The “Rebuild America Partnership”: The President’s Plan to Encourage Private Investment in America’s Infrastructure
http://www.whitehouse.gov/the-press-office/2013/03/29/rebuild-america-partnership-president-s-plan-encourage-private-investmen
The White House, March 29, 2013
Investing in infrastructure not only makes our roads, bridges, and
ports safer and gives our businesses and workers the tools to compete
successfully in the global economy, it also creates thousands of good
American jobs that cannot be outsourced. Since the President took
office four years ago, America has begun the hard work of rebuilding our
infrastructure: American workers have improved over 350,000 miles of
U.S. roads and more than 6,000 miles of rail, and they have repaired or
replaced over 20,000 bridges. But there’s more to do, and taxpayers
shouldn’t have to shoulder the entire burden themselves.
We know that America works best when it’s calling upon the resources
and ingenuity of our vibrant private sector. That’s why the President’s
plan calls for a Rebuild America Partnership to help attract the
private capital that can go toward building the infrastructure our
workers and businesses need most.
By acting on the President’s plan, together we can build an
infrastructure that’s second-to-none and prove that there is no better
place to do business and create jobs than right here in the United
States of America.
•
Partnering with the Private Sector to Create Jobs and Invest in the Projects We Need Most:
The President is continuing to call for Congress to enact a National
Infrastructure Bank capitalized with $10 billion, in order to leverage
private and public capital and to invest in a broad range of
infrastructure projects of national and regional significance, without
earmarks or political influence.
•
Giving State and Local Governments Flexible New Tools to Invest in Infrastructure:
The President’s new America Fast Forward Bonds program will build upon
the successful example of the Build America Bonds program, broadening
its use to include the types of projects that can be financed with
qualified private activity bonds while also making the combined program
more flexible. In addition, the Administration is proposing changes to
the Foreign Investment in Real Property Tax Act (FIRPTA) aimed at
enhancing the attractiveness of investment in U.S. infrastructure and
real estate to a broader universe of private investors.
•
Building the Transportation Network Our Businesses and Workers Need to Succeed:
In addition to the sound implementation of TIFIA’s recent eight-fold
expansion, the Administration is also proposing $4 billion in new
competitive funding for the innovative TIGER and TIFIA programs.
The President’s Plan to Attract Private Infrastructure Investment
Through a “Rebuild America Partnership”
Despite progress over the last four years, too many construction
workers remain out of work and too many of our nation’s infrastructure
needs remain unmet. The President’s new “Rebuild America Partnership”
will bring together an array of new and existing policies all aimed at
enhancing the role of private capital in U.S. infrastructure investment
as a vital additive to the traditional roles of Federal, State, and
local governments, making American workers and businesses more
competitive and putting more Americans back on the job:
•
Partnering with the Private Sector to Create Jobs and Invest in the Projects We Need Most.
To leverage private and public capital for infrastructure projects
showing the greatest merit, the President is continuing to call for the
investment of $10 billion to create and capitalize an independent
National Infrastructure Bank (NIB), based on a model that has won
bipartisan support from the Senate in the past. Each dollar of Federal
funding can leverage up to $20 in total infrastructure investment,
mainly from partners in the private sector and State and local
government.
The National Infrastructure Bank's key provisions would
include:
o
Independent, Non-Partisan Operations Led by Infrastructure and Financial Experts:
While the NIB would be a government-owned entity, it would operate
independently and would have a bipartisan board composed of individuals
who possess significant expertise in the financing, development, or
operation of infrastructure projects.
o
Broad Eligibility for Infrastructure and Unbiased Project Selection:
Eligible projects would include transportation infrastructure, water
infrastructure, and energy infrastructure. In general, projects would
have to be at least $100 million in size and be of national or regional
significance. Projects would need to have a clear public benefit, meet
rigorous economic, technical, and environmental standards, and be backed
by a dedicated revenue stream. Geographic, sector, and size
considerations would also be taken into account.
o
Addressing Market Gaps for Infrastructure Financing: The
NIB would issue loans and loan guarantees to eligible projects at
interest rates approximately equivalent to Treasury securities of
similar maturities. Loans could extend to 35 years, giving the NIB the
ability to be a “patient” partner side-by-side with State, local, and
private co-investors. To maximize leverage from Federal investments,
the NIB would finance no more than 50 percent of the total costs of any
project.
•
Giving State and Local Governments Flexible New Tools to Invest in Infrastructure.
Recovery Act funding for “Build America Bonds” (BABs) helped to support
more than $181 billion for new public infrastructure. The President’s
new America Fast Forward (AFF) Bonds program will build upon the
successful example of the BABs program, broadening its use to include
the types of projects that can be financed with qualified private
activity bonds (PABs) while also while also making the combined program
more flexible. In addition, the Administration is proposing changes to
the Foreign Investment in Real Property Tax Act (FIRPTA) aimed at
enhancing the attractiveness of investment in U.S. infrastructure and
real estate to a broader universe of private investors. Taken together,
these proposals represent $7 billion in tax reforms to support
infrastructure investment among state and local governments as well as
their private sector partners.
o
America Fast Forward Bonds: The Recovery Act created the
BABs program as an optional new lower cost borrowing incentive for State
and local governments on taxable bonds issued in 2009 and 2010 to
finance new investments in governmental capital projects. The program’s
innovative design ensured that States, localities, and their private
sector partners receive the best bang-for-the-buck when they finance
their investments in new infrastructure. It also enabled them to
attract new sources of capital to infrastructure investment — including
from public pension funds that do not receive a tax benefit from
traditional tax-exempt debt — and brought down interest costs by about
80 basis points on 30-year bonds. Under the original BABs program, the
Treasury Department makes direct subsidy payments to State and local
governmental issuers in a subsidy amount equal to 35 percent of the
coupon interest on the bonds.
