to either bond local funding to be able to implement 
those local changes, and I look forward to talking to you and 
having possibly more of a knowledge for the communities. 
There's the three councils of government that represent about 
77 of the 85 county cities, and certainly they should have some 
input as to whether or not the plan, that is the 30/10 plan, is 
going to be something that is going to be helpful or 
detrimental in their eyes.
    I don't have many questions other than to thank you for 
being here. As far as the gas tax is concerned, while I agree 
that it is probably not the time to do it, but if people see 
that it is dedicated to things that they feel are important, 
especially with the fact that so many new hybrids are on the 
road, there is less gas tax coming into the communities for 
them to be able to assist in addressing some of their local 
concerns.
    So while it may not be right now, timely now, I don't want 
to--how would I say?--belabor it, but there hasn't been a gas 
tax increase since 1993. That is a long time and I think it is 
time that we begin to at least consider it and have the general 
public understand the reason why and be able to move forward in 
the next few years.
    So, with that, thank you, Mr. Chair. I yield back.
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    [GRAPHIC] [TIFF OMITTED] 55967.009
    
    [GRAPHIC] [TIFF OMITTED] 55967.010
    
    Mr. DeFazio. I thank the gentlelady.
    Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman. Thank you for calling 
this hearing.
    Thank you all for being with us.
    Secretary Conti, good to see you again especially. I know 
that the North Carolina Turnpike Authority has tentative 
projects on its books that would require coordination with our 
neighboring States for collection purposes. Mr. Secretary, how 
would the motorists traveling through or in the State be 
affected should these projects move forward?
    Mr. Conti. We are very active in a group called the 
Alliance for Interoperability. This is a critical issue as more 
and more States go to tolling as an option on some of the major 
highways, so we are trying to get a system where we can share 
information about license plate data so we can assess the 
tolls, if necessary, through video enforcement. We are going to 
need some help from the Federal Government on that effort, but 
it is something that we are actively leading in terms of a 
national coordination effort.
    Mr. Coble. Thank you, sir. You and I are both thoroughly 
familiar with the infamous Yadkin River Bridge which spans the 
Yadkin River, and I think, Mr. Conti, the most heavily traveled 
corridor between Washington and Atlanta. I think I am right 
about that.
    Mr. Conti. I think that is right, Congressman.
    Mr. Coble. But recently it was announced that the NCDOT 
will use GARVEE funds to finance the first phase of the 
project, and I commend you for taking that step forward. But if 
you would, Mr. Secretary, walk us through what led NCDOT to 
determine GARVEE Bonds were the best option to get to work.
    Mr. Conti. Well, we have had a very active GARVEE program 
for the last several years, using it for significant projects 
like the Yadkin River Bridge. We had applied for a TIGER grant 
for the $300 million that it will take to do the whole project. 
We were not successful in getting that amount of money out of 
the TIGER program, so we decided to do the first phase of the 
project, which is replacing the bridges, using our GARVEE Bond 
authority. Moving forward, we are also looking at ways to 
finance the second piece so we can get that under construction 
hopefully in the near term and get all the project done within 
the next three to four years.
    Mr. Coble. Thank you, sir. Now, the Chairman asked you 
about the TIFIA loan. Did you want to say any more about that? 
You responded to the Chairman.
    Mr. Conti. Well, I thought the Chairman's questions were 
very appropriate. I think the key is we need to know what the 
rules are for this program so we can decide if that is the 
vehicle we want to pursue to finance some of these important 
projects. And if the rules keep changing or we are not sure 
what the up-front fee is and how that is going to be 
calculated, we just need a lot more transparency, a lot more 
definition about what the rules are for that program and, 
frankly, all these programs--Build America Bonds, GARVEEs.
    We have had great success with the GARVEE program because 
the DOT defined the program early on and worked with the States 
to refine it, improve it, make it workable. I think all of us 
are very pleased with that. I think we need the same approach 
on TIFIA or any other of these financing programs. We just need 
to know what the rules are and how they are going to be 
applied, have a much more transparent process so we can 
understand how these decisions are made and what our financial 
liability might be.
    Mr. Coble. Thank you, Mr. Secretary.
    Thanks to all of you for being with us today.
    Mr. Chairman, I yield back.
    Mr. DeFazio. Thank you, Mr. Coble.
    Still on your time, Mr. Bertram, could you respond to that? 
Because I think that is a key point and we seem to have created 
some uncertainty here. They were assessed a fee. That was the 
previous Administration. Could you----
    Mr. Bertram. I totally agree with Gene. Putting these 
projects together is not cheap for an applicant; they require 
financial analysis, they have to go through preliminary 
engineering, the NEPA process. So I think people should have a 
better idea, before they put in a full application, what the 
rules are, and I think we will definitely keep that in mind for 
the next round of loans.
    Mr. DeFazio. Well, keep it in mind is one thing. The other 
is to have an expressed intent. It is like I will be advised by 
his concerns, it is like that doesn't mean anything. So don't 
you think there should be some guidance, perhaps a letter or 
something promulgated by the Secretary or your office that 
says, for this next round, these are the conditions we will 
apply?
    Mr. Bertram. Yes. I think in the next round, when we look 
at the letters of intent and we--or letters of interest and we 
go back to the applicants before they put in a full 
application, I think we will be very clear about what sort of 
the general outlines of those loans will be. I agree with you.
    Mr. Conti. Mr. Chairman, if I could just add an additional 
comment. To the Administration's credit, they had planned to 
have a public seminar, if you will, back in, I think, February. 
One of the snowstorms hit Washington that week, so it got 
cancelled.
    But I would be very supportive, and I think most of the 
States would be, if they would have some kind of a public 
discussion like that where we could come and present directly 
to the Administration and the leaders at DOT our views on how 
this program could be structured and have a good dialog, and 
then, of course, ultimately they need to make the decisions 
about how to structure it, but I think that kind of public 
exchange would be very helpful.
    Mr. DeFazio. That is a great idea. Have we rescheduled?
    Mr. Bertram. We haven't rescheduled that; we plan to do 
that this summer.
    Mr. DeFazio. Okay. Should be able to, you know----
    Mr. Bertram. With no snow this time.
    Mr. DeFazio. Then you have thunderstorms.
    Okay, with that, Mr. Carney.
    Mr. Carney. Thank you, Mr. Chair.
    Over here, guys.
    Secretary Bertram, I had a quick question. I am from 
Pennsylvania, but we pay attention to what transportation 
issues are around the Country, and looking at the toll road 
near San Diego that got the TIFIA loan and then the private 
owner operator, and it went bankrupt, what have we learned from 
that? Are there lessons that we need to be aware of as we apply 
this around the Country, this bankruptcy? Are we going to get 
the money back? How is this going to work?
    Mr. Bertram. You are referring to the South Bay project?
    Mr. Carney. Yes.
    Mr. Bertram. There was a--there is a dispute between the 
company that constructed the project and the project sponsor as 
to outstanding costs associated with building the road that 
were in the hundreds of millions of dollars, and the project 
sponsor decided to go into bankruptcy, which means that the 
court will now decide which of those construction claims are 
valid and will have to be paid. The Department of Justice is 
representing the Department in that case.
    There is a feature in TIFIA that people commonly refer to 
as the springing lien, which means that when a project sponsor 
goes into bankruptcy, the Federal Government is first in line 
to be repaid. This will be the first time that it is actually 
tested in a practical case, so I think whatever experience we 
get out of that, I think that will probably be the biggest 
lessons we get out of that. But there are risks to these 
projects, and that is why they want a TIFIA loan, because they 
could not get the whole project going without one. So we are 
working very closely with Justice and monitoring that.
    Mr. Carney. From your knowledge, do you anticipate this 
happening elsewhere where TIFIA money is involved?
    Mr. Bertram. On all of our loan programs we have sort of a 
portfolio monitoring process. I am not aware of any other TIFIA 
loan that is potentially in this situation.
    Mr. Carney. Okay. Thank you.
    Mr. Conti, I agree with you in your comments that 
innovative financing mechanisms are not the primary fund; we 
need to have a transportation bill, we need to have a full 
authorization bill. There is no question about that. That is 
the way to do this. But, from your perspective, what are some 
of the most efficacious of the innovative financing that would 
serve all of our needs, from your perspective?
    Mr. Conti. Well, I think the GARVEE program has been a 
very, very successful program. We certainly would continue to 
support that. Build America Bonds, we have had some experience 
with that in the transportation area and I think again offers 
some significant opportunities for us, so we would be very 
supportive of that. Again, the TIFIA program, or something like 
it, very helpful.
    I think the important thing is to have a range of tools 
available and then to have a one-stop shop, if you will, at the 
Federal level so you could deal with one agency or one office 
that could help you walk through the alternatives and what 
might be most useful, because every State is different, every 
city is different in terms of their own capabilities and what 
kinds of packages could be put together.
    None of these projects anymore are very easy to do from a 
financial perspective, so you really have to be creative; you 
have to look at all the tools and then package them together. 
For instance, our first toll road in North Carolina, about a 
billion dollar project, we used Build America Bonds, we used 
the TIFIA loan, and then we had something called State 
Appropriation Bonds, where the legislature committed resources 
over a 30-year period to repay those bonds. So that is a 
package of financing that made sense and it all worked, and we 
have that project under construction.
    Mr. Carney. Mr. Bertram, is the Department putting together 
a one-stop shop?
    Mr. Bertram. Yes, sir, that is one of the main concepts 
between our proposed Infrastructure Fund, is that there is one 
entity within the Department that major projects could go to to 
get information, get technical assistance, get planning help to 
do a combination of credit and grant programs, yes, sir.
    Mr. Carney. And the ribbon cutting on that will be when?
    Mr. Bertram. Well, we will work with you on developing 
that.
    Mr. Carney. Okay, thank you.
    No further questions, Mr. Chair.
    Mr. DeFazio. I thank the gentleman.
    With that, I would turn to the gentleman, Mr. Brown.
    Mr. Brown. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here today. You know, I am 
from South Carolina, along the coast there, and roads is a 
major problem. In fact, Mr. Conti, we are your next door 
neighbor and we have several major projects that we are 
independently, I guess, depending on each other to connect 
those roads, particularly I-73 and I-74.
    Mr. Conti. Yes, sir.
    Mr. Brown. I notice, as I travel up 95, that you all are 
making some pretty good progress, probably much more than we 
are. How are you actually funding those projects?
