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Wednesday, April 9, 2014

Delaney Testifies at Transportation & Infrastructure Committee P3 Panel Hearing

For more information on the P3 Panel, click here. http://transport.house.gov/news/documentsingle. aspx? Delaney's infrastructure bill, the Partnership to Build America Act is one of the largest pieces of bipartisan legislation in Congress and encourages the expansion of public-private partnerships in the United States. The American Infrastructure...


Rep. John Delany, D-Md., news release, April 8, 2014 

 Congressman John K. Delaney (MD-6) spoke at Tuesday's House Committee on Transportation & Infrastructure Special Panel on Public-Private Partnerships. The hearing, titled "The International Experience with Public-Private Partnerships" included testimony by Delaney, along with experts on global trends in public-private partnerships in infrastructure. For more information on the P3 Panel, click here.http://transport.house.gov/news/documentsingle.aspx?DocumentID=367010

Delaney's infrastructure bill, the Partnership to Build America Act (H.R. 2084) is one of the largest pieces of bipartisan legislation in Congress and encourages the expansion of public-private partnerships in the United States. The bill currently has 31 Republican and 30 Democratic cosponsors in the House. The American Infrastructure Fund, created by Delaney's bill, is effectively a public-private partnership with private capital providing the initial $50 billion by purchasing infrastructure bonds. Delaney's bill requires 25% of projects be public private partnerships, for which at least 20% of the financing is private debt or equity.

For more information on the Partnership to Build America Act, click here. http://delaney.house.gov/information-on-congressman-delaneys-infrastructure-bill Congressman Delaney submitted the following statement to the panel:

Chairman Duncan, Ranking Member Capuano, and esteemed colleagues on the P3 Panel:

Thank you for inviting me today to speak about public-private partnerships, the international experience, and my legislation to create a large-scale infrastructure finance entity to finance infrastructure projects here in the United States.

As today's subsequent panelists will no doubt explain in great detail, other countries have taken the lead in using public-private partnerships to build their infrastructure, and we in the U.S. are just starting to catch up.

Public-private partnerships can be used to provide a much needed capital boost to fund our infrastructure projects in certain circumstances. But in looking at the international experience around P3s and private capital held overseas alongside our infrastructure needs here at home, I thought it might be productive to highlight my legislation which uses a public-private model to provide up to $750 billion of infrastructure financing for our infrastructure projects.

My bill, H.R. 2084: the Partnership to Build America Act, creates a $50 billion infrastructure financing entity that isn't capitalized in the traditional way, by the government putting in the money. Instead this entity, called the American Infrastructure Fund, is effectively created as a public private partnership, with the $50 billion of capital being put in by the private sector in exchange for a one-time tax break. Specifically, the American Infrastructure Fund would sell 50-year bonds that pay a fixed interest rate of only one percent. The bonds in and of themselves would be a bad investment, but U.S. based multinational corporations will be incentivized to buy them because for every dollar of bond they purchase, they will be able to repatriate a certain amount of their overseas earnings tax free. That multiplier of how much they repatriate compared to bonds purchased will be determined by auction, but we expect that ratio to be around 4:1. The company can then sell the bonds--which you'll remember are a bad investment on their own--at a huge loss. If they sell them for around 20 cents on the dollar, then the "effective tax rate" of their loss on the bonds over the tax free repatriation will be in the 10%-15% range. This brings about $200 billion back from overseas into the U.S. economy in addition to the capitalizing the American Infrastructure Fund.

The $50 billion of capital in the American Infrastructure Fund can be safely leveraged at a 15:1 ratio to provide $750 billion of infrastructure financing, mostly in terms of low-cost bond insurance for muni-bonds, but also for low-cost loans. Access to low cost capital is important for states and municipalities to build their infrastructure, and expanding this access will pave the way for the increased infrastructure investment we desperately need. Additionally, the Partnership leverages private capital by encouraging public private partnerships by requiring a certain percentage of the projects to be PPPs.

The legislation is very bipartisan. In the House, we have 31 Republicans and 31 Democrats on the bill. In the Senate, they have 6 Democrats and 7 Republicans. The bill is also supported by a bipartisan group of think tanks and other stakeholders. As we look for ways to move the Surface Transportation Reauthorization forward and ensure solvency for the Highway Trust Fund, we should do so from the starting point that we need to INCREASE our infrastructure investment, not merely maintain the status quo which has left our infrastructure in its current deficient state. The bipartisan Partnership to Build America Act is teed up to do just that.

I know that two cosponsors of the bill are on this panel, Congressman Sean Patrick Maloney and Congressman Scott Perry. I'd like to end by thanking them for their support on this legislation, and thanking the panel for allowing me to testify.
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