Subscribe to our free, weekly email newsletter!


Senate trio sets sights on an American Infrastructure Bank

The legislation, drafted by Senators John Kerry (D-MA), Kay Bailey Hutchison (R-TX) and Mark Warner (D-VA), is entitled the BUILD (the Building and Upgrading Infrastructure for Long-Term Development) Act
By Jeff Berman, Group News Editor
March 16, 2011

A bipartisan group of senators this week has introduced legislation that they said would help to close the country’s widening infrastructure funding gap, serve as a job creator, and enhance U.S. competitiveness.

The legislation, drafted by Senators John Kerry (D-MA), Kay Bailey Hutchison (R-TX) and Mark Warner (D-VA), is entitled the BUILD (the Building and Upgrading Infrastructure for Long-Term Development) Act.

The main objective of the legislation is to support the establishment of an American infrastructure bank in the United States to leverage private investment, Kerry said at a press conference.

But unlike other calls for an infrastructure bank in the past, which have typically proposed an allocated funding amount that would serve as the primary source of funding for infrastructure projects, this one is different in the sense that it would require a lower up-front investment, which would subsequently be supported by private sector investment.

The BUILD Act, according to the bill’s authors, would establish a type of infrastructure bank it referred to as an American Infrastructure Financing Authority (AFIA), which would complement existing infrastructure funding and provide loans and loan guarantees for infrastructure projects.

It would require an upfront investment of $10 billion, which would earn interest, and AFIA could leverage up to $600 billion in private investments to repair, modernize, and expand the country’s ailing infrastructure system, according to United States Chamber of Commerce President and CEO Tom Donohue at the press conference.

AFIA would fund the most important and economically viable projects throughout the country and would be self-sustaining after the initial investment from the federal government. And by relying on the private sector, AFIA cannot provide more than 50 percent of a project’s cost, according to the senators, and in many cases it would provide less—or enough to bring in private investment.

The types of eligible projects would focus on include transportation infrastructure, water infrastructure, and energy infrastructure, which, in general, would have to be at least $100 million in size and be of national or regional significance. And projects would have to have a clear benefit, meet rigorous economic, technical, and environmental standards, and be backed by a dedicated revenue stream.

“This is new thinking – an entity that will operate without political influence to finance projects based on their national and regional importance, not their political value,” said Kerry. “It will be run transparently by experienced professionals under real Congressional oversight. It will include checks and balances to prevent abuse by both the private sector and from political actors.  It is a practical strategy for prosperity and a pragmatic vision that can be embraced outside of ideology or partisanship.”

Kerry added that there’s hundreds of billions in private capital available, from pension funds, private equity and sovereign wealth funds that could be used for investment in U.S. infrastructure.  He noted that time of the essence, explaining that Capital if the United States does not make every effort to put these resources to use in our own country, it will flow to our competitors. 

“With traditional funding methods like appropriations and municipal bonds squeezed by the economic slowdown, an American Infrastructure Bank would complement limited public investments by leveraging private resources to help get the job done,” he said.
“And by channeling large pools of new investment from private sources that don’t invest in infrastructure in the U.S. today, the Bank will help solve our infrastructure deficit without straining our budget.”

The concept of an American Infrastructure Bank was supported by Janet Kavinoky, Vice President, Americans for Transportation Mobility, and Executive Director, Congressional and Public Affairs at the U.S. Chamber of Commerce.

The U.S. Chamber of Commerce, said Kavinoky, has been on record since 1983 in saying it supports the idea of an infrastructure bank, adding it is something that has been used globally as a way to draw in private capital infrastructure investment for large projects and has the potential to do the same for large revenue-generating projects.

“It is important to note that this is not the answer to closing the gap for needed infrastructure investment,” she said. “It is one part of a set of solutions. We support this bill, because it specifically is targeting drawing in private investors, and we recognize there is a substantial amount of private capital available for U.S. infrastructure in critical areas. In some instances you need a source of patient capital that is willing to come in at a lower interest rate or a more coordinated level to help make projects more financially feasible and bring down the costs.”

For related articles, please click here.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The International Air Transport Association (IATA) announced August 2014 data for global air freight markets showing continued “robust”growth in air cargo volumes.

Even though some of its key metrics dropped sequentially from August to September, the outlook for manufacturing over all remains strong, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).

Company officials said that these planned changes, which will take effect on January 4, 2015, will provide for increases in current pay rates and reduce the time it takes for its nearly 15,000 drivers to reach top pay scale.

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA