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Introduction and Opening Remarks
On January 13, 1998, the Federal Highway Administration (FHWA) sponsored a one-day conference on Federal Credit Concepts for Surface Transportation. The conference brought together a diverse group of participants from a wide range of organizations and sectors, including the Congressional Budget Office, the Office of Management and Budget, the General Accounting Office, the Department of the Treasury, congressional staff, a number of state Departments of Transportation, constructors and developers, and members of the financial community. (Appendix A contains the conference agenda and Appendix B is a list of participants.)
The purpose of the conference was to explore the implications of using Federal credit (e.g., direct Federal loans, loan guarantees, and lines of credit) to help finance major surface transportation projects. The conference was one in a series of periodic policy discussions the FHWA has sponsored called "Searching for Solutions," in which experts are invited to help FHWA examine key transportation policy issues.
Peter J. Basso, Acting Assistant Secretary for Budget and Programs, United States Department of Transportation (DOT), 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.
A discussion of Federal tax law matters was moderated by Mitchell Rapaport, Esq., Nixon Hargrave, Devans & Doyle. The discussion focused on the tax implications of Federal credit and potential indirect Federal guarantees of tax-exempt obligations.
Three panels gave participants the opportunity to discuss and learn about Federal credit and its application in the surface transportation sector. The first panel focused on Federal credit legislation pending in both the House (Transportation Infrastructure Credit Act of 1997, H.R. 2330) and the Senate (Transportation Infrastructure Finance and Innovation Act of 1997, contained in S. 1173). The second panel examined how Federal credit could be used by project sponsors. The third, and last, panel reviewed potential risk-scoring methodologies for estimating the budgetary costs associated with the provision of Federal credit assistance. (Appendix C contains panel discussion questions. Appendix D provides a background paper on credit concepts for surface transportation. Appendix E contains pending Federal credit legislation and a side-by-side bill comparison. Appendix F contains project case studies. Appendix G is a glossary of related terms.)
Opening Remarks
Introductory remarks were delivered by Gloria Jeff, Deputy Administrator, FHWA. Ms. Jeff welcomed the conference participants and stated that one of the goals of the conference was to receive input from those with knowledge, expertise, and a stake in the outcome of the policy decision relating to Federal credit. Ms. Jeff noted that the issue of Federal support for the encouragement of capital markets financing of transportation infrastructure figured prominently in the Administration's internal debates, and that Federal credit is part of the ongoing issue of how to fund surface transportation projects in this country.
Ms. Jeff suggested that the basic question was one of how to maintain the Nation's investment in transportation infrastructure while seeking mechanisms to meet new and difficult transportation challenges. The key, Ms. Jeff added, was in seeking partnerships between the Federal Government, State and local partners, the private sector, and the financial community in a way that produces the most prudent financing strategies for stimulating more investment in transportation infrastructure.
Ms. Jeff noted that the conference was very timely because Congress would be reconvening later in January to resume the debate on the Intermodal Surface Transportation Efficiency Act (ISTEA) reauthorization. Ms. Jeff noted that the conference was truly a fact finder, and that among the important issues relating to Federal credit were the following:
- Is Federal credit the best way to help large-scale projects in light of what likely will be continuing budget constraints, or are there other forms of assistance the Federal Government should be considering?
- Given that the Federal Government can offer credit incentives, tax incentives, and regulatory incentives, which approaches would have the greatest benefit in stimulating more investment?
- Are there market gaps which the Federal Government can and should address through credit, and if so, how can that be done with least interference to the private capital markets?
Ms. Jeff closed by encouraging participants to contribute to the discussion. Ms. Jeff then introduced David Seltzer, who outlined the format for the session.
David Seltzer, FHWA Senior Advisor, Office of the Administrator began by briefly describing the conference agenda and noting that FHWA intended the conference to be as informal and interactive as possible.
Mr. Seltzer noted that the conference was structured to touch on the key issues that FHWA had identified in its research to date. These issues, Mr. Seltzer added, included the following:
- How can Federal credit be used by project sponsors?
- What are the tax issues relating to the provision of Federal credit?
- How can the Federal Government best assess the budgetary costs associated with the provision of Federal credit assistance?
- What are the key Federal policy issues relating to credit and how could DOT best develop administrative procedures for executing and monitoring a portfolio of credit-assisted projects under a Federal credit program?
Mr. Seltzer stated that the conference was a follow-up to a draft policy discussion paper, Federal Credit for Surface Transportation: Exploring Concepts and Issues. He added that 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. Mr. Seltzer closed by noting that the major conference findings would be published by mid-spring.
