[Senate Hearing 113-719]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 113-719

     OVERSIGHT HEARING ON IMPLEMENTATION OF MAP	21'S TIFIA PROGRAM 
                              ENHANCEMENTS

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 24, 2013

                               __________

  Printed for the use of the Committee on Environment and Public Works


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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED THIRTEENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware           JAMES M. INHOFE, Oklahoma
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island     MIKE CRAPO, Idaho
TOM UDALL, New Mexico                ROGER WICKER, Mississippi
JEFF MERKLEY, Oregon                 JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, New York         DEB FISCHER, Nebraska
MAZIE K. HIRONO, Hawaii

                Bettina Poirier, Majority Staff Director
                  Zak Baig, Republican Staff Director
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                            C O N T E N T S

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                                                                   Page

                             JULY 24, 2013
                           OPENING STATEMENTS

Boxer, Hon. Barbara, U.S. Senator from the State of California...     1
Vitter, Hon. David, U.S. Senator from the State of Louisiana.....     3
Gillibrand, Hon. Kirsten, U.S. Senator from the State of New York     4
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     5
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland     7
Boozman, Hon. John, U.S. Senator from the State of Arkansas......     8
Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode 
  Island.........................................................     9
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama, 
  prepared statement.............................................   120

                               WITNESSES

Foxx, Hon. Anthony, Secretary, U.S. Department of Transportation.    10
    Prepared statement...........................................    13
    Responses to additional questions from:
        Senator Boxer............................................    17
        Senator Vitter...........................................    25
        Senator Sessions.........................................    29
        Senator Wicker...........................................    32
Bass, James, Chief Financial Officer, Texas Department of 
  Transportation.................................................    41
    Prepared statement...........................................    44
    Responses to additional questions from:
        Senator Boxer............................................    52
        Senator Vitter...........................................    57
Yarema, Geoffrey S., Partner, Infrastructure Practice Group, 
  Nossaman, LLP, Member, National Surface Transportation 
  Infrastructure Financing Commission............................    63
    Prepared statement...........................................    65
    Responses to additional questions from:
        Senator Boxer............................................    74
        Senator Vitter...........................................    75
Leahy, Arthur T., Chief Executive Officer, Los Angeles County 
  Metropolitan Transportation Authority..........................    77
    Prepared statement...........................................    78
Roberts, James, President and Chief Executive Officer, Granite 
  Construction Incorporated......................................    89
    Prepared statement...........................................    92
    Responses to additional questions from Senator Boxer.........    98
    Response to an additional question from Senator Vitter.......    98
    Responses to additional questions from Senator Sessions......    99
Gribbin, D.J., Managing Director, Head, Government Advisory and 
  Affairs, Macquarie Capital.....................................   101
    Prepared statement...........................................   104
    Responses to additional questions from:
        Senator Boxer............................................   110
        Senator Vitter...........................................   112

 
     OVERSIGHT HEARING ON IMPLEMENTATION OF MAP-21'S TIFIA PROGRAM 
                              ENHANCEMENTS

                              ----------                              


                        WEDNESDAY, JULY 24, 2013

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in room 
406, Dirksen Senate Office Building, Hon. Barbara Boxer 
(chairman of the Committee) presiding.
    Present: Senators Boxer, Vitter, Carper, Cardin, 
Whitehouse, Gillibrand, Inhofe, and Boozman.

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Boxer. Welcome everybody. Mr. Secretary, welcome. 
We are going to do opening statements and, as soon as the last 
Senator appears, people come in and out, we will then turn to 
you for your comments and then we will ask you some questions.
    So, we are here today to conduct oversight of the TIFIA 
Program which we greatly expanded in MAP-21. TIFIA is supported 
by groups ranging from the U.S. Conference of Mayors that I 
think Secretary Foxx remembers well and with fondness, to the 
U.S. Chamber of Commerce to the AFL-CIO. And that is quite a 
coalition.
    The TIFIA Program provides direct loans, loan guarantees 
and lines of credit to surface transportation projects at 
favorable terms. And the reason the terms can be favorable is 
there is a steady stream of funding behind those loans that we 
can count on. So, the cost here to us is very, very low and we 
can leverage these funds.
    MAP-21 builds on the other already successful TIFIA Program 
by expanding it tenfold. And I want to thank my colleagues on 
both sides of the aisle who understood the potential of this 
program because we spent about $100 million a year in the old 
program, it is expanded this year to $750 million in 2013 and 
it goes up to $1 billion in fiscal year 2014.
    So, according to the Federal Highway Administration, every 
dollar made available for TIFIA can mobilize up to $30 in 
transportation investments. The additional funding for TIFIA in 
MAP-21, including leveraging, will support 1 million jobs. So 
we are talking about something that is very important here.
    Since its creation, the TIFIA Program has provided over $11 
billion in credit assistance to 34 projects totaling over $43 
billion. However, in recent years the number of applications 
for TIFIA assistance has greatly exceeded available funding. 
For example, in fiscal year 2011, the Highway Administration 
received requests for $14 billion in credit assistance for 
projects totaling over $48 billion in infrastructure 
investment. Before passage of MAP-21, the TIFIA Program could 
support less than one-tenth of that demand.
    The newly expanded TIFIA Program is experiencing incredible 
demand from cities and States. According to the FHWA, 31 
projects totaling over $42 billion are seeking assistance under 
the TIFIA Program. So, colleagues, we did the right thing by 
expanding this program.
    States and cities are stepping up to the plate to provide 
local transportation funding to accelerate projects through 
this program. The 30/10 Initiative in Los Angeles County is an 
example of how the program can successfully leverage local 
investments. It was called 30/10 originally. The intent was to 
build in 10 years, with TIFIA, what would otherwise take 30 
years. And we were able to step up and meet that need in Los 
Angeles.
    I have to thank former Mayor of Los Angeles Villaraigosa. 
He took 30/10 to the national level and explained that it could 
be replicated across the Country. We believe that here in this 
Committee and we started the expansion of TIFIA. In Los 
Angeles, they approved a half-cent sales tax dedicated to 
transportation and that is the stream of funding that is behind 
the TIFIA loans that they got from the Federal Government.
    With the greatly increased resources that Congress provided 
in MAP-21, it is critical, Mr. Secretary, that TIFIA funds be 
used efficiently, effectively and responsibly. And I have total 
faith in your leadership to make sure that is done.
    And we had a good meeting in which I said, you were in 
there for like 1 day, it was even before the vote on your 
nomination, and I said Mr. Secretary, please check on this 
because we have got to get those dollars out the door, make 
sure they are the right dollars, but get them out the door 
because we need the jobs.
    So today, Secretary Foxx will testify about how DOT is 
implementing the changes to TIFIA that were included in MAP-21 
and what steps the Department is taking to ensure the funding 
is being used in ways that stretch our resources effectively.
    Then we have a second panel. Transportation experts and 
stakeholders will share their impressions of the improved and 
expanded TIFIA Program and discuss the opportunities that the 
program creates across the Country.
    So, I am very excited about this. This is our first hearing 
after MAP-21 to take a look at the TIFIA Program. And now, of 
course, our next challenge in the next bill is to find a 
funding source to be able to continue not only this program, 
but our basic infrastructure programs. So, we are going to be 
working very hard on that.
    And with that, I would turn to our Ranking Member, Senator 
Vitter.

            OPENING STATEMENT OF HON. DAVID VITTER, 
            U.S. SENATOR FROM THE STATE OF LOUISIANA

    Senator Vitter. Thank you, Chairman Boxer and members of 
the Committee and Secretary. This is an important hearing that 
I have been looking forward to.
    And I want to especially welcome to the Secretary and 
congratulate him on his nomination and confirmation. I am happy 
your first committee appearance as Secretary is here at EPW and 
I hope that this is the first of many appearances as we work 
together on important programs.
    Certainly, ensuring that America has a healthy, 
comprehensive infrastructure network is a fundamental 
responsibility of Government. Our transportation infrastructure 
is a critical component of our economy, our way of life, and it 
is fundamental to connect people and communities and to promote 
and sustain economic growth.
    Over the course of the next year, the Committee will need 
to not only ensure proper implementation and oversight of MAP-
21's reform, but also work toward a new reauthorization. So, 
needless to say, we have a lot of work ahead of us. That is why 
it is really important that we begin that process today with an 
examination of MAP-21's reforms to TIFIA. While many pieces of 
MAP-21 are still being put into place, TIFIA got an early start 
and it is well into implementation. And so that gives us an 
opportunity to do oversight now.
    Since TIFIA was first established in 1998, it has been an 
essential tool for many States and communities. With proper 
implementation of MAP-21 reforms, I think TIFIA can and should 
build on that past success. It is a powerful, flexible 
investment tool designed to leverage taxpayer dollars and 
encourage both private sector participation and efficiencies 
for critical projects.
    MAP-21's reforms to TIFIA have increased transparency by 
broadening access and refocusing the program on project 
financial liability. Quality infrastructure means something 
different in every part of the Country. For years, 
understanding this concept and empowering it through our 
Federal policy is what has made transportation infrastructure 
such a bipartisan issue. That is why proper oversight of TIFIA 
is critical to making sure that the program not only follows 
the legislative intent but is equipped for tomorrow's 
challenges.
    There are already areas of concern, including the 
management of TIFIA's rolling application process, the 
potential use of improper discretion in the project approval 
process, and the functionality and ramifications of TIFIA's 
definition of rural projects seeking the rural financing 
structure. So, I hope this hearing focuses on those areas of 
concern in particular as we do appropriate oversight.
    As we have seen over the last several years, uncertainty 
causes real disruption for our States and communities in the 
planning, maintenance and delivery of transportation 
infrastructure. Making sure these uncertainties are addressed 
and that the program operates as promised will go a long way in 
settling that landscape.
    As we move into more comprehensive discussions of our 
transportation infrastructure needs, it must be noted that 
while TIFIA is an essential tool to invest in our 
infrastructure, it certainly does not replace a sound, 
sustainable Highway Trust Fund. I want to make that point as 
well.
    Again, I thank the Chair and the witnesses for all the work 
brought into this hearing and I look forward to the testimony 
and discussion.
    Senator Boxer. Senator Vitter, I agreed with every single 
thing you said.
    Senator Vitter. Do we have that on the record?
    [Laughter.]
    Senator Boxer. Yes. I said it to put it in the record. I 
agreed with everything you said.
    So, we are going to go by the early bird rule. So that is 
Gillibrand, Inhofe, Cardin and Boozman.
    Senator Gillibrand.

