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USDOT “Talking Freight” Webinar—Institutional Arrangements Establishing a National Freight Infrastructure Bank: Policy I PowerPoint Presentation
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USDOT “Talking Freight” Webinar—Institutional Arrangements Establishing a National Freight Infrastructure Bank: Policy Issues & Program Design David Seltzer September 16, 2009 Background Outgrowth of I-95 Corridor Coalition study (December, 2008)

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USDOT “Talking Freight” Webinar—Institutional Arrangements

Establishing a National Freight Infrastructure Bank:

Policy Issues & Program Design

David Seltzer

September 16, 2009

background
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 Obama’s FY2010 Budget (National Infrastructure Bank)
how to categorize freight projects
How to categorize freight projects?
  • HUBS: Terminals where goods are transferred-- Intermodal or Intramodal.
  • CORRIDORS: Longer Surface routes linking Hubs.
  • CONNECTORS: “Last Mile” surface links between Corridors and Hubs, generally in metropolitan areas.
why has public funding for freight been limited
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, complicating institutional structure.
  • Public “spillover” nature of benefits hard to measure—or monetize.

 As a result, the Constituency for Freight Projects is Narrower than for Public Works.

what problems are we trying to fix
What problems are we trying to fix?
  • Unavailable or expensive financing for projects?
    • Overcome “Market failure” b y providing loans and other financing subsidies.
  • Insufficient funding for projects?
    • Provide a deeper subsidy to reduce revenue requirements for major projects with public benefits.
  • What is the appropriatetimeframe for federal assistance?
    • Near-term stimulus.
    • Longer-term shift in federal funding role.
why create a new federal program for freight
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).
and why create a new special purpose entity spe
-- 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-funded programs by only handling largest projects.
why not instead authorize states to create regional entities
Why not instead authorize states 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

how big a program and how should it be funded
How big a program and how should it be funded?
  • AASHTO Freight Authorization Policy Statement :
    • $42 billion additional funding 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?
what organizational form should the spe take
What organizational form should the SPE take?

Governmental

Private

Owned and controlled by

Owned and controlled by

the public sector

the private sector

Government

Private

Government

Government

Sponsored

Non-Profit

Dept./Agency

Corporation

Enterprise

Corporation

Governing Board

n

Shareholder-owned

n

Membership

n

Funded by U.S.

n

Fully or partially

n

For-profit

n

organization

govt.

funded by U.S. govt.

Implied federal

n

Not for profit

n

On-budget

May be on- or

n

n

backing

off-budget.

Rural

Telephone

Transportation

Dept. of

Fannie

Mae

Bank,

Finance Corp.

Transportation

Freddie Mac

FDIC

.

(proposed)

Special Purpose Entity’s Relationship

to the Federal Government

More Federal

Less Federal

why does the spe s organizational status matter to federal policymakers
Why does the SPE’s organizational status matter to Federal policymakers?
  • Budgetary Scoring Treatment of NFIB’s 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
potential portfolio of assistance
Potential Portfolio 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:
    • New Discretionary Grant program for projects with public benefits.
    • Expanded Federal Credit Program
    • Allocates Volume Cap under new $[25] billion Tax Credit Bond program and expanded $[30] billion Private Activity Bond program.

---------------------------------------------------

  • Authorize States to establish the Transportation Finance Corporation
    • Federally-chartered private non-profit corporation created to serve as nationwide non-federal issuing conduit for Tax Credit Bonds.
other policy design issues tbd
Other Policy Design 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?