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Foreword
This report summarizes a conference held on January 13, 1998 sponsored by the Federal Highway Administration (FHWA) on Federal credit concepts for surface transportation.
This report is the 18th issue of Searching for Solutions: A Policy Discussion Series. The series deals with emerging transportation issues such as congestion pricing and public-private partnerships as well as other relevant transportation policy topics.
This conference was a follow-up to a November 1997 draft policy discussion paper, Federal Credit for Surface Transportation: Exploring Concepts and Issues. The session was intended to address questions stimulated by the discussion paper, identify critical policy and technical issues, and discuss possible solutions to potential barriers to program implementation.
Due to continuing Federal and State budgetary constraints, there are insufficient financial resources to fund major transportation projects with traditional sources. In recent years, the United States Department of Transportation (DOT) has sought to encourage innovative financing as a means to address the Nation's transportation challenges. Using this mandate as a framework, the conference focused on creative approaches for using credit (e.g., direct loans, loan guarantees and lines of credit) to help finance major surface transportation projects.
Conference participants were greeted by FHWA Deputy Administrator Gloria Jeff. In her introductory remarks, Ms. Jeff stated that strategies to facilitate interaction between the capital markets and traditional transportation financing mechanisms figure prominently in the Administration's debates on highway financing.
Three panels gave participants the opportunity to explore Federal credit and its application to the surface transportation sector. The first panel focused on Federal credit legislation pending in both the House and Senate (respectively, the Transportation Infrastructure Credit Act of 1997, H.R. 2330, and the Transportation Infrastructure Finance and Innovation Act of 1997, Subtitle C, Chapter 2, of S.1173). The second panel examined how Federal credit concepts could be used by project sponsors. This session considered how two standby lines of credit to the San Joaquin Hills and Foothill/Eastern Transportation Corridors and a direct Federal loan to the Alameda Corridor assisted these projects in obtaining financing. The third and last panel reviewed potential methodologies for estimating the budgetary costs associated with the provision of Federal credit.
Mitchel Rapaport, Esq., of Nixon Hargrave, Devans & Doyle led an afternoon discussion of Federal tax law matters. The discussion focused on the tax implications of Federal credit, with special focus on those circumstances in which such assistance could be construed as an indirect Federal guarantee of a tax-exempt obligation.
Peter J. Basso, DOT Acting Assistant Secretary for Budget and Programs, delivered a keynote presentation in which he discussed key Federal policy issues relating to credit and administrative procedures for executing and monitoring loans under a DOT-sponsored Federal credit program.
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