    [Senate Hearing 115-319]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-319

           THE LONG-TERM VALUE TO U.S. TAXPAYERS OF LOW-COST FEDERAL
                              INFRASTRUCTURE LOANS

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

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 11, 2018

                                   __________

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

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                     U.S. GOVERNMENT PUBLISHING OFFICE
    31-282 PDF                  WASHINGTON : 2018

    -----------------------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Publishing Office,
    http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
    U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
    E-mail, gpo@custhelp.com.

                  COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED FIFTEENTH CONGRESS
                                 SECOND SESSION

                        JOHN BARRASSO, Wyoming, Chairman
    JAMES M. INHOFE, Oklahoma            THOMAS R. CARPER, Delaware,
    SHELLEY MOORE CAPITO, West Virginia      Ranking Member
    JOHN BOOZMAN, Arkansas               BENJAMIN L. CARDIN, Maryland
    ROGER WICKER, Mississippi            BERNARD SANDERS, Vermont
    DEB FISCHER, Nebraska                SHELDON WHITEHOUSE, Rhode Island
    JERRY MORAN, Kansas                  JEFF MERKLEY, Oregon
    MIKE ROUNDS, South Dakota            KIRSTEN GILLIBRAND, New York
    JONI ERNST, Iowa                     CORY A. BOOKER, New Jersey
    DAN SULLIVAN, Alaska                 EDWARD J. MARKEY, Massachusetts
    RICHARD SHELBY, Alabama              TAMMY DUCKWORTH, Illinois
                                         CHRIS VAN HOLLEN, Maryland

                  Richard M. Russell, Majority Staff Director
                  Mary Frances Repko, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

                                 JULY 11, 2018
                               OPENING STATEMENTS

    Barrasso, Hon. John, U.S. Senator from the State of Wyoming......     1
    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     2

                                   WITNESSES

    Holtz-Eakin, Doug, President, American Action Forum..............     5
        Prepared statement...........................................     7
    Sarmiento, Vicente, Director, Orange County Water District.......    14
        Prepared statement...........................................    16
    Motyl, Brian, Assistant Director of Finance, DelDOT..............    31
        Prepared statement...........................................    34

                              ADDITIONAL MATERIAL

    Statement of the Council of Infrastructure Financing Authorities,
      July 11, 2018..................................................    59

           THE LONG-TERM VALUE TO U.S. TAXPAYERS OF LOW-COST FEDERAL
                              INFRASTRUCTURE LOANS

                                  ----------

                            WEDNESDAY, JULY 11, 2018

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:07 a.m. in
    room 406, Dirksen Senate Office Building, Hon. John Barrasso
    (Chairman of the Committee) presiding.
        Present: Senators Barrasso, Carper, Inhofe, Boozman,
    Wicker, Fischer, Rounds, Ernst, Sullivan, Cardin, Gillibrand,
    Booker, Markey, Duckworth, and Van Hollen.

               OPENING STATEMENT OF HON. JOHN BARRASSO,
                 U.S. SENATOR FROM THE STATE OF WYOMING

        Senator Barrasso. Good morning. I call this hearing to
    order.
        Today the Committee will examine the benefits of Federal
    infrastructure leveraging programs to American taxpayer
    dollars.
        This is the seventh hearing our Committee has held this
    year on improving our Nation's highways, bridges, and water
    projects. These hearings have shown infrastructure is critical
    to our Nation's prosperity.
        As America's population and economy have grown, our
    infrastructure has not kept pace. Maintenance shortfalls and
    project backlogs have left many key elements of our
    infrastructure in transportation in need of major repair and
    replacement in transportation, as well as water. As a result,
    major infrastructure improvements are needed across the country
    to build, to maintain, and to replace these vital systems.
        Timely decisions and timely construction are keys to
    success. The sooner a project is built, the sooner it can have
    a positive impact on the lives of the people in those
    communities and those affected.
        Loan and loan guaranty programs often allow expensive
    projects to be delivered in a timely fashion and at a reduced
    cost. These programs are the Transportation Infrastructure
    Finance and Innovation Act, referred to as TIFIA; the Water
    Infrastructure Finance and Innovation Act, called WIFIA; and
    the new Securing Required Funding for Water Infrastructure Now
    Act, the SRF WIN Act.
        TIFIA loans have been used very successfully for the
    construction of critical transportation infrastructure, and we
    expect to see similar success through WIFIA and SRF WIN. These
    programs enable State and local project sponsors to borrow
    money at lower long-term cost and to complete construction
    years sooner than if funding were secured through other means.
        As we have heard in past hearings, leveraging Federal
    funding to maximize investment is a tool that the Trump
    administration strongly supports. Two of these leveraging
    programs are key components of America's Water Infrastructure
    Act, the bipartisan legislation that we passed unanimously
    through this Committee last month.
        Based on our water infrastructure bill, the Congressional
    Budget Office, or the CBO, has estimated that the WIFIA program
    and the SRF WIN program would receive appropriations of $400
    million over 2 years. That expenditure would then be leveraged
    by State borrowing to generate $12 billion in new water
    infrastructure spending.
        Converting $400 million in Federal resources into $12
    billion in new infrastructure spending is exactly the kind of
    leveraging that President Trump has been calling for.
        This is particularly true for the SRF WIN program, which is
    designed to help rural States. Such leveraging seems good for
    Federal taxpayers as well as States, alike. Congressional rules
    dictate that all bills be scored by the CBO to assess the
    amount of taxpayer dollars that are going to be spent, but also
    by the Joint Committee on Taxation--the JCT--to judge if any
    Federal revenue will be lost.
        When States use tax-free bonds for infrastructure projects,
    JCT assumes that the Federal Treasury will lose tax revenue
    when States borrow, so under their theory the $12 billion in
    increased State infrastructure spending is presumed to cost the
    Federal Treasury $2.6 billion.
        The Committee has addressed this scoring issue by cutting
    back the size of the SRF WIN program. These changes will be
    reflected in the version of the American Water Infrastructure
    Act that will soon be brought to the Senate floor.
        Now, I believe that leveraging programs such as WIFIA and
    TIFIA and SRF WIN are good for Federal taxpayers since they
    enable States to address more of their infrastructure backlog.
    If States aren't able to finance their infrastructure needs,
    then Federal taxpayers will inevitably be on the hook to
    directly fund more projects in the future.
        So, today, former CBO Director and American Action Forum
    President Doug Holtz-Eakin is going to share his observations
    on how leveraging programs can generate economic growth and
    demonstrate benefits to the taxpayer far beyond any loss of
    Federal revenue. We will also hear about successful projects
    using these programs in Delaware and in Santa Ana, California.
        Before we introduce our witnesses today, I would like to
    turn to Ranking Member Carper for his remarks.

              OPENING STATEMENT OF HON. THOMAS R. CARPER,
                U.S. SENATOR FROM THE STATE OF DELAWARE

        Senator Carper. Thanks, Mr. Chairman.
        Great to be with all of our colleagues and to see some
    familiar faces, and to actually see a couple of new ones, too.
    Thank you all for coming, for joining us today.
        Mr. Chairman, thanks for the holding the hearing. We are
    here, as you said, to discuss several innovative low-cost
    Federal loan programs and the value that they provide for the
    development of our transportation infrastructure, as well as
    for the people who use that infrastructure and for the American
    people.
        Congress created the Transportation Infrastructure Finance
    and Innovation Act, known as TIFIA, back in 1998. I was a
    Governor then, and I recall the National Governors Association
    working with the Administration on this initiative. But we did
    it in order to fill a gap in our infrastructure investments.
        Public funding is critical for the majority of
    transportation projects; however, at times, lack of sufficient
    funding makes it difficult for agencies to build high cost
    projects, despite the many benefits that these projects might
    yield.
        In 1998 Congress found that ``a Federal credit program for
    projects of national significance can complement existing
    funding resources by filling market gaps.'' That is what we
    were thinking about 20 years ago.
        There is a project underway in Maryland, transportation
    project, that flows right of Delaware. Some of you know there
    is a road called Route 301 that flows off of--if you take 50
    East out of here and pick up on the other side of the
    Chesapeake Bay, pick up 301. It is really a beautiful drive.
        Senator Cardin. What State is that in?
        Senator Carper. That is in your State, in the State of
    Maryland, which is well represented here today. And when you
    get to Delaware, a beautiful four-lane highway becomes a two-
    lane road, you slow down, and it goes through a more developed
    area. For years, for decades, we wanted to do something about
    it, but what we do, we pick up 301, we turned it into a four-
    lane limited access highway.
        And the 301 project in Delaware I think is a really good
    example of a project where traditional funding mechanisms just
    were not sufficient. The improvement to Route 301 in my State
    had been needed for a long time, but the project cost was more
    than 3 times higher than the total Federal funding Delaware
    receives in a single year, so building it with public funding
    alone just was not feasible.
        The TIFIA loan that we have obtained enabled the US 301
    project to move forward, improving safety and regional
    mobility, and providing the State with a convenient alternative
    to the commercial traffic bottleneck on I-95. Actually, it is a
    bottleneck that goes through Middletown and a bunch of other
    areas, Odessa, before you get to I-95. But the project is
    expected to generate about 15,000 jobs, and it will contribute
    to the long-term economic vitality of our region, and I think
    it will be good for our neighboring State, Maryland.
        Building on the success of the TIFIA program for
    transportation in 2014, Congress made low-cost financing
    available for a lot of infrastructure as well, by authorizing
    the Water Infrastructure Finance Innovation Act, or WIFIA.
    Through WIFIA the Environmental Protection Agency can now
    provide credit assistance in the form of secured or direct
    loans, or loan guarantees, for a wide range of drinking water
    or wastewater projects.
        EPA is now reviewing letters of interest for WIFIA loans
    and has begun providing loans to help complete water
    infrastructure projects. These projects have the potential to
    increase the availability of drinkable water, to replenish
    groundwater, improve water quality, reduce pollutants, and
    improve the resilience of water facilities.
        The U.S. Army Corps of Engineers was also authorized to
    provide similar assistance for water resource projects, such as
    flood control or hurricane and storm damage reduction; however,
    Congress has not yet appropriated funds, nor has the Trump
    administration requested funds, for the Army Corps to use this
    authority.
        Innovative finance programs such as WIFIA and TIFIA offer
    loan terms that make them a good value for borrowers, such as
    low fixed interest rate, longer payment schedule, and an option
    to defer payment. Of course, the loan programs are not a
    replacement for public funding, nor should they be. The TIFIA
    program has now been authorized for 20 years, during which time
    just 67 loans have been made.
        The 301 project I have been talking about in Delaware was
    our State's very first TIFIA loan. Many projects are not well
    suited for loans because they lack a revenue stream to enable
    the repayment of that loan.
        As we consider calls to expand these innovative finance
    programs, we should keep in mind that in 2015 we reduced the
    size of the TIFIA program because it was not being used. There
    is still significant unused credit assistance available in the
    TIFIA program. As a result, expanding the program will not
    necessarily increase the level of infrastructure investments.
        Last week the Federal Transit Administration changed their
    policy to consider USDOT loans such as TIFIA as Federal funding
    rather than as the local match. However, the TIFIA statute is
    quite clear that these loans count toward the non-Federal share
    of a project when they are repaid with local funds. This policy
    change could lead to many prospective projects not applying for
    TIFIA programs at all, which could exacerbate the problem of
    unused loan authority.
        Congress and the Administration should be working together
    to make it easier for State and local agencies to access these
    loans and invest in our infrastructure, not more difficult. Our
    goal should be to provide a portfolio of options for
    infrastructure investment, including direct Federal grants and
    loans, so that State and local project sponsors may identify
    the best techniques to improve their community's water, their
    mobility, and their quality of life.
        We look forward to hearing from our witnesses today to
    figure out how we can best achieve that goal and again we thank
    you all for joining us.
        Mr. Chairman, thank you for holding this hearing.
        Senator Barrasso. Thank you very much, Senator Carper.
        We will now hear from our witnesses. We have Doug Holtz-
    Eakin, who is the President of the American Action Forum; we
    have Vicente Sarmiento, the Executive Director of the Riverside
    County Transportation Commission; and Brian Motyl, who is the
    Assistant Director of Finance at Delaware Department of
    Transportation.
        I would like to remind the witnesses that your full
    testimony will be made part of the official hearing today, so
    please keep your statements to 5 minutes so that we may have
    time for questions. I look forward to hearing the testimony of
    each of you, beginning with Mr. Holtz-Eakin.

