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4 T R A N S P O RTAT I O N F I N A N C E Encouraging broader implementation of value tion of program match alternatives, toll credits, and pricing and tolling approaches. other soft match provisions. Enhancing the ability of states to capture the Consider taking the first steps to move toward a value of transportation investments, for instance, multimodal, multipurpose transportation program in the retaining a portion of the increase in the value of current reauthorization cycle, such as expanding oppor- land and structures around interchanges that can be tunities to flex funds between highways and transit attributed to transportation investment and allowing investment, broadening eligible uses of surface trans- sponsors of highway projects to capture benefits that portation funds for freight, and broadening eligible uses already accrue to transit. of Airport Improvement Program funding to embrace Maintain and enhance alternative financing initia- surface transportation investments that primarily serve tives. The subject was widely discussed at the conference, airports (for example, rail and roadway access projects). and numerous ways were presented for the initiative to be Make adjustments to achieve consistency of fed- accomplished. The committee does not endorse any par- eral laws so that transportation decisions are not driven ticular approach. Some of the potential options discussed by inconsistencies in the funding processes. at the conference include the following: Reauthorizing the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and mak- Administrative ing adjustments so that it is accessible to a broader range of borrowers and types of investment. Make adjustments to achieve consistency of fed- Offering bridge financing or credit enhance- eral rules and processes, including but not limited to ment opportunities to recipients of full-funding funding eligibility and related procurement rules and grant agreements to help them deal with funding procedures within individual modes and across modes. uncertainty. Given the complexity of many innovative finance Expanding innovative finance programs for rail strategies, provide full public disclosure of the public and freight, possibly including development of a sector's financial commitment and exposure to risk and freight infrastructure bank concept. liability before approval for projects exceeding a given Increasing utilization of the state infrastructure size threshold (e.g., $100 million). bank (SIB) program and expanding eligibility for Consider possible improvements to the customer ser- federal funding of state-level SIBs, while maintaining vice component of the U.S. Department of Transportation's federal policy goals. (DOT's) innovative finance programs, including actions to Facilitating publicprivate partnerships that speed the response time of U.S. DOT regarding proposed help to develop, finance, and operate transportation innovative finance applications and in negotiations of facilities. One specific measure that was discussed TIFIA transactions. would revise the tax code to enable public purpose surface transportation projects with significant pri- vate participation to access tax-exempt financing (as RECOMMENDATIONS REGARDING currently allowed for other transportation modes). FUTURE RESEARCH These so-called private activity bonds were proposed in past legislation (the Multimodal Transportation The conference addressed long-term financing issues Financing Act, S. 870, introduced in the Senate in and needs beyond the upcoming reauthorizations. On 2001, as well as previously in the Highway the basis of conference discussions, the committee Infrastructure Privatization Act, 1997, and the developed suggestions for various potential research Highway Innovation and Cost Savings Act, 1999).2 initiatives: [Editor's note: They have also been proposed in the current Congress (S. 104, introduced in the Senate Sponsor research related to the development of on January 24, 2005).] comprehensive alternatives to the gasoline tax for surface Continuing to expand flexibility relating to transportation funding, including the possible creation of nonfederal match provisions, including the applica- a national commission to study the alternatives. 2 Minority statement of Dennis G. Houlihan: The committee found that accessibility, and civil rights standards as conventionally financed pro- innovative financing techniques have become regular tools for trans- jects. Worker protection standards include, but are not limited to, portation finance. As such, projects using innovative finance, including Davis-Bacon and Section 13 (c) of the Federal Transit Act provisions. state infrastructure banks and tax credits, should be required to com- In cases where there are direct and subsequent generations of recipients ply with the same federal and state worker protection, environmental, of funds from an innovative financing, such as with state infrastructure