         OPENING STATEMENT OF HON. KIRSTEN GILLIBRAND, 
            U.S. SENATOR FROM THE STATE OF NEW YORK

    Senator Gillibrand. Thank you, Madam Chairwoman. Thank you 
for holding such an important hearing.
    Secretary Foxx, congratulations on becoming our Nation's 
17th Secretary of Transportation. I look forward to working 
with you over the coming years and to address many of the 
transportation needs that New York has.
    My State of New York faces a diversity of transportation 
challenges ranging from highly dense urban areas experiencing 
high level of traffic and congestion, major bridges over the 
Hudson River that handle high levels of commuter traffic, to 
rural highways that need to be safely maintained to ensure that 
commerce and agriculture are not disrupted.
    As you know, much of the transportation infrastructure is 
rapidly aging and in need of repair and, in some instance, 
replacement. As others have pointed out, the American Society 
of Civil Engineers once again gave our infrastructure a dismal 
report card. Our Nation's bridges were rated C plus. The report 
found that 60 percent of New York's roads are in poor or 
mediocre condition.
    That is why I believe a strong Federal investment is 
necessary. We cannot allow our Country to continue to fall 
behind and we need the long-term policies that ensure 
sustainable funding for our Nation's infrastructure.
    As I travel across my State, I have seen firsthand the 
challenges that the municipalities and counties are facing to 
maintaining that aging transportation infrastructure. According 
to the New York State DOT, out of the 17,000 highway bridges in 
New York State, more than 2,000, representing 12 percent, are 
structurally deficient. That means that they will need 
significant repair.
    More than 4,500, or 20 percent, are functionally obsolete, 
meaning that they were not designed to handle the levels of 
traffic they are currently experiencing on a regular basis. 
According to the American Society of Civil Engineers, the cost 
to repair or replace all of New York's deficient bridges is a 
staggering $9.37 billion. That is higher than any other State.
    I am proud to work on this Committee and I am proud of the 
work they did coming together on our bipartisan bill, MAP-21, 
and particularly the provision that significantly expanded the 
TIFIA Program. This will result in enhanced ability to leverage 
Federal dollars at the local level in order to spur capital 
investment in national and regionally significant 
transportation projects. With smart investments like this, we 
can harness the potential of the financial sector to spur 
economic development and create good paying jobs.
    My colleagues may be aware of the project currently 
underway in New York to replace the Tappan Zee Bridge. The 
project was selected by the Obama administration as a project 
of national significance. Now, this bridge is an integral part 
of the Northeastern Interstate Highway System, a vital 
transportation artery critical to interstate commerce that 
carries about 133,000 vehicles daily. That is 40 percent more 
traffic than the bridge's original design.
    A TIFIA loan has long been considered a key element of 
financing the Tappan Zee Bridge to reduce overall borrowing 
costs and the potential toll increases that may otherwise be 
used to finance such a large construction project. The full 
cost of this nationally significantly project should not be 
borne by the residents of New York State alone, or by 
dramatically increasing tolls on the bridge.
    Mr. Secretary, thank you again for agreeing to come before 
this Committee for this oversight hearing today. Thank you for 
your willingness to serve our Nation at such a critical time.
    Thank you, Madam Chairwoman.
    Senator Boxer. Thank you, Senator Gillibrand.
    Senator Inhofe.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Madam Chairman.
    Let me start off by saying that I cannot think of anyone 
who could have been nominated anywhere in America who is better 
qualified, and is going to be easier to work with, than 
Secretary Foxx. I think a lot of that is that misery loves 
company.
    [Laughter.]
    Senator Inhofe. And you and I were both, we were both 
mayors of major cities. We know what a hard job is, don't we?
    Mr. Foxx. We do.
    Senator Inhofe. I would also mention that Gary Ridley is in 
the audience and I hope we get a change to say hello to him 
because he probably has testified at the table where you are 
right now before this Committee more than anybody else has and 
he is kind of Mr. Transportation out in the western part of the 
United States.
    As I have said here before, I believe in Federal 
infrastructure spending and see it as one of the primary 
purposes of Government. Given our enormous infrastructure 
needs, it is difficult to imagine that the next highway bill 
could ever meet all of these needs. Not only do we need to get 
the most out of our Federal highway dollar, but we also need to 
incentivize the State and local government and the private 
sector to invest as much as possible in roads and bridges.
    This hearing is an opportunity to examine the program of 
one of the most important financing tools in MAP-21, which is 
essential in leveraging the finite Federal funds. Now, I had 
three long paragraphs following this talking about the TIFIA 
Program which I will not repeat because they are precisely what 
Chairman Boxer said in her opening statement. So, I will just 
agree with your statement in this rare case.
    [Laughter.]
    Senator Inhofe. Now, unfortunately since the passage of 
MAP-21 last August, there have been some tremendous criticisms 
of the inefficiency of the administration of the very loans we 
are trying to promote. There is no point in providing almost 15 
times the funding provided in SAFETEA-LU for TIFIA if it 
prevents resources from being used for their intended purpose.
    It is essential that we address institutional obstacles 
currently preventing optimal use of TIFIA and others and any 
ideas Secretary Foxx and our distinguished panel have regarding 
how do we overcome these challenges.
    Finally, even with the fully funded and optimized TIFIA 
Program, we have got to inevitably turn our attention to the 
shortfall in the Highway Trust Fund. CBO has said, in April, 
that absent additional revenue in the Trust Fund, we will be 
faced with a 92 percent cut in any new highway funding, meaning 
most of all Trust Fund receipts will be used to reimburse 
States for projects that are already under construction.
    Although I would prefer that we successfully identify a 
sustainable funding source, I have suggested in the past that 
it is reasonable to resort to General Fund, as we have, over 
five times in the past, when faced with no alternative other 
than a series of short-term extensions.
    And I want to say this because we have a lot of my 
conservative friends. First of all, I know that you are aware 
of this, Mr. Secretary, I have probably been ranked the most 
conservative member as much or more than anybody else has. But 
I always say that we, I am a big spender in two areas, defense 
and infrastructure. If you read the Constitution, that is what 
we are supposed to be doing here.
    And so, I was upset with some of my conservative friends 
who would make statements on the floor during, while were 
trying to get this bill passed just a little over a year ago, 
that were really not right. In fact, the conservative position 
was to do a reauthorization as opposed to doing extensions, 
extensions, you could argue, does that take 30 percent off the 
top or 28 percent or what? We know that it takes a lot of money 
out of the system. You cannot plan for it and it does not work. 
You cannot put the reforms, we had more reforms in our bill a 
year ago than all other bills, I think, combined than we have 
had in the past. You do not get that with extensions.
    So, we are going to be faced with this thing and I would 
like to, the only conservative group is the American 
Conservative Union who correctly used statements that I used on 
the floor saying the conservative position is to come up with a 
good, healthy reauthorization bill and start doing what the 
Constitution says that we are supposed to be doing.
    So, I just know that we are going to do the best we can and 
we are going to work as a team. And we are going to make this 
thing happen. And, of course, we rejoice in having your 
capabilities to work with us there and look forward to that 
process.
    Thank you, Madam Chairman.
    Senator Boxer. Senator Inhofe, I am breathless after that.
    [Laughter.]
    Senator Boxer. Senator Cardin.

         OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
            U.S. SENATOR FROM THE STATE OF MARYLAND

    Senator Cardin. Madam Chair, it is always a pleasure to 
come after my big spending friend from Oklahoma.
    [Laughter.]
    Senator Cardin. We are good friends. We came to Congress at 
the same time and Senator Inhofe has been a real champion on 
these issues as Senator Boxer has been a champion on this 
issue.
    Secretary Foxx, welcome. It is a real pleasure to have you 
as Secretary of Transportation and we are honored that your 
first appearance is before this Committee which has a 
reputation of working across party lines to get things done. 
So, welcome. That is not always the case with secretaries 
appearing before Committees, so you think you are in a, I 
think, friendly Committee that has an objective of giving you 
the tools necessary to modernize our infrastructure.
    And you are following on the footsteps of Secretary LaHood 
who did an incredible job in service for this Country and had a 
wonderful relationship with the Members of Congress and, as a 
result, I think we got some good things done for the Country.
    So, we look forward to a similar working relationship 
between you and this Committee and the Congress. And welcome.
    TIFIA was a pragmatic way to leverage more transportation 
funding. And it certainly is accomplishing those purposes. But 
as many of my colleagues have pointed out, it does not deal 
with the fundamental issue that we have and that is how do we 
finance long-term commitments to modernize our transportation 
in this Country? I could not agree with more with the previous 
speakers that we need a long-term, robust transportation 
program.
    Senator Inhofe, it is difficult to look at how we can get 
that from General Funds when we do not have enough General 
Funds to balance the Federal budget. So, it is, I do not 
disagree with you philosophically, but I think it is a 
practical manner. We have to tackle the issue of where are we 
going to get the revenues necessary to fund the fundamental 
functions of Government. And yes, I agree that transportation 
is a fundamental responsibility and that we need to have 
funding for that.
    Senator Inhofe. Since you mentioned my name, it is all 
right, but let me just respond. I do not disagree with that at 
all. I looked at things that are funded out of the General Fund 
and I think in terms of funding of our infrastructure is more 
important than a lot of those things. That is not my choice. I 
would rather have the long-term funding source that you 
mentioned. But we do not have that yet. I am saying that this 
has that kind of a critical effect on me and what I would be 
willing to do. So, I agree with you.
    Senator Cardin. I understand my colleague and my friend. I 
would just point out that some of us are prepared to make the 
tough decisions so that we have the revenues necessary to do 
what is right for this Country.
    And there have been Members who have suggested a carbon 
tax, a pollution tax, as a way of not only dealing with energy 
policy and environmental policy, perhaps also having revenue to 
deal with a long-term transportation program. And I think we 
need to look at those types of proposals in a way to accomplish 
our mutual objective of being able to finance modern 
transportation in this Country.
    Let me mention two other issues that I need to point out as 
we talk about TIFIA. One is that many of the States that are 
utilizing TIFIA to build new roads have a long backlog on 
repair and maintenance of their existing roads. Senator 
Gillibrand mentioned the problems in New York with bridges. If 
you take that nationwide, the backlog on repairs of our bridges 
and highways is close to $3 trillion.
    So, as we are building new roads, which is important, we do 
not have the funding to maintain the existing roads. And I 
think we need to look at how we can put a priority on 
maintaining the safety of our existing transportation 
infrastructure.
    The second point I want to raise in regards to TIFIA, 
because TIFIA is not helping us with repair and maintenance, 
the second is whether we have the right mix of transportation 
programs within TIFIA. It is my understanding that 84 percent 
of the TIFIA-funded programs go for new highways. I would 
suggest that if you represent a State like I do in Maryland and 
you look at our No. 1 transportation challenge, the Washington 
Metro Area has been rated as the worst traffic congested area 
in the Nation.
    So, we need help on transit projects. And yet transit 
projects are having a difficult time getting TIFIA funding. We 
have a need in this region for the Purple Line expansion of the 
Washington Metro System, the Red Line expansion, the Baltimore 
Metro System, and yet when we take a look at the transportation 
bill that is on the floor today, the appropriations bill, it 
does not have the type of robust appropriations that give us 
great hope that these types of projects can move in a timely 
way.
    So, Secretary Foxx, I just really wanted to make those 
comments as we talk about TIFIA to recognize that we have 
broader issues. This Committee and this Senator look forward to 
working with you so we can accomplish our mutual objective of 
modernizing our transportation system that will not only 
improve the quality of life of the people who live in this 
Country, provide a cleaner environment, but help our economy 
grow.
    Senator Boxer. Thanks, Senator.
    Senator Boozman.

            OPENING STATEMENT OF HON. JOHN BOOZMAN, 
            U.S. SENATOR FROM THE STATE OF ARKANSAS

    Senator Boozman. Thank you, Madam Chair.
    It is good to have you here, Secretary Foxx. I really 
enjoyed the visit in the office and getting to know you and I 
think you are going to do great things for transportation. And 
as you are feeling, the Committee is going to be very, very 
supportive.
    In Arkansas, we have some concerns. We would like to, we 
have a couple of major interstates that we would like to work 
really hard to get completed, I-49 North-South corridor, we do 
not have very many of those running through the Country, and 
then also the I-69 project. So, we look forward to working with 
you on that.
    The other thing is that I hope the Committee, we are in the 
process of sequestration. And it is here now. It is here for 
the foreseeable future unless we figure out a way to undo that 
where it can make it so we do not have the across-the-board 
cuts. But again, I hope we can work together to manage 
sequestration as best we can for the Department and hopefully 
we can do that and provide you some help in that regard.
    Also, working with the FAA to improve certification, to 
make our aircraft manufacturers internationally competitive, I 
think is very important.
    In regard to TIFIA, just ensuring that the medium-sized, 
small communities, rural States have an equal opportunity to 
participate. And I think that is very, very important. And then 
two, promoting what we say cooperative federalism with the 
States, working together and, as we face the challenges we have 
talked a lot about today, we all agree that we just do not have 
the funding base that we need, trying to think outside the box, 
you know, that we can come up, working with the States, working 
with the private entities, to try and get some of these things 
done.
    And then also something that is very, very important, and I 
think after visiting with you I know it is important to you, 
reducing the bureaucracy, reducing the roadblocks so that we 
can get these projects done in a timely fashion which would 
save a tremendous amount of money and be, you know, very 
helpful in a variety of different ways.
    So, again, we welcome you on board. We look forward to 
working with you and appreciate your testimony today.
    Thank you, Madam Chair.
    Senator Boxer. Thank you, Senator Boozman.
    Senator Whitehouse.

         OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Whitehouse. Thank you, Chairman.
    Welcome, Secretary Foxx. I am delighted that you are where 
you are and I look forward to working with you on Rhode Island 
issues.
    We hear a lot of talk in Washington about our Nation's 
deficit. But we have a very, very serious infrastructure 
deficit as well as a fiscal deficit. It gets much less 
attention but is probably more immediately important to the 
American people when bridges are not safe, highways are not 
smooth, water is not cleaned properly and the services that 
they are accustomed to in those and other areas are not 
provided. So, I really think we need to work on this.
    I am a big fan of the TIFIA Program but my Rhode Island 
Director of Transportation, Mike Lewis, tells me we have got 
nothing that qualifies for the TIFIA Program. We have got 
plenty of highways that need to be repaired, we have got plenty 
of bridges that need to be repaired, we have got an enormous 
amount of work to do.
    We have got aging infrastructure on the water side, which 
is not your problem, it is equally serious. I think we are at, 
what, $600 billion a year in water infrastructure that we are 
behind on? And our water resources bill is trapped here in the 
Senate because the House cannot legislate. And so, it is a 
frustrating circumstance to be in.
    Just when we get to the Q and A, I want to ask your 
thoughts about what are the other creative ways in which we can 
go forward, particularly to help States like mine where TIFIA 
does not apply because we do not have the toll roads and the 
revenues to offset.
    So, I welcome you. This is a big issue. Infrastructure 
should be something Republicans and Democrats can agree on. 
Every American is entitled to safe highways, safe bridges and 
safe water, both disposal and drinking water, and, at the 
moment, that deficit gets nowhere near the attention that it 
should.
    So, thank you, Chairman, and thank the Ranking Member for 
focusing on this and I look forward to the hearing.
    Senator Boxer. Thank you so much, Senator.
    Well, Mr. Secretary, the floor is yours.

 STATEMENT OF HON. ANTHONY FOXX, SECRETARY, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Secretary Foxx. Thank you, Chairman Boxer, and Ranking 
Member Vitter and members of the Committee. It is a pleasure to 
join you today in my first hearing as the U.S. Secretary of 
Transportation. I am going to discuss the Transportation and 
Infrastructure and Innovation Act Program, more commonly known 
as TIFIA.
    Mayors and Governors across this Country are looking for 
ways to get more out of taxpayer dollars while making critical 
investments for the future. And I know this from experience. 
TIFIA is a powerful tool that helps us do just that. And I do 
want to applaud the leadership of Chairman Boxer and so many 
others who have been instrumental in helping us get the 
reauthorization done and also the TIFIA Program's expansion.
    As you know, TIFIA was created by Congress to help State 
and local governments finance large-scale transportation 
projects with innovative sources of revenue. TIFIA's flexible 
terms and low interest rates make it possible to obtain 
financing for critical projects that otherwise would have been 
delayed or deferred because of their size and complexity.
    This includes projects like the recently closed SR-91 
Corridor Improvement Project in Riverside, California. At the 
beginning of this month, we provided a $421 million loan to 
this $1.3 billion project which is expected to reduce traffic 
delays and create more than 16,000 jobs.
    TIFIA is also a multi-modal program. Many large-scale 
surface transportation projects, including highways, transit, 
railroad, intermodal freight and port access projects are 
eligible for assistance. Increasingly, we are seeing a broad 
interest in TIFIA for innovative projects and projects with 
non-traditional sponsors. And we are seeing interest in States 
across the Country with more States taking advantage of the 
program each year.
    TIFIA is fulfilling its fundamental goal which is to 
leverage Federal funds by attracting substantial private or 
non-Federal investments in critical infrastructure improvements 
projects to improve the Nation's surface transportation system. 
In short, TIFIA is helping us stretch our dollars further.
    This Committee recognizes the power of TIFIA as a tool that 
can leverage Federal resources and your comments reflect that. 
MAP-21, the transportation bill that you passed and the 
President signed last summer, included a significant expansion 
of the program, increasing TIFIA's funding more than eightfold 
from $122 million per year to $1 billion per year in fiscal 
year 2014.
    We estimate that TIFIA's leverage ratio is more than 30 to 
1, meaning that $1 of budget authority will result in over $30 
of infrastructure investment. At the MAP-21 funding level, the 
TIFIA Program will stimulate as much as $30 billion or more in 
infrastructure investment in fiscal year 2014 alone.
    The demand for TIFIA is high. In each of the last 3 years, 
we have received $12 billion to $15 billion in requests for 
TIFIA assistance. This year is no different. The Department of 
Transportation has received a record $15.8 billion in requests 
to finance 31 projects across the Country. Thanks to the strong 
bipartisan support and the leadership of Chairman Boxer and 
Ranking Member Vitter and the rest of this Committee, we now 
have the resources to meet the demand for TIFIA.
    Since MAP-21 went into effect, we have been working hard to 
disperse this money quickly, committing more than $800 million 
of budget authority for 18 projects. In total, we have 25 
projects progressing through the TIFIA pipeline right now. To 
put that into perspective, that is about two-thirds the total 
number of projects that TIFIA has financed since 1999.
    We are also streamlining the way that we manage this 
program and we are continuing to spread the word, developing a 
series of webinars for local stakeholders who are interested in 
accessing TIFIA.
    Transparency and accountability are also high priorities 
throughout the process. DOT is working to keep stakeholders 
informed throughout our creditworthiness evaluation process 
which is a rigorous but highly efficient effort to ensure that 
loans are likely to be repaid and that the taxpayers are 
protected.
    We are also committed to oversight. Our DOT Credit Council 
is chaired by Deputy Secretary John Porcari and reviews all 
TIFIA requests. Under the Obama administration, the DOT Credit 
Council has strengthened its focus on creditworthiness 
requirements, incorporating lessons from the financial crisis 
and ensuring that projects are not over leveraged or financed 
based on overly optimistic assumptions about revenue.
    And I think I am out of time, Madam Chairman.
    Senator Boxer. That is all right. Please go ahead. We will 
give you another 2 minutes. Go ahead.
    Secretary Foxx. Thank you.
    Above all, TIFIA has been a highly successful way to 
leverage Federal dollars and it has helped communities across 
America invest in the large-scale infrastructure projects we 
need to be successful in the 21st century.
    To date, the program has extended more than $11 billion in 
credit assistance to support almost $44 billion in highway, 
bridge, rail and bus projects. This year, we expect to obligate 
TIFIA funds for seven or more projects, which is a record 
number, and 2014 promises to be even busier.
    Again, it is a pleasure to be here and I look forward to 
working with all of you to address the Nation's important 
infrastructure needs. I am happy to answer any of your 
questions.
    [The prepared statement of Secretary Foxx follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
        