                    STATEMENT OF DOUG HOLTZ-EAKIN,
                    PRESIDENT, AMERICAN ACTION FORUM

        Mr. Holtz-Eakin. Thank you, Chairman Barrasso, Ranking
    Member Carper, and members of the Committee, for the privilege
    of being here today. I will be brief, and I look forward to
    answering your questions.
        The design of infrastructure finance programs centers on
    their unique feature, which is that infrastructure, once it is
    provided to one individual, is available to all, and this
    collective benefit aspect of it is an important thing to think
    about when designing the financing of infrastructure projects.
        Those benefits can take a variety of forms; they can take
    the form of better productivity. So, if we have a better road
    network, we can see improved business productivity, higher
    wages, increased standard of living. They can also take the
    form of non-marketed benefits. If we have a better road
    network, I can get from home to work faster, so I can leave
    later and see my family more; I can get home more quickly after
    doing the same amount of work in my office, so my measure of
    productivity is the same, but my life is better. So those kinds
    of benefits figure into the returns of infrastructure projects.
        They also typically do not accrue to just one jurisdiction;
    there are spillovers and benefits. As you just mentioned,
    between Delaware and Maryland, in wastewater, streams flow
    across different jurisdictions so there is a natural Federal
    role in making sure that adequate infrastructure is provided
    that recognizes the benefits to all, including the spillovers
    to other jurisdictions.
        So the programs we are discussing today, WIFIA and SRF WIN,
    have exactly those characteristics, and I think that is
    important to be noted. They rely heavily on project selection
    by the State and local authorities who are most familiar with
    the benefits that will accrue to their affected stakeholders,
    and that project selection is an important part of thinking
    about the economics of infrastructure. Is the return to money
    in the public sector in an infrastructure project the same or
    greater than using that capital in a private investment and
    getting a market rate of return? That is the core economic
    question. They are best positioned to answer that through a
    variety of means.
        Second thing they do is because stakeholders have money
    invested in these projects, it ensures not just good project
    selection, but efficient project operation. There is no
    interest in wasting their own money, and thus, the Federal
    taxpayers' money is well protected as well.
        And then the third is the fact that the Federal Government
    does actually have a stake in this that enhances the scale and
    the scope of these projects, and it does provide the leveraging
    aspect that the Chairman mentioned, that a large amount of
    infrastructure can be supported through a relatively modest
    Federal investment.
        The thing I would note about all of that is that that very
    framework for thinking about good infrastructure projects and
    good infrastructure finance bears essentially zero relation to
    the CBO score that you will get on your bill, or any other
    bill. CBO scores are costs. They do not in fact attempt to
    measure benefits; they do not reflect the productivity that
    infrastructure can provide; they don't reflect the non-marketed
    benefits that the population enjoys; they reflect only the
    costs, and indeed, they reflect only the Federal budget costs.
        So the right way to think about the score on a WIFIA or SRF
    WIN program is it is a good measure of the budgetary resources
    that will not be available for other priorities from the Senate
    or the House because of the funding of WIFIA or SRF WIN. That
    includes the subsidy costs that you have to cover and the Joint
    Committee's estimate of taxes not collected as a result of the
    program.
        So there is nothing wrong with the scoring; it just answers
    a very narrow question: What budgetary resources does this
    program make unavailable to other priorities? It doesn't answer
    the core question: Is this a good idea? And that is something
    that the Congress and the Committee must consider when going
    forward with these projects.
        So, I am delighted to be here today, and I look forward to
    answering your questions.
        [The prepared statement of Mr. Holtz-Eakin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Well, thank you so much for your
    testimony.
        Mr. Sarmiento, let me first apologize. I think I introduced
    you from the wrong location. In fact, I understand you are the
    Orange County Water District representative. If you could
    clarify things as you open, but we are delighted that you are
    here to share your experience with us today. Thank you for
    being here.

                    STATEMENT OF VICENTE SARMIENTO,
                 DIRECTOR, ORANGE COUNTY WATER DISTRICT

        Mr. Sarmiento. Thank you. Good morning, Chairman Barrasso
    and Ranking Member Carper and members of the Committee. It is
    my honor and privilege to be with you and address the Committee
    on the need to support Federal financing of our Nation's public
    water infrastructure projects.
        My name is Vicente Sarmiento, and I am a Director with the
    Orange County Water District, as well as a Councilmember from
    the city of Santa Ana, California.
        The Orange County Water District is an internationally
    recognized leader in the water industry, and we are presently
    celebrating our 85th anniversary. We are proud to provide clean
    and safe drinking water to 2.5 million people that live and
    work in Orange County, California, and our primary
    responsibility is to be stewards of the Orange County
    Groundwater Basin, which is a large underground aquifer that
    provides 75 percent of the county's water.
        One of our most important assets is to recharge that basin
    with the Groundwater Replenishment System, or GWRS. It takes
    treated wastewater that would otherwise be sent to the Pacific
    Ocean and applies an advanced purification process that
    produces high quality water that meets or exceeds Federal and
    State drinking water standards. It is the world's largest
    advanced purification project of its kind. Some have called it
    toilet to tap. We like to refer to it as showers to flowers.
        GWRS is a collaborative effort with the Orange County
    Sanitation District. Presently we generate about 100 million
    gallons a day of safe water for our folks in Orange County, and
    that is for about 850,000 folks. With our final expansion, we
    will be generating 130 million gallons a day for 1 million
    residents in Orange County.
        The GWRS final expansion will cost approximately $270
    million and is estimated to create about 700 new jobs during
    the design and construction phase. With this final expansion,
    the Orange County Water District and Sanitation District will
    be recycling 100 percent of recyclable water within their
    service area.
        To finance the final expansion, the Orange County Water
    District applied for a WIFIA loan for 49 percent of its
    project, or $135 million. Of the 47 applications submitted, we
    were advised that our loan will be approved at the end of the
    month, which makes us very happy.
        The borrowing rate of the assistance is approximately 3
    percent. Our AAA rated agency could have issued tax exempt
    bonds at 3.8 percent, which is nearly a percent higher, but
    that would have cost our ratepayers approximately $18 million
    more had we gone to the private bond market.
        In addition to the cost savings, the WIFIA loan program
    allows for repayment flexibility, subordination of other
    projected debt, and other opportunities to leverage the
    assistance, such as the State Revolving Fund, or SRF, for the
    remaining 51 percent.
        It is fair to say that the WIFIA assistance is an essential
    tool in our toolbox to use to finance critically important
    water infrastructure projects. If not for the WIFIA loan, we
    would have had to have sought funding from the SRF.
    Unfortunately for us, the SRF is currently oversubscribed in
    California. Incidentally, the Orange County Water District does
    not want to see the SRF reduced, replaced, or dismantled at the
    expense of the new WIFIA program. Both programs are very vital
    to realizing important water projects.
        As a director and councilmember that represents many
    working families, I applaud your support of WIFIA, which
    provides access to funding for smaller agencies in low income
    communities.
        In closing, the Orange County Water District was able to
    realize its landmark project, the GWRS, with reduced cost to
    our ratepayers and without significant delays because of the
    WIFIA program.
        Finally, I want to thank you for allowing me to appear
    before you and your efforts to provide support for the water
    infrastructure projects that know no political or geographic
    boundaries, no socioeconomics of the end user, or any other
    differences among us. Water is genuinely a resource that
    benefits and is vital to us all.
        I would be happy to answer any questions you or any of the
    other Committee members have. Thank you.
        [The prepared statement of Mr. Sarmiento follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Well, thank you. We are glad that you are
    here to testify today and share your experience.
        Senator Carper.
        Senator Carper. I just want to say a word about Brian for a
    moment.
        Brian, why do you pronounce your name ``motel''?
        Mr. Motyl. Just the way I was told.
        [Laughter.]
        Senator Carper. Have you ever told your parents that they
    were mispronouncing your name?
        Mr. Motyl. No, I have not.
        Senator Carper. Where do you come from? You didn't grow up
    in Delaware. Are you from New York? Where are you from?
        Mr. Motyl. From New York. Upstate New York.
        Senator Carper. And what brought you to Delaware? What
    brought you--was it to work with the Department of Natural
    Resources?
        Mr. Motyl. High taxes in New York, bad schools, crime rate,
    better Governor in Delaware.
        Senator Barrasso. Who was the Governor at the time?
        Mr. Motyl. Mr. Carper.
        Senator Carper. I have no further questions.
        [Laughter.]
        Senator Carper. We are glad you are here. Thanks for all
    your work at the Department of Natural Resources and at DelDOT.
    God bless. Thanks. Welcome.
        Senator Barrasso. Mr. Motyl, welcome. Please share your
    testimony.

