[Congressional Record Volume 143, Number 112 (Friday, August 1, 1997)]
[Extensions of Remarks]
[Page E1617]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E1617]]
          THE TRANSPORTATION INFRASTRUCTURE CREDIT ACT OF 1997

                                 ______
                                 

                          HON. ROSA L. DeLAURO

                             of connecticut

                    in the house of representatives

                        Thursday, July 31, 1997

  Ms. DeLAURO. Mr. Speaker, today I introduced the Transportation 
Infrastructure Credit Act of 1997. This bill will create public-private 
partnerships to build more highway and mass transit projects, and 
create tens of thousands of new jobs. I am pleased to be joined by my 
colleagues, Representatives Bonior, Frost, Olver, Green, Kennedy of 
Rhode Island, McGovern, and Delegate Christian-Green in offering this 
important proposal.
  The House of Representatives recently voted to reject, by a vote of 
214 to 216, a $12-billion, 5-year increase in funding for highway and 
mass transit projects above the current $125 billion budget proposal. 
Like many of my colleagues who supported this modest increase in 
transportation construction funds, I was disappointed by the House's 
failure to agree to these additional moneys.
  Our Nation needs additional capital to meet the more than $30 billion 
annual shortfall in funds to construct highway and mass transit 
projects. The Government must encourage private infrastructure 
investment to match overseas investments. In Asia, 10 to 15 percent of 
all infrastructure is privately owned. However, in the U.S., less than 
1 percent of transportation infrastructure is privately owned. The 
Transportation Infrastructure Credit Act encourages private sector 
development, ownership, and financing of our Nation's infrastructure 
needs.
  This bill is needed because there is no compatible financing 
mechanism available for large projects that exceed $100 million. Unlike 
State Infrastructure Banks created by the ISTEA bill, this bill will 
give the U.S. Department of Transportation the capacity to make loans 
immediately to large State and interstate infrastructure projects.
  The Transportation Infrastructure Credit Act offers an innovative 
approach to addressing this financing shortfall. It proposes spending 
$500 million in Federal funds over 5 years to leverage $10 billion in 
private capital investments in transportation infrastructure. The 
legislation authorizes $100 million annually in credit incentives for 5 
years. These funds would be administered by the U.S. Department of 
Transportation [DOT], which would offer four financing products that 
would attract private investments in highway and mass transit projects.
  Public-private partnerships created through the Transportation 
Infrastructure Investment Act can leverage $2 billion in actual 
construction for every $100 million invested by the Federal Government. 
Each $1 billion invested in infrastructure creates between 20,000 and 
30,000 jobs. This means that the bill can create as many as 300,000 new 
jobs on top of those created by traditional ISTEA funding.

  These four financing mechanisms are particularly attractive to 
project sponsors interested in financing projects with dedicated, user-
fee based revenue streams, such as tolls (for highways) or user fees 
(for mass transit). For this reason, most projects financed through 
this bill would be commercially owned.
  I would like to take a moment to explain each of the four financing 
mechanisms, or ``products,'' contained in this proposal that would be 
offered the Department of Transportation (DOT).
  Direct loans, the first product, would be subordinated or junior 
loans that would typically be used to finance about one-third of the 
cost of a project. The remaining two-thirds of the cost of a project 
would be provided by private sources (such as loans and municipal 
bonds). The large private interest will ensure that projects are chosen 
carefully. The Department of Transportation used this type of loan for 
the Alameda Corridor project in California.
  Under this bill, DOT would also offer stand-by lines of credit. DOT 
would provide two different forms of this type of credit: partial 
credit enhancement and a guarantee for the debt service on project 
debt. Stand-by lines of credit help investors by ensuring that debt is 
covered during the ramp-up period--the period during which the project 
is being constructed, but there is no revenue stream such as tolls to 
repay investors.
  The third product can be referred to as insured loans. DOT would be 
able to provide highly restricted insured loans, which are also called 
guaranteed loans. These insured loans would cover 100 percent of the 
principal and interest on the federal portion of the project debt, and 
only that portion of the debt.
  The final product DOT could offer is called development cost loans. 
This financial product, which is also called risk insurance or 
speculative loans, would absorb the preliminary costs of projects such 
as pre-construction costs, preliminary engineering, and environmental 
impact studies.
  Because of limitations on the use of these financial products, the 
risk to the Department of Transportation is limited. At the same time, 
use of these mechanisms allows projects to move forward with private 
sector construction financing.
  The total cost of this bill is $500 million over a 5-year period. 
This $100 million a year would support $2 billion in loans and project 
insurance each year for 5 years for a total of $10 billion. This 
proposal is consistent with the goals of the Intermodal Surface 
Transportation Efficiency Act [ISTEA] reauthorization, and would 
increase overall highway and mass transit spending.
  The legislation also contains a mechanism to back the $100-million-a-
year cost of the loans. By using a fraction of the unobligated balances 
of the Highway Trust Fund--an amount that has reached approximately $10 
billion, we can support the budget authority created by this bill. 
States have been arguing that they should be able to put their 
unobligated transportation balances toward transportation projects, and 
this bill creates an exceptional opportunity to use these funds for 
building highway and mass transit projects.
  In light of the limited funding budgeted for the ISTEA 
reauthorization, this bill makes sense. It is cost effective, it builds 
public-private partnerships, it creates jobs, and it ensures that 
highway and mass transit projects are built to serve the public good. I 
urge my colleagues to join in cosponsoring this important bill.

                          ____________________