    Senator Boxer. Well thank you so much, Mr. Secretary, for 
that. And it really is music to our ears because we stuck our 
necks out and decided together, all of us on this Committee, 
both sides, that this was a program worth expanding in a time 
when, as you know, we are not expanding many other things.
    But I wanted to ask you, when you took over and I talked to 
you and others did about this, did you make any changes in how 
you deal with it? Did you put more people on this program? What 
changes are you making administratively handling this newly 
robustly funded program?
    Secretary Foxx. Thank you for the question. First of all, I 
will say that we are focusing very much on helping these 
projects move through the pipeline. That was one of the first 
orders of business for me coming into the Department, having 
conversation with you and many others on the Committee.
    And we are making progress on that. We had two projects 
that have moved recently, actually, in the Los Angeles area.
    Senator Boxer. Have you had to make any changes in the way 
TIFIA is handled or do you think your predecessor, who was also 
pretty terrific, had he put it all in place or are you moving 
people around, more help, et cetera?
    Secretary Foxx. Well, in terms of staffing, we are 
expanding our staffing and you can expect that we are going to 
add something on the order of 16 additional people to help us 
move projects through the pipeline.
    Senator Boxer. Good. I think it is important because you 
point out at the same time you want to get the money out on the 
street you also want to make sure they are safe investments for 
us. And that is why TIFIA is so effective because there is very 
low risk to us.
    Now, in addition to the large increase in funding, MAP-21 
also included a number of policy enhancements that were broadly 
supported by outside organizations, many of whom are here 
today, including the ability to provide Master Credit 
Agreements for what we call ``a program of projects'' and 
increasing the share of projects' costs that could be covered 
by TIFIA.
    Can you explain the status of DOT implementing these 
changes and allowing applicants to take full advantage of these 
new provisions?
    Secretary Foxx. We have one request by a community sponsor 
to purse a Master Credit Agreement and actually even, in the 
course of pursing that opportunity, I believe that it was 
decided that it was not a good fit for that particular sponsor.
    The flexibility is very important because what it allows us 
to do, potentially, is to pool projects by a project sponsor 
and to have an overreaching credit agreement that is available. 
I think that flexibility is still very important. But that is 
as far as it has gone, to my knowledge.
    Senator Boxer. But you are prepared to deal with those as 
they come in?
    Secretary Foxx. Absolutely.
    Senator Boxer. MAP-21 also made improvements to make TIFIA 
assistance more practical and usable for all regions of the 
Country, particularly rural areas. What is DOT doing to educate 
potential applicants to make them aware of the new provisions 
and how they can benefit particularly in the rural areas?
    Senator Foxx. A very good question. One of the things that 
our staff is working on and had already started are a series of 
outreaches to local communities all across the Country. Some of 
them have been through webinars. There are other efforts to 
make this available to local communities.
    I also want to point out that changes to the program that 
allow for a lower limit for assistance to rural communities has 
been very, very important and we are looking to make even 
greater use of that flexibility.
    Senator Boxer. Thank you, Mr. Secretary.
    Senator Vitter.
    Senator Vitter. Again, thank you, Mr. Secretary, for being 
here.
    As the Chairman noted, we dramatically expanded TIFIA. Part 
of that deal was to also streamline and simplify the criteria 
used and we tried to make it real simple, eligibility and 
creditworthiness. That is because we wanted to increase 
transparency and really get in the project selection process 
and really get the program back to its original intent.
    Some of us are a little concerned that in the DOT 
application, however, there is a new term in there, public 
benefit, asking for a description of public benefit. Why is 
that inserted in there? Because it is not what we wanted to get 
back to, eligibility, either, you know, either you are in the 
box or not, either you are eligible or not, and 
creditworthiness.
    Concern is that something like public benefit is obviously 
completely subjective and it would re-insert tremendous 
Administration discretion which, quite frankly, we did not want 
to do. We wanted this to be more of the rolling first come, 
first served, you know, let us have clear, objective criteria.
    So, why is that term in your material and the application 
process?
    Secretary Foxx. Well, thank you for the question, Senator, 
and let me say at the outset that may be a comment I will need 
to come back to following the hearing.
    But on the face of it, what I can tell you is that I do not 
know of any request for a letter of interest that has come into 
us that has been excluded as a result of some concern about 
public benefit. In other words, every project that has come 
through our doors our staff is trying to work to get to yes on 
those projects. And I think that is consistent with the view 
that you had in crafting the legislation and the view that I 
have in terms of trying to get these projects done.
    Senator Vitter. Right. Well, I would urge you to go look at 
that and maybe supplement your answer because if what you say 
is true, and I hope it is, then it is just sort of a useless 
time-consuming question and then why not take it out and not 
make people, you know, answer another question which really 
does not have to do with the two criteria we laid out.
    Related to that, as I said, we dramatically expanded TIFIA. 
We wanted it to be more or less a first come, first served 
rolling process. So, with that in mind, have many projects have 
received assistance since the NOFA was issued in July of last 
year?
    Secretary Foxx. Senator, I know of one project that has 
made it all the way through the process. There are several 
projects that are in the course of making it through. I think 
there are five or so that have gone through the 
creditworthiness process and have been invited to apply for the 
program.
    You may recall that one of the things that has changed with 
the program is that we are being really, we are frontloading a 
lot of the effort on the creditworthiness so that when we get 
to the application phase, we can move much faster. And I think 
we are finding that that is actually the case.
    So, as we say, I believe that by the end of this year you 
are going to see several projects that will get through and I 
think 2014 is going to be even more expansive.
    Senator Vitter. OK. Well again, the concern is related to 
what I was talking about a minute ago, the concern is that 
there are dozens pending and so it is not sort of a stream 
moving through the pipeline. If there are dozens pending, the 
concern is that there is going to be picking and choosing 
rather than moving eligible projects the pipeline.
    Secretary Foxx. If I might, sir?
    Senator Vitter. Go ahead.
    Secretary Foxx. My instruction to our staff is to try to 
get the yes on every application that we get in and it should 
be an outlier when we cannot get it done. There may be some 
situations as we go through creditworthiness that just do not 
work. And even then, we are going to try to figure out a way 
with the project sponsor to try to help make it work.
    So, I want you to understand that is where I am coming 
from.
    Senator Vitter. Right. And certainly, let me back up. I am 
not suggesting that we should bend much less break the rules 
about eligibility or creditworthiness, but simply that we 
should not be picking and choosing subjectively. No one should, 
including the Administration. And if you can get the pipeline 
moving to illustrate that you are not, I think that would build 
confidence. Because right now, there are a lot pending, and 
that is the concern.
    As was mentioned, another issue that has come up, and I 
will end on this and you can address it, is the rural carve out 
and the threat that some mega-projects that technically meet 
that criteria could gobble up all of that money. Can you 
address that as move forward?
    Secretary Foxx. Yes. Again, I think the flexibility that 
this Committee and the Congress provided us to be a little more 
tailored to rural communities has been extremely helpful. That 
is one of the reasons why we have also been pretty insistent on 
keeping the 33 percent amount that is contributed to projects 
pretty solid across the range of projects that have come 
through because it leaves us with the ability to use that 
capacity to do projects in rural American and other parts of 
the Country.
    I come from a State that has urban parts to it and also 
rural parts to it and all of those parts are part of America 
and we are going to keep working to make sure we are building 
every part of this Country through this program.
    Senator Vitter. Thank you.
    Secretary Foxx. Thank you.
    Senator Boxer. Thank you, Senator Vitter.
    Senator Gillibrand.
    Senator Gillibrand. Mr. Secretary, as I mentioned in my 
opening statement, New York State is in the process of seeking 
a TIFIA loan to finance a significant portion of the costs of 
construction for the replacement of the Tappan Zee Bridge. In 
March, Governor Cuomo announced that the process is moving 
forward and was in the credit review stage. Since them, we have 
not received an update on the current status. Could you provide 
me with an update on the status of New York's request?
    Secretary Foxx. Thank you, Senator, and I appreciate the 
significance of this project. It is a project of national 
significance and a bridge that continues to be very highly 
trafficked, as you have pointed out.
    This project has gone through several phases. It is still 
in creditworthiness. But, and by the way, it is the largest 
TIFIA request that we have ever tried to work through. So, I 
expect that this project will continue making its way through 
the creditworthiness review.
    I will say that at a certain point there was some concern 
about what the appropriate percentage level would be for the 
TIFIA loan. I think there was an interest in having it be 
higher than 33 percent. It is now agreed by the parties to keep 
it at 33 percent and I think we are going to see that project 
moving its way through the system.
    Senator Gillibrand. Are there other mechanisms or 
alternative funding besides TIFIA, including tax exempt or tax 
credit financing, and other public-private partnership programs 
that currently exist within DOT?
    Secretary Foxx. There are. Private Activity Bonds, Buy 
America bonds, there are other tools that we have in the 
toolbox. And of course, the President has proposed an 
Infrastructure Bank as part of his fiscal year 2014 budget, all 
of which will be helpful, effective tools to build our system.
    But I think, as has been pointed out across the Committee, 
there is also still a tremendous need for both repair and new 
across the Country.
    Senator Gillibrand. How do you, if you could, give us some 
specifics, how do you plan to utilize the Federal Highway 
Administration's Office of Innovative Program Delivery as you 
seek to meet the Nation's infrastructure needs?
    Secretary Foxx. Great question. We are seeing some examples 
of some pretty innovative project delivery today. The Highway 
Administration has started a program called Every Day Counts. 
And the whole goal of that program is to speed project delivery 
because when we shave time off of projects without compromising 
safety and environmental controls, we actually save money and 
help those dollars go further.
    So, what they have done are things like, in some situations 
when you are building a bridge, for example, the components can 
be put together on the roadside and then wholly moved over into 
the bridge thoroughfare to make the bridge get built a little 
faster. And we are looking at ways to do that.
    We are also looking at our NEPA processes and our other 
permitting requirements to see if we can find ways to 
streamline those to get projects done quicker.
    Senator Gillibrand. Well, on that last point, is it 
helpful, do you think, to work with other agencies like the 
Department of Commerce, the Department of Energy, to help 
streamline implementation of additional public-private 
partnerships? Because as we look at the idea of Infrastructure 
Bank or an infrastructure authority which would not be 
providing financing but actually would be providing 
streamlining, are there ways the Department of Transportation 
can do that? What is your view of that approach?
    Secretary Foxx. There are ways that we could do that. And I 
think the President, again, has put on the table some very good 
ideas about how to do that and I hope that we can see some 
activity around Congress in terms of responding to those ideas.
    Again, though, even if you have a $10 billion 
Infrastructure Bank, you match that against the need for repair 
and maintenance and improvements across the Country. It is a 
huge step to get it there. It is a huge step to get more 
private money involved in building our infrastructure. But we 
still have a great need beyond that.
    Senator Gillibrand. And in terms of streamlining, do you 
think working with other agencies is the right approach to do 
that?
    Secretary Foxx. I do.
    Senator Gillibrand. Or can you do that independently?
    Secretary Foxx. Yes. It is essential and, you know, 
actually in some of our activity with EPA and HUD, we have been 
able to work together to make our projects more impactful at 
the local level. I can speak to that specifically as having 
been a mayor.
    I think that as we start to think about our 
reauthorizations, for instance, one of the policies that we are 
working on right now is a national freight policy and the 
freight policy is designed to look at our economic data which 
will come a lot from Commerce and will help us begin with the 
end in mind as we build our Nation's freight infrastructure, 
whether it is rail, highway, or whatever.
    So, we are actually collaborating a good deal and I will be 
looking for ways to help us collaborate across agencies to make 
our transportation system even more impactful.
    Senator Gillibrand. Well, one example I just want to 
highlight. I have talked to many investors who would be 
delighted to invest in a high-speed rail line, particularly in 
highly frequented corridors, whether it is Washington to New 
York to Boston, New York up to Montreal, or New York from 
Albany all the way out to Niagara.
    These are highly trafficked routes that could be very 
financially lucrative if the investment is done properly and 
many of those investors say we do not need financing, we do not 
need loan guarantees, we do not need any financing. What we 
need is the streamlining and the ability to do the project in a 
timely manner because if you cannot structure the build out in 
a way that is affordable for an investor, it cannot be done.
    Is that something you have looked at? Is it something you 
have considered about how to be more creative?
    Secretary Foxx. Yes, there is a lot of conversation about 
private building of infrastructure whether it is rail or 
something else. And I have yet to see a private sector player 
agree, out of benevolence, to build some infrastructure for 
someone. There has always got to be a revenue source that gives 
them a return on that investment.
    Having said that, I think there is a lot we can do engaging 
with the private sector to figure out how to streamline the 
process for them. And we are seeing this in some parts of the 
Country. Chicago has an Infrastructure Bank that they have 
established. It is bringing private sector money to the table 
and it is helping to pick projects that will provide the best 
return but also the best public benefit.
    So, I think that we should continue working toward that. 
But the point, I think the larger point that I am also trying 
to make here, is that while there are some projects that are 
great candidates for public-private partnerships, there are 
some projects that are simply part of the public good and will 
never qualify for a public-private partnership but are not 
unimportant because of that.
    Senator Boxer. Thank you, Mr. Secretary. I think you can 
see how well-received you were here. We are very happy to see 
you.
    Secretary Foxx. Thank you.
    Senator Boxer. We are excited to work with you as we tackle 
our next problem. And we have a big problem. We have to figure 
out a way to move forward and we know you are going to be a 
very big help to us. And I am going to ask you this question. 
Will you stand ready to be a resource for us as we put together 
the next bipartisan highway bill?
    Secretary Foxx. Senator, I will do everything I can to be 
helpful to you and to the Committee and I look forward to 
working with you.
    Senator Boxer. Thank you so much.
    Senator Inhofe, I am sorry, I forgot that you wanted to 
question. I am sorry. Stay here. Do not move.
    [Laughter.]
    Senator Inhofe. Do not leave. When I wind up, it will be 
time for the next panel.
    But I just, real quickly, one thing I would request and 
that is, you probably, in my opening statement I talked about 
all of the reforms that were there, a lot of them having to do 
with NEPA, a lot of them having to do with other enhancements 
and other projects.
    So what I would ask of you, and we probably had more, I 
believe, and I said this in my opening statement, that we had 
more reforms in this bill than in all of the rest of them. I 
have been around in these bills since I was in the House, back 
in the 1980s, and I think we have had more.
    So, what I am going to ask you to do is look at all of 
these reports and be sure that they are carried out so that 
they are put into practical use, which would be very helpful 
and building a lot more miles of road. So, if you would do 
that, to become personally familiar with all of those reforms, 
I would appreciate that.
    The question I would ask you is, I was serious when I said 
a lot of these people here in Washington and the U.S. Senate do 
not know what a hard job is. There is no harder job than being 
the mayor of a major city and, you know, there is no hiding 
place. If they don't like the trash system, it ends up in your 
front yard. In fact it did, in my front yard.
    Senator Boxer. Oh, no.
    [Laughter.]
    Senator Inhofe. So, we understand that and when I was first 
elected, they had neglected the infrastructure in my city of 
Tulsa. And I had to immediately jump in there. What kind of 
experience did you have as mayor of Charlotte, North Carolina, 
in terms of your infrastructure?
    Secretary Foxx. Thank you for the question, Senator. It is 
hard to be a mayor right now and not have a lot of experience 
with infrastructure.
    In Charlotte, we had gone through a period of about 30 
years of dramatic, kind of sprawl expansion, as a result of our 
ability to annex. And shortly after taking office, it became 
very clear to me that we were not going to be able to annex 
anymore both because the laws had changed but also because we 
had run out of land.
    Senator Inhofe. That is exactly what happened to us, the 
same situation.
    Secretary Foxx. And yet, we were experiencing exponential 
population growth. In fact, it was the largest, the fastest 
growing metro region in the Country. So, our transportation 
systems have to do several things at once. It has to move 
things and people, it has to enhance the ability to make good 
land use choices, and it has to, hopefully, provide people with 
a reliable way to get someplace.
    So, for us it was highways. It was transit. It was bike 
paths and sidewalks. It was bridges. And when those things all 
work together well, what happens is that people have choices. 
And when they have choices, they feel empowered and that is 
ultimately what transportation does for our Country. It 
empowers people to have a good quality of life and have good 
jobs.
    Senator Inhofe. Well, that is why I said that there is no 
better training ground for your job than to have handled it at 
that level.
    As you know, one of the agencies in your jurisdiction, the 
FAA, is currently involved in a lawsuit. That is why I wanted 
to visit with you a little bit here. This event, caused the 
Oshkosh Event, is the largest such event anywhere in the world. 
And the revenues that are generated for the FAA far exceed the 
amount that they would pay their air traffic controllers.
    So, as soon as the Chairman dismisses you and asks for the 
next panel, maybe we could visit about that in the back room 
here?
    Secretary Foxx. Yes, sir.
    Senator Inhofe. Thank you very much.
    Thank you, Madam Chairman.
    Senator Boxer. Thank you so much, Senator Inhofe.
    Thank you, Mr. Secretary. We look forward to working with 
you.
    We will ask our second esteemed panel to come forward. Mr. 
James Bass, Chief Financial Officer, Texas Department of 
Transportation; Mr. Geoffrey Yarema, Partner, Nossaman, LLP; 
Mr. Art Leahy, my friend and Chief Executive Officer, Los 
Angeles Metropolitan Transportation Authority; Mr. James 
Roberts, President and Chief Executive Officer of Granite 
Construction Incorporated, another one of my friends; and Mr. 
D.J. Gribbin, Managing Director, Macquarie Capital.
    If you will all take your seats. We are going to get 
started because we have votes behind us coming soon. So, please 
be seated. We are going to start with Mr. James Bass and we are 
going to go all across the table.
    We are very interested in getting your views today on 
TIFIA, what you feel about the program, any reports back from 
your perspectives since you are really on the ground.
    We will start with Mr. James Bass, Chief Financial Officer, 
Texas Department of Transportation.