    Mr. Conti. Well, right now we are funding them through the 
traditional grant programs and State funding, but we are 
looking, on 95, at tolling options on 95 for significant 
capacity expansion and modernization. We would not just toll 
the existing facility; we would have a significant effort to 
improve, modernize, expand capacity, and then toll it.
    And Secretary Limehouse and I have had several discussions 
about working together. Actually, we had a five State coalition 
several years ago, Virginia all the way to Florida, to look at 
that 95 corridor and work together, and we continue to have 
good relationships up and down that corridor and we will be 
continuing to work in partnership on some of those efforts.
    Mr. Brown. I know that it is just a matter of time when it 
has to go from two lanes to three lanes. I went to see the 
shuttle launch a couple weeks ago and that part in Florida is 
just the same way, it is just stop and go from time to time.
    Mr. Conti. Exactly. Georgia has done a pretty good job of 
widening more than some of the rest of us.
    Mr. Brown. Yes, South Carolina has been in that same 
ballpark too.
    Mr. Leahy, I was interested in listening to you that you 
could charge a total of $9.50 for a 10 mile ride. That is 
pretty amazing.
    Mr. Leahy. Yes, sir, it is. Maybe I should describe the 
physical layout. The SR-91 connects Orange County, which is 
jobs ridge, with Riverside County, which has many people who 
come to Orange County and, indeed, LA County to work. There is 
a mountain range which separates those two counties and this 
toll lane, the 91, goes over a pass through that mountain 
range. So it really operates just like a bridge like in San 
Francisco; thus, there are no really easy options. So I don't 
know that I would argue that is applicable in all cases, but in 
this instance it works.
    Mr. Brown. Does it have truck traffic also?
    Mr. Leahy. Yes, sir, a great deal of truck traffic.
    Mr. Brown. Well, we are trying to help you out a little bit 
on that with the Panama Canal being expanded. We think a lot of 
those tankers or big container boats, instead of stopping in 
Los Angeles, will actually go through the Canal and come up the 
East Coast to Charleston and some of the other places. So I am 
leading all this up to lobby the Secretary to recognize that 
pattern and shift in the transportation arena. But, anyway, 
that is interesting. And I heard the statement it is making $20 
million a year or thereabouts?
    Mr. Leahy. Yes, sir, and, again, no taxpayer money. I would 
just note there is major truck and rail traffic and logistic 
centers in Riverside and San Bernardino counties, major impacts 
of goods movement in Los Angeles on the 60 and the 10. So we do 
think that Federal support for goods movement and the like is 
very important to all States.
    Mr. Brown. So you are looking for a little relief if we 
could help you out a little bit over that?
    Mr. Leahy. Yes, sir.
    Mr. Brown. Mr. Secretary, I noted in South Carolina we had 
to do a lot of creative things to be able to meet our 
transportation needs. I am kind of amazed as I sit on this 
Committee--and this is my tenth year--that we haven't taken 
more of a proactive role in trying to address the 
transportation shifts in this Country.
    I don't know that we really did much to update the 
interstate system basically since the 1950s or so, and it seems 
like to me it would be an ideal time with the unemployment 
around 10 percent, and we know that transportation, every 
billion dollars we spend creates 30,000 jobs or thereabouts. It 
seems like to me it would be a good match, with the economy 
down, that this would be a spark to create jobs in this down-
turned economy.
    Mr. Bertram. Okay. And the Recovery Act included almost $27 
billion with the highway funding, which I think has now been 
obligated by all the States and most of those projects are 
underway.
    Mr. Brown. But most of those went to resurfacing and doing 
some other stuff. I don't know what we--we haven't done 
anything. I know the gentleman from North Carolina, we are 
trying to do some things within our own structure to extend the 
interstate system. In fact, we have about 30 miles built in 
Myrtle Beach which is all local money.
    So we just need some relief, and we were hoping that the 
reauthorization bill would be more available than postpone 
another 18 months. We felt like that ought to have been a jump 
start to create the jobs and the economy. We are just looking 
for some help. I know in South Carolina, when I chaired the 
Ways and Means Committee, we created an infrastructure bank, 
and that was our hope, and we actually have under construction 
about $3 billion worth of construction jobs because of it.
    So I was hoping that on the national level that somebody 
would be creative enough to create a similar kind of device and 
fund it with some additional funding so we could address just 
our major projects. Do you have any thoughts about that?
    I know my time has expired, Mr. Chairman. I apologize.
    Mr. Bertram. As said before, I think the Infrastructure 
Fund that we have proposed, which could do credit projects, 
would be sort of the leveraging you are sort of talking about, 
where you would have a certain amount of Federal money, would 
turn by a multiplier of whatever the credit subsidy is into a 
loan, and then also get local and State matching funds. So we 
would be interested in working with you.
    Mr. Brown. Okay, thank you very much.
    I have one other issue, Mr. Chairman, I was going to talk 
to the Secretary after the meeting.
    Mr. DeFazio. There will be an opportunity for a second 
round also.
    Ms. Markey, you have already been mentioned twice by Mr. 
Washington.
    Ms. Markey. Thank you.
    Mr. DeFazio. So go right ahead.
    Ms. Markey. Thank you, Mr. Chairman. This is my first 
hearing on this Subcommittee, and I look forward to working 
with all of you.
    And thank you for being here, Mr. Washington. You have done 
an incredible job. I have a couple of questions. The FasTracks 
expansion was originally funded back in 2005 with a sales tax 
increase. Can you talk a little bit about how you cultivated 
public support for that tax increase? We are talking about 
other funding mechanisms like a gas tax increase. How did you 
get really overwhelming public support for it?
    Mr. Washington. Yes. The transit agency, RTD, went out to 
voters in, actually, 2004 to ask that a four-tenths of a cent 
be put on the ballot to build out the FasTracks investment 
program. It was extraordinary support from the Metro mayors, 
some 34 Metro mayors came together and supported that 
initiative; it was passed on the ballot. Some of the highlights 
of that successful campaign had to do with jobs and congestion 
relief and mobility, so all of those things came together for a 
58 percent success on the vote. But I think the biggest piece 
had to do with the Metro mayors that came together in a 
nonpartisan way to support that investment program.
    Ms. Markey. Well, I want to congratulate you on that. Of 
course, then, unfortunately, with the recession, sales tax 
revenues have gone down and you have, I think, a $2 billion 
funding gap, and Denver RTD I think is the only transit agency 
to successfully utilize the public-private partnership program. 
So can you talk a little bit about what are some of the 
benefits and impediments of that program? And do you think that 
the pilot program should be continued in the next 
reauthorization?
    Mr. Washington. I do think it should be continued. That 
public-private partnership program, we were honored to be 
selected by the Federal Transit Administration to be in the 
Penta-P Program. The Penta-P Program--and I always get tongue-
tied when I try to say what that is--the public-private 
partnership pilot program, the Penta-P Program. So we were one 
of the agencies to be selected to be in that program, which 
came with very streamlined processes for the New Starts 
process. So where a lot of the processes take maybe five to 
seven years, in that program we were able to get from point A 
to point B, where we are now, about to pick a concessionaire 
team, in about two years. So that was very, very key.
    I do and would encourage Congress to continue with those 
streamlined approaches, whether it be the Penta-P Program or 
some of these innovative financing pieces that we are talking 
about today. But we would not be able to pursue as we have the 
public-private partnership to this degree without having those 
streamlined approaches.
    Ms. Markey. Do you think that your participation in the 
pilot program helped at all working through the FasTracks? I am 
sorry, the New Starts program?
    Mr. Washington. Yes. Yes. They helped tremendously. I think 
some of the substantial savings resulted from being able to 
lessen some of the risks and impacts of future inflation. When 
you look at construction costs, being able to get through the 
NEPA process, being able to get through some of the risk 
assessment pieces really helped us in terms of being able to go 
out now in this economy, where we are getting bids in 15, 20 
percent below internal estimates, that has helped us a great 
deal being able to speed that up. So, yes.
    Ms. Markey. Thank you very much, Mr. Chairman.
    Mr. DeFazio. If I could follow up. I am a little confused, 
Mr. Washington, because I had asked about your testimony and 
the Penta-P Program yesterday, and I was told you don't have 
your grant yet. You said it took you from five years to two 
years. I mean, do you have assurances that you are going to get 
it and could you just give me a little more detail?
    I am very frustrated with the bureaucracy and the length of 
time, as is the Chairman of the Full Committee, to get through 
this process, and we are looking at legislative streamlining in 
our bill, but since the Administration doesn't want to do the 
bill, we are not making a lot of progress there. And I am not 
going to give them things they want until they do what I want, 
which is talk about how the heck we are going to pay for our 
transportation infrastructure. So we are not changing the law.
    But how is it that you could have gone from five years to 
two years? What different processes were adopted and why 
wouldn't we just apply all these processes to every FTA grant? 
But there is this other question where staff says you don't 
have the grant yet, so we don't know if it worked.
    Mr. Washington. Yes. We do not have the grant yet, but we 
have great assurances that we will get the grant.
    Mr. DeFazio. In what time period?
    Mr. Washington. In 2011 or whenever the next transit 
transportation reauthorization bill. So----
    Mr. DeFazio. Okay. So it didn't actually go from five to 
two, it has gone to five to maybe three.
    Mr. Washington. Yes, I would agree with that.
    Mr. DeFazio. But you are saying that somehow--but you are 
saying you are at a point of just waiting for the final 
approval and money; you are not grinding through having to go 
through the cost benefit analysis for the 172nd time for some 
bureaucrat at FTA, right?
    Mr. Washington. Yes, sir. Yes, sir. And if I could 
elaborate. Because of the timing of the FFGA and the new 
transportation reauthorization bill, we phased this project, 
where the private equity funders brought the money, that 
private equity up front in the project. So we are using that 
private equity money up front to build one of those lines, 
which we hope to break ground on in August. Then with the 
timing of the FFGA do phase two of the program. So that is how 
we are structuring that.
    Mr. DeFazio. Okay. But they did develop for you and apply, 
and you did go through a process that was streamlined in terms 
of the normal shuffling of paper back and forth in assessing 
the benefits and all that.
    Mr. Washington. Yes, sir.
    Mr. DeFazio. So we do have a model to streamline there.
    Mr. Washington. Yes, sir.
    Mr. DeFazio. Okay. All right.
    Okay, Mr. Schauer.
    Mr. Schauer. Thank you, Mr. Chairman.
    I am from Michigan and, needless to say, it is very 
difficult to take advantage of these innovative financing 
programs without State match, without local public dollars, let 
alone private dollars. In fact, at 2:15 I have a meeting with 
some Members of the Michigan delegation that are on the full 
T&I Committee with some DOT officials and representatives from 
the governor's office, trying to figure out some innovative 
ways to not leave about a half a billion dollars of Federal 
road funding on the table for fiscal year 2011 that would be 
distributed to other States. I am also working with some 
communities on transit projects.
    So I am intrigued by the ideas of the Assistant Secretary 
and those of you who have also commented on these, and I am 
just wondering if you have ideas that I can take back, short of 
the legislature stepping up and doing what it has to do on the 
revenue side or through financing to draw down these Federal 
dollars. It is a jobs issue for my State. Certainly, it is a 
jobs issue from the standpoint of providing mobility for urban 
areas for intermodalism that is desperately needed. And the 
reason I am on this Committee is to help our State make these 
key investments, and there are opportunities for public-private 
partnerships in a number of these, so I wonder if you can say 
something that will give me some hope or take back to my State.
    Mr. Bertram. I know you have met with the Secretary, 
Secretary Ray LaHood, on this issue. He has asked Victor 
Mendez, who is the Administrative----
    Mr. Schauer. Yes. Victor has been a part of those meetings, 
yes.
    Mr. Bertram. I don't think we are going to find one silver 
bullet to help you; I think Victor is looking at a number of 
different alternatives that we are working on that hopefully we 
can take back to the State fairly soon, like I said, not one 
solution, but a couple of maybe different steps to deal with 
the match issue for Michigan this year. We are very aware of it 
and want to work with you on it.
    Mr. Schauer. Great.
    I don't know if anyone else has any advice or comments. 
Yes, sir.
    Mr. Leahy. In California, the law permits a county to seek 
a sales tax for a limited period of time, up to 30 years, but 
it might be 10 years, and it requires a two-thirds vote. In 
order to get a measure passed--and I mentioned we received 68 
percent approval in Los Angeles during the recession--but in 
order to get that level of support, that requires a detailed 
set of projects in different categories with a schedule for 
delivering those projects. In California, typically, agencies, 
county commissions like the MTA have an oversight committee, a 
taxpayers' oversight committee which are independent of the 
Authority, which can then make independent annual reviews and 
reports to the taxpayers. And then the tax expires.
    The point of all of that was to create assurances to the 
taxpayers that the money will stay in the local area, that it 
will go where it is promised to go, and that there will be 
independent oversight to assure the voters that in fact has 
happened. Because the tax will expire, that really motivates 
the local authority, of course, to deliver on the promises so 
that the voters might give consideration at some point in the 
future.
    Mr. Schauer. Well, thank you for that. That is an 
interesting model. The Michigan Department of Trans--actually, 
the State Transportation Commission has pulled 243 State 
projects from its five-year plan as a result of our current 
situation, so we have to figure out a way to put those projects 
back in the plan and do it now. I am very concerned about this 
construction season. I am pleased that we reached agreement 
with the Senate on a 15-month bill. We certainly need a longer 
term bill.
    But one of the provisions that I supported, and actually 
initially introduced, that was in the Jobs for Main Street bill 
that we passed just before the end of the year, the Senate has 
not acted on, would waive the State match for 2011. Now, some 
States may choose not to do that because that, in fact, reduces 
the overall size of the pie. But in a State like Michigan, 
where we are about $85 million short for fiscal year 2011, that 
would give us the fungibility to avoid, again, leaving half a 
billion dollars on the table.
    So, Mr. Secretary, I appreciate your efforts. Please extend 
my thanks to Secretary LaHood, and we will continue to work.
    I yield back. Thank you, Mr. Chairman.
    Mr. DeFazio. Okay, Mr. Brown has, on behalf of Mr. Diaz-
Balart, a request.
    Mr. Brown. Mr. Parker, this is a couple of questions for 
you, and I note, for the sake of time, I am just going to read 
you the questions, submit them in writing, and let you respond.
    One is the Port of Miami Tunnel project is interested 
because it highlights the benefits of transfer and risks 
associated with the project to the private partners in the 
project. Would Florida DOT have moved forward with this project 
if they were not able to transfer the potential risks 
associated with construction costs and overruns to the private 
sector? Is that a yes or no?
    Mr. Parker. Very definitely No, it would not have gone 
forward without risk transfer to the private sector.
    Mr. Brown. Okay. Both the I-5 and 95 project and the Port 
of Miami Tunnel project used public-private partnerships with 
availability payments. Can you talk a little more--I won't ask 
you to elaborate, but, but you can give me this in writing--can 
you talk a little bit more about the availability of payments 
and how they are applicable to highway projects that are not 
tolled and how they are applicable to transit projects? And I 
guess if you can just submit those to him. And I know that time 
is moving along pretty quickly----
    Mr. DeFazio. Well, I think there would be general Committee 
interest if you can answer that question right now, the second 
one. The first one was a little more specific geographically, 
but the availability issue that he just raised, could you 
address that?
    Mr. Bertram. Was that to me?
    Mr. DeFazio. Mr. Parker? I thought he was addressing it. 
Okay, Mr. Parker. Both. Both of you. Because that is a very 
interesting question.
    Mr. Parker. It is a tool that we found very attractive for 
both projects to gain the benefit of the risk transfer without 
imposing certain economic consequences on the Port of Miami and 
in order to preserve State priority in the I-595 corridor in 
maximizing throughput, rather than maximizing the revenue that 
those tolled lanes would yield. And what we found is that the 
market was extremely interested in that concept. Basically, it 
is an annual payment which covers the initial construction 
costs, the ongoing operations and maintenance costs, and it 
covers the capital renewals that occur over a 35-year 
concession period. And there are some variations on a theme in 
there.
    In the Port of Miami Tunnel, there is no toll whatsoever 
charged; these are monies that are forthcoming from the State 
of Florida and from the local jurisdictions, some of which are 
paid through the availability payment and others of which have 
been paid up front. The risk transfer is enormous. These are 
the largest bored highway tunnels that have ever been built in 
the United States; they are being built in the worst 
geotechnical conditions that are imaginable.
    And the bids that the State received by doing this through 
a public-private partnership resulted in construction costs 
that were half of what the State's independent engineers had 
anticipated. The reason for that was that there were new 
entrants to the market who were attracted to the PPP, the 
public-private partnership structure. They did not need the 
revenue. They were not looking for the revenue upside; they 
were looking for the compensation in the form of a long-term 
revenue stream.
    And I think this is a model that addresses many of the 
policy concerns that have been out there relative to 
negotiating a fixed rate of return, of isolating the revenues 
between the public and the private sector. About one-third of 
the cost of the I-595 project would be covered by tolls. The 
State of Florida does is it sets the toll to maintain the 
traffic flow--just as in the SR-91 project--it collects it 
physically through the Florida Turnpike Enterprise, and it 
retains those monies. The State uses that revenue to pay the 
availability payment, and whatever shortfall there is it makes 
up, and if there is an upside, the public benefits from that 
upside.
    Mr. DeFazio. But as I recall from your testimony, there was 
a lump sum payment upon completion; there was also some 
benchmark payment in the interim. So it wasn't that it all was 
put in--there were some fairly substantial payments there. And 
those came from State funds?
    Mr. Parker. They come from a combination of State and 
Federal funds in the I-595 case. In the Port of Miami Tunnel 
case, what emerged was that the State and the City of Miami and 
Miami-Dade County forged a partnership to pay for the project. 
Miami-Dade County wanted to pay for their share up front and to 
finance that through a municipal bond.
    Mr. DeFazio. Okay.
    Mr. Parker. So we injected, upon completion, a $350 million 
final acceptance payment in the Port of Miami Tunnel, and that 
still maintained the risk transfer, because that check is not 
written until the project is actually built.
    Mr. DeFazio. I have a question both to you and to Mr. 
Bertram in terms of when we are looking at risk transfer. If 
the availability payments depend upon pledging future revenues 
from State and local entities--let's say we are dealing with 
California today; no offense to Mr. Leahy--how would we assess 
risk in terms of their future capability to produce a non-
dedicated revenue stream from apparently general fund 
resources? How did that work in Florida and how would it work--
I ask you that and then I am going to ask Mr. Bertram how that 
would work generally.
    Mr. Parker. Well, this is a very critical question for us 
because it also raises an issue that Mr. Conti was addressing 
regarding the subsidy for TIFIA loans. In the case of Florida 
those future payments are actually financed through a TIFIA 
loan by the concessionaire, and in Florida there is a statute 
that absolutley limits the amount of the State's surface 
transportation trust fund which can be committed to public-
private partnerships at 15 percent of the annual outlays. And 
those outlays come off the top in terms of making funds 
available for meeting the obligations of the State.
    The State of Florida is roughly a AA credit, and this is an 
appropriations risk issue; however, by isolating that 15 
percent and taking it off the top, there was a great deal of 
comfort that can be given that those appropriation obligations 
will be met. There is also a history of appropriations 
obligations being met.
    The difficulty we encountered in the TIFIA process is that 
despite this very certain source of annual revenues from an AA 
credit, the initial run at scoring the TIFIA loan subsidy put 
it very close to a rather speculative toll road kind of 
project. This posed a lot of issues for the State, as well as 
the concessionaire, in terms of being able to finance it 
because, again, our loan was capped at a $20 million subsidy, 
and some of the initial numbers that we were looking at had 
ranged up to $35 million, which would have meant the State or 
the concessionaire would have had to subsidize the loan up to 
$15 million.
    We were, fortunately, able to work with the Federal Highway 
Administration and indirectly through OMB to rethink the 
scoring and to say, well, look, this is essentially a AA credit 
rather than a speculative toll road, and got that subsidy way 
down, but still encountered some of the transparency and 
mechanical difficulties that North Carolina did at the time.
    Mr. DeFazio. Mr. Bertram or Mr. Conti. I realize that I am 
interjecting here, but I think this is a key point, because the 
availability stuff seems very attractive, but we need to know 
how it is going to work consistently over time and how the Feds 
are going to look at it. So, Mr. Conti, do you want to say 
something else?
    Mr. Conti. Well, I just wanted to add we haven't gone as 
far as Florida in terms of use of that tool, but our State 
treasurer is very concerned about some of the debt 
affordability issues that Mr. Parker just outlined, so whatever 
we do will be constrained by the leadership of our State in 
terms of how comfortable they are in committing future revenues 
to support those kinds of payments, and we are very much 
engaged in that process of dialogue. So that is a financing 
issue within each State that would be important as you consider 
whether that is a tool you want to make available more broadly.