                       STATEMENT OF BRIAN MOTYL,
                 ASSISTANT DIRECTOR OF FINANCE, DELDOT

        Mr. Motyl. Thank you very much for inviting me to talk
    about this very valuable financing tool. As Senator Carper
    said, for many years Delaware has been working on this US 301
    project. It has been a priority. But unfortunately, with all
    the available resources we have, we just couldn't make it
    financially feasible to complete this much needed project.
        Delaware has basically four sources of funds for capital
    programs, and none of the four, even in combination, could
    totally fund this project. Plus, we need to save our available
    resources for ongoing infrastructure needs of the State.
        Delaware receives a Federal highway allocation of
    approximately $175 million annually, and the cost of this
    project was over $635 million, so Federal funding alone would
    not do the job. We do have normal senior revenue bonds, which
    we do use for infrastructure financing; however, these bonds
    are paid back through pledged revenues from DMV fees, motor
    fuel tax, and toll revenues. So all the State residents are
    paying back these bonds, so the theory on the bonds is we are
    going to use the money for projects that everyone in the State
    can benefit from. So, to use a revenue bond for the 301 project
    really wasn't a good option, and from a cost perspective it
    wouldn't have worked well, anyway.
        We do have just regular State resources, which are defined
    as revenues minus debt services, minus transportation operating
    expenses. State resources average about $270 million a year, so
    you could see that the $270 million is inadequate to cover all
    of our normal infrastructure needs and then try and finance a
    project of this size.
        The other option we had--and we did take advantage of--was
    a dedicated toll revenue bond for US 301, but the toll revenue
    bond is a higher interest rate, and the debt service coverage
    on that revenue bond did not allow us to fully finance the
    program. Just to simplify that, the revenue generated from the
    roadway would not be sufficient to pay the debt service, should
    we use the dedicated 301 toll revenue bonds, so we did use that
    in conjunction with the TIFIA loan to get the project done.
        In December 2015 DelDOT was successful, and we did close
    the TIFIA loan, and the project finally became a reality.
        Overall, the program is great. There are a couple of areas
    where it could be improved upon. For one, the time from the
    submission of the letter of intent to apply to the date of the
    loan closing was almost 3 years. The complete process was time
    consuming, and substantial documentation was provided. However,
    without the loan, the program could not have been done, so we
    are grateful for the loan.
        Preparation of the application was considerably involved
    and time consuming. We spent many hours on conference calls
    with TIFIA personnel discussing the project financial plan and
    proposed loan terms. The loan negotiation and final
    documentation was exceptionally good. All terms and conditions
    were adequately detailed in loan documents, and the loan terms
    were both positive for Delaware and for TIFIA, making the
    project possible.
        Some of the terms of the loan that are incredibly important
    that need to be talked about is the below market interest rate,
    which was over 1.3 times lower than our toll revenue bond
    interest rate. The other good factor about TIFIA that saved us
    a lot of money and made the project more financially feasible
    was that interest accrues only on the draws, as the TIFIA money
    is drawn. When we take out a revenue bond, we pay interest from
    day 1 on the full amount of the loan, so that is a huge feature
    that made the project more financially sound.
        Another key feature was the 10-year principal deferral,
    which was necessary to keep the debt service down at the
    beginning phases of the project in the early years. We were
    able to establish a toll stabilization fund, which is very
    beneficial to both DelDOT and TIFIA, should there be an
    economic downturn and revenues aren't quite sufficient to pay
    debt service. There is also a revenue sharing provision, which
    allows us to use some of the money to pay down the TIFIA loan.
        As far as reimbursement of funds, the required submission
    documentation is very easy to compile and not burdensome on the
    agency at all. Reimbursements have been received promptly and
    as scheduled, with no problems.
        I am running out of time, so I will go right to the
    summary.
        Several financing scenarios were run over almost 40 years
    as we attempted to find a fiscally sound financing plan for the
    US 301 project. The project could not have moved forward
    without the TIFIA loan. The Delaware Department of
    Transportation is grateful for this valuable program and
    maintains a great working relationship with our TIFIA partners.
        The loan process was at times cumbersome, and the loan
    terms and negotiating were time consuming; however, the
    benefits of the TIFIA loan far outweigh the at times lengthy
    required processes involved with the program.
        Thank you.
        [The prepared statement of Mr. Motyl follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Well, thank you very much for the
    testimony from all of you. I will start with a round of
    questioning and will start with Mr. Holtz-Eakin.
        The Congressional Budget Office found that the
    authorization for WIFIA and the SRF WIN in America's Water
    Infrastructure Act would generate about $12 billion in State
    funded investment. In your experience, would $12 billion in new
    State funding for needed infrastructure be positive or negative
    for the economy, and how about for U.S. taxpayers? The bottom
    line is is this going to be better or worse in the long run?
        Mr. Holtz-Eakin. I would expect it to be better. If you
    listen to the care with which these projects were vetted at the
    local level, these are projects that you are funding which are
    passing the threshold of things which add enough productivity
    and benefits to the population that they are worth doing, so
    $12 billion of that activity is a benefit to the population.
        Senator Barrasso. And to the taxpayers and to the
    communities in which they live?
        Mr. Holtz-Eakin. Absolutely. If the economy is better off,
    they are going to get more tax revenue. If people can receive
    these benefits through the infrastructure projects, they are
    not going to have to pay for them in other ways. Even
    environmental and health benefits have economic ramifications
    in that way.
        Senator Barrasso. Mr. Motyl, according to the 2016 U.S.
    Department of Transportation Report, TIFIA accelerates the
    delivery of significant transportation projects by an average
    of 13 years. What was Delaware's Department of Transportation's
    experience with TIFIA as it relates to accelerated project
    delivery, and then how does that help in terms of
    decisionmaking and ultimately benefit the taxpayers in your
    home State of Delaware?
        Mr. Motyl. Well, I will tell you in our case we have been
    working on the 301 project for over 40 years, and it just could
    not be done with any of the available programs or resources, so
    it accelerated the project in that there would be no project
    without the TIFIA loan. So, it is a valuable tool for those
    large projects that States just can't do on their own without
    the help.
        Senator Barrasso. Mr. Holtz-Eakin, we have heard what you
    have said and what he had said in terms of how much benefit it
    is to the communities and locales, but the Joint Committee on
    Taxation determined that if States borrowed the $12 billion to
    fund new infrastructure projects, then the Federal Government
    would lose about $2.6 billion in tax revenue. The calculation
    is based on looking solely at the loss of revenue from tax
    exempt bonds.
        If you were to look at all the economic impacts of $12
    billion in State investment and infrastructure, which is why I
    asked the first question, would you expect the benefits to the
    taxpayers to far outweigh this revenue loss?
        Mr. Holtz-Eakin. Yes, I would. As I mentioned in my
    opening, I don't think there is anything wrong with what the
    Joint Committee does or the CBO's score; it is simply a very
    narrow question. It is focused solely on the Federal budget
    costs; it does not look at the benefits to anyone in the
    economy and to the population as a whole.
        Senator Barrasso. Mr. Sarmiento, what aspects of the WIFIA
    program made it attractive for the Orange County Water District
    to use this tool?
        Mr. Sarmiento. Well, I think the benefit that we have is to
    be able to provide a project on an accelerated basis to our
    ratepayers. Also, the fact that we could use that to leverage
    some of the other moneys that are available to us.
    Unfortunately, in California, because the SRF is
    oversubscribed, it would have delayed project delivery for some
    of our ratepayers. We have a backlog of projects that we need
    to address, but this is certainly one source that was valuable
    to us, and our experience has been very positive with it.
        Senator Barrasso. So, without the tool, the detrimental
    impacts would have been significant and felt by people living
    in your communities?
        Mr. Sarmiento. It would have, and we see that, when project
    delivery is delayed, we have folks that will not remain in the
    communities; sometimes they will leave; they won't invest in
    projects that we need that are ancillary to the water project.
    But we certainly see that we do need all levels of funding and
    all different types of programs that are available to our
    ratepayers.
        Senator Barrasso. Thank you.
        Mr. Motyl, could you talk about some of the aspects of the
    TIFIA program that made it attractive for the Delaware
    Department of Transportation to use the program, how important
    it was to have TIFIA available for you to pursue?
        Mr. Motyl. Yes. Probably the top four reasons would be the
    principal deferral. We have 10-year principal deferral, which
    keeps our debt service down during the early years of the
    project as the roadway matures and traffic builds. Without the
    principal deferral, the debt service would have been
    unmanageable in the first couple years of the project, so that
    is crucial.
        The below market interest rate also very helpful.
        The fact that interest accrues as the money is drawn allows
    us to use our other funds first that we are paying on from day
    1, and just pay interest on the TIFIA as we use it, which saves
    us millions of dollars in interest expense.
        And the ability to prepay the loan. If the roadway out-
    performs, which we hope it will, we could prepay this loan and
    get rid of our debt service a lot quicker.
        Senator Barrasso. Well, thank you very much.
        Before turning to Senator Carper, I am submitting for the
    record and ask unanimous consent to enter into the record
    letters of support signed by the American Public Works
    Association and the Water Infrastructure Network, which is a
    coalition including the U.S. Chamber, the American Society of
    Civil Engineers, and numerous other leading infrastructure