    STATEMENT OF JAMES BASS, CHIEF FINANCIAL OFFICER, TEXAS 
                  DEPARTMENT OF TRANSPORTATION

    Mr. Bass. Thank you and good morning.
    I would like to thank you, Chairman Boxer, for holding this 
hearing to discuss the TIFIA Program. It is my privilege to 
provide a State's perspective on the program. And while I have 
the opportunity, I would like to thank the Committee for MAP-21 
as we consider it to be the most significant surface 
transportation legislation passed over the last 20 years.
    Since its passage, Texas has worked diligently to implement 
the new provisions and of note, the Texas legislature recently 
passed legislation permitting Texas to assume some 
environmental review for transportation projects. We have 
looked very carefully at the success that California has had 
with that program since 2007 and we are hopeful that we can 
replicate the same success in Texas.
    We will continue to implement the new elements of MAP-21 in 
the second year of the bill and we look forward to updating the 
Committee on those efforts in the coming months.
    Today, I am before you to discuss one MAP-21 provision, in 
particular, the TIFIA Program. MAP-21 solved several key 
challenges, at least on paper, that have held back the TIFIA 
Program. We were very encouraged by the substantial increase in 
funding for the program, the increased share of project costs 
that TIFIA could finance, provisions for rural projects, and 
the congressional desire to make the TIFIA Program more 
efficient. However, if MAP-21 funds are not deployed to 
projects that are ready, the program will lose momentum and 
Congress' objectives will have not been fully achieved.
    Since TIFIA's inception back in 1998 as part of TEA-21, 
Texas has been an early and frequent user of the program. In 
fact, we view TIFIA as a critical component in the delivery of 
all of our larger-scale projects in the State. Within the last 
10 years, our legislature in Texas has enacted several 
innovative financing initiatives that can be used in 
conjunction with TIFIA to deliver those projects sooner and 
more efficiently than traditional methods.
    To date, projects in Texas have received $3.4 billion in 
TIFIA assistance which, when combined with State, local and 
private investment, have helped to deliver over $11 billion in 
transportation infrastructure. Because of the way the Office of 
Management and Budget scores TIFIA, the Federal budget impact 
for these projects is estimated at only $343 million. Compared 
to the traditional Federal funding, TIFIA helped save the 
Federal Government over $8.5 billion to deliver these same 
projects and TIFIA is a great example of States doing more with 
fewer Federal dollars available.
    Under MAP-21, Texas has submitted six letters of interest 
and we continue to have open and forthright discussions with 
the USDOT about our projects. They have been good partners to 
work with and we certainly appreciate their willingness to meet 
with us and work through the new TIFIA process.
    Prior to MAP-21, USDOT was allowed discretion to evaluate 
and choose eligible projects under specific criteria. USDOT 
also had the authority to weigh and compare the relative merits 
of eligible projects under the selection criteria and to choose 
those that scored highest under that weighted scoring system.
    Over time, USDOT continued to add criteria such as 
livability to their list of selection criteria and too much 
discretion seemed to be permeating the process and made the 
program more about meeting subjective criteria as opposed to 
funding the best projects in order to meet the mobility demands 
of the citizens.
    MAP-21 eliminated discretionary selection criteria as it 
established a limited set of objective eligibility criteria 
that required a yes or no determination of satisfaction. TxDOT 
and other States welcome this change in MAP-21 because we 
believe market forces should direct where projects are selected 
to receive TIFIA funding.
    A year after passage, however, the majority of funds have 
not yet been put to use. A problematic effect of the new 
approach, whether intended or not, is that it does not meet 
Congress' intent that USDOT improve its timeliness in 
processing TIFIA credit assistance.
    The new law requires USDOT to indicate whether an 
application is complete within 30 days of receipt and to 
approve or disapprove an application within 60 days after 
giving notice that it is complete. By adjusting the process 
prior to MAP-21 and by requiring that almost every project 
detail be disclosed prior to the application stage, USDOT has 
put an undue burden on the project sponsors and has dragged out 
what was intended to be a streamlined process.
    In addition to the timing issues, USDOT has indicated that 
except under exceptional circumstances, they will not consider 
assistance for more than 33 percent of the total project costs. 
We would be thankful if they would consider that projects may 
benefit from more than that 33 percent.
    I see, Madam Chair, that I just ran out of time.
    Senator Boxer. Go ahead.
    Mr. Bass. OK. So, we believe USDOT should adhere to 
Congress' intent and at least consider projects that would 
benefit from more than 33 percent to fund their projects, 
especially if it is important to put all of the dollars in the 
TIFIA Program to work.
    Given that MAP-21 is only a 2-year bill, we have a 
compelling reason to get the TIFIA Program back on track. MAP-
21 provides critical changes in increased funding. But change 
can be made to further correct the program.
    Again, I would like to thank the Committee for the 
opportunity to be here today to share TxDOT's past and present 
interest in and experience with the TIFIA Program. And we also 
appreciate the professional and positive working relationship 
that we have enjoyed with the USDOT staff and we are committed 
to working with all of our Federal partners to support the 
continued success of the very valuable TIFIA Program.
    [The prepared statement of Mr. Bass follows:]
    
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    Senator Boxer. Thank you for that. I really appreciate your 
specific points there, thank you, because I can take them up 
with the Secretary.
    And now we turn to Mr. Geoffrey Yarema, Partner, Nossaman 
LLP. Tell us what your company does.
    Mr. Yarema. Nossaman is a law firm. I am based in Los 
Angeles and proud to be a constituent.
    Senator Boxer. Thanks.

   STATEMENT OF GEOFFREY S. YAREMA, PARTNER, INFRASTRUCTURE 
    PRACTICE GROUP, NOSSAMAN, LLP, MEMBER, NATIONAL SURFACE 
       TRANSPORTATION INFRASTRUCTURE FINANCING COMMISSION

    Mr. Yarema. Chairman Boxer, thank you for the invitation to 
participate in this important, timely hearing. I have submitted 
for the record a detailed statement and will cover only the 
highlights in my remarks today.
    My views about TIFIA are shaped from two perspectives. 
First, as I mentioned, I am a partner in a law firm that 
represents States and regional transportation agencies around 
the Country. They are all struggling with the same basic 
problem, how to deliver their largest and most complicated 
projects while minimizing the use of Federal gas taxes. Many of 
our agency clients have successfully done exactly that thanks, 
in significant part, to the TIFIA Program.
    Second, I was privileged to serve on the National Surface 
Transportation Financing Commission that Congress empowered 
under SAFETY-LU. Among the unanimous recommendations of our 
bipartisan report was strong support for a TIFIA Program sized 
to meet projected demand. In enacting MAP-21, Congress did just 
that.
    And the States have responded. As you have mentioned, since 
MAP-21's passage, prospective applicants have submitted 31 LOIs 
for TIFIA loans to help finance over $42 billion of projects. 
This is clearly noteworthy. But what I consider equally 
noteworthy is that the number of States requesting assistance 
has now risen to 24. There are more projects in the pipeline 
that will push both of these numbers even higher.
    With increased TIFIA demand comes increased USDOT 
responsibility to respond. The USDOT has made significant 
efforts since last year. What can be done to deliver on 
congressionally enacted enhancements and do better?
    First, we can streamline the application process. Before an 
application can be formally submitted there are two steps, the 
letter of interest and the creditworthiness review. These serve 
valuable functions. But the enormous detail the USDOT is 
requiring of all LOIs is tantamount to a full-blown application 
process without having to worry about the statutory deadlines 
Congress improved on processing the applications themselves.
    Second, we need help in using TIFIA to maximize competition 
for public works construction contracts. When States issue 
procurements that contemplate bidders using TIFIA, States can 
maximize competitive tension only if the USDOT can first make 
conditional commitments before bidders' prices are submitted, 
and second, they are able to close their TIFIA loans soon after 
those bids are received. This can be done in a way that 
absolutely ensures careful creditworthiness analysis.
    Third, the USDOT needs to consider making loans larger than 
33 percent whenever they are creditworthy. I am sure you will 
recall that in adopting MAP-21, Congress permitted loan sizes 
to rise up from 33 percent to 49 percent of eligible costs. 
Nevertheless, to my knowledge the USDOT has yet to actively 
consider a loan greater than 33 percent despite numerous 
creditworthy requests.
    The program office responds to such requests saying that 
public sponsors must meet some higher, undefined standard 
having nothing to do with creditworthiness, an obligation not 
derived from any MAP-21 statutory language.
    Fourth, it is critical to preserve TIFIA's value 
proposition. TIFIA loans are intended to be subordinate to 
investment grade debt, not in most circumstances investment 
grade themselves. TIFIA loans are intended to allow sculpting 
of repayment toward the latter part of a loan's duration. These 
features have been hallmarks of the TIFIA Program since its 
inception in 1998 and need to be retained.
    Fifth, the USDOT should strongly consider processing higher 
quality credits more efficiently. Consistent with congressional 
intent, TIFIA applicants dedicate a wide range of non-Federal 
revenue sources to repay TIFIA loans. Loans for projects backed 
by their own future user fees, like tolls, deserve revenue-
specific analysis.
    On the other hand, however, projects backed by a State's 
own highway fund or other investment grade rated revenue 
sources deserves streamlined due diligence and approval 
processes. The USDOT never need recreate the work rating 
agencies have already performed.
    Finally, we can enhance transparency for better management. 
The USDOT has increased its communications with the public. 
Yet, it remains simply impossible for public agencies to obtain 
sufficient information to understand the extent to which the 
TIFIA Program capacity remains for a given fiscal year.
    Will TIFIA be fully utilized? We do not know.
    Senator Boxer. You need to conclude, please.
    Mr. Yarema. That is fine. That is fine.
    [The prepared statement of Mr. Yarema follows:]
    
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    Senator Boxer. Art Leahy, happy to see you. Please proceed.

  STATEMENT OF ARTHUR T. LEAHY, CHIEF EXECUTIVE OFFICER, LOS 
      ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY

    Mr. Leahy. Senator, it is a pleasure to be here.
    Chair Boxer, Ranking Member Vitter, members, thank you for 
having us. Thank you for having the panel today. We always 
appreciate the work of the Committee.
    Los Angeles County Metro, Metropolitan Transportation 
Authority, is what we call in California a self-help county. We 
have sales tax measures, voter-approved sales tax measures, 
which have a duration of 30 years. The voters vote for those 
projects because included in the tax measure will be list of 
projects, a list of deliverables. So, we will be held 
accountable by the taxpayers of LA County to deliver those 
projects.
    The TIFIA Program is of great assistance to us. There is a 
TIFIA loan on our very important Crenshaw/LAX Light Rail 
project, and I am pleased to say that we have been invited, 
just a few weeks ago, to apply for a large TIFIA loan for our 
subway, the Purple Line out to the west and the regional 
connector in downtown Los Angeles.
    These projects will be substantially paid for with local 
voter-approved sales taxes. But what TIFIA does is allow, it 
allows us to accelerate these projects, to get the benefit 
quicker, it allows us to save some money to deliver more 
projects. and it helps improve our credibility with our 
taxpayers so that they will approve future sales tax measures 
as appropriate.
    By the way, to get a sales tax measure approved in 
California requires a two-thirds vote. So, it is very important 
to us that we deliver the goods and that we earn the trust and 
confidence of our taxpayers.
    I will not go through the points that have already been 
made but a number of them are very important and we hope the 
Committee considers them.
    We think that the TIFIA Program helps transportation 
dollars go further. We know that this will help us create jobs. 
The two projects that I just mentioned are going to create 
40,000 jobs in Los Angeles. Not all of those jobs will be in 
LA. Some of them will be all over the Country. But we know that 
the TIFIA Program allows us to deliver the projects faster, we 
know it allows us to create jobs.
    So with that, Senator, or Chair Boxer, I will close and 
thank you again, Ranking Member Vitter, for having me.
    [The prepared statement of Mr. Leahy follows:]
    
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    Senator Boxer. Thank you so much.
    And next we turn to Mr. James Roberts, President and CEO of 
Granite Construction Incorporated.
    It is nice to see you.