    Mr. DeFazio. Right. And just one other question, Mr. 
Parker. That 15 percent, is that by statute in Florida?
    Mr. Parker. Yes.
    Mr. DeFazio. So, theoretically they could change that. But 
we take it as a--okay.
    Mr. Parker. And what we have actually done in explaining 
that process is gone through a very detailed process both with 
the banks who financed against those possible payments and 
TIFIA; and there was language specifically crafted, there was 
report language, there was a pledge to budget the monies. So I 
think this----
    Mr. DeFazio. About as good as you can get.
    Mr. Parker. Yes.
    Mr. DeFazio. Outside being constitutionally dedicated 
somehow.
    Mr. Parker. Exactly. And we are working with the California 
Transportation Commission right now on analyzing some of their 
P-3 projects, and this is a very real issue out there.
    Mr. DeFazio. Sure.
    Mr. Bertram, anything the Department would like to add?
    Mr. Bertram. Just one quick comment. The Miami Tunnel 
project was the first time that TIFIA actually considered 
availability payments; we had not done that before. We don't 
have any other projects that we have approved since we approved 
that last September, so it is a new vehicle, but it seems 
promising. I think other potential applicants have been 
interested in maybe using that as well. But it is something 
new, not----
    Mr. DeFazio. So at this meeting we are going to reschedule, 
where you bring in all the DOTs and other entities to explain 
to them what kind of programs you are interested in and how 
they are going to be applied, you will have some discussion of 
the future of availability payments as relates to TIFIA and/or 
other Federal ways to----
    Mr. Bertram. Sure.
    Mr. DeFazio. Okay. I think it would be key to get there.
    Okay, Ms. Richardson just came in. Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    Mr. Bertram, I am a few minutes late; I came from a 
Homeland Security Committee meeting, so I apologize if my 
question might be duplicative. A lot of discussion so far, me 
being here, has been about TIFIA, which seems to be expiring. I 
guess the last time of turning in requests was March 1st, 2010. 
Is there any intention on the Administration's part to expand 
this program or to continue it, or is there something we need 
to do legislatively to help you do that?
    Mr. Bertram. Currently, the program is authorized through 
the end of December; it was reauthorized as part of the overall 
highway extension. It is funded through contract authority 
through the Highway Trust Fund, so there will have to be some 
sort of--if we are going to continue to do this with contract 
authority from the Trust Fund, there will have to be some 
extension at some point.
    Ms. Richardson. Okay. And then I come from California, so 
you heard some of Mr. Leahy's ideas. In California, in 
particular, we are looking at the 30-in-10 program, which needs 
Federal financing support. What did you think about what Mr. 
Leahy shared today?
    Mr. Bertram. I think we want to work with Los Angeles, with 
all the sort of interested parties in Los Angeles. And there is 
a dedicated stream of funding that was dedicated to 
transportation, and that is the sort of stream of funding and 
revenue that lends itself to doing some of the innovative 
financing projects and approaches we have discussed today, and 
the Department is very interested in working with Los Angeles 
to see where we can be helpful.
    Ms. Richardson. Is there anything on the Federal level 
congressionally we can do that would help you to do that sooner 
rather than later?
    Mr. Bertram. I think it is going to depend sort of which 
projects are going to be ready from LA sooner rather than 
later. I think reauthorizing the TIFIA loan, maybe taking a 
look at the Administration's proposal for the Infrastructure 
Fund, which also has loans and grants in it would be helpful 
for projects like LA's.
    Ms. Richardson. And, Mr. Bertram, are you familiar with--
when I was on the city council a few moons ago, with HUD we had 
a program with the CDBG loan program, it was called the Section 
108; it is a loan guarantee program provision within CDBG 
programs, and essentially what it would allow you to do, most 
cities, local governments receive a certain amount of CDBG 
funds on a formula basis each year. The City of Long Beach 
receives approximately $10 million per year. What we were able 
to do was take the $10 million per year and talking about risk 
base, and I think we didn't borrow on more than 40 percent of 
it or something. So we were able to do $40 million worth of 
park development projects in the advance of what we were 
planning on doing. Have you considered doing a similar program, 
or do you consider that is what TIFIA is?
    Mr. Bertram. No, there is a similar program in the transit 
program called Grant Anticipation Notes, which basically 
someone who receives Formula Transit funds can pledge future 
revenues to those bonds. It is similar to GARVEE Bonds in the 
highway case, but it can be done in transit. A lot of transit 
authorities also use it for discretionary programs like the New 
Starts Program, where they have a full funding grant agreement 
over five or six years, but they want to sort of accelerate the 
construction over two. So we do have those tools available for 
transit.
    Ms. Richardson. Do you foresee us being able to extend 
that, for example, to bond programs, since many cities are 
beginning to do bonds like what Los Angeles did?
    Mr. Bertram. They are bond--it essentially is a bond 
program. The State or local entity floats the bond and pledges 
the future Federal either formula or discretionary grants 
against those bonds.
    Ms. Richardson. But what happens if the State can't float 
the bond or is in delay of floating the bond?
    Mr. Bertram. I am sorry, if it is delayed?
    Ms. Richardson. Given a State's financial situation----
    Mr. Bertram. Sure.
    Ms. Richardson.--particularly California is what we are 
talking about, what if we are delayed in doing that? Do you 
foresee that this might be something the Department could do on 
its own? Are you familiar with this program?
    Mr. Bertram. I am not familiar with the HUD program, but 
there is a program, like I said, in transit and highways that 
basically lets you pledge future Federal funds to pay those 
bonds. I am not familiar enough with the bond market right now 
to know if a State would have trouble issuing those sorts of 
bonds with future Federal pledges; I just don't know. I would 
have to get back to you on that.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] 55967.011
    
    Ms. Richardson. Okay, I would like to work with you.
    Mr. Leahy, did you want to add anything?
    Mr. Leahy. Yes, Congresswoman. I am going to the committee 
of the MTA Board tomorrow and then the full Board next week to 
ask them to support the 30/10 approach with a number of 
provisos as to how that would work. We would then look forward 
to working with the host communities around Los Angeles County, 
but also with, of course, USDOT. We are now working on a number 
of transit projects, a dozen rail projects that we think we 
will be able to advance and, as you know, we have a very strong 
revenue stream. I know there is some interest on the board that 
we will be discussing having to do with seeing whether we might 
be able to also accelerate the highway program.
    Ms. Richardson. Yes.
    Mr. Leahy. That dialog will just now be starting.
    Ms. Richardson. Okay. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. DeFazio. Mr. Diaz-Balart, one of your questions was 
asked by Mr. Brown earlier, but I understand you may have 
another, so go ahead.
    Mr. Diaz-Balart. Yes. Thank you, Mr. Chairman. I apologize, 
I had to step out. I apologize to you, Mr. Chairman, and the 
Members.
    Mr. DeFazio. No problem.
    Mr. Diaz-Balart. I had to manage some time on the Floor.
    Just quick comments. Mr. Chairman, as you know, Florida has 
been a leader in innovative financing, taking advantage of 
really, I guess, all available options to leverage much needed 
funding. A few of the examples, if I may, the I-75 widening in 
Lee and Calder Counties, which expanded 30 miles of highway 
using the Design-Build Finance approach. That, Mr. Chairman, 
advanced the project by five years and allowed the project to 
actually be completed ahead of schedule.
    The I-95 express lanes. We have had some conversation about 
congestion pricing. I-95 express lanes or HOT lane project, 
which used that concept to provide increased traffic flow, has 
actually been very well received.
    The Miami Intermodal Center, which was financed through 
TIFIA. The Port of Miami Tunnel and the 595 corridor 
improvements. When I walked back in, I know that is what you 
were talking about.
    So I think it is important that we need to obviously 
encourage further innovation. Our infrastructure, I guess 
everybody understands, needs repair, and with our national debt 
skyrocketing and, frankly, no end in sight, I think it is 
imperative that we look at alternative options to fund our 
future infrastructure needs.
    So, again, thank you for already asking one of my 
questions, and I am sure a few others that I had have already 
been asked. So let me just ask one, if that is all right, Mr. 
Chairman. I want to ask the following.
    Considering the already difficult financial environment 
that we, by the way, the Federal Government and also State 
governments are facing, it is imperative that we avoid any 
actions that might further impair the ability to access private 
resources. So to you, gentlemen, what actions should we talk to 
avoid that or, frankly, what actions should we not do to avoid 
that? And I don't know who wants to take that, maybe Mr. 
Parker. You want to start with that? Then we will see if 
anybody else wants to take a stab at it as well.
    Mr. Parker. Well, I think the interest of the private 
sector in infrastructure, and transportation infrastructure in 
particular, is keen and remains so. The financial markets have 
been very challenging, so we have to be taking a somewhat 
nuanced approach in how we present those opportunities. On the 
one hand, there is a concern that valuable federally funded 
assets will be sold off and come under the jurisdiction of 
private entities who will control the tolls. I think that we 
have amply demonstrated in some of the examples that you cited 
that there are many other types of public-private partnerships 
that we could pursue and that don't have those kinds of dire 
implications or connotations.
    The critical issue is the allocation of risk and the fair 
compensation for risk. The financial situation as it has 
evolved over the past couple years has taught us that revenue 
risk is something which is going to be very difficult to share 
with the private sector at this time. Whether the projects are 
in Texas or Florida, Virginia, California, and whether they are 
in the airport sector or the road sector, the experience has 
been pretty clear that the private financial markets have 
stepped back from accepting revenue risk, which is why we have 
gained some acceptance with availability payments.
    That situation is stabilizing at this time, and it is 
possible we could revisit it. Long-term financing is really the 
key. TIFIA provides 35-year financing, so we have been able to 
marry together relatively short-term bank financing of 8 to 10 
years with 35-year TIFIA debt to make these long-term 
commitments. If we can access the capital markets with Build 
America Bonds, with private activity bonds, then I think we can 
open up some new doors for private investment, and that is a 
capital markets issue.
    Mr. Diaz-Balart. Thank you.
    Mr. Leahy. I would note that as regards--in Los Angeles we 
have a fair number of public-private partnerships and we lack 
those joint development activities around mostly our rail 
lines. I think that to a private firm, of course, risk and time 
are money, so at the current time, what the FTA will do--and 
they are cooperative with us, they are good partners--but what 
they will want to do is to approve a joint development project 
at the end of the negotiation process between, in this case, 
the MTA and the private developer. We would suggest that an 
earlier FTA approval, so that we can conclude the negotiations 
without being at risk of something going wrong, might be 
helpful.