    groups, highlighting the benefits of TIFIA, WIFIA, and SRF WIN.
        Without objection, they are submitted to the record.
        [The referenced information was not received at time of
    print.]
        Senator Barrasso. Senator Carper.
        Senator Carper. Thank you. I want to telegraph my pitch.
    One of the things that Brian mentioned, we are very grateful in
    Delaware for the program and the ability. This money actually
    enables us to build this road. We wanted to build this road
    forever.
        You mentioned a couple things that could be done maybe to
    make this program better, so I would just ask you to be
    thinking about that. Telegraphing my pitch. Before I finish, I
    am going to come back and ask each of you is there any way we
    can make this program better, more effective, better for
    taxpayers, maybe better for our local communities, so think
    about that.
        Brian, you mentioned toll revenue bond rate versus TIFIA
    loan rate. I heard you say 1.3 percent. Not 1.3 percent; you
    said 1.3 times. Would you just use actual rate numbers?
        Mr. Motyl. Yes. It was 1.33 percent lower. The TIFIA rate
    was, at the time----
        Senator Carper. I am just trying to get at the toll rate
    versus the TIFIA rate.
        Mr. Motyl. This is the rate of the borrowing. The toll
    revenue bond was 4.27 percent.
        Senator Carper. Versus?
        Mr. Motyl. The TIFIA loan was 2.94, so it was 1.33 lower.
    If we were to borrow the whole loan amount at the 4.27, it
    would have been over $26 million more, plus the other savings
    with the interest accrual. So, it is many millions of dollars
    we benefited from the TIFIA loan.
        Senator Carper. And was deferral actually an attractive
    aspect as well, that comes with the TIFIA loan?
        Mr. Motyl. Absolutely, because the bondholders and the
    TIFIA lender worry about the debt service coverage, and the
    revenues at the beginning period, when the roadway is open,
    provided very low coverage factor for the repayment of the debt
    service. So, allowing us to defer the principal payment made
    our debt service much smaller during the first 10 years of the
    project, which made our coverage much higher, gave us a better
    interest rate, and allowed us to have a really fiscally sound
    program.
        Senator Carper. All right, good.
        My colleagues, I know the projects in each of our States
    that you have a special interest in that you see maybe as you
    travel around your State, every day that I go down State on
    State Route 1, which goes from I-95 down passed the Dover Air
    Force Base, I see this project coming to a conclusion. I am
    going to actually clip the ribbon I think probably in November,
    and it will be all done. But it is just really exciting to see
    what is actually happening and to be able to know that we are
    going to enjoy it very, very soon.
        A follow up question, if I could, for Brian, deals with
    transit policy change. Last week, the Federal Transit
    Administration released a guidance document that seems to
    suggest that Federal loans such as TIFIA should be considered
    part of the Federal funding, rather than as local match. Since
    DelDOT will repay the TIFIA loan, plus interest, through local
    toll revenues, do you consider that loan to be Federal funding
    or local funding? And in your opinion, if policy changed to
    require transit projects to use TIFIA and Federal grants for no
    more than, say, 50 percent of the total project cost, would
    that make TIFIA less attractive to project sponsors?
        Mr. Motyl. It absolutely would make it less attractive. A
    lot of projects probably won't move forward if they can't use
    TIFIA as the match. TIFIA, I don't see how it could possibly be
    considered non-Federal. FHWA funding is grant funding; that is
    money that the Federal Government gives us. That is Federal
    funding. TIFIA is repaid by State dollars; it is all our money
    that is paying it, so it is ultimately our money. It has to be
    considered as a State resource. And by not doing that, I think
    it is going to drastically hurt the amount of applications for
    the transit program.
        Senator Carper. All right, thank you.
        Now for my pitch well telegraphed. One of the things my
    colleagues hear me say a lot is everything I do I know I can do
    better. I think it is true of all of us; probably true for all
    Federal programs. How might we do this program better?
        Doug, do you want to lead us off? Any improvements that you
    can think of that we should make?
        Mr. Holtz-Eakin. I don't have a laundry list of issues with
    either TIFIA or WIFIA. I think these are programs that are
    essentially pretty new, and probably the best thing you could
    do is to build in some evaluation of their effectiveness into
    their operation.
        Senator Carper. All right, thank you.
        Mr. Sarmiento.
        Mr. Sarmiento. Well, again, I think that----
        Senator Carper. Would you just tell us one more time that
    really funny line you used?
        Mr. Sarmiento. Right.
        Senator Carper. Go ahead, one more time.
        Mr. Sarmiento. One more time, OK. So, we took a long time
    trying to message that this is clean, safe water, so people
    kept calling it toilet to tap. But when we said showers to
    flowers, for whatever reason, they started finally drinking and
    taking a little risk.
        [Laughter.]
        Mr. Sarmiento. And they actually enjoyed it, and it tastes
    better than some of our tap water.
        Senator Carper. Some of my colleagues missed. I just
    thought it was worth repeating.
        [Laughter.]
        Mr. Sarmiento. Well, when you come to Orange County, we
    will make sure we have some bottled water for you. I think we
    may even have some in our offices here in DC, so we will make
    sure we deliver some.
        Senator Carper. A reminder that branding is important.
        Any other change you would recommend with respect----
        Mr. Sarmiento. More than anything, I think, obviously, the
    options of having the programs available is very important
    because they work complementary to one another. But with the
    SRF WIN, not requiring the application fee is something that
    obviously benefits and reduces the obstacle maybe for some of
    these smaller agencies, some of the smaller communities. And as
    we know, and myself representing a community that has many
    working families and low income families, those agencies that
    do work under our larger agency as retailers and producers have
    a difficult time, so to the extent any barriers could be
    removed for them to access some of the credit lines is a good
    thing.
        Senator Carper. Thank you, sir.
        Brian, just very briefly. You mentioned a couple things
    that we might do to make it better. If you want to reiterate
    those, that would be fine.
        Mr. Motyl. Sure. The application process is very time
    consuming. You work with TIFIA staff, you work with their
    consultants, you work with their legal team. They are requiring
    a lot of back and forth questions and all. But overall, you
    know, it is worth doing the extra work to save that kind of
    money, so that is minor, but I wanted to bring up everything.
        Probably the biggest thing that could be fixed is the
    reimbursement process. For example, if we are using FHWA funds,
    we run a report Monday morning for the expenditures the prior
    week, and FHWA reimburses us the full amount a week later.
        With TIFIA, expenditures are getting reimbursed 30 to 60
    days after the initial expenditure, so it can be a little
    burdensome on the State. In Delaware's case, the General Fund
    pays all of our bills, so they are on the hook for all that
    money until we get the TIFIA money to repay them.
        So the monthly reimbursement process and the time between
    the approval hopefully could be streamlined so that we could
    get our money a little quicker.
        Senator Carper. Thanks.
        Our thanks to each of you.
        Thanks so much.
        Senator Barrasso. Thank you, Senator Carper.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Mr. Sarmiento, in June 2018 the Association of Metropolitan
    Water Agencies wrote an article on the benefits of the WIFIA
    program, and I am going to quote from the article. It says that
    ``Perhaps, most importantly, WIFIA is designed to leverage
    modest Federal appropriation into a significant pot of
    available funds. To put it simply, WIFIA offers a tremendous
    bang for the buck in today's tight budget time.''
        Now, I fully agree with that and feel that that leveraging
    is working. Of course, WIFIA is fairly new, but we have been
    using TIFIA for quite a while, and it has been very successful.
        My question would be--as you know, Senator Boozman's SRF
    WIN Act is within the WIFIA program. That being said, do you
    believe the programs like WIFIA and the SRF WIN Act offer a
    long-term value to the taxpayers?
        You have actually answered that, worded a little bit
    differently, in your previous statement, but could you answer
    that for the record?
        Mr. Sarmiento. And I want to thank Senator Boozman for
    working with my Senator, Feinstein, in California and co-
    authorizing that, because, for us, SRF is a valuable tool that
    we have as an opportunity to fund some of these vital programs.
    The unfortunate part about it in California is that the program
    is oversubscribed. So, to the extent that we have other options
    and other alternatives and other tools in our toolbox, it is
    always a good thing.
        So, we certainly believe that having more opportunities,
    having the ability to access, especially for some of our
    smaller agencies and for those that don't have the capacity, we
    are blessed in the Orange County Water District. We are a very
    large agency, but we do have retailers and producers that work
    with us that don't have as much capacity and have trouble
    bundling projects together, so we certainly see the value with
    that.
        Senator Inhofe. Well, in fact, when I chaired this
    Committee, and Senator Boxer was the ranking member, she talked
    about the same thing you are talking about, except it was
    TIFIA. You have to have access to make it into a large program.
    That is good.
        Now, some have raised the concerns that the SRF WIN Act
    could cannibalize SRFs, as well as the WIFIA program, and I
    have to admit I have this hard for me to believe, considering
    we have multiple supporters of both the WIFIA and the SRFs, and
    I am one of those. In fact, the SRF WIN Act has clear language
    that the program will not be funded until the SRF and the WIFIA
    program are funded at the 2018 levels. I can say, as an
    original cosponsor of the Boozman legislation, that our
    intention is to provide base funding for those programs in
    addition to SRF WIN Act funding to attack the $600 billion
    investment we need for water infrastructure.
        The Orange County Water District is a WIFIA applicant, as
    well as a supporter of the SRF WIN Act, so what are your
    concerns about the accusations on cannibalizing the Act?
        Mr. Sarmiento. Well, I think that obviously there is value
    with the SRF program. There is obviously value with the WIFIA,
    but WIFIA is intended for larger projects, so I think the SRF
    WIN obviously addresses those smaller projects that some
