Infrastructure Alert – March 13, 2012


Washington, D.C., continues to arm wrestle over transportation funding legislation, as the Senate and House work to move competing legislation.  Last week saw support for the House bill crumble away, even as leaders tried to work out contentious provisions in their bill. Meanwhile, the Senate has compromised on a series of amendments and says they will finish work on their bipartisan bill by the end of this week.  Despite the glacial pace on the Hill, there has been much activity and many funding announcements at the agencies and on the state level.  Very noteworthy was Chicago’s announcement that it will create an Infrastructure Trust, which will leverage private investment to retrofit buildings in the city for greater energy efficiency.

On The Hill

This past week the Senate moved closer to passing a bipartisan transportation bill. The bill, combining work from the Senate Banking, Commerce, Finance and Environment and Public Works committees, would reauthorize transportation funding for two years at $109 billion.

After weeks of negotiations Senate Majority Leader Reid (D-Nev.) and Senate Minority Leader McConnell (R-Ky.) agreed to consider 30 amendments, 18 of which actually relate to provisions in the 1500 page bill. At the end of last week, senators had voted on nine of the amendments, passing four and rejecting five.  Included in the rejected provisions were proposals to expedite the approval of the Keystone XL pipeline.  The Senate resumes voting on the remaining amendments this week with a vote on final passage expected Tuesday.

On the other hand, the past two weeks saw the House of Representatives moving farther, and farther away from passing the House Republican Leaders’ original 5 year, $260 billion transportation reauthorization.  In hopes of passing the bill, Rep. Boehner (R-Ohio) had restored dedicated transit funding but kept out many other provisions considered to be controversial, such as new revenues through expansion of domestic drilling and spending levels that many conservatives in his own party considered too high.

After failing to gather support for the original proposed five year legislation, Republican leaders also attempted to work with an 18 month bill, but it quickly became clear that a shorter, extension type bill would not pass the House either.  As passage of the Senate bill looks likely, many believe that the House’s only option is to take up the two year Senate bill or draft its own legislation that is very similar.

In other Hill news, last Thursday the House Appropriations Subcommittee on Transportation held a hearing on the Department of Transportation’s Fiscal Year 2013, $74 billion budget request.  Secretary Ray LaHood testified on funding needs for surface transportation and aviation. Subcommittee Chairman Rep. Tom Latham (R-Iowa) highlighted what he described as problems with the proposed budget. Latham said the administration’s proposal would not be able to pass the House of Representatives.

At The Agencies

U.S. Department of Transportation Secretary LaHood announced that 12 cities and states will share $16.9 million to relocate, replace, and improve segments of railroad track under the Federal Railroad Administration (FRA)’s Rail Line Relocation and Improvement competitive grant program. The FRA received more than $67 million in state and local government requests for these funds, which will be used to enhance safety, livability, and economic development in American communities.

U.S. Department of Agriculture Secretary Tom Vilsack announced that rural electrical cooperative utilities in eight states will receive a share of almost $250 million in funding to install smart grid technologies and make improvements in generation and transmission facilities.

U.S. Department of Transportation Secretary LaHood announced the availability of $500 million in funding for transportation projects in the fourth round of the TIGER (Transportation Investment Generating Economic Recovery) Discretionary Grant program.  TIGER grants are awarded to transportation projects that have a significant national or regional impact.

Last month Secretary LaHood also announced that the overwhelming demand for TIFIA (Transportation Infrastructure Finance and Innovation Act) program loans has greatly exceeded the dollars available. The Department of Transportation received 26 TIFIA letters of interest exceeding $13 billion. The high number of applicants for TIFIA credit assistance in response to a Notice of Funding Availability (NOFA) for 2012 follows the trend in recent years of overwhelming demand for the program. Requests in 2010 were more than $12 billion and more than $14 billion in 2011. In light of the increased demand, the president’s FY 2013 budget proposes to increase the program’s funding level to $500 million which will leverage into approximately $5 billion in TIFIA loans.

In The States

New York:  New York Governor Andrew Cuomo has begun holding public hearings on the soon to be constructed new Tappan Zee Bridge.  Some of the major issues thus far are mass transit and bus lanes, noise due to construction, and the aesthetics of the new bridge.

Illinois:  Chicago Mayor Rahm Emanuel announced the creation of the Chicago Infrastructure Trust, which will leverage private investment for retrofits to help achieve greater energy efficiency.  The private financing will be provided by five organizations: Citibank, Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., J.P. Morgan Asset Management Infrastructure Investment Group and Ullico.  The trust’s first project, Retrofit Chicago, will retrofit municipal buildings to reduce energy consumption by 20 percent.  The mayor and his administration maintain that the program will create an estimated 2,000 jobs.

Kansas:  U.S. Transportation Secretary Ray LaHood announced a $54.6 million loan to Kansas City Southern Railway Company for the purchase of 30 new General Electric locomotives.  The loan is from the Federal Railroad Administration’s Railroad Rehabilitation and Improvement Financing (RRIF) Program.  This program provides direct loans for eligible borrowers to acquire, improve, or rehabilitate rail and rail-related intermodal equipment and facilities.  There is currently up to an aggregate of $35 billion available in the RRIF program for these types of projects. 

Massachusetts:  Massachusetts Governor Deval Patrick filed a $1.5 billion bond bill authorizing the state’s first infrastructure bank.  The bank will leverage private investments to help fund transportation infrastructure.  The bill includes $1 billion for statewide road and bridge improvements and $311 million for improvements to rail and transit infrastructure.  Although the bill only provides funding for one year, Patrick intends to introduce a five-year bond bill to help finance long term transportation infrastructure projects. 

Indiana/Kentucky:  Indiana Governor Mitch Daniels and Kentucky Governor Steve Beshear have signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project.  The two states will evenly divide the financing and the construction of the project. Kentucky will use a design-build approach to construct a new Interstate 65 bridge and will finance the project through toll-revenue bonds.  Indiana will construct an East End bridge between Utica, Indiana and Prospect, Kentucky and will use a private-sector team for financing, construction, and long-term maintenance.   

Events This Week

On Thursday, March 15 at 9:00 a.m. the Senate Appropriations Committee will hold a hearing on the 2013 budget for the Department of Transportation.

On Wednesday, March 21 at 10:00 a.m. the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for the Department of Transportation and HUD. Shaun Donovan the secretary of Housing and Urban Development will testify.

On Wednesday, March 21 at 10:00 a.m., the House Transportation and Infrastructure Committee Subcommittee on Water Resources and Environment will hold a series of hearings titled "Review of Innovative Financing Approaches for Community Water Infrastructure Projects."

On Thursday, March 22 at 10:00 a.m., the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for Federal Aviation Administration, Federal Highway Administration, Federal Railroad Administration, and Federal Transit Administration. The heads of each administration will be present to testify.


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