usdot "talking freight" webinar—institutional arrangements

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  • 1.
    • USDOT Talking Freight WebinarInstitutional Arrangements
  • Establishing a National Freight Infrastructure Bank:
  • Policy Issues & Program Design
  • David Seltzer
  • September 16, 2009

2. Background

  • Outgrowth of I-95 Corridor Coalition study (December, 2008)
    • Evaluate the potential benefits of creating a new special purpose entity (SPE) to help advance major freight projects.
  • Recent proposals to create a national-level SPE to help finance infrastructure, including:
    • National Infrastructure Bank Act of 2007 (S. 1926, Dodd-Hagel)
    • National Infrastructure Development Act of 2009 (H.R. 2521 DeLauro)
    • Build America Bonds Act of 2009 (S. 2021, Wyden-Thune)
    • President Obamas FY2010 Budget (National Infrastructure Bank)

3. How to categorize freight projects?

  • HUBS :Terminals where goods are transferred-- IntermodalorIntramodal.
  • CORRIDORS:Longer Surface routes linking Hubs.
  • CONNECTORS :Last Mile surface links between Corridors and Hubs, generally in metropolitan areas.

4. Why has public funding for Freight been limited?

  • Much of Freight Infrastructure is privately-owned.
  • Intermodal Uses straddle existing Federal programs.
  • Projects often span political jurisdictions, complicatinginstitutional structure.
  • Public spillover nature of benefits hard to measure ormonetize.
  • As a result, the Constituency for Freight Projects is Narrower thanfor Public Works.

5. What problems are we trying to fix?

  • Unavailableorexpensive financingfor projects?
    • Overcome Market failure b y providing loans and other financing subsidies .
  • Insufficient fundingfor projects?
    • Provide a deeper subsidy to reduce revenue requirements for major projects with public benefits.
  • What is theappropriate timeframefor federal assistance?
    • Near-term stimulus.
    • Longer-term shift in federal funding role.

6. Why create a new Federal program for freight--

    • Assist projects whose scale and complexity exceed state/local capacity.
    • Overcome gaps in federal-aid eligibility.
    • Provide One-stop Shopping for project sponsors.
    • Target projects with major economic benefits regionally& nationwide.
    • Enhance project selection at the federal level (focus on outcomes, not modes).

7. -- and why create a new Special Purpose Entity (SPE)?

  • Autonomy & Expertise may lead to improved Project Selection.
  • Align the singular mission of SPE with a dedicated revenue stream to accelerate investment.
  • Offer One-Stop Shopping with multiple tools to project sponsors.
  • Take pressure off of states formula-fundedprograms by only handling largest projects.

8. Why not instead authorizestates to create regional entities?

    • Projects of truly national significance should have national funding responsibility.
    • National scope brings economies of scale and avoids dilution of effort at regional level (SIBs).
    • Allows access to direct federal credit support:
      • Lower-cost source of financing.
      • Greater budgetary efficiency through fractional scoring.
  • --Federal Tax Subsidies

9. How big a program and how should it be funded?

  • AASHTO Freight Authorization Policy Statement :
    • $42 billionadditionalfunding for Goods Movement Infrastructure over 6 years (in addition to existing freight-related funding):
      • $21 billion in Formula Funding to States
      • $21 billion in Discretionary Allocations (new $3.5 billion/yr. Program)
    • Funded by:
    • Increases in existing freight-related sources such as:
      • Diesel Fuel Tax
      • Heavy Vehicle Use Tax
    • New sources of dedicated freight-related fees such as:
      • Customs Duties
      • Container Tax
      • Surface Freight Waybill
      • Other?
    • General Fund?

10. What organizational form should the SPE take?Special Purpose Entitys Relationship to the Federal Government Less Federal More Federal Governmental Owned and controlled by the public sector Private Owned and controlled by the private sector Government Dept./Agency Government Corporation Government Sponsored Enterprise Private Non-Profit Corporation Dept. of Transportation Rural Telephone Bank, FDIC.Fannie Mae Freddie Mac TransportationFinance Corp. (proposed) Funded by U.S. govt. On-budget Governing Board Fully or partially funded by U.S. govt. May be on- or off-budget. Shareholder-owned For-profit Implied federal backing Membership organization Not for profit 11. Why does the SPEs organizational status matter to Federal policymakers?

  • Budgetary Scoring Treatment of NFIBs Borrowing and Spending
  • Treasury Concerns about:
    • Cost-Effectiveness of Capital Raising Process
    • Implied Federal Liability if SPE Issues Public Debt
    • Competition with U.S. Treasury borrowing/Administrative burden

12. What types of assistance should be offered? 13. PotentialPortfolio of Assistance

  • The National Freight Infrastructure Bank (NFIB)
    • Receives $3.5 billion/year [$21 billion total] of revenues:
      • ~$3.0 billion for Grants
      • ~$0.5 billion for Credit ~$5 billion of loans .
  • NFIB selects projects > $[250] million for:
    • NewDiscretionary Grant programfor projects with public benefits.
    • ExpandedFederal Credit Program
    • Allocates Volume Cap under new $[25] billionTax Credit Bond programand expanded $[30] billionPrivate Activity Bond program .
  • ---------------------------------------------------
  • Authorize States to establish theTransportation Finance Corporation
    • Federally-chartered private non-profit corporation created to serve as nationwide non-federal issuing conduit for Tax Credit Bonds.

14. Other PolicyDesign Issues TBD

  • Multi-purpose Bank to assist Freight, Intercity Passenger Rail and other major Surface Transportation Projects?
  • Consolidate existing Federal credit programs (TIFIA and RRIF)?
  • Part of Reauthorization or part of new Stimulus?
  • Receive General Fund contributions?


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