SUMMARY OF SELECT P3 PROVISIONS
FIXING AMERICA'S SURFACE TRANSPORTATION (FAST) ACT
The TIFIA (Transportation Infrastructure Finance and Innovation Act) Federal loan program is funded at $275 million for fiscal year 2016; $275 million for fiscal year 2017; $285 million for fiscal year 2018; $300 million for fiscal year 2019; and $300 million for fiscal year 2020. The redistribution of unused balances provisions are repealed. In addition to TIFIA's current eligible credit recipients, the bill attempts to encourage the use of TIFIA funds for rural infrastructure and Transit Oriented Development (TOD) projects.
The Senate version of the bill authorized TIFIA at $300 million per year; the House version authorized the program at $200 million per year. Ensuring conferees set final TIFIA levels at or near the Senate-passed bill's levels, as well as repealing the redistribution language, were both part of AIAI's aggressive legislative advocacy effort during Conference Report negotiations.
PRIVATE ACTIVITY BONDS (PABs)
The FAST Act does not include provisions on tax-exempt Private Activity Bonds. Increasing the cap on PABs to $19 billion from $15 billion for qualified transportation projects was also part of AIAI's legislative advocacy effort, but the proposal faced near-universal opposition in the House from the Republican Leadership and key GOP Members who were unwilling or unable to find additional PAB pay-for's in an extremely tight fiscal environment and strong political opposition to additional "spending."
The Conference Report modifies the WIFIA (Water Infrastructure Finance and Innovation Act) program "to ensure both public and private capital have an equal opportunity to participate. Some have expressed concerns that modifying the prohibition on the use of tax exempt debt financing may inadvertently disadvantage private capital being used in financing projects. The conferees would request that as the Environmental Protection Agency and the US Army Corps of Engineers continue to implement the WIFIA program, the agencies include specifications that will ensure private capital has an equal opportunity to engage in the financing of these projects" (quote: Conferee Joint Summary Release).
First authorized in 2014, the WIFIA program has been criticized both for its lack of major appropriations and for its exclusion of tax-exempt debt as an allowable financing option. The inclusion of the tax-exempt debt provision will be of particular interest to AIAI's members in the water space.
NATIONALLY SIGNIFICANT FREIGHT AND HIGHWAY PROJECTS PROGRAM
The NSFHP program is a new grant program under the bill, funded at $800 million for fiscal year 2016; $850 million for fiscal year 2017; $900 million for fiscal year 2018; $950 million for fiscal year 2019; and $1 billion for fiscal year 2020. The program would provide grants of up 60 percent federal money for highway, bridge, rail-grade crossing, intermodal and freight rail projects costing more than $100 million that improve movement of both freight and people, increase competitiveness, reduce bottlenecks, and improve intermodal connectivity.
While NSFHP doesn't speak directly to P3s, as a new grant program with a maximum 60 percent Federal match arguably it opens the door to alternative financing and procurement strategies of interest to AIAI members for motivated states and regions interested in solving specific transportation bottlenecks.
NATIONAL SURFACE TRANSPORTATION AND INNOVATIVE FINANCE BUREAU
The bill creates the National Surface Transportation and Innovative Finance Bureau to administer the application process for the same programs in the hopes to reduce project delays. The bill also creates a Council on Credit and Finance responsible for reviewing applications for credit assistance programs, including TIFIA, PABs, the Nationally Significant Freight and Highway Projects (NSFHP) program and the Railroad Rehabilitation Improvement and Financing (RRIF) program.
The purposes of the Bureau, as specified in the bill, are to provide assistance on best practices; help project sponsors identify eligible sources of financing and funding; to reduce uncertainty and delays with respect to environmental reviews; and to reduce "costs and risks to taxpayers in project delivery and procurement."
For P3s, the Bureau is charged with identifying "best practices with respect to standardized State public-private partnership authorities and practices...including best practices related to accurate and reliable assumptions for analyzing public-private partnership procurements; procedures for the handling of unsolicited bids; policies with respect to noncompete clauses...standard contracts for the most common types of public-private partnerships for transportation facilities; and analytical tools and other techniques to aid eligible entities in determining the appropriate project delivery model, including a value for money analysis." The emphasis here on best practices and VfM analyses will be of particular interest to AIAI related to its state advocacy efforts.
VALUE CAPTURE FOR LOCAL COST SHARE
The bill allows project sponsors to use "the revenue generated from value capture financing mechanisms as local matching funds for capital projects and operating costs." The local match is frequently cited by public officials as a deal-breaker for advancing infrastructure projects.
The bill does not broadly expand the ability of State DOTs to impose tolls on existing interstates, but it does set a three-year time limit on the three-state Interstate Reconstruction and Rehabilitation Pilot Program that already existed. Three states - NC, MO and VA - have previously been approved to participate in the program but because of local political issues, have not proceeded. The FAST Act limits the time a state can be designated as a pilot program participant, which opens an opportunity for other states to apply to the program.
The bill requires Amtrak to set up separate accounts for the Northeast Corridor (NEC) and the National Network but stops short of keeping all operating profits in the NEC. [A House proposal would have banned Amtrak from transferring operating profits from the NEC to offset National Network operating losses; this provision was not included, but the bill does appear to make steps toward an eventual NEC infrastructure separation from Amtrak. The "ring fencing" of NEC operating profits was intended to set up P3-type financing opportunities for greater capital investment.]
The bill also allows the Secretary to provide operating subsidies from Amtrak's appropriations for private passenger rail operators who wish to compete to provide long distance services under a pilot project.