    In addition, I think to get projects speeded up and to 
reduce the time required for getting things going, we would 
suggest creating a presumption on the part of TOD projects, 
which are near transit locations with high density transit 
services. There should be a presumption that those projects 
will have less traffic and air quality impacts than a project 
which is not around a transit center. That would be a way of 
speeding up those sorts of TOD projects and encouraging them to 
occur faster.
    Thank you.
    Mr. Washington. And, Congressman, I would just sort of 
piggyback on the private sector involvement. I think that is 
very key, but retaining control, the public sector retaining 
control of fares, tolls, and that sort of thing. I think, as we 
look to rebuild our infrastructure, we need a Marshall Plan. We 
are looking at our highways and roads and bridges very old. I 
think we have an opportunity here to rebuild our 
infrastructure, at the same time retrain workers and job 
creation.
    So we are coming at a point in time in our history, I 
think, where we have to rebuild our infrastructure, and at the 
same time we have high unemployment. That is coming together. I 
think we can create these jobs knowing that we have to rebuild 
that infrastructure. So I think it is a combination of all the 
tools in the toolbox, as Mr. Conti said, a range of tools 
available, whether it is public-private partnerships, whether 
it is railroad rehabilitation loans, whether it is TIFIA, all 
of these things. And, also, as we are doing in Denver, making 
sure that all of our lines are construction-ready even though 
we have a funding gap, just in case manna from heaven does 
fall.
    Mr. Diaz-Balart. Okay, thank you.
    Mr. DeFazio. I thank the gentleman. The gentleman's time 
has expired.
    I just want to follow up on his line of questioning because 
this goes back to--because time is money, and we all know that 
in terms of these projects. We had an earlier discussion of 
Penta-P and Mr. Washington says that they think they have 
gotten through the process and will get approval from FTA in a 
substantially reduced time period, but staff tells me we have 
never seen any guidance or gotten anything out of FTA in terms 
of how did they do that for Denver.
    And if they could do it for Denver, why can't we do it for 
everybody and save the whole Nation tens or hundreds of 
billions of dollars as we try and rebuild our infrastructure? 
So that I am going to direct to Mr. Bertram, but first I want 
to hear briefly from Mr. Parker, because he has been involved 
in a Penta-P project, the Oakland Airport Connector project, 
that hasn't gone forward, and I am wondering what was your 
experience with the Penta-P.
    Mr. Parker. It has been troubling. Basically, the 
experience was that our involvement with Penta-P was sort of 
curtailed and a decision was made to allocate Federal funding 
below $25 million so that the New Start process was avoided 
entirely. BART went through the NEPA process, but not the 
formal New Start process, and the project was originally put 
out to bid as a P-3.
    At that time there were insufficient funds to cover the 
true cost of the project and it was pulled back. With ARRA it 
was resubmitted to the marketplace as a design-build-operate-
maintain on a very fast-track schedule with a $70 million ARRA 
commitment. It proceeded as one of the fastest procurements 
that has ever been done in the history of mass transit; got 
four bids, three of which were deemed responsive, one of which 
was $60 million under the budget.
    The BART board was very happy with that. There was a huge 
amount of State and regional funding committed to the project 
to fill the original funding. After the project was submitted 
to the BART board, FTA conducted an audit, found that there 
were certain exceptions to the Title VI program and basically 
pulled back the $70 million of ARRA funds.
    Mr. DeFazio. What does that mean, exceptions to what? Oh, 
civil rights?
    Mr. Parker. There are certain civil rights procedures and 
there was an audit conducted which found certain exceptions, 
and FTA decided to withhold its approval of any funding for the 
project. So the status now is that BART is trying to fill the 
$70 million hole that was created when that money was pulled 
back. A civil rights plan is pending in front of FTA right now. 
BART is working feverishly with its stakeholders and funding 
partners to fill that hole and to retain the $24 million that 
was originally from Penta-P, but really is just hanging fire.
    We have also put in for a TIFIA loan, and BART has been 
looking for a response on that TIFIA loan for over a year. They 
have been through two cycles with it. So it is really a very 
complex relationship with the Federal Government on that 
project right now.
    Mr. DeFazio. And I guess, to Mr. Bertram, that is something 
we are going to deal with in our bill whenever we can get the 
Administration to sit down and talk about getting our bill 
done, but the issue he raises at the end there. Well, there are 
a number of issues imbedded in that, but when you talk about a 
TIFIA loan and it is for BART, but this is a spur of BART, but 
we have to consider it like a New Start--this is like BART 
doesn't exist, it hasn't been there for 30 years, it doesn't 
have an operating history, it doesn't have a history with the 
FTA, and they have to come in as though they are a greenfield 
project in some other city somewhere else. That is something we 
want to deal with in our bill, to say, look, you have to look 
at the history of this institution, BART, and that expedites 
things.
    So there are two things. One is we have the civil rights 
rewrite hanging, waiting for approval; and, B, this other 
exception. We would really like to have some explanation of how 
Penta-P worked so well for Denver. Why it isn't working for 
BART; what is generally applicable from Penta-P that may have 
used--I shouldn't say very well for Denver because, who knows, 
some bureaucrat somewhere may still find some deficiency in Mr. 
Washington's application and say, well, yes, we were going to 
give you the money, but now we are not. But that comes back to 
Mr. Conti in terms of certainty, transparency, and all those 
things.
    Could you just comment on that? Then we have to move on.
    Mr. Bertram. I am not that familiar with the Penta-P 
process. If the staff or you have certain questions about that, 
I think we can get the Federal Transit Administration to 
explain that to you better; I really don't have enough 
background to really comment on that.
    Mr. DeFazio. We will submit a question for the record, but, 
in my experience, I have never had an answer to any one of 
them, but we will be happy to try that. We will go right ahead.
    With that, we are going to go to Chairman Oberstar. I am 
also going to hand him the gavel because I have to step out 
briefly.
    Mr. Oberstar. [Presiding] Before you leave, Mr. Chairman, 
let me express once again my admiration for your persistence in 
following through on the financing issue. All the other issues 
are difficult, but this is the hardcore, the hard wood of the 
issue of surface transportation. You have held numerous 
hearings over the past three years and again this year. This is 
another critical issue. Thank you for your persistence, for 
your creativity. Great idea that you had that I think would 
have solved all of our problems except the Joint Tax Committee 
people didn't think we could impose a fee on speculators. That 
would have solved a great many of our problems. But thank you 
very much for your persistence.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Mr. Oberstar. And thank you, Mr. Petri, for your 
participation here and your great contribution during all the 
deliberations on SAFETEA, SAFETEA-LU.
    How many on this panel would support continuation of the 
Highway Trust Fund and the user fee as it is currently 
established? Just raise your hands. Think it is a good idea? 
Got a couple of dissenters. You don't think the Highway Trust 
Fund, Mr. Leahy, Mr. Washington, is a good financing mechanism?
    Mr. Leahy. Well, my hesitation was that obviously the 
revenues are not adequate to demand----
    Mr. Oberstar. That is not the issue. Do you think the 
Highway Trust Fund as a principle, as a concept is viable?
    Mr. Leahy. Yes, sir.
    Mr. Oberstar. Mr. Bertram?
    For the record, let it be noted that the panel all nodded 
or raised assent.
    Second, in the current situation, at 18.3 cents, is the 
current level of revenue into the Trust Fund sustainable, 
viable for the needs of transportation, highway and transit? 
No. The value of the construction dollar has eroded 47 percent 
in just the last five years; more if you go back ten years. The 
revenues into the Highway Trust Fund have declined over the 
past year and a half; actually, beginning in December of 2007, 
when the recession started.
    So we are now at a revenue-in of roughly 36, $38 billion, 
with a program authorization of $53 billion. Stimulus money has 
come in to make up some of that shortfall, but stimulus is 
going to run out by the middle of August. We will have probably 
400 or so projects yet to be built. An enormous success, by the 
way, enormous success. The $34.2 billion highway and transit 
funding under the jurisdiction of this Committee has produced--
that and the Clean Water Revolving Fund produced 1,200,000 
direct and stimulated jobs.
    But direct jobs, those on construction sites and those in 
the supply chain, as I call it, the sand and gravel pit, the 
asphalt producers, the cement producers, the ready-mix 
producers, the steel, the rebar, high beam, fence posts, 
fencing, even landscapers all got jobs because of this; 
1,200,000 jobs.
    Just those on direct jobs, the 330,000 onsite construction 
jobs, that has produced $1.7 billion payroll as of our last 
hearing at the end using figures reported as of March 12. A 
$1,700,000 payroll. In addition to which the workers on job 
sites paid $393 million in Federal taxes and avoided $253 
million in unemployment compensation checks. Those are stunning 
figures.
    In the process, State DOTs have built, rebuilt, expanded 
34,000 lane miles of highway. That is equal to three-fourths of 
the interstate highway system which took us 50 years--we did it 
in one year. And transit agencies purchased over 10,000 transit 
vehicles, in addition to a few thousand railcars for intercity 
passenger rail.
    That is an extraordinary accomplishment in a year. People 
forget the recession didn't start January 21st, 2009, it 
started December 2007. So we have gone from losing 750,000 jobs 
a month to creating some 6,000-plus jobs last month.
    But it is not sustainable unless we continue the 
investment, and the genius of the Highway Trust Fund was the 
user fee adopted in 1956. Of all the portraits on the wall 
here, only that gentleman in the corner, John Blatnik, my 
predecessor, was present at the creation. There is another one 
in the Democratic receiving room, Charlie Buckley from New 
York. He and Blatnik and George Fallon and Jerry Cooper. I 
forget who the other was, the five coauthors of the Interstate 
Highway Program in 1956.
    The first proposal to finance this new highway system was 
from George Humphrey, Eisenhower's Secretary of Treasury, who 
proposed to finance it with bonding; we will just float bonds 
on Wall Street. That was his background before he came to 
Treasury. And the five wise men thought about it for a while 
and said, well, wait a minute.
    First of all, you don't have a road map showing us where 
these highways are going to be built and, secondly, you mean we 
are going to pay the interest on the bonds, pay the capital on 
the bonds, and pay fees to the bond traders and build highways 
with that? And John Blatnik told me--we shook our heads and 
said, no, that is not sustainable.