   STATEMENT OF JAMES ROBERTS, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, GRANITE CONSTRUCTION INCORPORATED

    Mr. Roberts. Good morning. It is a pleasure to be here.
    As you mentioned, my name is Jim Roberts and I am the 
President and Chief Executive Officer of Granite Construction 
Incorporated, a California-based company that over the past 90 
years has built thousands of roads, tunnels, bridges, airports 
and other infrastructure-related projects used by millions of 
people every day.
    I am here today representing the Associated General 
Contractors of America, better known as AGC, a national 
association of 26,000 businesses involved in every aspect of 
construction with 94 Chapters representing members in every 
State.
    As this Committee is well aware, our transportation 
investment needs are great and the funds to fix the problem are 
running short. While not the subject of today's hearing, the 
very real concern about the solvency of the Highway Trust Fund 
weighs heavily on the construction industry and we urge you to 
address this problem sooner rather than later.
    Senator Boxer. Thank you.
    Mr. Roberts. The solution to meeting our transportation 
infrastructure needs is two-fold. First, Congress and the 
Administration must work together in a bipartisan way to 
increase user fees and identify new revenue sources to address 
our transportation needs both now and into the future.
    Second, there must be more private sector involvement in 
the construction of transportation projects. AGC believes the 
Transportation Infrastructure Financing Innovation Act Program 
has a prudent record of accomplishing this objective. TIFIA has 
been successful in filling market gaps and leveraging co-
investment by providing eligible projects with supplemental or 
subordinate debt.
    Throughout its history, State and local governments, other 
public authorities as well as private entities including 
contractors undertaking large-scale construction projects have 
taken advantage of secured loans, loan guarantees or lines of 
credit provided through TIFIA. Thankfully, through the 
bipartisan leadership of Chairman Boxer and the other members 
of the Environment and Public Works Committee, Congress 
provided the TIFIA Program with a substantial increase in 
budget authority in MAP-21.
    Granite is proud to have supported the construction of 
various TIFIA-facilitated projects since the inception of the 
program. Specific projects include the Central Texas Turnpike 
System and the 183(a) projects in Texas, the Reno re-track in 
Nevada, the Triangle Expressway in Raleigh-Durham, North 
Carolina and the Inter-County Connector in Maryland. TIFIA 
credit assistance on these efforts totaled $2.4 billion which 
generated $9 billion worth or work.
    We are currently on teams building the IH 35 East LBJ 
Expressway in Dallas, $845 million, the Tappan Zee Bridge in 
New York, $3.1 billion, and the US 36 managed lanes between 
Denver and Boulder, Colorado, $359 million, all of which are 
currently seeking TIFIA financing.
    The construction industry benefits from TIFIA financial 
assistance because it allows transportation projects to 
actually move forward. Many of the projects that receive TIFIA 
financing have been built using the design build contracting 
method. Under the design build, contractors are selected based 
on a technical proposal and price.
    The up-front financial costs a contractor undertakes in 
putting together a complex design build project are significant 
and can exceed 1 percent of the overall value of the project. 
If the project does not move forward because of a lack of 
funding, the contractor's preliminary investment may be lost. 
Repeated losses will eliminate qualified contractors from 
pursuing these projects, thereby eliminating competition.
    Granite has established processes for identifying, tracking 
and selecting opportunities that fit our business model and 
risk profile. Project funding is a key, significant factor in 
the process. Dedicated financing sources such as TIFIA 
demonstrate to us that the owner is committed to awarding the 
project which allows us to be more likely to submit a proposal.
    Despite the clear priority that was given to the TIFIA 
Program in MAP-21, AGC is concerned that here has been a 
noticeable slowdown in the award of TIFIA financing since MAP-
21 was enacted. It appears the DOT is being extremely cautious 
in approaching the approval of TIFIA financing on individual 
projects.
    AGC recognizes that DOT must take seriously its fiduciary 
responsibility in overseeing projects that are awarded TIFIA 
financing. Awarding financing to a project that ultimately has 
financial problems and puts the Government at risk for a 
financial loss is not in the best interests of the program. 
However, it is equally problematic to be over-cautious, slow 
and bureaucratic in making the financing decision.
    The past success of the TIFIA Program and the promise that 
it provides in the future should not be undermined by an 
inefficient process. AGC believes some adjustment can be made 
to the program so that it operates more openly and efficiently.
    DOT should redirect more personnel to the TIFIA review 
team. DOT should not hold all decisions on TIFIA awards until a 
record of decision on the project has been issued. This, in 
particular, seems to be contrary to the current review 
requirement that is found elsewhere in MAP-21. DOT should 
develop educational tools and technical advisors to assist 
States that lack the experience in applying for this 
assistance. There must be full transparency in the project 
selection process to encourage States that continue to make 
applications. TIFIA should be available to help establish an 
investment grade rating for projects that are close but 
ultimately unable to do so on their own.
    AGC encourages DOT to accept these recommendations. This 
will help move vital projects to construction. While it is 
still critically important and the Administration address the 
long-term solvency of the Highway Trust Fund, we must also 
assure that programs like TIFIA, which help provide financing 
to fill some of the funding shortfall, are operated as 
efficiently as possible.
    Thank you for allowing AGC to present our views on TIFIA to 
this Committee and I welcome your questions.
    [The prepared statement of Mr. Roberts follows:]
    
    
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    Senator Boxer. Thank you so much.
    And last, but not least, Mr. D.J. Gribbin, Managing 
Director of Macquarie Capital.
    Welcome.

STATEMENT OF D.J. GRIBBIN, MANAGING DIRECTOR, HEAD, GOVERNMENT 
            ADVISORY AND AFFAIRS, MACQUARIE CAPITAL

    Mr. Gribbin. Thank you, Madam Chairwoman, and thank you, 
Senator Vitter, for the opportunity to testify today about the 
impact that TIFIA has had.
    By way of introduction, I am a Managing Director at 
Macquarie Capital and Head of our government advisory and 
government affairs practice here in the United States. 
Macquarie is the world's largest private sector investor in 
infrastructure. We have been particularly successful in 
developing P3 projects here in the U.S. Since 2008, Macquarie 
has been successfully involved in two-thirds of all large P3 
projects, which have a total asset value of about $14.4 
billion.
    Prior to joining Macquarie, I served as a Chief Counsel of 
the Federal Highway Administration and as a General Counsel at 
the U.S. Department of Transportation. As a result, I have the 
privilege of working with TIFIA from both the public policy and 
private transactional perspectives.
    Art, Jim and James covered the benefits of TIFIA so I will 
not talk about those. In my remarks what I would like instead 
is to cover three topics, the benefits of TIFIA that extend 
beyond just finance, the need for administrative reform of the 
loan approval process, and the importance of a portfolio 
approach to lending.
    First, TIFIA has done more than just provide additional 
capital for transportation infrastructure. TIFIA encourages 
prioritization of project selection, innovation in project 
finance and considerable creativity in project delivery. In 
short, the TIFIA success story goes far beyond the $11 billion 
invested in $43 billion worth of projects.
    At its most basic, just the fact that borrowers have to 
repay funds encourages sponsors to select projects that will 
produce a return on investment. Federal financial support that 
has to be repaid, especially projects repaid with toll revenue, 
brings significant discipline to the project selection process, 
avoiding the challenge of bridges to nowhere.
    While the increased funding for TIFIA was extremely helpful 
to the program, I would encourage the Committee to allow the 
Department to use some policy criteria for awarding loans and 
not have TIFIA just morph into a broad grant-like program that 
subsidizes every project. Simplifying TIFIA loan criteria 
removed some of the subjectivity of the process, but it also 
broadened the criteria such that every large potential project 
could qualify. This dramatically limits the Administration's 
ability to use TIFIA to stimulate innovation.
    In the Bush administration, we used the TIFIA Program to 
encourage governments to utilize pricing to finance their 
infrastructure and manage congestion. The Obama administration 
used TIFIA to encourage livability. Both Administrations 
provided TIFIA loans to high priority projects that did not 
directly advance policy goals.
    But TIFIA was a very useful tool to encourage new thinking 
about transportation projects. It would be a loss to the 
transportation community if the Department was denied the 
ability to use TIFIA as an incentive to encourage new thinking.
    My second point is to second Geoff Yarema's comments on the 
need to speed the process. In fact, the most serious challenge 
facing the TIFIA Program is the time it takes to process and 
approve a loan application. The changes incorporated in MAP-21 
and improvements made by the TIFIA office since the passage of 
MAP-21 have helped alleviate some of the concerns about timing, 
but there is still much to be done.
    Most of the improvements to the program can be made 
administratively and do not require a change in statute. I have 
listed seven changes in my written testimony, but let me just 
touch on two briefly here.
    First of all, it would be very helpful if TIFIA was moved 
to the Office of the Secretary of Transportation. This would 
improve communications with and between OMB, Federal Highways, 
the Office of Innovative Program Delivery, the Credit Council 
and the Office of the Secretary, all of which have a role in 
approving TIFIA loans. Moving to the Office of the Secretary 
would expedite and improve that communication.
    Second, the Department should establish a rule that no 
policy changes regarding TIFIA loans should be made affecting 
lending decisions on a particular loan after the application 
has been submitted. In other words, policy changes should be 
prospective, not retroactive.
    The changes I listed in my written testimony can shave 
months off the loan approval process.
    Finally, let me talk about risk. The TIFIA program has 
always carefully balanced at-risk projects in need of 
subsidized subordinate debt against the potential that a 
borrower may not be in a position to repay the loan. This 
tension was evidenced in the position taken by a staff member 
who worked early in the days of the program who refused loans 
for projects that were risky because a loan may not be repaid 
and refused loans for projects that were not risky because they 
were not in need of TIFIA assistance.
    Fortunately, the TIFIA Program found its way out of this 
Catch-22 and developed into the very potent and successful 
program that exists today. But there will always be a tension 
between supporting needy projects and getting repaid.
    As the TIFIA Program matures, it would helpful for this 
Committee to encourage TIFIA to take a portfolio approach. In 
any portfolio, some loans will under-perform and others will do 
quite well.
    While the Credit Council should be very careful stewards of 
taxpayer funds used in these loans, they should not be 
encouraged to pursue a minimal risk, or worse a zero risk 
strategy. Such a strategy would work against the policy 
foundation of the TIFIA Program which was to provide credit for 
projects that would otherwise be difficult to finance. It is 
important to keep in mind that the worst performing TIFIA loan 
still provides infinitely more return than the best performing 
grant.
    In conclusion, I would like to thank the Committee for its 
leadership in championing the TIFIA Program and welcome any 
questions you might have.
    [The prepared statement of Mr. Gribbin follows:]
    
