Wyden, Hoeven, Begich Introduce TRIP Bond Program to Help Build Transportation Infrastructure
— TRIPs will inject $50 billion in Private Investment into Transportation Projects
By U.S. Senator Ron Wyden ,
Washington, D.C. – Looking to leverage private investment and an untapped market for tax credit bonding to rebuild America’s transportation infrastructure, U.S. Senators Ron Wyden (D-Ore.), John Hoeven (R-N.D.) and Mark Begich (D-Alaska) have introduced legislation to create a tax credit bond program dedicated to transportation infrastructure. Transportation and Regional Infrastructure Project bonds or TRIPs will be a financing tool to fund the rebuilding of the nation’s crumbling transportation infrastructure.
“Recent experience has demonstrated that the private sector has considerable resources for funding infrastructure projects, that are currently going untapped,” Wyden said. “TRIPs will build on recent experience with tax credit bonds and leverage private funding in a fair and efficient way that has been proven to save taxpayer money. With TRIPs, we not only create the financing tool but a mechanism for states to allocate the funding in a fair and equitable way without ignoring the needs of larger, more costly projects.”
“TRIP Bonds represent a cost-effective, efficient way to leverage private-sector dollars to build the infrastructure so necessary to growing America’s economy and creating jobs,” Hoeven said. “We will advance the legislation in a bipartisan effort and seek to do it within the surface transportation reauthorization, while ensuring that it is fully paid for so that it doesn’t contribute to the deficit. At the same time, by making more construction dollars available up front, we will enhance both infrastructure and economic activity.”
“Expanding, maintaining and repairing our nation’s transportation infrastructure is key to our long-term economic growth,” Begich said. “TRIPs bonds are an efficient way to invest in our infrastructure by leveraging private funds while saving taxpayers money. This bill will support projects that are vital to our future, create jobs, and help keep Alaska’s food, medicine, mail and equipment on the move.”
The American Society of Engineers issued a report recently saying that without the necessary investment in transportation the economy will lose more than 870,000 jobs and the GDP will be suppressed by $3.1 trillion by 2020. TRIPs are tax credit bonds designed exclusively to fund transportation infrastructure projects. Bondholders will receive a tax credit instead of the tax-exemption found in municipal bonds – making the bonds fairer to the tax payers and ensuring that the bonds do not become tax havens. Under the plan put forward by the senators, $50 billion in tax credit bonds would be issued over a six year period with the principal cost of the bonds being covered by a trust fund composed of Customs User Fees.
TRIPs will originate with each individual state’s infrastructure bank. Each state infrastructure bank will be allocated two percent of the total amount of bonds to issue to projects of their discretion – a total of $1 billion per state. States are also able to pool their funds for larger projects, including those that affect multiple states. Most states have already created infrastructure banks, but those who have not can do so at any time to receive their portion of the TRIP bond funding.
TRIPs has been endorsed by a wide range of state and local officials as well as business and labor leaders including: American Association of Road and Transportation Builders, American Association of State Highway and Transportation Officials, American Highway Users Alliance, Associated General Contractors of America, International Union of Operating Engineers, Laborers’ International Union of North America, National Association of Manufacturers, U.S. Chamber of Commerce, American Society of Civil Engineers.
“We endorse Senator Wyden’s and Senator Hoeven’s efforts to attract private investment capital into the transportation sector through targeted federal tax code incentives,” said David Seltzer, President, Mercator Advisors LLC. A $50 billion program of qualified tax credit bonds, properly structured, should attract considerable interest from capital market participants and has great potential to help advance major infrastructure projects.
Click here to see what else is being said about Wyden, Hoeven and Begich’s effort to inject more private sector funding into infrastructure project and to learn more about how TRIPS will work.