On March 15, Sen. John Kerry, D-Mass., along with Sen. Mark Warner, D-Va., and Sen. Kay Bailey Hutchison, R-Texas, introduced the Building and Upgrading Infrastructure for Long-Term Development (BUILD) Act to help fund transportation, water, and energy infrastructure projects with national or regional significance. Like previous “infrastructure bank” legislation, the BUILD Act creates an independent financing agency which would issue loans for eligible projects to complement traditional sources of government funding.
A link to a summary of the bill and Sen. Kerry’s press release may be found by clicking here.
The bill includes the following key provisions:
- Creates the publicly owned American Infrastructure Financing Authority (AIFA) and provides $10 billion in federal start-up funding for initial loans. AIFA would be managed by a seven-member board and a CEO all nominated by the President and confirmed by the US Senate.
- Eligible projects would have to cost at least $100 million ($25 million for rural projects), have a proven, dedicated revenue stream, and demonstrate a clear public benefit. AIFA could only fund up to 50 percent of an approved project.
- Requires AIFA to become self-funded after a few years through the fees and interest payments on its loans and loan guarantees. AIFA would be subject to congressional oversight as well as an Inspector General and an independent auditor.
The BUILD Act creates a new source of revenue for infrastructure projects at a time when funding remains scarce because of the weak economy. Although previous attempts to create infrastructure banks have been unsuccessful, the BUILD Act enjoys key backing from labor and industry and is the most promising approach so far introduced in Congress to address the nation’s continuing infrastructure crisis. The bill is particularly attractive because it is bipartisan and has the potential to overcome political gridlock and gain the support of a broad ideological coalition. At the same time, the proposal will likely be challenged in both the Senate and the House of Representatives, where it will face questions about its source of funding and the merits of creating a new public entity with spending authority.