Transportation Bill

As federal funding for surface transportation projects was set to expire on July 31, President Obama signed a three-month transportation extension bill preventing highway funding from drying up.  Obama, who has pressed for a multi-year highway bill, relayed that he had no alternative but to sign the short-term measure to prevent an interruption of money for roads and bridges.   The President also blamed Congress for failing to renew the Export-Import Bank, omitted from the highway bill against the wishes of the White House.

On July 30, in a 91-4 vote, the Senate passed the stopgap bill.  The House, in a 385-34 vote, passed the bill the day prior.  The $8 billion bill will extend federal transportation funding until October 29, 2015.  By passing this act it will give Congress more time to pass a long-term bill. The Senate expects to have their 6-year reauthorization bill completed and passed in the fall.

The bill the Senate now plans to pass in the fall (HR 22) would reauthorize Federal highway, safety and transit programs through fiscal 2021 and rail programs through fiscal 2019. Also, it would establish a national freight program, alter the permitting process for capital projects, and revise the environmental review process on transportation projects. Some specifics of the bill are listed below:

·         $45.6 billion would be transferred from the general fund to the Highway Trust Fund.

·         The authority to spend money from the Highway Trust Fund would be extended until October 1, 2021.

·         $256.2 billion would be allocated to expand contract authority through fiscal 2021.

·         The Transportation Infrastructure Finance and Innovation Act (TIFIA) program would be reauthorized and funded at $300 million each year from fiscal 2016 through 2021.

·         $11.7 billion would be spent to fund the National Freight Program through fiscal 2021.

·         Authorizations for federal funding of the Appalachian Development Highway System would be extended through fiscal 2050.

·         $8.99 billion would be allocated to rail from fiscal 2016 through 2019.

·         The PTC implementation date would be pushed back to December 31, 2018.

Included in the measure are offsets for three years. They include reducing the Federal Reserve’s dividend payments to banks and authorizing the sale of 101 million barrels of oil from the Strategic Petroleum Reserve. Other offsets include the recalculation of customs fees to account for inflation and the blocking of Social Security payments to those with felony warrants. Much of the language in the amendment was taken from other Senate surface transportation bills. During the special Sunday session, an amendment that would repeal the Affordable Care Act was not approved to be added. However, an amendment that would reauthorize the Export-Import Bank was considered and passed.

Some lawmakers and industry leaders oppose the amendment that would authorize the sale of oil from the Strategic Petroleum Reserve, cut the dividend rate paid by the Federal Reserve, and block individuals with felony warrants from social security. Specifically, the American Bankers Association, Financial Services Forum, the Financial Services Roundtable, the Independent Community Bankers of America, and the Clearing House Association oppose the proposal that would reduce dividends. Also, legislators are concerned that these offsets are not recurring and that the funds collected only fund the act for three years and not all six.

Transportation, Housing & Urban Development (THUD) Appropriations Bill

The Transportation, Housing, and Urban Development Appropriations Bill (HR 2577) was approved by the Senate Appropriations Committee and was placed on the Senate Legislative Calendar No. 138. However, the full Senate is taking up a different THUD bill. HR 2577 that passed the House would allocate a net $55.3 billion for transportation and housing programs, which is $1.49 billion more than what was allocated in fiscal 2015, but $9.74 billion less than what was requested by the Administration.

Public Private Partnerships and Transportation

According to The American Society of Civil Engineers (ASCE) the U.S. infrastructure system urgently needs maintenance, modernization and a reliable, long-term-stream of money.

One response is “P3” –public-private partnership. Those who favor P3s think of them as a ubiquitous solution.  Those opposed to P3s strongly disagree. Despite their fundamental disagreement, there are a few items that those who favor P3s and those that oppose P3s probably agree on:

·         The “public” in P3 is generally a governmental entity. The “private” is a nongovernmental, usually for-profit, entity. The “partnership” is a joint venture between the governmental and nongovernmental entities.

·         Most people appreciate having access to roads, bridges and hospitals. (Since many hospitals are governmental hospitals, they are relevant to this discussion).

·         Nobody really likes paying taxes or tolls.

·         Since nobody really likes paying taxes or tolls, it is a good idea to build and operate the governmentally owned roads, bridges and hospitals as efficiently as possible.

That is likely where the consensus ends.

There is an extremely vocal movement that vehemently opposes toll roads that are built and operated by P3s for example.  Quotes from the grassroots populist movement opposed to P3s can easily be found online.

Because there is no counter-balancing grassroots movement in support of P3s, it is more challenging to find similarly passionate online quotes from P3 supporters.  Hence, it appears that federal, state and municipal governments have been much less comfortable executing new investments that merge private enterprise with the public sector. However, tough times often lead to a new way of viewing novel programs to both update crumbling infrastructure and stimulating the economy.  Presently a grassroots movement in support of P3s may be emerging as P3 alternatives seem all the  more attractive when the public sector is faced with more and more debt and competing priorities for borrowing capacity.

For more information on P3s, please contact Martin J. Milita, Esq., Senior Director,  located in DMGS’ New Jersey office at mjmilita@dmgs.com or 973-222-1855.

Demand Emphasizes Need for TIGER Grants

The demand for infrastructure investments, and for all types of transportation projects, has been overwhelming.  On July 30, U.S. Department of Transportation Secretary Anthony Foxx announced that applications for its seventh round of Transportation Investment Generating Economic Recovery (TIGER) grants totaled $9.8 billion, almost 20 times the $500 million set aside. Among the 625 eligible applications received this year from all 50 U.S. state and territories, 60 percent are road projects, 18 percent are transit projects, 8 percent are rail projects, 6 percent are port projects, and 6 percent are bicycle-pedestrian projects.

The highly competitive TIGER program, which began as a part of the American Recovery and Reinvestment Act, offers federal funding possibilities for large, transformative multi-modal projects.  These federal funds leverage money from private sector partners, state and local governments, metropolitan planning organizations and transit agencies. 

Since 2009, the TIGER grant program has provided a combined $4.1 billion to 342 projects in all 50 states, the District of Columbia and Puerto Rico.  The $584.1 million awarded under TIGER 2014 supported 72 capital and planning transportation projects in 46 states and the District of Columbia. 565 applications were submitted in 2014. 

“The consistent number of high quality projects we’re unable to fund through TIGER every year demonstrates the need for Congress to act to give more communities access to this vital lifeline,” Secretary Foxx said. “That is why we proposed doubling TIGER in the GROW AMERICA Act.”

Earlier this year, the Department reintroduced an improved surface transportation reauthorization bill, the GROW AMERICA Act.  The bill would provide $7.5 billion in funding over six years for the TIGER grant program.  Under the GROW AMERICA Act, the TIGER grant program will be available for another six years, extending a proven track record of helping communities coordinate innovative, multi-modal transportation projects that serve the diverse travel needs of their residents and businesses in the 21st Century.