    In those days, Congress sensibly adjourned the end of June, 
beginning of July, and went home for six months. Members had 
only one paid trip back to their districts, by the way, in 
those days, so they had to use that judiciously. And over the 
summer and the fall they thought about it, convened, they 
talked by phone. Phone calls were very important in those days, 
you had a dial phone, you know? Didn't have touch tone phones, 
didn't have cell phones. Conversations were much more 
substantive. And they came back with a plan--connect all towns 
50,000 population or greater--and with a user fee, 3 cents, to 
finance, deposit in a trust fund, to be used only for highways, 
not part of the general revenues of the Federal Government.
    It passed the House, the Senate; Eisenhower signed in June 
of 1956; the first projects were underway in September. Talk 
about stimulus; they were ready to go. And two years later the 
Bureau of Public Roads came back to the Congress to say that 3 
cents isn't enough; we need another penny to sustain what was 
then a 42,500 mile system, $22 billion. And that one cent 
passed the House on a voice vote.
    Now, I don't think you could pass the prayer on a voice 
vote. You certainly can't do it in the Senate; someone will put 
a hold on it. But we need that same spirit in the Congress 
today that we had 54 years ago. A greater good, a good greater 
than your own immediate re-election, your own outlook for your 
district; a greater good for the Country. That is what the 
Highway Trust Fund represents.
    I have visitations by parliamentarians from all over the 
world, ministers of transportation. They marveled at our 
highway system. How do you do it? I explained the Highway Trust 
Fund. No one has anything like it; no other government, no 
other nation, no other transportation program. They collect 
their dollars, put them all in one pot, then redistribute the 
dollars.
    In 1956, our gross domestic product was $345 billion. Today 
it is over $13 trillion. In 1956, we averaged one car per 
household. Household we have three cars today. That one car 
drove, on average, 6,000 miles. We are driving 15,000 miles on 
average. We had a million trucks. We have 7 million trucks on 
America's roads today. And the trucks and the cars are pounding 
the daylights out of the highways. Highway speed was just under 
50 miles an hour. That is why we had those very attractive, 
very beautifully designed cloverleaf interchanges. Now they all 
have to be rebuilt, so you have diamond interchanges, faster 
access and egress.
    To sustain this system and to sustain this economic growth, 
we have to invest, and we have been caught up for 12 years--12 
years before we won the majority--and 8 years of the Bush 
Administration of saying taxes are bad, taxes are awful. Even 
the current President ran on a platform, we are not going to 
raise your taxes. So an increase in the user fee is contrary to 
his campaign pledge.
    I have become an equal opportunity complainer. I complained 
about the Bush Administration not doing the $375 billion 
transportation bill; now I am complaining about this one not 
doing a $450 billion transportation bill.
    Either we invest, as two national commissions have 
proposed,--and they have studied the issue for over two years, 
with ample extensive documentation--or we do nothing and be 
ever more mired down in congestion, traffic jams, fatalities, 
and huge costs to our economy. The costs are real.
    General Mills, in the Twin Cities, according to a study 
done by the Minnesota Chamber and a business alliance group and 
building trades just three years ago, to support an increase in 
the user fee gas tax in Minnesota, did a study of goods 
movement in Minneapolis-St. Paul, and General Mills spends $654 
million a year moving Wheaties and Betty Crocker products in 
the Metro area. But for every mile an hour their trucks 
traveled below the speed limit, they lose $2 million. Overtime 
charges for drivers, late delivery fees to customers.
    UPS did a survey, which reported that for every five 
minutes delay their trucks experienced nationwide, they lose 
$100 million.
    Try to get a plumber. Well, we will be there between 8 and 
noon. Contractors are telling us we used to do eight calls a 
day; now we are doing four.
    There is a business cost; there is a consumer cost; there 
is an economy cost to inaction. But now we need to come to a 
consensus. We can't ask people to pay more for what they are 
getting now because the current structure of our surface 
transportation program is not delivering projects in a timely 
fashion. It has caught up with complexities internally, and we 
have a bill that will address those issues; transform the 
Department, transform the agencies, create an office of project 
expediting, do a lot of things to move things better. But now 
we need a way to finance it, a way to pay for it.
    These hearings that have been conducted in this Committee 
for the last three years have exposed a number of financing 
options, but nothing that is a sustainable financing mechanism 
as the Highway Trust Fund is and the user fee.
    So among the financing facilities, at least 11, tax-exempt 
bonds, tax credit bonds,--you have discussed some of those 
during this hearing today--loans, loan guarantees, GARVEE 
Bonds, the GAN Bonds, lines of credit, public-private 
partnerships, congestion pricing, tolls, private activity 
bonds, State infrastructure banks. But my experience is that 
while those are targeted facilities, they don't add up to a 
sustainable program. You would agree with that?
    GARVEE Bonds have generated $9.3 billion in financial 
activity, revenue activity. SIBs, $6.2 billion. That is against 
an overall program of $53 billion. We need to go much higher 
than that.
    So while I think we need to retain all those financing 
facilities, as they are quaintly called in the language of the 
trade, we need to go beyond that.
    Apart from how we would manage TIFIA, the questions are 
should there be a limit on the amount of interest; should there 
be no limit, but only the discipline of the marketplace, the 
lowest bidder wins. A good deal for the public provided there 
is enough competition, more than two, at least, competitors. 
There are those internal issues. The real question is how do we 
get over this hump. We need $140 billion over current revenue 
stream over the next six years, so a mechanism. And we have had 
a robust discussion.
    I see Mr. Mica has joined us at the hearing. I thank him 
for his participation. He has been deliberate and thorough and 
participatory. He has several ideas of his own that we have 
tried out. We all come acropper with our ideas.
    So a proposal that I initially thought was not viable but 
may be the answer, is to direct the Treasury to deposit $130 
billion in Treasury notes into the Highway Trust Fund--it can 
be done at once or it can be done successively over a period of 
years--to be repaid with future revenues out of the Highway 
Trust Fund with a moratorium on repayment for, say, the first 
four years, giving the economy time to recover, the surface 
transportation program to become more robust. And then have an 
increase in the gas tax or user fee four years hence.
    What is your reaction? Mr. Parker, we will start with you. 
You are on the firing line, the private sector.
    Mr. Parker. Well, my speciality is spending the money, not 
necessarily how to raise it. But I would say that that is a 
very complex question. It has to do with the budgetary 
processes of the government; it has to do with the credit 
markets ultimately. I think it is a concept that we are 
familiar with that we use in the private sector, but how it 
plays out in terms of governmental accounting is an area that I 
am just not an expert in. And I think that is really where a 
concept like that would need to be vetted, is really how it 
affects governmental accounting processes.
    Mr. Oberstar. Mr. Leahy?
    Mr. Leahy. Thank you, sir. I think that, as you alluded to 
earlier, it is quite clear that revenues are not adequate to do 
the work which is needed to be done. I think the other 
activities that we have described, which you just listed, 
although important, do not solve the problem. So I think we do 
face the stark options which were referenced, which is we 
either shrink the program or we expand the revenues.
    Speaking for myself now, I think that it is imperative for 
the good of the economy and for the transportation system, for 
the reasons that you referenced, to expand the revenue so that 
we can maintain and expand the program. I won't make an opinion 
about how that revenue expansion should occur, but it is clear 
that it has to occur.
    Mr. Oberstar. Well, if it was good enough for President 
Ronald Reagan in 1982 to sign the authorization bill with a 5 
cent increase in the user fee, then it ought to be good enough 
for President Obama. And at the time President Reagan said this 
user fee, this gas tax, does not increase the deficit; 
secondly, it is users of the system paying for its investment 
and upkeep and expansion; and third, he said at that time, the 
cost to the users of the system would be the equivalent of two 
shock absorbers over a year. You might save that money if your 
roads are improved.
    Mr. Washington?
    Mr. Washington. I agree with the approach. I do not think 
we can afford to do nothing. I think that our infrastructure is 
in bad shape, and I applaud the idea to raise revenues and, as 
you say, the gas tax. So I agree. I think we pay now or pay 
later. As we see our infrastructure fail all over the Country, 
as we see the maintenance in some of our older transit systems 
start to fail, I do not think we can afford to do nothing. So I 
agree with the approach. I think we need to raise revenues. If 
it is a gas tax, so be it; if it is user fee, so be it. I think 
we have to develop a plan and a strategy to address our issues 
here in America.
    Mr. Oberstar. Thank you.
    Mr. Conti?
    Mr. Conti. Thank you, Mr. Chairman. I think you have hit a 
very important point. We are looking for stability and 
predictability for long-term investment, so anything that is 
done at the Federal level to give us assurance that those 
dollars will be there over the next five to six years would be 
very critical to us being able to move forward at the State and 
local level to develop these projects and to deliver them in a 
timely way. So I would support anything that would guarantee 
that kind of long-term stability in the program, just as the 
Highway Trust Fund has for the last has for the last 50 years, 
as you said.
    Mr. Oberstar. Thank you.
    Mr. Bertram?
    Mr. Bertram. I agree with you. Innovative financing 
techniques are limited financing options that can be used in 
certain types of projects that have revenue streams. There is 
heightened interest, but it is not sort of a solution to every 
transportation program. They have their place; they have been 
very useful; they have allowed sponsors to bring in projects 
more quickly and on time and also cheaper, but it is not this 
one-size-fits-all magic bullet for all of our problems.
    I think the Department and Secretary LaHood has been clear, 
has been very supportive of the Highway Trust Fund as a 
mechanism. We support it, keeping the efforts to keep the Trust 
Fund solvent and to keep the highway and transit programs 
going.
    Mr. Oberstar. He certainly has. He has done a great job as 
Secretary.
    Well, Mr. Mica, I know that you concur in the view that we 
cannot afford to do nothing, but the something is a vexing 
issue, and I appreciate your partnership and participation in 
this quest for financing mechanisms. The floor is yours.
    Mr. Mica. Well, thank you. I have to compliment you and Mr. 
DeFazio. He has gone? Jim, make sure you tell him that I 
complimented him on holding the hearing. But it is an important 
hearing, all kidding aside, and I do really appreciate Peter, 
you, Mr. Chairman, your interest in looking at these innovative 
financing means. I think we have come a long way.
    I still think we have a long way to go in looking at some 
creative options in financing. I come from the private sector 
and you have heard me say a hundred times if you can finance 
the deal, you can do the deal. In business we say that term, 
and the same thing as it relates to building the 
infrastructure. We certainly know the need; American Society of 
Civil Engineers is estimating $2.2 trillion now over the term 
of the bill.
