Narrowing the ‘infrastructure gap’

Recent action in the U.S. Congress has raised hopes for increased funding for water and transportation infrastructure to begin to narrow the gap between the nation’s current levels of investment and the estimated levels needed to repair, rehabilitate, maintain, and upgrade our systems.

On May 15, by a vote of 83 to 14, the Senate passed the Water Resources Development Act (WRDA) of 2013 (S. 601, originally introduced by California Senator Barbara Boxer), which, among many other things, would create a five-year pilot program for Water Infrastructure Finance and Innovation Authority (WIFIA), similar to the successful Transportation Infrastructure Finance and Innovation Act (TIFIA) program. TIFIA also started as a pilot program.

According to an American Water Works Association (AWWA) summary, the WRDA would authorize $50 million annually for the U.S. Environmental Protection Agency and another $50 million annually for the U.S. Army Corps of Engineers. That should support a total of at least $1 billion annually in low-interest loans through the two agencies, AWWA said. Download a white paper on WIFIA at

However, state, local, and private-sector investment will be key. The pilot program loans can only cover a maximum of 49 percent of a project’s cost and project selection criteria will reward projects that bring state and local funds or public-private partnerships (P3s) to the table. According to AWWA’s review of the legislation, eligible projects include pipe replacement or rehabilitation, new or upgraded treatment plants, combined sewer overflow and wastewater projects, water reuse, desalination, capital projects to improve energy efficiency, and new water supply projects.

On May 22, Maryland Congressman John K. Delaney, with 13 Republican and 13 Democratic co-sponsors, introduced The Partnership to Build America Act (H.R. 2084). The Act would create a $50 billion dollar infrastructure fund that can be leveraged to $750 billion. This fund would be capitalized by the sale of 50-year bonds that are not guaranteed by the federal government and pay 1 percent interest rate.

To encourage U.S. corporations to buy the bonds, they would be allowed to repatriate tax-free a certain dollar amount in overseas earnings for every $1 they invest in the bonds. H.R. 2084 would create the American Infrastructure Fund (AIF), which would provide loans or guarantees to state or local governments to finance transportation, energy, communications, water, and education infrastructure projects. The states or local governments would be required to pay back the loan at a market rate determined by the AIF.

According to Delaney, the Partnership to Build America Act would:

  • Create a large-scale infrastructure financing capability with zero federal appropriations
  • Create significant jobs in the short-term and help U.S. competitiveness in the long-term
  • Allow for repatriation while ensuring U.S. corporations’ tax savings are invested in the U.S. economy
  • Push project-selection decisions down to state and local governments that have to have “skin in the game”
  • Encourage and create a framework for growth in P3s

The Act requires that at least 25 percent of AIF-financed projects must be P3s for which at least 20 percent of a project’s financing comes from private capital using a P3 model.

Prospects for passage and enactment of the infrastructure funding bills are difficult to predict; however, there does appear to be some level of bipartisan support.

Speaking of the nation’s infrastructure, beginning with this issue, we are incorporating Rebuilding America’s Infrastructure (RAI) as a monthly section in CE News (see page 40). RAI articles and columns focus on the transportation sector – roads, bridges, and railways.

Bob Drake

Posted in Uncategorized | January 29th, 2014 by

Comments are closed.