February 2010 Volume 35, Number 2
On Wednesday, January 20, during a news conference held on a Capitol Hill, the coalition Building America’s Future and representatives of other organizations, including ASCE, urged the Obama administration and Congress to take the steps necessary to create and fund a national infrastructure bank (NIB). The purpose of the bank would be to help finance large infrastructure projects nationwide. Representing ASCE at the press conference was Andrew Herr-mann, P.E., F.ASCE, a managing partner of New York City–based Hardesty & Han-over, ASCE’s treasurer, and the chair of the advisory council for the 2009 Report Card for America’s Infrastructure.
“A national infrastructure bank should play a role as a funding and financing vehicle for projects that have major national or regional impact,” explained Edward G. Rendell (D), the governor of Pennsylvania and one of the cochairs of the coalition, which includes members of Congress, mayors, and governors from across the country. “This is an important reform that is urgently needed to address our nation’s infrastructure funding shortfalls,” he said.
The details of the NIB’s governance, distribution, and financing have not yet been developed. Nevertheless, it is believed that initial funding for the bank would come from the general fund of the 2011 federal budget. The bank would then lend money to state and local entities for infrastructure projects of national importance. User fees collected for such projects as toll roads and dams would be used to repay the loans. The issuance of low-interest bonds also is being considered as an option.
Herrmann states in an e-mail that ASCE has no official stand on how an NIB should be structured and financed and how its funds should be distributed. In December 2008, however, ASCE developed the document “Principles for Infrastructure Stimulus Investment,” which, Herrmann states, “urged policy makers to choose projects that not only met the initial goal of creating jobs but also attained a secondary goal, such as increased public safety or environmental restoration. ASCE would similarly urge policy makers to develop an NIB that financed projects that could meet those goals.”
Herrmann goes on to explain that “ASCE’s top strategic initiative is to improve the condition of the nation’s infrastructure. The NIB offers an innovative financing tool for projects of regional and national significance that can begin to make progress on the $2.2 trillion that must be spent over the next five years.” The figure he cites is contained in the 2009 Report Card for America’s Infrastructure,which gave the nation’s built environment an overall grade of D.
Even though it offers an additional source of financing, an NIB is not a magic bullet that will solve the nation’s problems overnight, according to Allison Dickert, the manager of issues development in ASCE’s government relations division. Such federal funding programs as the Highway Trust Fund and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (safetea-lu) will still be needed and will not be replaced by an NIB. (Portions of a bill reauthorizing safetea-lu have been passed by the House of Representatives’ Transportation and Infrastructure Committee, but its financial details are still under development.)
An NIB will help civil engineers “not only by putting them to work designing the projects financed by the bank, but by demonstrating to the public the benefits of infrastructure to our quality of life and economy,” Herrmann states. In a press release from the coalition, Herrmann wrote, “Whether we’re talking about billions of dollars lost as a result of traffic each year or billions of gallons of water lost through leaky pipes, failing infrastructure has a negative impact on the checkbook and quality of life of each and every American.”
Although support for an NIB has grown in the past few years, the concept itself is not new. In 2007 Senator Chris Dodd (D-Connecticut) and Senator Chuck Hagel (R-Nebraska) introduced a bill literally hours before the bridge in Minneapolis carrying Interstate 35W over the Mississippi collapsed. Despite its timeliness, however, the bill failed to make it past the Senate’s review process. Moreover, the budget for fiscal year 2010 that President Obama proposed last spring contained a provision to the effect that $5 billion per year would be allocated to an NIB, provided that Congress passed the law necessary to create such an entity. In response, Representative Rosa L. DeLauro (D-Connecticut) introduced the National Infrastructure Development Bank Act of 2009 (H.R. 2521) in May to create an NIB, but that bill is still being reviewed by several House committees.
In addition to Rendell, other high-profile members of Building America’s Future have discussed the benefits of an NIB. Arnold Schwarzenegger (R), the governor of California and a cochair of the coalition, had this to say in the press release: “Too many of our cities have structurally deficient and outdated water and sewer pipes.... Faced with shrinking revenues and budget deficits, the national infrastructure bank could help finance projects that will allow cities and states to provide the high quality of life and safety our citizens deserve.”
The mayor of New York City, Michael R. Bloomberg, another coalition cochair, voiced his support for the legislation, stating that “funding infrastructure projects that are in the pipeline and can be started in the next year is one of the most effective ways Congress can support job creation and economic growth.” He also noted that an NIB would fund projects on the basis of merit rather than
politics. —Brett Hansen