    agencies may not be eligible for SRF or WIFIA. So, I think it
    is one more element that allows agencies of all levels and all
    sizes, and again, because we are a larger agency, we can't
    qualify for the WIFIA program, and as I said, the SRF is so
    oversubscribed in California that we do need that augmented or
    ancillary support for those smaller agencies.
        Senator Inhofe. And you believe that helps.
        All right; Mr. Holtz-Eakin, I was interested in your
    explanation on scoring. It was fascinating that you ended that
    up by saying is this a good idea. That was your question.
        Well, let me be the only one who is responding. I think no
    is a better response because of the way that it is calculated.
    When you talk about the loss of revenue from the tax exempt
    bonds as being the source of the negative scoring that has
    taken place, is there a better idea? Have you thought about
    this? You are the expert in this area.
        Mr. Holtz-Eakin. So, to be clear, that question was is
    doing the infrastructure project a good idea, and I think the
    answer would be yes, even if you get the negative score, just
    to be clear.
        Senator Inhofe. OK. That is not how I interpreted the
    methodology of the scoring.
        Mr. Holtz-Eakin. There are an enormous number of things
    that cost Federal money and they are worth doing, and this is
    an example of one where you have a score that says it costs
    money, but we have localities across the country who are
    willing to put their own money; they are willing to have
    private entities pay tolls and things like that to make these
    projects go. Clearly, they are in the interests of the
    population.
        Senator Inhofe. OK, my time has expired, but I am going to
    ask questions for the record, send you something so we can
    pursue this a little further, because I think it would be
    worthwhile. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Barrasso. Thank you, Senator Inhofe.
        Senator Cardin.
        Senator Cardin. Thank you, Mr. Chairman.
        I thank all of our witnesses.
        Let me start by just underscoring the point of the Chairman
    and the Ranking Member as to the need for greater
    infrastructure investment here in America. Our infrastructure,
    whether it is water infrastructure or transportation
    infrastructure, is not where it needs to be; it is hurting our
    economic growth, and it is certainly affecting quality of life.
    So, I usually look forward to the summers because I commute
    between Baltimore and Washington every day, and usually the
    summer is a lot easier because the schools aren't in and people
    are on vacation. The summer commute should take me a little
    over an hour. This morning was about an hour and 45 minutes, so
    even in the summertime our infrastructure is stressed.
        I appreciate my colleague from Delaware talking about 301.
    As we crossed the Bay Bridge and head north into Delaware, the
    needs. If you were to head south, Senator Carper, and tried to
    get into Virginia, you have to go across the Nice Bridge, Harry
    Nice Bridge. I just checked Waze, and there is a tremendous
    backup there right now, and this is 11 o'clock on a weekday.
    That bridge needs to be replaced.
        I just mention that because we have significant projects in
    which TIFIA is helpful in trying to put together, because of
    the size, that can be done, but there is still not enough
    money.
        And I do appreciate the scoring issues you are talking
    about because one of the things President Trump tried to do is
    leverage more of the Federal funds by asking the States and
    local governments to come up with more of their funds. I am not
    sure that is a good idea, and it will be interesting to see how
    that gets scored by Joint Tax Committee, because that would
    increase the States' use of tax exempt funding, which would
    have a score, I assume. And I see a nod from Dr. Holtz-Eakin.
        So, I guess my question to all three of you; I am one who
    believes, as I think the majority of this Committee believes,
    we should be having a more robust Federal infrastructure
    program with Federal funds, that we should have a bigger
    program, but what can we do to better leverage the funds that
    we have?
        Certainly, TIFIA and WIFIA were programs that do that, but
    are there better ways to leverage the Federal share without
    requiring larger local government shares, because we are all
    the same taxpayers, whether it is Federal or State? But are
    there better ways of leveraging to be able to keep interest
    costs down or to get a greater leverage from the governmental
    shares, whether they be Federal, State, or local?
        Mr. Holtz-Eakin. So, in the end, this is Casablanca, you
    round up the usual suspects. You have the Federal Government,
    you have the State governments, you have the localities and
    special districts, things like that; and if you want to keep
    their shares down, you have to attract private capital. So, the
    difficulty is, to attract private capital, you are going to
    have to have some cash flows that you can give to them that
    offer a rate of return that is commensurate to what they could
    get elsewhere, and that becomes the core sticking point in
    trying to have enormous private participation in infrastructure
    projects. There just, in my view, aren't enough places where
    you can or are willing to toll a bridge, pay a fee for
    wastewater, whatever it may be, to generate the cash flows that
    will attract that much private capital.
        So, I believe, as much as you can get is a good thing, but
    the core framework should be are these projects that are worth
    it for the country. If they are, get as much private capital as
    you can, but the rest will have to come from taxpayers, one way
    or another. But they have benefits as well, so you should do
    it.
        Senator Cardin. I agree with your assessment. You need the
    money. And yes, TIFIA has been able to reduce some interest
    costs. TIFIA has been able to get more predictable funding,
    which is an extremely important thing to get projects moving,
    so that is a really positive program. Strongly support that.
    But at the end of the day, if you are trying to attract more
    capital, you have to have a revenue flow in order to deal with
    it, whether it is taxpayer revenue flow or whether it is a
    special revenue flow.
        Any other ideas from our panelists as to how we can better
    use the Federal participation today to increase the
    infrastructure in this country?
        Mr. Sarmiento. Well, Senator Cardin, I think I would agree
    with you as well, the more low barrier ability to access
    funding for these projects, since there is such a deferred
    maintenance on those and deferred investment in our
    infrastructure, is better, but ideally, that would be the best
    scenario, to have grants and maybe funding available that is
    easy to access. But given where we are, I think these low
    interest loans and credit assistance to agencies is probably
    the next best thing, and that is something that we need to
    continue to protect, continue to improve on the approvals so we
    accelerate some of that delivery on that investment. So, to the
    extent that agencies like ours benefits from a more rapid, more
    quick approval so we can deliver those services and deliver
    those projects to our ratepayers is a benefit that is very,
    very valuable to them.
        Senator Cardin. Thank you.
        Thank you, Mr. Chairman.
        Senator Barrasso. Thank you, Senator Cardin.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        Mr. Motyl, the FAST Act created the Build America Bureau,
    which now manages TIFIA and other transportation financing
    programs. The purpose of the Bureau is to be a one stop shop
    for Federal transportation funding, such as TIFIA, grants, and
    private activity bonds. Has the Bureau been effective in
    managing these programs, do you think?
        Mr. Motyl. Yes, they have. Our working relationship with
    the Bureau is exceptional. I, luckily, don't have to deal with
    them a lot right now because I don't have problems. Things are
    happening as they are supposed to with the loan program, so I
    don't deal with them a lot now. I did during loan process, but
    I found that they are always knowledgeable and very helpful. I
    have nothing negative to say about the Bureau.
        Senator Fischer. OK. And when the Build America Bureau
    receives a TIFIA application, it doesn't scale the review to
    the project based on size. For example, a $20 million project
    must meet all of the same requirements as a $400 million
    project.
        Should the Build America Bureau scale projects based on
    size, do you think?
        Mr. Motyl. I think they probably should. Any time you can
    streamline the program would be beneficial. In our case, we
    needed it to do the roadway, but if I am to go to TIFIA for a
    low-cost loan, I may go elsewhere if it is really small, if I
    have to go through a lot of application process, and it becomes
    burdensome. I might get the funds elsewhere. Of course, there
    is still that savings, but it is not going to be very
    significant if it is a very small program. They could probably
    speed up delivery and have more applications if they did.
        Senator Fischer. I am from the State of Nebraska, and we
    are viewed as a rural State. And though 10 percent of the loans
    provided by TIFIA must go to rural projects, TIFIA loans are
    still perceived as going mostly to urban areas. In fact, rural
    is defined as areas outside an urban population with more than
    150,000 people, and rural projects must cost at least $10
    million.
        Right now, there have been 84 projects in 22 States that
    have utilized the TIFIA program. Texas and California alone
    account for 26 of those projects. Six States account for about
    two-thirds of all of TIFIA projects, and nine States account
    for over 80 percent of all TIFIA projects.
        What do you think can be done so that we can broaden the
    use of TIFIA to benefit all States?
        Mr. Motyl. I am not sure. I don't know why the other States
    wouldn't be applying for and using the funding; it is going to
    provide the lowest cost of financing in most cases. I don't
    know why they would not apply.
        Senator Fischer. Do you think we need to look at what is
    all involved in the application process and maybe try to make
    changes to that so it can be more broadly used? I mean, in my
    State, it is difficult to find an urban area with 150,000
    people and then say, outside of that area, well, that is going
    to be the rural area, when the State itself, outside of a metro
    area and the Lincoln area, is a rural area.
        Mr. Motyl. Maybe it goes back to some of the necessary
    terms. We used it for the 301 project because we had a
    dedicated revenue source, but for small projects we don't have
    a dedicated revenue source; all of our revenue is pledged to
    our senior revenue bonds, so TIFIA won't work for a majority of
    our projects, so we want to use it for those projects. So maybe
    if the smaller loan amounts, they still need to be secured, but
    maybe have a subordinate pledge of existing revenues or
    something, because not all these small projects are going to
    have the revenue stream that TIFIA requires for repayment.
