EPW Hearing Statement: The Long-term Value to U.S. Taxpayers of Low-cost Federal Infrastructure Loans
WASHINGTON – Today, the U.S. Senate Environment and Public Works Committee held the hearing, “The Long-term Value to U.S. Taxpayers of Low-cost Federal Infrastructure Loans.” Below is the opening statement of Ranking Member Tom Carper (D-Del.), as prepared for delivery:
“Thank you Mr. Chairman. Today, we’re here to discuss several innovative, low-cost Federal loan programs and the value they provide for the development of infrastructure, as well as for the people who use that infrastructure and for the American taxpayer.
“Congress created the ‘Transportation Infrastructure Finance and Innovation Act,’ or ‘TIFIA’ program in 1998 in order to fill a gap in infrastructure investments. Public funding is critical for the majority of transportation projects; however, at times, the lack of sufficient funding makes it difficult for agencies to build high-cost projects despite the many benefits that those projects might yield. In 1998, Congress found that, and I quote: ‘a Federal credit program for projects of national significance can complement existing funding resources by filling market gaps.’
“The 301 project in Delaware is an excellent example of a project where traditional funding mechanisms were not sufficient. The improvements to Route 301 in Delaware had been needed for decades, but the project cost was more than three times higher than the total federal funding Delaware receives in a year, so building it with public funding alone just wasn’t feasible. The TIFIA loan enabled the US 301 project to move forward – improving safety and regional mobility and providing the State with a convenient alternative to the commercial traffic bottleneck on I-95. The project will also generate approximately 15,000 jobs, and it will contribute to the long-term economic vitality of the region.
“Building on the success of the TIFIA program for transportation, in 2014, Congress made low-cost financing available for water infrastructure, as well, by authorizing the ‘Water Infrastructure Finance and Innovation Act,’ or ‘WIFIA,’ program. Through WIFIA, the Environmental Protection Agency can now provide credit assistance, in the form of secured or direct loans, or loan guarantees, for a range of drinking water and wastewater projects.
“EPA is now reviewing letters of interest for WIFIA loans and has begun providing loans to help complete water infrastructure projects. These projects have the potential to increase the availability of drinkable water, replenish groundwater, improve water quality, reduce pollutants, and improve the resilience of water facilities. The U.S. Army Corps of Engineers was also authorized to provide similar assistance for water resource projects, such as flood control or hurricane and storm damage reduction; however, Congress has not yet appropriated funds, nor has the Trump Administration requested funds, for the Army Corps to use this authority.
“Innovative finance programs such as WIFIA and TIFIA offer loan terms that make them a good value for borrowers, such as a low fixed interest rate, a long repayment schedule and an option to defer payment. Of course, loan programs are not a replacement for public funding, nor should they be. The TIFIA program has now been authorized for twenty years, during which time just 67 loans have been made.
“The 301 project in Delaware was our state’s very first TIFIA loan. Many projects are not well suited for loans because they lack a revenue stream to repay that loan.
“As we consider calls to expand these innovative finance programs, we should keep in mind that, in 2015, we reduced the size of the TIFIA program because it was not being used. There is still significant unused credit assistance available in the TIFIA program. As a result, expanding the program will not necessarily increase the level of infrastructure investment.
“Last week, the Federal Transit Administration changed their policy to consider USDOT loans such as TIFIA as Federal funding rather than as the local match. However, the TIFIA statute is quite clear that these loans count toward the non-federal share of a project when they are repaid with local funds. This policy change could lead to many prospective projects not applying for TIFIA loans at all, which could exacerbate the problem of unused loan authority.
“Congress and the Administration should be working together to make it easier for state and local agencies to access these loans and invest in infrastructure – not more difficult. Our goal should be to provide a portfolio of options for infrastructure investment — including direct Federal grants and loans — so that state and local project sponsors may identify the best technique to improve their community’s water, mobility, and quality of life.
“I look forward to hearing from our witnesses today about how we can best achieve that goal. Thank you, Mr. Chairman.”