Brookings: Revive State Infrastructure Banks to Stretch Transpo Dollars

In these days of stagnant gas taxes, state and local governments are scrambling for new ways to finance infrastructure. Rahm Emanuel has his $7 billion Chicago Infrastructure Trust, and Antonio Villaraigosa has his America Fast Forward. Even John Kasich in Ohio is trying to sell advertising at rest stops to shore up ODOT.

Image: ##http://www.nawc.org/newsflow/081407-nl/government/government.html##National Association of Water Companies##

In a new report, the Brookings Institution offers another potential answer: state infrastructure banks. These financing agencies offer local governments low-interest loans for important infrastructure projects, and they can attract additional private capital.

“With Washington gridlocked and retrenching, the new state banking models offer a hopeful counterpoint to national dysfunction,” said Brookings’ Mark Muro in a press release.

State infrastructure banks aren’t a new tool. The first ones were created with an infusion of federal cash in the early 1990s. Today, 33 states have an infrastructure bank or a state revolving fund. These institutions have financed about $9 billion in infrastructure spending for 1,200 projects. About 88 percent of the total spending, however, went to road projects.

Republicans wanted to include federal funding to recapitalize SIBs in the transportation reauthorization, but MAP-21 did not offer any changes to the way these institutions are structured. The bill didn’t include a national infrastructure bank either, which Republicans oppose.

Robert Puentes, director of Brookings’ Metropolitan Infrastructure Initiative, emphasized that while SIBs can address some funding problems, they are no substitute for a national infrastructure bank. SIBs can be inappropriate funding mechanisms for projects of truly national significance or that cross state lines.

“They are similar in name only, ” Puentes said. “They would fulfill very different functions.”

Indeed, SIBs vary greatly in their effectiveness. Of the existing 33 SIBs, 10 are inactive. The major factors that determine success, according to Brookings, are pretty simple: The SIBs must have sufficient capital, and they have to apply market discipline when selecting projects, prioritizing those that offer multiple benefits and strong economic returns.

Many times, however, the most competitive projects are toll roads. It’s often hard for transit to compete when the overriding interest is in direct return on investment from users, rather than public benefit.

  • Bolwerk

    Where is the “private capital” supposed to come from? I am always a bit suspicious of such schemes. Private companies do expect a return; where does that come from?

  • I would think that value-capture of transit-oriented development would provide a very nice return on SIB investments.

ALSO ON STREETSBLOG

Top 10 Reasons to Oppose the House Transpo Bill

|
Congress is in recess this week, but that doesn’t mean the furor surrounding the House transportation bill has died down. Transportation for America has put together a top ten list of the reasons opposition to the bill is so strong. Here’s one of the lesser known implications: #7. Requires More Bureaucracy at Transit Agencies: In […]

Puppies and Peanut Butter: Brookings on State Transpo Mistakes

|
As transportation advocates adapt their messaging to a new, more conservative Congress, the language of fiscal conservatism has become the mother tongue of the movement. Smart Growth America and the Bipartisan Policy Center have recently used the fiscal responsibility argument to urge policymakers to invest more strategically, especially as infrastructure budgets shrink. Now the Brookings […]

Clock Ticks on a Popular Way to Pay for Infrastructure

|
A few weeks ago, when a new ferry was inaugurated in Puget Sound, Washington Governor Chris Gregoire smashed a bottle of champagne and declared, “God bless this boat.” It had been three years since the leaky electric boats that had ferried passengers between Coupeville, Whidbey Island, and Port Townsend were retired three years ago. The new […]

A National Infrastructure Bank By Any Other Name …

|
The House transportation committee’s new $450 billion bill provides for a national infrastructure bank intended to "maximize the limited resources available for our surface transportation needs," as the panel’s early outline puts it. (Photo: National Association of Water Cos.) This sounds a lot like the infrastructure bank proposed by Rep. Rosa DeLauro (D-CT) and 35 […]

A National Infrastructure Bank: Can the U.S. Learn From Europe?

|
On Labor Day, President Barack Obama gave a speech in which he pushed for the creation of a National Infrastructure Bank. Legislation that would establish the bank was introduced over the summer in Senate Bill 1926, authored by Chris Dodd of Connecticut and Chuck Hagel of Nebraska. But the idea of an independent financing entity […]