President creates Build America Investment Initiative

Washington, D.C. — On July 17, President Obama announced a new executive action to create the Build America Investment Initiative, a government-wide initiative to increase infrastructure investment and economic growth. As part of the Initiative, the Administration is launching the Build America Transportation Investment Center – housed at the Department of Transportation – to serve as a one-stop shop for cities and states seeking to use innovative financing and partnerships with the private sector to support transportation infrastructure.

The Build America Investment Initiative is intended to engage state and local governments and private sector investors to encourage collaboration, expand the market for public-private partnerships (P3s), and put federal credit programs to greater use. Starting with the transportation sector, this initiative will harness the potential of private capital to complement government funding.

As part of the Initiative, the Administration is launching the Build America Transportation Investment Center: Housed at the Department of Transportation, this center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. Additional details are below.

To expand and increase private investment and collaboration in infrastructure beyond the transportation sector, a federal Build America Interagency Working Group, co-chaired by Cabinet Secretaries Lew and Foxx, will work with state and local governments, project developers, investors and others to address barriers to private investments and partnerships in areas including municipal water, ports, harbors, broadband, and the electrical grid. The effort will include a particular focus on improving coordination to accelerate financing and completion of projects of regional and national significance, particularly those that cross state boundaries.

As part of the drive toward innovative infrastructure solutions and to highlight the opportunities for infrastructure investment, the Treasury Department will host an Infrastructure Investment Summit on Sept. 9, 2014. This session will bring together leading project developers and institutional investors with state and local officials and their federal counterparts, and will focus on innovative financing approaches to infrastructure, and highlight other resources that support project development.

Housed at the Department of Transportation, the Build America Transportation Investment Center will serve as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. This center will provide:

· ‘Navigator Service’ for the Public and Private Sector — Through hands-on support, advice and expertise, the center will make DOT credit programs more understandable and accessible to states and local governments and leverage both public and private funding to support ambitious projects.  The center will also provide private sector developers and infrastructure investors with tools and resources to identify and execute successful P3s.

· Improved Access to DOT Credit Programs — The center will encourage awareness and efficient use of existing resources at the Department, including the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. TIFIA provides long-term, flexible financing to highway and transit projects that feature dedicated revenue sources. Each dollar of Federal TIFIA funding can support about $10 in loans, loan guarantees or lines of credit. In many cases, the lower cost of capital and flexible terms offered by TIFIA are critical factors in determining whether a P3 is a viable and cost-effective option for a project. The center will also focus on the use of key DOT programs including the Private Activity Bond program (PABs), and the Railroad Rehabilitation and Improvement Financing Program (RRIF).

· Technical Assistance — The center will share best practices from states that are leading the way on private investment to states that have not yet adopted innovative financing strategies, encouraging a more robust national market. Today, the top six states for P3s have nearly two-thirds the value of all U.S. P3 projects. Twenty states have no P3s in transportation at all. The center will provide technical assistance to help remove barriers to ensure the public and private sector can come together to complete projects that make sense. Through a website and on-demand technical assistance, the center will provide information about DOT credit programs, case studies of successful projects and examples of deal structures, standard operating procedures for P3 projects and analytical toolkits. It will also help interested investors better understand how DOT credit and grant programs can be used together to support project development.

· Information to Reduce Uncertainty and Delays — The center will work in partnership with the interagency Infrastructure Permitting Improvement center to provide visibility for local and state governments, project sponsors and investors on the permitting process.

The Build America Investment Initiative taps into the opportunity to increase the pipeline of effective P3s and other innovative financing mechanisms:

· High Demand — Institutional investors, both domestic and international, recognize the strength of our economy and want to invest in America. In 2013, the U.S. was the top destination for foreign direct investment with over $230 billion. The global investment community has over $83 trillion dollars with a growing appetite for infrastructure. That is potentially hundreds of billions of dollars to fund the building of U.S. public-private infrastructure.

· Proven Approaches — Some states and communities have established successful P3s and have developed strong institutional knowledge of how these projects are best structured and managed. Expanding that know-how to other states has the potential to increase the flow of capital by tens of billions of dollars over the next few years. Today, for example, the top five states in P3s have nearly twice the per-capita value of projects as the next 20 best states – and if those states caught up, it could mean up to $30 billion worth of infrastructure projects.

Building on Models of Success — Some states and localities across the country have developed successful track records utilizing P3s and other innovative financing approaches for infrastructure projects. The Build America Transportation Investment center will use the lessons-learned from these leaders to help other communities and private project sponsors understand and better use federal financing programs and to structure deals that incorporate best practices and avoid pitfalls.