[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
  
  
 
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              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:]
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