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    Senator Boxer. I want to thank the panel. You did exactly 
what we asked you to do, Senator Vitter and I, we want to know 
how this program that we agreed to expand is working and I 
think what we are hearing from you is some concerns about the 
pace, but, on other hand, I do not hear complete criticism.
    So, I am going to go to Mr. Leahy to talk to him. I know 
Los Angeles is doing extraordinary work in delivering so many 
transit and highway projects in a short period of time. And you 
explained why. People voted to tax themselves which is always 
the best mandate you can have, especially a super majority.
    So, when Mayor Villaraigosa came here with his team of 
people and you were among them, and we decided to take this to 
our colleagues, we have seen tremendous movement and progress 
in Los Angeles.
    I just wonder if you could elaborate on the economic 
benefits of accelerating these types of projects, both in terms 
of jobs created and costs saved by building these projects 
faster, particularly at a time of lower construction costs. So, 
if you could expand on that.
    Mr. Leahy. Sure. Well, we have three major projects I 
mentioned, all of which are being accelerated in part because 
of the potential for TIFIA, a North-South Crenshaw Light Rail 
line, a regional downtown connector that will hook up major 
regions of LA County, which is a very large county, as you 
know, and the subway out to the west side of Los Angeles.
    In the case of the TIFIA loans, we save money, several 
hundred million dollars on the TIFIA financing for these three 
projects, we get the benefits of the projects quicker and, 
altogether, the projects will create more than 40,000 jobs in a 
struggling Los Angeles economy.
    And this all, I would say to that, the subjective benefit 
of proving to the voters that we can deliver the goods. We made 
promises, we are going to deliver on those promises. So, they 
know they can count on us.
    To get a two-thirds vote in favor of a sales tax in the 
middle of a recession is quite an achievement. What it reflects 
is voter support for these projects and voter confidence that 
we are going to deliver the project.
    Senator Boxer. And of course what it does for us is it 
gives us a steady stream of payback for the TIFIA loan.
    Mr. Leahy. Exactly.
    Senator Boxer. Mr. Bass, out of all of the folks here, I 
think you were a bit negative about the way the DOT is handling 
things now and it is important that we expand on that because 
the purpose of this hearing is, I mean, we have just as much at 
stake in the TIFIA Program as all of you do because we put our 
confidence in it and we want to make sure it is working right.
    So, I want to press you on some of the things you said. Are 
you having personal experience that shows you that they are not 
moving quickly, that they are not moving to a larger share of 
the projects from 33 percent to 49 percent? So, are you 
concerned about, because you have been very successful, Texas 
has been a leader in taking advantage and successfully 
delivering large-scale projects.
    So, are you sensing a change for the worse since we have 
expanded it? I am trying to grab, because we are going to 
communicate, I hope that Senator Vitter and I can write a joint 
letter to Secretary Foxx, laying out some of the problems. So, 
expand on that a little bit.
    Mr. Bass. Thank you for the question. Let me first state 
that the TIFIA Program had a very positive effect and impact 
within the State of Texas and continues to do so. With any 
program, we do see that there are areas for potential 
improvement.
    Senator Boxer. Right.
    Mr. Bass. So under the four letters of interest that the 
State of Texas, TxDOT, submitted under MAP-21, we initially 
asked for up to the 49 percent participation of eligible 
project costs. We received a response back from the TIFIA 
Program office that, in order to go above and beyond the 
historic cap of 33 percent, we would need to have a compelling 
argument in order to go above 33 percent.
    Senator Boxer. I think a good, compelling argument is that 
we said that they should.
    [Laughter.]
    Mr. Bass. We attempted that.
    [Laughter.]
    Mr. Bass. However, we apparently were not very persuasive 
as we are at 33 percent.
    Another project, and I think you heard from some of the 
other witnesses today, the challenge, and I can only imagine 
the TIFIA office and program at a time when it is expanded 
eight- to tenfold and trying to bring on additional staff with 
the experience and expertise to be able to hit the ground 
running on Day 1. So, I certainly understand the challenges 
they face.
    But as an example on the timing, I would use the Grand 
Parkway Project in the Houston area of Texas. We submitted our 
LOI, Letter of Interest, last August.
    Last week, we priced, in the capital markets, $2.9 billion 
in bonds. We will close on those next week. We are currently at 
the Credit Council stage with TIFIA, so we have not yet been 
invited to formally submit an application, yet we have already 
gone through with the rating agencies and investors and priced 
that into the market.
    So, what we did in our financing structure last week is we 
included some temporary financing mechanisms in the hope and 
anticipation of closing with TIFIA later this year, that we 
will then be able to use TIFIA to take it out. But we have been 
running about 11 months and we have been able to take it to 
capital markets but we have not been able to close with TIFIA.
    Senator Boxer. Well, I think this is very important 
information for us. Let me make a commitment here. Secretary 
Foxx said he is adding 16 people. So, clearly he gets the fact 
that they are not staffed up enough. And this is very critical.
    Looking at it from their side, they do not want to make a 
mistake because the first mistake, politics will implode on 
whoever makes a mistake, whether it is a Republican 
Administration or a Democratic one. It becomes political if 
there is a mistake. And so, we have to understand that.
    At the same time, when you say you have closed on your 
bonds and so on and so forth. So, here is what I am going to 
propose. This is my last comment of this hearing. All of you 
have been very constructive. And I do appreciate the 
specificity that you brought to this because we cannot really 
help if we do not know what is going on.
    Obviously, Secretary Foxx is a great believer in this 
program and wants to make it work. I am going to ask staffs on 
both sides to work with Senator Vitter and I to draft a letter 
that is very specific and laying out, we will send him all of 
your testimony, but we will also lay out in a format that is 
very simple, because you have been very straightforward, what 
the problems are. You have my word that we will do that.
    Is anyone here from DOT? Did anyone stay from DOT? Good. 
Well, that is wonderful.
    [Laughter.]
    Senator Boxer. You can kind of a give a heads up. Why don't 
you introduce yourself to us?
    Mr. Anderson. I am Blair Anderson. I am in the DOT Budget 
Office. I have a nice little note pad here with me.
    [Laughter.]
    Senator Boxer. That is good. And I am very glad you stayed. 
I seriously mean that. Because a lot of times we do not have 
that happen and then we have to recreate the entire thing. So, 
you are taking notes.
    We are going to write a letter. And it is my hope that we 
can break through some of the, perhaps, institutional 
resistance because this is a greatly increased program and I am 
sure that means greatly increased applications and a lot of 
pressure.
    So, thank you all. And I will turn it over to David to 
finish this.
    Senator Vitter. I am glad one person from DOT hung around. 
When you shyly raised your hand at first, I was tempted to ask 
and how was your summer internship going.
    [Laughter.]
    Senator Vitter. But I am just kidding.
    [Laughter.]
    Senator Vitter. I am glad one significant person is here 
from DOT to listen to this because that is the point. We wanted 
to hear it and I think it is important for the Department to 
hear it. And thank you all for your testimony and for being 
specific and precise.
    Let me ask all of you, when we dramatically expanded this 
program, the intent was for this to be a rolling, more or less 
first come first served if you met the eligibility process. 
What has happened is you have a lot of applications built up.
    Now, maybe that is because they are getting their sea legs 
under them, hiring new people, it is a big expansion. The 
alternative is a fear some of us have that they still want to 
sort of pick winners and losers and use a lot more discretion 
than we intended.
    Which is the case in each of your opinions?
    Mr. Bass. I guess I will start. In my opinion, I think it 
is the first that you mentioned, staffing up for a greatly 
enhanced program. And I do not know the details of the salary 
ranges that they are authorized to offer, but I can certainly 
imagine that it may be challenging to attract the talent with 
the experience.
    Some of these, as you well know many of these projects are 
very complicated financial transactions and in order to attract 
staff with that experience, I can certainly understand that it 
might be challenging given civil service salary levels.
    Senator Vitter. Anybody else want to chime in? You do not 
all have to answer.
    Mr. Roberts. Just real quickly, from AGC's perspective, I 
think the key ingredient is to keep the political environment 
away from it and focus on streamlining and expediting the 
timeliness of it and that, whatever it takes, whether it is 16 
or 26 or whatever. The opportunity is there and we just need to 
make sure it is expedited and actually shown physically with 
the jobs out in the construction market itself.
    Mr. Leahy. Senator, I would just note that, you know, there 
are some TIFIA loans that may have more risk. There are others 
that have little risk. In Los Angeles, we have a large voter-
supported revenue stream so the loans that we get are basically 
risk free. We think that when that is the case, that should 
allow for expedited processing of that loan application. Other 
loans may have more risk and that might not be the case.
    Senator Vitter. OK.
    Mr. Gribbin. I am sorry. I would just chime in on that. 
When I was at DOT, I actually was on the Credit Council so I 
have seen this both from inside the Government and outside. 
TIFIA being slow in processing applications is not new. TIFIA 
has struggled with timeliness since its creation.
    I think part of the challenge now that it is so popular and 
fully funded is the way that DOT is structured to administer 
those loans is not particularly as effective as it could be. 
And there are a number of structural changes and process 
decisions that need to be made to help move those quicker.
    Senator Vitter. Mr. Gribbin, let me follow up with you. In 
your testimony, you suggested that there should be more 
subjective policy-oriented factors. And as you can tell from my 
comments, I think I disagree with that. Would that not, in 
fact, increase the uncertainty and probably increase the 
bureaucratic time requirement in such a way that is would be 
less effective and more costly in the marketplace?
    Mr. Gribbin. Intuitively the answer to that would be yes. 
In practice, we have not seen the program move faster with 
limited policy criteria.
    Part of my comments were driven by the fact that TIFIA is 
very successful because it is a niche player in infrastructure 
finance. It is used in specific situations where governments 
can repay over time loans for projects. And it has done a 
fantastic job in that.
    I think part of the challenge is to resist the temptation 
to take what has been really effective in a niche and try to 
apply it across a number of areas where TIFIA really would not 
be all that helpful.
    And then second, the program itself can be a really useful 
tool to encourage borrowers to think outside of the box and to 
approach transportation finance in a different manner. And as I 
noted in my testimony, you have seen both the Bush 
administration and the Obama administration use it successfully 
to that extent, and I think there have been significant policy 
and transportation improvements as a result. And incorporating 
policy decisions into the loan process has not significantly 
slowed down the process.
    Senator Vitter. Right. Well, I am hoping that we are going 
to change that record over time and that once this office is 
ramped up in terms of staffing, we will streamline the process. 
I do not think we have adequately tested that yet or have given 
it enough time. But, certainly, we are all going to be pushing 
to streamline that and to decrease that timeline.
    My only final comment would be maybe we should pare down 
the universe where we use TIFIA if it is more effective and 
makes more of an impact in that universe. I would hate to 
increase and get back to very subjective factors because I 
think that level of loosey-goosey discretion really increases 
uncertainty and therefore lack of efficiency and lack of time 
limits in the market.
    Senator Boxer. Senator Carper, we are just finishing up. 
So, welcome.
    Senator Carper. Thank you, Madam Chair.
    Senator Boxer. So, you can use your 5 minutes any way you 
want.
    Senator Carper. I just came to hear Senator Vitter say 
loosey-goosey.
    [Laughter.]
    Senator Carper. I do not think I ever heard that term, we 
use that term in Delaware but I did not know it was a Louisiana 
thing as well.
    Senator Vitter. I am not sure it means the same thing.
    [Laughter.]
    Senator Carper. You never know.
    Sometimes when I pop in at the end like this, I apologize, 
we had a couple of bills come up on different committees and I 
just, we just have a lot going on. So, I apologize for missing 
your statements.
    And coming in at the end of like this, sometimes when I 
chair, I chair the Senate Committee on Homeland Security and 
Government Affairs, but sometimes when I get to the end of a 
hearing I will ask, you know, you had a chance to give an 
opening statement and answer the questions and so forth, let me 
just ask you to each take a minute to give a closing statement.
    And what I am looking for is concurrence, where there seems 
to be consensus, and in terms of your advice to us going 
forward.
    So we will start, how do you pronounce your last name? Is 
it Gribbin?
    Mr. Gribbin. Gribbin, yes.
    Senator Carper. Mr. Gribbin. Just a quick closing 
statement, some good advice that you think represents a 
consensus view.
    Mr. Gribbin. Yes, we can divide the issues on TIFIA into 
two buckets, one is policy and one is administration. And I 
think that while there might be some difference on how, from a 
policy standpoint, do you best use TIFIA, I think there is a 
fair amount of consensus on the administration side that there 
are a number of changes the Department can make that would 
greatly streamline the process, whether that be centralizing 
TIFIA decisionmaking inside the Department, providing expedited 
processing for what are commonplace loans, I think there are a 
whole series of things that the Administration can do speed 
along.
    And I am thankful for this committee to have a hearing and 
especially that there is going to be a letter afterwards which 
maybe could include some of these ideas which will be sent back 
to the Department.
    Senator Carper. Good. Thanks. Mr. Roberts.
    Mr. Roberts. Yes, sir. I think it is very consistent across 
the panel that TIFIA is an excellent program for financing. It 
should not be utilized as a funding mechanism which it is not. 
It is a financing mechanism. We have given many, or several, 
individual recommendations. I will review, real quickly, some 
of them. Direct more personnel to the TIFIA review team.
    Senator Carper. OK.
    Mr. Roberts. This is very important to expedite the 
process. Not hold the decisions on TIFIA awards until a record 
of decision has been issued but have it a process where you 
would have the creditworthiness going along simultaneously so 
that we can expedite the end result of the approvals.
    Develop more educational tools to those entities that are 
not capable today of understanding the process. It is a very 
long process, a very detailed process. Also, more transparency 
in the project selection process. We talked about that a little 
bit today. Very transparent, open, so that people have a strong 
level of trustworthiness of the program.
    And also, one thing I did mention earlier is that TIFIA 
should be available to help establish investment grade rating 
for projects that are close but ultimately unable to do so on 
their own so that it actually is helping at the same time.
    Senator Carper. OK. Good.
    Mr. Roberts. Key ingredient--great program. Let's expedite 
it and get it out in the field.
    Senator Carper. All right. Thanks.
    Is it Mr. Leahy?
    Mr. Leahy. Yes.
    Senator Carper. As in Pat Leahy, our colleague? Is he your 
father?
    Mr. Leahy. No, sir.
    [Laughter.]
    Senator Carper. There is a resemblance. Do you see it, 
Barbara?
    [Laughter.]
    Senator Boxer. I am not getting into it.
    Senator Carper. All right. Please.
    Mr. Leahy. Senator Carper, thank you for asking.
    Senator Carper. About Senator Leahy?
    [Laughter.]
    Senator Carper. Actually, I did meet him on a train one 
time. All right. That is good.
    Mr. Leahy. I have lamented that I cannot call him dad for a 
long time.
    [Laughter.]
    Mr. Leahy. Anyway, we think the TIFIA Program has been very 
useful in Los Angeles for a number of projects. We appreciate 
it. We believe that we have a very strong non-Federal revenue 
stream in Los Angeles from voter-approved sales tax measures. 
The TIFIA Program helps encourage, incentivize the development 
of non-Federal revenue streams because it allows us to get the 
benefit quicker, to show the taxpayers and the voters that they 
can trust us.
    We have discussed this before, but we think the notion of a 
Master Credit Agreement is commendable and that the loan should 
be fully subordinated just to facilitate it to get that work 
done. And with that, I will close. I appreciate being here with 
you.
    Senator Carper. Thanks. Thanks so much for coming. Mr. 
Yarema, please.
    Mr. Yarema. Senator, I appreciate the opportunity. We have 
reviewed a number of things here today where we think the U.S. 
Department of Transportation can improve, some mechanical, 
technical things that, I am not sure are entirely a lack of 
staff. And so, I hope that there will be some care given to 
some of the suggestions that we have put forward.
    I appreciate the focus of this hearing is on implementation 
of MAP-21 but we are only a short time away from 
reauthorization of MAP-21 and I think it is worth pointing out 
that, you know, this Committee really pioneered the policy that 
TIFIA should be sized to meet the demand, anticipate demand, at 
the time of reauthorization. That has turned out to be a really 
good policy. Every dollar that you put forward for TIFIA, I 
think, has a 30 or 40 to 1 leverage.
    So, as you look forward to reauthorization, I think what 
you are looking forward to is another increase in the program's 
loan capacity. And that, I think, will be something that 
discussion should be started on now.
    Senator Carper. OK. Thanks.
    And last, for Mr. Bass. Sometimes people call me Carp. So, 
Carp recognizes Bass for a response, if you will. Just a quick 
close.
    Mr. Bass. Thank you. No. 1, the TIFIA Program is a 
tremendous program in assistance to States in delivering 
projects. No. 2, the existing staff has done a wonderful job in 
a very challenging environment of a greatly expanding program. 
Having said that, I do think there are some opportunities to 
improve the timeliness of the overall process.
    One of the things we talked about as well is that 
historically the cap on participation from TIFIA had been 33 
percent. Under MAP-21, that was increased to 49 percent. There 
appears to be possibly a reluctance to go above the 33 percent 
and, if that is true, I think a clear set of criteria as when 
the Administration would consider more than 33 percent would be 
helpful.
    Last, for rural projects with a set aside, I think if there 
is an opportunity to perhaps streamline that process for 
projects in rural areas of the Nation, that would be beneficial 
as well.
    Senator Carper. Good.
    Madam Chair, I would just say thanks for recognizing me. I 
just want to say, in conclusion, it's one of the recurring 
themes, and Chairman Boxer and I have been partners for a long 
time in governance of our Country, but one of the things we 
focus on is how do we get better results for less money, how we 
leverage a little bit of Federal money to be able to stream a 
whole lot of money into, particularly, the infrastructure which 
we know is one of the ways to grow our economy.
    And the last thing is to say, find out what works and do 
more of that. This is something that works. We know it is not 
perfect. We know we can make it better. So, thanks very much 
for coming by and sharing with us some of the ideas to make a 
good thing even better.
    Thanks, Madam Chair.
    Senator Boxer. Well, Senator Carper, I know your incredible 
chairmanship that leads you in other directions, but you always 
manage to show us that you care about these issues deeply, and 
it is a pleasure to have you on this Committee.
    And Secretary Foxx was very good and I think what has 
happened here with these really good people who want this 
program to work, who love what we did, is that you are exactly 
right. We are going to use their comments, send them over to 
the Secretary, we have a representative of DOT still here with 
us taking copious notes.
    Senator Carper. Who is that?
    Senator Boxer. If the gentleman will raise his hand and 
introduce yourself to Tom Carper.
    [Laughter.]
    Senator Boxer. He has become a star of our show and, 
because we are so happy that he stayed here to transmit this 
because, hearing it from you, sir, and then hearing it from us, 
and I know that Secretary Foxx is very interested in making 
this work better.
    So, I want to thank everyone for your presence here. We are 
committed to this program and we are committed to making sure 
it is the most effective program that it can be.
    Thank you very much for your help.
    We stand adjourned.
    [Whereupon, at 11:45 a.m., the Committee was adjourned.]
    [An additional statement submitted for the record follows:]

