Dr. Mark Zandi, chief economist for Moody’s Analytics says, “Arguably nothing the government spends money on produces a higher long-run return than infrastructure.”

Why should the federal government and local governments see the America Fast Forward innovative financing program — which includes the TIFIA direct low-interest loan program adopted last year in MAP-21 as well as a proposed qualified tax-credit bond program — as creating breakthrough opportunities?

From the federal government’s point of view, what are the advantages of the America Fast Forward innovative financing program?

• A robust federal transportation financing program secured by local funding streams together with existing grant programs would stretch limited federal dollars and leverage more local dollars for badly needed investments in transportation infrastructure across the country. This is especially important as revenues in the Highway Trust Fund drop to new lows.
• Such a program would accelerate completion of local transportation projects and accelerate their benefits, including a more efficient and robust economy, enhanced job creation, enhanced federal tax revenues, energy conservation, improved public safety and public health, and reductions in air pollution and greenhouse gas emissions.
• With a financing program, the federal government would get paid back, reducing the burden on the federal budget and the program’s contribution to the federal deficit.
• Such a program effectively leverages local money. For every $1 billion in capitalization, which serves as a loss reserve, the federal government can make ten $1 billion loans to ten communities and support up to $30 billion in transportation infrastructure investment.
• Such a program will mobilize more widespread local infrastructure investments. Because communities can see a greater prospect for success with a financing program, it is reasonable to expect more communities will get active and submit applications.
• The local level is where the really big money is. In the aggregate, there is more capital available at the local level than at the federal level. And voters have more trust in local government and tend to be more willing to authorize local governments to spend local money on local projects.
• The timing is good for these investments. Interest rates are at an all-time low, as are construction costs, while unemployment rates in many states are still very high.
• If structured to include, as the TIFIA low-interest loan program does, a Master Credit Agreement (analogous to a line of credit), this program will promote local multi-project system planning, rather than one project at a time, further improving efficiencies.
• More communities will be able to plan and implement with federal help more system-wide infrastructure investment programs and realize them on an accelerated basis.
That’s the “secret sauce” for this program!

From the local and regional government’s point of view, what are the advantages of the America Fast Forward innovative financing program?

• Innovative low-interest federal financing will enable local governments to accelerate project delivery much earlier while reducing costs by saving years of inflation.
• The timing is good for infrastructure investments. The need is great and interest rates are at an all-time low, as are construction costs, while unemployment rates in many states are still very high – and these investments are major job creators.
• Accelerating transportation projects also accelerates the benefits that will result. These benefits include a more efficient and robust economy, good new jobs, encouraging private investment, enhanced public safety and improved public health, energy conservation, and environmental benefits such as reductions in air pollution and greenhouse gas emissions.
• A robust federal financing program, in tandem with federal grant programs, will enable many more local and regional community winners. A loan program capitalized at $1 billion will enable $10 billion in loans and potentially ten times as many winners as a grant program capitalized at $1 billion. Because local/regional governments have a greater chance of success, the program is likely to generate more interest and more applicants.
• The Master Credit Agreement will enable communities to begin planning for multiple projects, thus creating the opportunity for systemwide planning instead of merely planning line by line. This also enables communities to plan more holistically – for TOD, for example, and for bike and pedestrian improvements – and to accelerate the benefits that will be achieved.
• The prospect of moving forward with multiple projects on an accelerated basis will make it easier to build the necessary county and metropolitan-area-wide coalitions and create broader support for investment programs: The politics are easier because the competition is much less intense when the wait for project completion is much shorter. Localities that are waiting for “their” project in a queue that will last only 10 years are far more likely to be collaborative than if they must wait in a 30-year queue. This will reduce regional tensions and political rivalries over priorities.
This more efficacious environment for resolving local priorities and building local coalitions may be the “secret sauce” for this program on the local level.

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