The Administration proposes to create a new permanent AFF Bonds
program, which would be an
optional alternative to traditional
tax-exempt bonds. Like BABs, AFF Bonds would be conventional taxable
bonds issued by State and local governments in which the Federal
government makes direct payments to State and local governmental issuers
in a subsidy amount equal to 28 percent of the coupon interest on the
bonds. The 28-percent subsidy rate is approximately revenue neutral in
comparison to the Federal revenue cost from traditional tax-exempt
bonds.
The Administration proposes to include as an eligible use for America
Fast Forward Bonds issuance for the types of projects and programs that
can be financed with qualified PABs, subject to applicable State bond
volume caps for the PABs category.
o
Reformed Project Limitations for Qualified Private Activity Bonds:
The Administration proposes modifying certain restrictions in the
qualified PABs program, in order to encourage greater take-up and
infrastructure construction:
Increase the national limitation for qualified highway or surface
freight transfer facility bonds to $19 billion from $15 billion.
Eliminate the volume cap for qualified PABs issued for water
infrastructure, in an effort to help address what the EPA has estimated
is a roughly $600 billion need for capital investment in wastewater and
stormwater as well as drinking water infrastructure over the next 20
years.
Increase from 25 percent to 35 percent the limitation on the use of
proceeds for land acquisition, in order to enable greater PABs usage in
areas with high land costs.
Permit private ownership of qualified PAB-supported airports, docks
and wharves, and mass commuting facilities, putting these infrastructure
categories on an equal footing under the qualified PABs program with
other infrastructure types.
o
FIRPTA: Infrastructure assets can be attractive investments
for long-term investors such as pension funds that value the long-term,
predictable, and stable nature of the cash flows associated with
infrastructure. Under current law, gains of foreign investors from the
disposition of U.S. real property interests are generally subject to
U.S. tax under FIRPTA, and foreign investors including large foreign
pension funds regularly cite FIRPTA as an impediment to their investment
in U.S. infrastructure and real estate assets. With U.S. pension funds
generally exempt from U.S. tax upon the disposition of U.S. real
property investments, the Administration proposes to put foreign pension
funds on an approximately equal footing: exempting their gains from
the disposition of U.S. real property interests, including
infrastructure and real estate assets, from U.S. tax under FIRPTA.
•
Building the Transportation Network Our Businesses and Workers Need to Succeed.
The
Transportation Infrastructure Finance and Innovation Act (TIFIA)
program — which provides direct loans, loan guarantees, and lines of
credit to regionally or nationally significant transportation projects —
received an eight-fold increase in funding to $1 billion in the recent
surface transportation reauthorization. Over the past 13 years, TIFIA
has entered into 27 loan agreements worth $10.4 billion, resulting in
more than $41 billion in total project investment. The program, which
is especially important to mayors and local leaders, highlights the
important role that infrastructure financing can play in catalyzing
private investment, and its expansion was a significant step towards
more innovative infrastructure financing.
In addition to the sound implementation of TIFIA’s recent expansion,
the Administration is also proposing $4 billion in new competitive
funding for the Transportation Investment Generating Economic Recovery
(TIGER) and TIFIA programs in 2014. This additional investment would
make new grant and loan funding available for States and localities
across the country, giving them both a new source of financing and the
flexibility to design projects and financing packages to meet their
needs.
Diana Britt The 710 tunnel wouldn't get us anywhere near Señor Fish; not even the Metro Goldline stop at Meridian is all that close. Who thinks up these posts of yours?See Translation
SR - 710 Study Thank you for your engagement with the SR 710 North Study. All five alternatives under review by the Study Team seek to improve connectivity to key destinations located throughout the Study Area and reduce cut-through traffic on local streets thereby reducing congestion.
Winston Mdtjya Yes please find us a better way to get here coming from Long Beach!!! And taking the metro for 1.5 hrs is not a good alternative.
Peggy Tyarks Drouet Are people really going to drive from Long Beach or Alhambra to eat at Senior Fish in South Pasadena? Why wouldn't people from Alhambra or Long Beach eat instead at the Senior Fish in Alhambra? Don't people usually eat at the branch of a chain restaurant that is closest to them? If I want to go to Senior Fish, I would go to the one in South Pasadena, the one closest to my home. I wouldn't take the Gold Line to Little Tokyo to eat at the Senior Fish there. Or drive to Alhambra to go to the Senior Fish there. What does this have to do with connectivity to key destinations (Senior Fish is definitely not a key destination) or to reducing cut-through traffic on local streets, as if people from Alhambra chose to go to Senior Fish in South Pasadena or vice versa, they would be adding to and not reducing cut-through traffic? If anyone took a 710 tunnel to the Senior Fish in South Pasadena, they would then be clogging the streets in Pasadena to get there.
