Delaney to Introduce Infrastructure Funding Legislation
For Immediate Release: February 11, 2013
Contact: Will McDonald 202-225-2721
Delaney to Introduce Infrastructure Funding Legislation
- Creates a large scale funding capability for rebuilding transportation, energy, communication, water and educational infrastructure using a disciplined public-private partnership model;
- Helps working families by putting Americans to work and improving overall U.S. competitiveness;
- Creates a path for repatriation of overseas corporate earnings in a manner that ensures American job creation; and
- Timing of legislation inspired by President Bill Clinton’s comments at the Democratic Issues Conference.
WASHINGTON – Congressman John K. Delaney (MD-6) announced today that he will introduce legislation creating the Office of Infrastructure Investment and the American Infrastructure Fund.
“Within the next month, I intend to introduce a bill that will create a large scale infrastructure funding capability that can rebuild our aging infrastructure, position the United States to compete globally in the 21st century, and create jobs,” Delaney said. “We started drafting legislation last week and are in the process of gathering support for the bill among members of Congress, labor, the private sector, and state and local governments. We expect our legislation will benefit from the ideas of other members of Congress committed to this concept and that it will continue to be shaped by our outreach.”
“Our proposal will be rooted in the notion that the federal government should be partnering with local governments and the private sector in tackling this important challenge,” Delaney added. “In that regard, our bill will combine investments by U.S. corporations, for which they obtain a tax-credit for overseas earnings repatriation, with low-cost funding and project specific private investment to help build the backbone of our country for the future.”
Speaking at the House Democratic Issues Conference last week, President Bill Clinton put forth the idea of using overseas corporate earnings to rebuild our infrastructure. (To view a video excerpt of President Clinton’s remarks on the topic last week, click here.) Delaney was inspired to act now based on these comments.
A summary of key provisions of the bill under consideration:
- Creates the Office of Infrastructure Investment, a new office within the Treasury Department, designed to be a resource for states and local governments looking to structure cutting edge public-private partnerships;
- Creates the American Infrastructure Fund managed by the Office of Infrastructure Investment to make loans to states - or to guarantee a state or local bond issuance - provided that the proceeds of the loans or bond issuance are invested in qualifying infrastructure projects;
- Provides that the loans or guaranties be supported by credit obligations of the state but be structured to have minimal impact on an individual state’s credit rating by making them subordinate to other general obligations of the state, exceptionally long dated obligations, or be made to a local authority with a state guaranty;
- Requires that as a condition to receiving a loan or guaranties from the American Infrastructure Fund that a state require the underlying infrastructure project be built pursuant to requirements for prevailing wages;
- Requires projects be partially funded with private capital procured through a competitive procurement process using standardized procedures and documentation developed by the Office of Infrastructure Investment;
- Provides that the American Infrastructure Fund be funded by selling both Junior Infrastructure Bonds not guaranteed by the U.S. government and Senior Infrastructure Bonds that will include a guaranty of the U.S. government;
- The Junior Infrastructure Bonds will pay a rate less than the Senior Infrastructure Bonds and be freely tradable. The Junior Infrastructure Bonds will be the “first loss” and represent a minimum of 5% of the assets of the American Infrastructure Fund (or more depending upon activities). Assets of the American Infrastructure Fund include the total of loans or outstanding guaranties;
- Provides that Congress approves the amount of Junior Infrastructure Bonds that may be offered from time-to-time and thereby control the size of the American Infrastructure Fund; and
- For every $1 dollar of Junior Infrastructure Bonds purchased, the purchaser may repatriate $4 dollars of overseas corporate earnings tax-free.
Benefits of the proposed bill:
- For every dollar of tax credit produced under the program, the American economy will receive a significant multiple of infrastructure investment;
- The American economy is estimated to have at least a $2 trillion infrastructure deficit. If only 10% of the estimated cash sitting overseas was repatriated in this manner, the American Infrastructure Fund could finance over $500 billion of this need and thereby help millions of working families by creating jobs;
- Creates a path for some of the estimated $1.7 trillion of overseas earnings to return to our shores and further stimulate our economy while ensuring high quality American jobs will be created in the process;
- Limits the risk of allocating funding for anything other than rational economic development reasons since the federal government does not select the projects and states and private investors share risk in the viability of the project;
- It is taxpayer friendly as it requires no appropriations and involves structuring the American Infrastructure Fund in a safe and sound manner with significant risk based capital and limited lending parameters;
- Creates a framework for public-private partnerships at the project level that can create investment opportunities for pension funds looking for investment opportunities; and
- Helps working families by creating jobs and positions the United States to compete in the 21st century.