    We have had some things that have been successful; the 
Build America Bonds and I was pleased to see some of that up.
    Interested a bit in the Administration's proposal on their 
little fund and I have a question.
    Mr. Conti, I have written you a letter at least ten times, 
but it has never gotten from my brain to paper, and I will cite 
it to you very briefly. I have a summer home in North Carolina, 
up in Blowing Rock, which is about as close to heaven as you 
can get without developing wings.
    Mr. Oberstar. You don't have to worry, he doesn't vote 
there, though.
    Mr. Conti. I think Mr. Coble is a neighbor of yours up 
there, isn't he?
    Mr. Mica. Yes, Howard, and Virginia Foxx is my 
Congresswoman.
    Mr. Conti. Right.
    Mr. Mica. But I have been up there thirty-some years and I 
just admire what you have done in two areas. One is some of 
your bypass systems. Was some of that financed under GARVEE 
Bonds?
    Mr. Conti. I am sure we financed some of our bypasses with 
GARVEEs, yes.
    Mr. Mica. But absolutely wonderful model of how the State 
has taken charge and done some things remarkable on some of the 
roads.
    And then the other thing, Mr. Chairman and everyone else, 
North Carolina does one of the best jobs on enhancements, and 
they just beautify their highways, especially the springs. I 
can almost just go to North Carolina right about now and start 
looking at the right-of-way.
    Mr. Conti. We are very proud of that, Congressman.
    Mr. Mica. It is absolutely magnificent. So that is the ten 
letters all in one----
    Mr. Conti. Thank you.
    Mr. Mica.--complimenting you on what you have done in my 
part of my spare time home State. My kids are both Appalachian 
State graduates.
    Mr. Conti. Great.
    Mr. Mica. Well, in any event, enough of the small talk 
here.
    Actually, Mr. Bertram, your $4 billion a year, $25 billion 
over a couple years I think is sort of peanut sized thinking in 
what we need in infrastructure. Projects today, I can name you 
right now 20 projects that exceed the $4 billion mark. Don't 
you think that is small in terms of what size--and then why 
wouldn't we do with more of the infrastructure bank and use it 
in maybe a GARVEE Bond method of repayment of a small Federal 
stream back? And of course, if you have revenues coming in on 
any projects that have any revenues, transit or others, you can 
even expand that capacity. What is your thinking?
    Mr. Bertram. Absolutely. I think----
    Mr. Mica. What is the reason for your small thinking? I am 
a right wing conservative.
    Mr. Bertram. You know, I think as we discussed at the 
hearing before----
    Mr. Mica. But I don't think you have enough money.
    Mr. Bertram. The TIFIA program I think currently is sort of 
a great demonstration of what the demand is for Federal 
financing.
    Mr. Mica. And that is over-subscribed, I understand?
    Mr. Bertram. It is absolutely over-subscribed. We currently 
have 39 letters of interest----
    Mr. Mica. Totaling what?
    Mr. Bertram. $14 billion.
    Mr. Mica. See? So----
    Mr. Bertram. Absolutely.
    Mr. Mica.--again, $4 billion a year doesn't get us. I am 
thinking more in the $200 billion range fund.
    Mr. Bertram. Well, I think, once again, the Infrastructure 
Fund wouldn't just be grants; the Fund would be able to make 
loans or loan guarantees to buy----
    Mr. Mica. Right. Mr. Brown is gone, but Mr. Brown told me 
that they leveraged some of their State money for every public 
dollar, $6 to $8 leveraging.
    Mr. Bertram. They have a very successful State 
infrastructure bank where they----
    Mr. Mica. How about us adopting that one at the Federal 
level?
    Mr. Bertram. Well, I mean, a State infrastructure bank 
program is a national program. I am not sure how many States 
are currently participating in it; I think the majority are. 
Some of them use it----
    Mr. Mica. Thirty-two?
    Mr. Bertram. Excuse me?
    Mr. Mica. Thirty-two?
    Mr. Bertram. Thirty-two or 34, yes. Some of the use----
    Mr. Mica. How about taking that model, South Carolina, 
instead of your measly little stingy proposal and getting some 
real money?
    Mr. Bertram. You know, I said before I think the $4 
billion, once you leverage it and use it for loans and loan 
guarantees, would actually be able to support a substantial 
amount of projects, depending on what the applications are 
between grants and loans.
    Mr. Mica. Well, again, it is not always how much we spend, 
it is how we spend it, too, and how we utilize that revenue 
stream.
    Tell me, Mr. Parker, the RRIF loans have not been that 
successful. Have you dealt at all with those, and why, and what 
could we do to make them more successful?
    Mr. Parker. Actually, as Mr. Bertram indicated earlier, 
there are a number of applications of RRIF now. We work with 
the Port Authority in New York and New Jersey in buying about 
$500 million of railcars using that as a financing mechanism, 
and we see much greater application in public transit for the 
use of those monies.
    Mr. Mica. I know, but is there anything we can do to make 
it even more attractive to utilization by the private sector or 
by public entities?
    Mr. Parker. Well, right now, this up-front risk premium is 
a challenge to a lot of projects.
    Mr. Mica. Up-front risk premiums?
    Mr. Parker. Yes.
    Mr. Mica. That is something that would help, an adjustment 
in that?
    Mr. Parker. Some adjustment there would be helpful.
    Mr. Mica. Some adjustment. Is that set by Federal or is it 
Federal administrative law or rule?
    Mr. Parker. It is a calculated number.
    Mr. Mica. But we could impact that through specific 
language.
    Mr. Parker. Yes. But it has remarkable flexibility.
    Mr. Mica. No, the RRIF loans, we have been having trouble 
getting some of those out and I said what could we do that 
would enhance the attractiveness and potential expanded 
utilization of RRIF.
    Mr. Oberstar. The problem--if the gentleman would yield.
    Mr. Mica. No, go right ahead.
    Mr. Oberstar. The problem on the RRIF loan was it took five 
years to get rules in place, to get it established, so some of 
the good projects that were envisioned at the outset just went 
away. Now they are coming back. And it is showing the ability 
to repay, and those have been impediments.
    Mr. Mica. Well, he said the risk premium is----
    Mr. Oberstar. There are a number of operational issues that 
I think we can resolve. Yes, I think we can address it.
    Mr. Mica. The standard required for the risk premium is one 
thing. Anything else you can think of, Mr. Parker? We have 
things in place; TIFIA has been successful, the Build America 
Bonds successful. How do we make RRIF more successful?
    Mr. Parker. Well, I think RRIF right now is extremely 
attractive because of the flexibility that it offers and the 
possibility of doing 100 percent financing, and that really is 
something that has captured everyone's attention. It is being 
looked at in projects as diverse as Denver Union Station and 
the acquisition of railcars. We are looking at it in Atlanta in 
terms of an intermodal center. We are looking at it in Miami 
for the Grand Central Station portion of the Miami Intermodal 
Center.
    And I think even in terms of some of the rail improvements 
in the Tampa-Orlando area I think there is option to 
incorporate those kinds of financing mechanisms. So we like it 
because it is extremely flexible right now, and we would like 
to retain that flexibility and take a look at the way the risk 
premium is calculated.
    Mr. Mica. Okay. Well----
    Mr. Oberstar. But--if the gentleman would yield again--RRIF 
is a rail infrastructure, which has been expanded now beyond 
freight rail, which I think is appropriate to do, but we may 
need to clarify that authority in our legislative language.
    Mr. Mica. Well, again, I am looking for anything from folks 
that have dealt with this that they see as an impediment to 
actually getting even more money out there.
    Then, again, my point with the Administration is thinking 
bigger in terms and maybe adopting more of a South Carolina 
infrastructure bank plan, which would give us much greater 
capacity, because we go through these projects. The tunnels in 
New York, the one to Long Island is $7.2 billion; the 2nd 
Avenue subway $7 something billion; the New Jersey Transit is 
$8 billion; the intermodal center at Miami is $1.7 billion.
    I mean, I could just name projects in the multi-billion 
dollar category, and to build high speed rail we are using 
little pinking shears around the edges, and unless we use 
innovative financing--and I think some of these projects, for 
example, true high speed rail. I go back to the Northeast 
Corridor. The Administration proposal right now has $15.7 
billion over the next 20 years, get us to 2030. We would be 
doing about 100 miles an hour, on average, up from 83 in the 
northeast corridor.
    When we don't have high speed rail, we have used all 
Federal money in their proposal. Wouldn't you think it would be 
attractive to the private sector, with the potential revenue 
stream of millions? I mean, they have half the business of 
Amtrak right now. Amtrak has 28 million passengers and half of 
them are in the northeast corridor. I bet you could double or 
triple the number of passengers if you had a true high speed 
train.
    I would just take 120 miles an hour, which is a slow high 
speed train. But couldn't we leverage 15.7 and get us to a 
higher speed a lot faster?
    Mr. Parker. I just returned from a trip to China and I took 
the train from Beijing to Tianjin at 350 kilometers per hour, 
and it was extraordinary and the ride was smoother than what I 
experienced going from Stanford, Connecticut to Providence; and 
it is something where I think if we can attract that kind of 
investment----
    Mr. Mica. The vision we have right now is we are going to 
spend 15.7 or whatever it is, $15.2 in the next 20 years with 
Amtrak and end up at around 100 miles an hour, on average, in 
our busiest, most congested corridor that we would have the 
most beneficial results. For aviation we would free up a lot of 
the most congested corridor in the Nation. And if I took even 
$10 billion and leveraged it with the private sector with some 
innovative financing, I sure as hell know we could--am I 
smoking the funny weed here, Mr. Parker?
    Mr. Parker. No. I think there are private partners out 
there that would welcome that opportunity, particularly in the 
northeast corridor.
    Mr. Mica. Mr. Washington?
    Mr. Washington. Yes, sir. Thank you.
    Mr. Mica. If you want to agree with me, you are recognized.
    Mr. Washington. Well, I won't agree on the funny weed 
thing, but----
    Mr. Mica. I don't do those things.
    Mr. Washington. I just wanted to comment on the RRIF loan. 
Mr. Parker mentioned and Mr. Bertram also mentioned that we are 
using the RRIF loans for Denver Union Station. Denver Union 
Station is our hub where all of our lines for the FasTracks 
program will come into, our downtown hub. We were successful in 
working with the Department of Transportation to get both TIFIA 
and RRIF loans approved to the tune of about $150 million 
apiece. So the increased flexibility, the favorable rates, all 
of those things that have to do with the RRIF loan was very, 
very key to us in getting Denver Union Station off the ground.