                   Statement of Hon. Jeff Sessions, 
                 U.S. Senator from the State of Alabama

    Good morning, thank you Chairman Boxer and Ranking Member 
Vitter for holding today's hearing about innovative financing 
for transportation infrastructure under MAP-21.
    Congress passed MAP-21 just 13 months ago. This was an 
important, although short-term, bill that we all hoped would 
streamline the road construction process, reduce regulatory 
burdens, and give greater control over road projects to the 
States. MAP-21 also maintained near-current levels of Federal 
highway spending in a manner that was deficit neutral. I was 
pleased to vote for the bill out of committee in 2011 and to 
support it on the floor last year.
    However, just 14 months from now--at the end of September 
2014, the Federal highway program will, yet again, face 
expiration. And CBO reports that the highway trust fund will be 
insolvent by 2015, when highway trust fund revenue is expected 
to be $38 billion--almost $14 billion less than would be needed 
to meet the expected $52 billion in obligations. According to a 
recent CRS report, a new 6-year highway bill at current funding 
levels would require Congress to fill an ``$85 billion gap 
between planned spending and projected [] revenues . . . '' 
Solving this funding shortfall will not be easy.
    With a national debt of $16.8 trillion and growing every 
day, adding even more debt to fund infrastructure is not a 
viable option. The latest CBO figures show that, by the time we 
complete the current fiscal year (FY2013), the Federal 
Government will have spent $3.5 trillion in just 1 year, with a 
deficit of $642 billion. \1\
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    \1\ http://www.cbo.gov/sites/default/files/cbofiles/attachments/
44172-Baseline2.pdf.
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    We need to be smart about funding infrastructure. The 
``TIFIA'' program, which is the focus of today's hearing, does 
help leverage Federal funds to accomplish more infrastructure 
projects. I look forward to hearing an update on the TIFIA 
program today.
    But not all ``infrastructure spending'' is meritorious. If 
we are going to try to fully fund our highway program and other 
essential programs, this Government cannot afford to waste a 
dime of taxpayer money on wasteful or risky projects. Just a 
few months ago, the Las Vegas Review-Journal reported that: 
``[Senator] Reid, the Senate majority leader . . . said the 
Federal Railroad Administration has agreed to a loan of almost 
$5 billion [for XpressWest].'' The details of the XpressWest 
project were deeply troubling:
     Estimated cost for this 185-mile rail line from 
Victorville, CA to Las Vegas, NV was $6.9 billion--probably a 
very rosy estimate that understated the likely actual costs.
     Just $1.4 billion of the $6.9 billion cost was proposed 
to come from private sources.
     The remaining $5.5 billion--or at least 80 percent of the 
total project cost--would be fronted by the American taxpayer 
in the form of a loan by the U.S. Department of Transportation 
(through the Railroad Rehabilitation and Improvement Financing, 
or ``RRIF,'' program).
     Imagine the audacity of someone to ask the American 
taxpayer--at a time of record debts and deficits--to finance 80 
percent of a project like this. Yet, the Las Vegas Review-
Journal characterized Senator Reid as ``the project's most 
powerful booster.''
     The Reason Foundation issued a Taxpayer Risk Analysis of 
the XpressWest project that identified a laundry list of 
significant concerns with the project.
     We know a primary purpose of the XpressWest train was to 
transport tourists--many of them, gamblers--from California to 
Las Vegas resorts and casinos. Why should American taxpayers 
pay for that kind of ``infrastructure''?
    House Budget Chairman Paul Ryan and I were deeply concerned 
about this dubious project and the possibility that this 
Administration, working in tandem with Senator Reid, would 
agree to devote billions of dollars in taxpayer funds for this 
proposal. Several months ago, when a decision approving the 
loan seemed imminent, we wrote Secretary LaHood and strongly 
urged him to ``reject the XpressWest loan application and to 
direct its available RRIF funds to more worthy transportation 
infrastructure projects that could truly provide a reasonable 
rate of return to the taxpayers of this Nation.'' The Las Vegas 
Review-Journal reported that Senator Reid responded to our 
letter by stating: ``We shouldn't allow Tea Party-driven 
ideology to limit much-needed investments in our infrastructure 
that create thousands of direct and indirect jobs.''
    Fortunately, in one of Secretary LaHood's final actions in 
the Administration, he signed a letter dated June 28, 2013, 
indefinitely suspending review of the XpressWest loan 
application explaining that ``serious issues persist'' with the 
XpressWest loan application; that there are ``significant 
uncertainties still surrounding the project''; and that, as a 
result, USDOT has ``decided to suspend further consideration'' 
of the XpressWest loan request.
    So, I applaud Secretary LaHood for his prudent decision to 
kill the XpressWest project. Today is this committee's first 
opportunity to hear from his replacement--Secretary Foxx. I 
look forward to asking Mr. Foxx about his views on prudent 
infrastructure investments and the importance of guarding 
taxpayer dollars against proposals like the XpressWest loan 
request.
    In particular, as we try to find ways to fully fund the 
Federal highway program and to meet our growing infrastructure 
needs through programs like TIFIA, I believe this Government 
needs to take a close look at all of its programs to make sure 
we're as lean and fiscally prudent as possible. At a time of 
record Federal debt, we simply cannot afford to waste a dime of 
taxpayer money on risky, wasteful projects like XpressWest--
even if some call them ``infrastructure projects.''
    Last week, an editorial by the Las Vegas Review-Journal had 
some advice for Secretary Foxx in the wake of the XpressWest 
decision. The paper wrote: ``Here's a better idea for new 
Transportation Secretary Anthony Foxx: Dump the idea of pouring 
huge sums of money into a utopian high-speed rail project that 
can't possibly cover debt payments. If the Department is 
serious about `investing' those billions, spend them on 
improvements to the nation's interstate system . . . '' \2\
---------------------------------------------------------------------------
    \2\ Editorial dated July 18, 2013, http://www.reviewjournal.com/
opinion/editorials/rail-no-return-investment-look-interstates.
---------------------------------------------------------------------------
    I think that is sound advice. Thank you.

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