        Senator Fischer. Right.
        Mr. Motyl. That might be a big issue why they are not
    getting the applications.
        Senator Fischer. Thank you very much.
        Mr. Motyl. You are welcome.
        Senator Fischer. Thank you, Mr. Chair.
        Senator Barrasso. Thank you, Senator Fischer.
        Senator Duckworth.
        Senator Carper. Senator Duckworth, would you yield to me
    for a minute? Am I mistaken or is the first full week you have
    been back with us full-time since the birth of Miley?
        Senator Duckworth. It is.
        Senator Carper. We are glad you are back. It was nice to
    see her on the floor this week.
        Senator Duckworth. Thank you so much. Pretty bipartisan. It
    is good to be back.
        Thank you, Mr. Chairman.
        I am so happy that we are discussing the importance of
    safe, reliable infrastructure to hardworking families, small
    businesses, and communities both in my home State of Illinois
    and around the Nation. I want to thank the witnesses for
    participating in today's hearing, and I do agree with my
    colleagues that more must be done to ensure that State and
    local governments have the tools that they need to move
    infrastructure projects forward.
        My first question is for Mr. Motyl. Would you agree that
    while financing mechanisms are attractive for advancing large
    infrastructure projects, what is important is robust funding
    programs, because they are absolutely crucial to ensuring safe
    and reliable transportation systems? I am trying to get at the
    difference between the funding and financing.
        Mr. Motyl. Right. Well, there has to be a good mix between
    funding and financing. Our transportation trust fund is
    probably similar to any other transportation trust fund in the
    country. Our State resources is our revenues minus our debt
    service minus operating, so if you are relying totally on debt
    financing, you are taking away from the State resources; you
    are taking away from the infrastructure of the State.
        So, yes, long programs are nice and necessary, but all the
    infrastructure needs can't be met with just loan programs
    alone. You really need some grant funding and other mechanisms.
        Senator Duckworth. Thank you. And mechanisms like TIFIA and
    WIFIA were designed to help State and local governments pursue
    major infrastructure projects that otherwise would be too
    expensive to advance through traditional means. With an
    impressive leverage of 42 to 1 for TIFIA and 102 to 1 for
    WIFIA, it is easy to understand why Congress is really enamored
    with these tools.
        However, securing a loan, as you have said, isn't always
    easy. They are limited to certain types of projects with high
    cost thresholds, and they are limited to a portion of total
    project cost.
        Assuming that a project's underlying fundamentals are
    financially sound, that is to say, the non-Federal sponsor
    enjoys appropriate bond ratings, private instruments have been
    identified, et cetera, would you agree--following up on your
    answer to the first question--that TIFIA and WIFIA could
    benefit other major infrastructure projects such as building or
    modernizing airports, for example?
        Mr. Motyl. Absolutely. As long as there is a dedicated
    revenue stream, I don't know about airports, but I would assume
    it would work the same way. It is going to provide a lower cost
    to financing, so ultimately it would be a great way to finance
    a project.
        Senator Duckworth. Thank you. I am glad to hear you say
    that.
        I am actually going to be introducing legislation in the
    coming weeks that would responsibly expand TIFIA eligibility
    for major airport projects such as those that are already
    underway in Chicago, Salt Lake City, Philadelphia, Miami, and
    elsewhere.
        Would the greater Delaware region benefit from a proposal
    to expand these financing instruments to help modernize and
    improve our aging airport infrastructure?
        Mr. Motyl. That is totally out of my realm. I would assume
    yes, but I can't really say anything.
        Senator Duckworth. No, that is fine.
        My next question is for Mr. Sarmiento. It is my
    understanding that the Orange County Water District is
    receiving WIFIA assistance for a water recycling project to
    benefit your 2.4 million customers, and that is fantastic.
    However, success stories like those we have heard about today
    must not allow us to ignore the significant limitations of
    WIFIA and TIFIA. They often fail to help rural communities
    where infrastructure projects are unlikely to provide a rate of
    return that lures private investments or the tax base is not
    adequate to repay a substantial Federal loan.
        Would you agree, then, that clean drinking water and safe
    roads are just as important to small rural and disadvantaged
    communities as they are to major metropolitan areas?
        Mr. Sarmiento. Thank you for that question, Senator. Yes, I
    do agree. I think because we are blessed as a large agency, I
    think we could leverage the private bond market obviously at a
    higher cost for our ratepayers. We do have some smaller
    agencies that are part of our network of producers, so we
    realize that they also have a difficult time being able to be
    eligible for some of this funding.
        So, to the extent rural communities, disadvantaged
    communities, we see issues going on in Flint, Michigan,
    Compton, California, West Virginia, all over the country that
    have these issues, and sometimes accessing funding is difficult
    because of their capacity and their ability to go ahead and
    apply and leverage some of those private dollars. So, for us,
    we are completely supportive of what this Committee and what
    these bills are trying to do to make sure that all agencies are
    able to deliver clean, safe drinking water, because we know
    communities of color, low income communities are the ones who
    especially suffer when there isn't funding like this available.
        Senator Duckworth. Thank you for your answer.
        I yield back, Mr. Chairman.
        Senator Barrasso. Thank you.
        Senator Boozman.
        Senator Boozman. Thank you, Mr. Chairman, and thank you for
    you and our Ranking Member for holding the hearing on such an
    important subject.
        Senator Booker and I have worked really hard to secure
    broad bipartisan support and endorsements from over 30 of the
    Nation's leading organizations representing construction,
    engineering, municipalities, conservation, public works, labor
    for the SRF WIN Act. Thanks to the hard work by the EPW
    majority and minority staff, SRF WIN no longer scores.
        Despite all this, SRF WIN does have some detractors. The
    main argument I hear is that the legislation is a solution in
    search of the problem, with which I am totally confused.
    According to the EPA's most recent drinking water
    infrastructure needs survey and assessment, released earlier
    this year, $472.6 billion is needed to maintain and improve the
    Nation's drinking water infrastructure over the next 20 years.
    That is just the drinking water; that doesn't have anything to
    do with wastewater infrastructure.
        One of the other problems that I am seeing is that
    municipalities, because they are struggling financially, tend
    to push things down. You know, you deal with it, the EPA comes
    in, eventually the DOJ because it has been pushed down, and all
    of a sudden you are under a court order with a fine, and again,
    subsequently massive rate increases. So, this is just an
    attempt to again put some more tools in the toolbox.
        Can you tell us again, Mr. Sarmiento, if you feel like that
    this would be a good tool in the toolbox to help you in dealing
    with the many problems that we have? And let me congratulate
    you, also, on the fact that you all do a great job, and you
    have a huge problem, a huge population with, like everyone
    else, limited resources, but also in a climate that makes it
    very, very difficult.
        Mr. Sarmiento. Thank you, Senator. And you are right, I
    think for us our challenge is hydrology is difficult to
    predict, so we have, unfortunately, suffered the last four out
    of five seasons with very, very dry seasons. We normally
    average 14 inches of rain a year. Last year we received less
    than 5 inches of rain, so it is a problem that just becomes
    very difficult for us to address. Programs like this, programs
    such as WIFIA, the SRF, the SRF WIN are vital to us because
    they make it available for us to be able to choose from, again,
    different resources for us to tap into.
        We could finance our final expansion of our groundwater
    replenishment system, but it would be going out to the private
    sector and bringing things back at a much costlier rate to our
    ratepayers. We would suffer delays. So, the fact that these
    programs are available to us, we can deliver much quicker, we
    can make sure that folks--because I think there are some
    tangible benefits that we are talking about, but there are also
    some intangible benefits that we don't discuss sometimes. Not
    knowing whether or not we are going to have to go into a
    drought crisis, we are going to have to start rationing, we are
    going to have to deal with heavy, heavy conservation, makes
    folks unsettled. It hurts our economic development in our town,
    in our region just because people don't like uncertainty. And
    when you see that, it makes it very difficult for us to be able
    to attract folks, and there is a multiplier effect to the money
    that is invested and the money that is made available for these
    improvements.
        So, we certainly applaud the efforts, Senator, that you are
    doing, along with Senator Booker and this Committee, because it
    does make that uncertainty a little bit less difficult for us
    to overcome.
        Senator Boozman. Very good.
        Mr. Holtz-Eakin, affordability is a major concern in
    Arkansas, with many families having trouble affording to pay
    the utility bills every month. When a community invests in
    their infrastructure, ratepayers generally see rate spikes.
        Can you explain how leveraging programs like WIFIA and
    TIFIA and SRF WIN help communities plan ahead to ensure their
    ratepayers won't see massive rate spikes in the future?
        Mr. Holtz-Eakin. As a way to augment the ability to do debt
    finance investments, which is the core of these programs, it
    allows you to smooth the rate increases over a longer period of
    time. If you had to finance on a year by year basis big capital
    construction projects, you would be getting enormous rate
    spikes, and that is just not desirable.
        Senator Boozman. And that goes along with what you just
    said, Mr. Sarmiento, about having the predictability, the
    reliability.
        Thank you all very much. We appreciate you being here.
        Senator Barrasso. Thanks.
        Now we turn to the man celebrating his birthday today.
        Senator Markey. Thank you, Mr. Chairman.
        Senator Barrasso. Happy Birthday, Senator Markey.
        Senator Markey. Thank you, Mr. Chairman.
        Senator Carper. Senator Markey, I just note for the record
    each of the witnesses modified their testimonies to begin their
    testimonies by extolling you, saying how they wish each of
    their Senators was as accomplished.