    Mr. Mica. Well, we welcome all of you, especially our 
guests that have dealt with some of these projects, to give us 
at the Federal level the input that we can improve what we 
have, expand innovative financing. We have a big shortfall and 
we need to bridge the gap.
    Thank you, Mr. Chairman. I apologize, I have to run.
    Mr. Oberstar. Oh, don't apologize. Apologize for running, 
but don't apologize for your presence. That was very valuable, 
very constructive.
    Mr. Mica. Well, I apologize because I have to go downtown 
to a meeting. You know how it is.
    Mr. Oberstar. I know. We are all pulled in different 
directions.
    Mr. Mica. This is a good hearing and I appreciate these 
guys coming in. But anything you see, too, you can give us or 
the Committee as ideas, anything we can tweak to make what we 
have better or what we don't have implemented, it will help.
    Mr. Oberstar. Well, we have pulled together all the 
financing mechanisms that we can to put into the Metropolitan 
Mobility and Access Program, and we have provisions in our bill 
to speed up and increase the capacity for TIFIA and for SIBs. 
The difference in our passenger rail system and that of China--
or France, Spain, Italy, Germany--is they built new line. They 
are not sharing with freight--they didn't take aging 
infrastructure. In France it was all blown up in World War II. 
Seventy-five percent of the train stations were blown up. Two-
thirds of all the rail lines were destroyed by Allied, as well 
as Nazi, bombing, and what the Allies and the Nazis didn't 
bomb, the Nazis pulled up the rail and melted it to make tanks. 
So they, in effect, started with a clean slate.
    Mr. Mica. But----
    Mr. Oberstar. And there was 100 percent capital funding 
from their governments.
    Mr. Mica. Some of the Europeans, though, have gone through 
some of the most congested areas and achieved high speed rail.
    Mr. Oberstar. Absolutely.
    Mr. Mica. I think we can learn from the guys that have done 
it successfully. Some of them have screwed it up. Of course, we 
weren't exactly the bastion of the best rail service; the 
Federal Government ended up taking over freight and passenger 
rail, which was left in disarray, and have worked our way out 
of that at least partially.
    But there are models, I believe, coming out of major 
densely populated metropolitan areas around the world where we 
have examples, and if we put out an honest RFP to construct in 
the northeast corridor with Federal participation--we don't 
even have to go to the $15 billion mark. I know sure as heck 
that we could achieve high speed 120 to 150 miles an hour on 
average in that corridor, and transform it dramatically. If the 
Government takes it over, takes 20 years to spend the money and 
do it in a half-baked fashion and get us to 100 miles an hour 
on average in 2030, I just think it is the wrong way to go. 
Amen.
    Mr. Oberstar. Well, we are all in this enterprise together 
to get there and do this, taken your ideas, putting them into 
the Amtrak authorization bill, and now we want this 
Administration to implement them. But you didn't vote for the 
gas tax increase.
    Mr. Mica. You want to get on the gas tax? [Remarks off 
microphone.]
    [Laughter.]
    Mr. Oberstar. So we can use all these other financing 
mechanisms, all these financial facilities that I cited and Mr. 
Mica cited. They don't add up to a program, do they? They don't 
add up to sustainable financing. If, in the end, to be 
successful, a credit facility has to show ability to repay, you 
are greatly limited in the number of projects you can finance, 
correct?
    Mr. Conti, you have had extensive experience in government 
at the Federal level, the State level. This is not putting you 
in the position of being an advocate for, but what do you think 
would be the public reaction to, in North Carolina, a 5 cent 
increase in the user fee, a 10 cent increase in the user fee in 
the current context--Highway Trust Fund walled off, firewalls 
around it, not used for anything else, only for highways and 
transit?
    Mr. Conti. Well, I don't know what the polling would tell 
you. I will tell you that if you tell people what you are going 
to do with the money and you actually deliver on it, I think 
that is where you get the buy-in from the voters for that kind 
of increase. And if you use the example of the recovery 
program, which you outlined how successful it has been, I think 
you specify: here is what we are going to ask you to support, 
this kind of increase in the revenue stream, and out of that we 
are going to do these specific projects and build these 
facilities, which will then make your commute easier, make 
getting your kids to school easier and safer and all that. So I 
think you have to tie the revenue stream to specific actions 
and then be held accountable for delivering on that.
    Mr. Oberstar. Well, that is my view. I have always trusted 
the collective wisdom of the public. I know that people 
generally don't know where their tax dollars go, what benefits 
they can point to specifically. But in the transportation arena 
they know when they are buying the fuel they are paying the gas 
tax, it is going to the road they drive away on, and it is 
going to be improved and it is going to make their lives 
better, and they can see the improvements as they drive away on 
them. So that is my view.
    Mr. Brown, did you have anything further that you would 
like to comment on?
    Mr. Brown. I was here earlier today and we had a good 
exchange. I just saw Mr. Mica as he was leaving, and he was 
espousing my infrastructure bank plan that we had in South 
Carolina, which we would like to see get some national 
attention, and I know my good friend from North Carolina 
certainly understands some of the benefits that we have 
received from the northern part of South Carolina that connects 
up to Interstate 73 and Interstate 74, Mr. Chairman, which we 
have talked about a goodly amount of time on this Committee, 
and thankful for you and some others for helping us get some 
funding to make that move along.
    But it is a big undertaking and I was hoping that we would 
have a vision that somehow or other we would go back and 
revisit the interstate system, which is getting overcrowded 
even at its capacity, but we need some new routes along the 
way.
    I appreciate your leadership on this and I appreciate the 
input from these very responsible and intellectual members of 
this team. I don't know who put the panel together, but I 
commend whoever did, because it has been a good learning 
experience for me too.
    And thank you, Mr. Secretary, for being part of the process 
and trying to solve some of these amazing problems we have here 
in the United States.
    Thank you, Mr. Chairman.
    Mr. Oberstar. Thank you, Mr. Brown. I regret your 
announcement to leave public service and return to private 
life. The only comfort I take out of that is the guarantee that 
you will be smiling more often. You will look more relaxed. 
They all do when they leave here.
    Mr. Brown. Mr. Chairman, nothing would make more smiling 
than the reauthorization bill.
    Mr. Oberstar. We are going to try to do that, and with your 
help we will get there before the end of this session.
    So we have a mix of financing mechanisms targeted to 
specific purposes and needs: tax-exempt bonds, credit bonds, 
loans, loan guarantees, the GARVEE Bonds that are actually 
repaid out of future revenues from the Highway Trust Fund, 
lines of credit, congestion pricing, tolls, private activity 
bonds, SIBs, public-private partnerships. All those targeted to 
specific maybe high-profile project needs. But the State 
Infrastructure Bank, the National Infrastructure Bank, or all 
these other loans and tolling are not going to repave that road 
in front of your home or on your drive home that is filled with 
potholes, because you can't generate a revenue stream from 
that.
    So we need to continue the Highway Trust Fund and we need 
to increase the revenues into that Highway Trust Fund, even as 
driving declined for the first time since the Highway Trust 
Fund was established in 1956, over the last year and a half. It 
was the first time we had 62 billion fewer vehicle miles 
traveled than in any previous year. That is starting to come 
back now. There is a little more confidence in the economy; 
creating more jobs. And as that confidence returns to be some 
increase in revenues into the Trust Fund, may get back to the 
$53 billion. But we need to go above that to compensate for the 
erosion of the value of the construction dollar and to 
accommodate the needs for just simple state of good repair, 
which is the engineering term for resurfacing our roadways.
    I mentioned earlier the 34,000 lane miles, as of a month 
ago, rebuilt with stimulus funds; 1200 bridges. That is 4 
percent of the need, 4 percent of the critical asset investment 
category that we have created for the future of surface 
transportation. At that rate, we would be here for a very long 
time trying to do resurfacing, and that is why we put $100 
billion over six years into the critical asset investment or 
state of good repair category funding. You are going to pick, 
States are going to pick the projects, going to make the 
choices, make the determinations, but we need to attack this 
issue, as well as creating additional revenue streams for 
expansion of capacity in our surface transportation system and 
for freight goods movement in an uncongested fashion.
    So with your thoughts at this hearing and good will, I know 
we can move a bill in this body; I am not so sure about the 
other. But if we do, then I think they might just come along 
with us.
    Do any of you have--Mr. Brown, do you have further comment?
    Mr. Brown. Mr. Chairman, I just want to give some 
affirmation to what you said about financing. I know Mr. Conti 
lives next door to Horry County, which has 14 million visitors 
come in a year. They passed a penny option sales tax for roads. 
I represent Berkley County; they passed a penny option sales 
tax for roads. Dorchester County passed a penny option sales 
tax for roads. Charleston County passed a half a cent.
    You are exactly on target, Mr. Chairman. If you can 
convince those people that they are going to be doing something 
about the roads, I think they are willing to pay more, which is 
evident in those four referendums in those four different 
counties.
    Thank you.
    Mr. Oberstar. Thank you. Those are very, very compelling 
examples. But we shouldn't be--is that a sales tax? Does that 
include food and clothing and other articles? We shouldn't be 
taxing your Cheerios and milk to pay for your roadways.
    Mr. Brown. I am not so sure it includes groceries, Mr. 
Chairman, but, you know----
    Mr. Oberstar. Okay. Nonetheless, we shouldn't be in that 
position. The Highway Trust Fund revenue stream should be 
keeping pace with the cost of construction, with the capacity 
needs of the system, and we should be increasing that revenue 
stream, because the users are paying for what they are getting.
    Mr. Brown. Well, and that is exactly my sentiment, too. It 
is a user fee, but, Mr. Chairman, what concerns me with all the 
hybrids coming onboard, they are going to be riding free unless 
we find some way to charge them for their access to the 
highways. The electric cars, you know.
    Mr. Oberstar. Well, the electric cars, I have a scheme. I 
have talked to a number of research firms on how we can charge 
them through their electric bill as they hook up their electric 
car at home or wherever the hell else they hook it up. But they 
have to pay too, because that car is rolling over the roadways 
and exacting its own toll on the roads and bridges of this 
Country. Everyone has to pay their fair share, you are right.
    Does our panel have any closing comments? Observations? 
Disclaimers? Thank you. You made a wonderful contribution to 
our inquiry and to the furtherance of our cause of improving 
transportation in this Country.
    The Committee is adjourned.
    [Whereupon, at 12:45 p.m., the Subcommittee was adjourned.]
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