        Senator Markey. And hopefully it will also be reflected in
    their answers to my questions. The answer is yes, if I can just
    give you a hint going forward. 7/11 is a good day, so I have
    always felt fortunate.
        Senator Barrasso. So, when they sing, ``Oh, thank heaven
    for 7-Eleven,'' you think it is about you?
        [Laughter.]
        Senator Markey. My favorite chain.
        Low-cost Federal loan programs are one important tool in
    our infrastructure toolbox that can help us modernize our
    Nation's roads and rail and water infrastructure.
        In 2018 Massachusetts closed on a $162 million TIFIA loan
    to implement positive train control technologies, which are
    safety features that can trigger a train to stop or slow down
    during an emergency, so that is a good use of a loan program,
    and Massachusetts took advantage of it.
        But earlier, Senator Duckworth mentioned that many of our
    small and disadvantaged communities may not be able to use
    these low-cost Federal loan programs because they cannot afford
    to repay the loan, and that is why, yesterday, I introduced the
    Clear Drinking Water Act, which would authorize more than $1
    billion in Federal grants to help small and disadvantaged
    communities replace contaminated water infrastructure to comply
    with the Safe Drinking Water Act requirements. And I am proud
    that 11 of my colleagues have joined me in cosponsoring this
    bill as it has been introduced.
        We must take swift action to eradicate the environmental
    contaminants of the 20th century and invest in infrastructure
    for the 21st century, and for every community in the country
    that can afford to replace their old facilities, there is a
    poorer community nearby that cannot.
        Mr. Sarmiento, do you believe that Congress should provide
    targeted Federal investments to small and disadvantaged
    communities that do not have the means to use low-cost Federal
    loan programs?
        Mr. Sarmiento. Thank you, Senator, and let me begin by
    saying Happy Birthday.
        Senator Markey. Thank you, sir.
        Mr. Sarmiento. I am also a fan of 7-Eleven.
        Absolutely. And I want to thank you for thinking about
    those communities, because I represent one of those communities
    that is a disadvantaged community in a wealthy county, albeit
    our average median income is very, very low relative to our
    neighbors throughout the county. We do feel that there is a
    huge benefit in making agencies in cities like ours eligible
    for those low interest loans, because we do have some heavily
    deferred maintenance on our infrastructure that we need to
    address, so, to the extent that additional funds are available,
    it certainly is a welcomed supply.
        Senator Markey. So, for every Palo Alto there is an East
    Palo Alto.
        Mr. Sarmiento. Right.
        Senator Markey. For every Boston there is a Chelsea. So, we
    just have to deal with the complexity of it that not everyone
    can comply with the requirements if they are required to pay it
    back dollar for dollar. Just very, very difficult.
        So, if we want to modernize America's infrastructure, we
    have to be committed to making those investments. But the Trump
    administration's infrastructure proposal, $200 billion of
    Federal funding that would presumably come from budget cuts,
    even possibly to older transportation and infrastructure
    programs, fails to deliver on the President's promise to invest
    $1.5 trillion in our Nation's infrastructure, and the reason
    why is simple: $200 billion simply is not $1.5 trillion.
        The Administration assumes that as a condition for
    receiving Federal assistance, cash strapped States and local
    governments will have to work with private investors to cover
    the other $1.3 trillion by using credit programs such as the
    Transportation Infrastructure Finance and Innovation Act. But
    many infrastructure projects are not well suited to attract
    private investment, and State and local governments are already
    struggling to find the funds to simply fill in potholes and
    maintain healthy drinking water.
        Dr. Holtz-Eakin, in a blog post you wrote that ``It is a
    tall order for the Administration's infrastructure plan to
    generate $1.5 trillion of investment.'' Do you think the
    Administration erred in assuming State and local governments,
    in partnership with private investors, can generate $1.3
    trillion in infrastructure investment?
        Mr. Holtz-Eakin. I think it was extremely optimistic. I
    mean, to get the private sector involved, you have to have some
    cash flows on the table for them, and at least in my judgment,
    it didn't look like there would be sufficient opportunities to
    do that, to generate that kind of participation. I also don't
    think that $1.5 trillion is the right way to think about any
    problem. The question is is an infrastructure project valuable?
    If it is, do it; and if it is not, stop, and you will either
    get to a $1.5 trillion or you won't. I don't see the magic of
    going for that number.
        Senator Markey. Except that it is a magical number that
    they have created, huh? The magic asterisk.
        Mr. Holtz-Eakin. My profession has been spent with magical
    numbers, and most of them are really magical.
        [Laughter.]
        Senator Markey. I remember when David Stockman, one of your
    predecessors, he talked about a magic asterisk in the 1981
    Reagan budget to make up for all of the funding they actually
    couldn't account for; they just put a magic asterisk next to
    it, and I think that is where they are with this $1.3 trillion.
        I think this is the Committee that should be realistic,
    that we should be practical. That is really what the history of
    the Committee is, and that we should just try to come back and
    put something together that has real numbers, realistic numbers
    that we are working on so that we can really have the
    infrastructure upgrade that we need.
        So, I thank you all very much, and thank you, Mr. Chairman.
        Senator Barrasso. Senator Wicker.
        Senator Wicker. Doug, I have known you for 20 years. You
    have been in and out of government; you have been on TV. How do
    you pronounce your last name?
        Mr. Holtz-Eakin. The correct pronunciation is Holts-Akin.
        Senator Wicker. Holts-Akin. OK.
        Mr. Holtz-Eakin. I long ago settled on Holts-Eakin because
    it is just not worth it.
        Senator Wicker. OK.
        [Laughter.]
        Senator Wicker. And Brian, help me with your last name.
        Mr. Motyl. Motel. Motel.
        Senator Wicker. Motel.
        Mr. Motyl. But Senator Carper pointed out that was wrong.
        Senator Wicker. Like the one at 7-Eleven there.
        [Laughter.]
        Senator Wicker. Well, Dr. Holtz-Eakin, you were very gentle
    in saying it is optimistic, overly optimistic. In a nutshell,
    what suggestion do you have for us, other than the one you
    made, to find out what the needs are and figure out how much
    the cost is, rather than start with 1.5? What would you do to
    make the financing more realistic, more doable, more workable?
        Mr. Holtz-Eakin. So, beginning narrowly, as I said in my
    opening statement, I think the design of WIFIA, TIFIA, SRF WIN
    is consistent with good infrastructure projects. You have
    people on the ground vetting them; there is local stakeholder
    financing, so they have a reason to both choose and operate
    them effectively; there is a role for the Federal Government in
    terms of a debt finance augmenting that; and that program will
    be designed and will generate some projects, and it might not
    get to $1.5 trillion, but they will be beneficial projects. So
    that makes sense to me.
        I think what you are seeing in the bigger picture, if you
    step back, and the Committee is well aware of this, is this is
    one way to use general revenues to finance infrastructure
    projects, and that is a reflection of the fact that there is
    not a stable financing mechanism that satisfies the Highway
    Trust Fund's needs. So, you have a bigger problem, which is
    what will be the way to commit to stable funding of
    transportation infrastructure from the Federal Government? And
    that question has been unresolved for quite a long time, and I
    know why.
        Senator Wicker. OK. But do you see Senator Boozman's point
    and my point, coming from smaller States that have never used
    TIFIA, never used WIFIA, because we don't have the revenue
    stream, that we need this other little program to maybe help us
    to bundle up some small funds and get eligible for this kind of
    nifty financing?
        Mr. Holtz-Eakin. I absolutely do. Remember, I am, first and
    foremost, a trained economist, and the core economic question
    is is the rate of return on this infrastructure project, albeit
    it a small one in a rural locality, greater than the market
    rate of return? And if the answer is yes, it should be done.
    The public will be better off doing that.
        There are things that get in the way of that:
    inefficiencies in bond and other markets, overhead costs in
    running Federal programs. To the extent that you can bypass
    those things, you are doing a better job of financing
    infrastructure.
        Senator Wicker. Mr. Motyl, we don't have a robust revenue
    stream in States like Mississippi and Arkansas, so do you have
    any ideas regarding small communities' being able to leverage
    private sector investment to fund transportation infrastructure
    projects, since TIFIA doesn't work for us?
        Mr. Motyl. I don't really have any experience on the
    private sector partnerships. I will say that TIFIA worked for
    us, and it is a tool that we have, but it is not fair that we
    can use it and so many other States can't. There have to be
    programs developed that everybody can take advantage of, and I
    don't know what those programs are; maybe grant funding for the
    lower income communities or whatever. But we can afford the
    loan; we are happy to pay it, but a lot of people can't, so
    there have to be programs for those other States.
        Senator Wicker. Well, I think it is worth mentioning, also,
    in response to Senator Markey's statement and question, that
    there is proposed in the Trump program a carve out for rural
    areas that just can't afford to do this.
        Mr. Sarmiento, do you want to comment on this issue?
        Mr. Sarmiento. Yes. I think because we are in a more urban
    area, we realize that there is a need for other States and
    other areas to be eligible for the same amount of funding and
    be able to access it. I know that the SRF WIN is trying to
    address maybe that gap that is there for those smaller agencies
    and smaller cities. So, we certainly believe that, as we go
    through this, the more options, the more tools in that toolbox
    that you are trying to create for our Nation is an important
    step forward.
        Senator Wicker. Well, it is a tool that is in our bill
    right now, and I appreciate the leadership and the Committee in
    trying to keep it there.
        Thank you, gentlemen.
        Senator Barrasso. Thank you, Senator Wicker.
        Senator Gillibrand.
        Senator Gillibrand. Thank you, Mr. Chairman.
        I would like to build on the concerns raised earlier in the
    hearing by Senator Carper regarding the Federal Transit
    Administration's guidance to count Federal loans, including
    TIFIA loans, as Federal funding when evaluating a project for a
    capital investment grant.
        I am very dismayed that in a letter dated June 29th of this
    year, the Acting Administrator of the FTA, Jane Williams, wrote
    that ``FTA considers U.S. Department of Transportation loans in
    the context of all Federal funding, and not separate from the
    Federal funding sources.''
        This ignores the distinction between grant funding and loan
    financing, and does not take into account whether the loan is
    actually repaid using non-Federal funds.
        The FTA's interpretation is not consistent with the law,
    which states that the proceeds of secured loan under the TIFIA
    program may be used for any non-Federal share of project costs
    required for a Federal highway or transit project if the loan
    is repayable from non-Federal funds.
        I am very concerned that this Administration is
    intentionally trying to make it more difficult for States and
    localities to use low interest Federal loans for major transit
    projects, and instead, push more private financing for public
    infrastructure projects.
        And just as our colleagues pointed out, private financing
    is not going to be available for non-economic projects, which
    may well account for a great deal of the rural projects that
    were mentioned by our colleagues from rural States.
        Just don't take my word for it. Acting Administration
    Williams' letter says, ``The FTA strongly encourages project
    sponsors to consider innovative financing and funding
    approaches, including value capture and private
    contributions.''
        Now, value capture obviously means there is an economic
    stream that you take from it. A rural road in Mississippi is
    not going to have enough of an economic stream. That is also
    the same for upstate New York.
        I think we can all agree that local project sponsors should
    be utilizing an element of non-Federal funding so that we can
    leverage our Federal resources with other funding sources.
    However, limiting the ability of a project sponsor to utilize
    the full suite of Federal grants and loan assistance to put
    together a financing plan for major projects is not the answer.
    This approach makes it more difficult to build major transit
    projects and could end up making those projects more expensive.
        First, Mr. Motyl, how do low interest Federal loans like
    TIFIA differ from other financing that you would get if you had
    to rely more heavily on other sources, including the private
    market?
        Mr. Motyl. Low interest loans like TIFIA have much greater
    flexibility than other financing options. We do a lot of bond
    financing; we have senior revenue bonds; we have dedicated toll
    revenue bonds. The flexibility with the amortization schedule
    on TIFIA gives you a lot of benefits; deferred principal
    payment.
        Senator Gillibrand. Are there any other benefits to local
    taxpayers of utilizing Federal financing?
        Mr. Motyl. Any savings to the Department is a savings to
    the taxpayers.
        Senator Gillibrand. Dr. Holtz-Eakin, you mentioned that a
    benefit of Federal loan programs is that project sponsors have
    an interest in not wasting money because they are repaying it.
    Would you agree that Federal loan programs like TIFIA require
    local project sponsors to have skin in the game?
        Mr. Holtz-Eakin. Absolutely, yes.
        Senator Gillibrand. And would you agree that there is a
    distinction between Federal grant funding that does not require
    repayment and credit assistance and loan financing that is
    repaid with non-Federal funding?
        Mr. Holtz-Eakin. Certainly seems so to me. I did not know
    about this guidance until today, but I am going to take a look
    at it.
        Senator Gillibrand. I would be grateful if you could submit
    a letter to the Committee of your thoughts on this guidance and
    what the negative or unforeseen effects of it will be.
        Mr. Holtz-Eakin. I would be happy to do that.
        Senator Gillibrand. Thank you, Mr. Chairman.
        Senator Barrasso. Thank you so much.
        Senator Carper.
        Senator Carper. I want to thank Senator Gillibrand for
    following up on this issue. I think you raised an important
    point, and I thank you for your comments.
        In reference to the concerns that Senator Fischer raised
    earlier about small projects, I would just like to note for the
    record that small projects--I believe those are ones that are
    under $75 million in project costs, but they do face easier
    requirements. For example, only one investment grade rating is
    needed, I believe, on these projects. So, requirements are not
    exactly the same, regardless of the size.
        However, I agree that there may be more to do to expand
    access to TIFIA loans to all of our communities, and we have
    been talking about those ideas here today.
        A couple of my colleagues, Senator Markey and others, Dr.
    Holtz-Eakin alluded to this as well, we have a huge demand and
    a need for infrastructure investments, all kinds. Not just
    roads, highways, bridges; not just airports, railroads; not
    just ports, not just broadband deployment; all kinds of needs.
    What we don't have is the will to pay for them.
        Some of us believe that there is value in the three Ps,
    public-private partnerships. I think that could be part of the
    solution, but I think the last, I don't know, 30 years or so,
    we have maybe 60 of them, something like that. That doesn't
    really solve the problem, although it is helpful. TIFIA is
    helpful, and you have given us some good ideas on how to make
    it even more helpful.
        Historically, we have used user fees to pay for
    infrastructure projects, especially with respect to roads,
    highways, bridges. The user fee that we use hasn't been changed
    in about 25 years, it is worth about half of what it was when
    it was adopted, so there are some of us who suggested we
    consider restoring the purchasing power of the user fees. Not
    everybody is crazy about doing that, although Senator Barrasso
    and I were in a meeting with the President, you were sitting
    right beside him, I was sitting right in front of him when he
    stated very boldly his strong support for raising--even more
    than some of us had suggested--the user fees, the ones that we
    traditionally use.
        In the meantime, people ask me how do we fund roads,
    highways, bridges in the long term. I think in the long term we
    move to a vehicle miles traveled approach. I think that is the
    way to go. We have a pilot project underway now. There are a
    number of States, especially on the East Coast, that are
    involved in that. Delaware is one of them. My 2001 Chrysler
    Town and Country minivan is one of several hundred vehicles
    that are even used in that project. They wanted a relic to be
    able to include with the really snazzy new cars and trucks to
    be part of it.
        Dr. Holtz-Eakin, would you just opine for us for a little
    bit about vehicle miles traveled? My sense is that is where we
    are going ultimately, because we are seeing more and more
    battery powered vehicles, electric powered vehicles, more and
    more fuel cell powered vehicles, and people like driving them.
    They are easier to maintain, better environmentally.
        Your thoughts about vehicle miles traveled?
        Mr. Holtz-Eakin. I am a big supporter of that switch. In
    the end, the damage to roadways comes from weight, axles, and
    miles driven, and you can adjust for all three of those things
    using a vehicle miles tax. It will, thus, be a more genuinely
    targeted user fee that will create the right incentives for the
    amount of driving that people do, the vehicles they select, and
    also the funding to both build and maintain roadways. So, I
    think that would be a big step in the right direction.
        Senator Carper. All right, thank you.
        Does either witness have any thoughts on this? You may or
    may not. If you do, please, go ahead, but if not, that is OK.
        Mr. Motyl. It is a great idea, and it makes sense. We will
    see how the pilot goes, but there is a lot of potential there.
        Senator Carper. All right, thank you.
        I think we will just hold it there. This has been a good
    hearing. We appreciate very much you all being here. Thanks so
    much for just helping us pronounce your names correctly and for
    helping us with some good advice on branding from California. I
    wrote that down. Maybe I will find a way to use that in
    Delaware. I will not give you the credit; I will just take it
    myself.
        Mr. Sarmiento. Thank you, Senator.
        Senator Barrasso. He never did that as Governor, did he?
        [Laughter.]
        Senator Barrasso. Senator Boozman.
        Senator Boozman. Well, we are not quite done, so we still
    have the opportunity to mess up names, pronunciations or
    whatever.
        Let me just ask one final thing, Mr. Sarmiento. One of the
    major criticisms with the WIFIA program is the lack of
    opportunity for small and medium projects in non-metropolitan
    rural areas, which is so important. Certainly, Senator
    Barrasso, Senator Carper, again, we have a few cities of size,
    but most of it is small and medium.
        You are a guy that runs a huge district and does it very,
    very well, but you are constantly aware, constantly in contact
    with the small and medium. Do you think a program like SRF WIN,
    that allows States to bundle their smaller projects into one
    application so they may qualify for the WIFIA program, would be
    helpful for the small and rural communities?
        Mr. Sarmiento. Yes, Senator. Thank you. And by the way, I
    never thought I would have the easy name to pronounce, so next
    to these two gentlemen I think I am in good company.
        But thank you for that question. I do think, as a
    representative of a larger agency, I think that we believe that
    there is a huge benefit to having the SRF WIN make itself
    available for those smaller agencies and smaller communities
    that don't have the capacity that may----
        Senator Boozman. So bundling would be a----
        Mr. Sarmiento. So the funding is critical because that is a
    way for eligibility. Obviously, we know the threshold for WIFIA
    is higher, so it does make sense to have easier accessible
    ability for these low interest loans.
        Senator Boozman. Well, thank all of you all for being here.
    We appreciate your testimony; it was very helpful. Again, we
    hear a lot up here about all of the situations of folks not
    getting along and trying to get things done, but this is not a
    Republican or Democrat issue; this is something that truly is
    affecting big city infrastructure, medium, small, and it truly
    is a crisis. So, we appreciate your efforts in helping us come
    up with better solutions. Thank you.
        Senator Barrasso. Thank you, Senator Boozman.
        I want to thank all of you for being here today to testify.
        The record is going to be open for another 2 weeks. Members
    may submit written questions, and I hope you will be able to
    respond quickly. I want to thank all of you for your time and
    your testimony today.
        The hearing is adjourned.
        [Whereupon, at 11:35 a.m. the Committee was adjourned.]
        [Additional material submitted for the record follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     [all]