Remarks by Victor Mendez, Administrator, FHWA
Bond Buyer's 14th Annual P3 Conference
Friday, November 15, 2013
It’s a pleasure to join you this morning.
I appreciate the chance to share a few thoughts about some of the major issues we’re facing in transportation, especially on the funding side.
I don’t think there’s anyone in this room who doesn’t believe we have a lot of work to do to improve our system of roads and bridges.
We all want to see a system that continues to enhance safety, foster economic growth, and increase the mobility of our citizens and businesses.
But there’s less consensus on several other fundamental questions, like: What’s the right level of public investment? And what role should the private sector play?
Sixteen months ago, President Obama signed into law a new transportation bill, Moving Ahead for Progress in the 21st Century – or MAP-21 for short.
MAP-21 basically held the status quo in terms of highway funding for two years, while introducing some significant changes on the program side, including a focus on performance measurement.
It also incorporated some of the ideas for streamlining project delivery that we had pioneered through our Every Day Counts innovation initiative, which is an effort we’re undertaking with our state, local and private sector partners.
SEQUESTER AND SHUTDOWN
Because we’re funded through MAP-21, the Federal Highway Administration is not supported through the annual appropriation process that we heard so much about in the days leading up to October first.
The bottom line is that FHWA has been spared the impacts that other agencies – even other parts of DOT – have faced under sequestration and the recent shutdown.
Even while we were up and running, it was difficult to see so many of our fellow public servants face so much uncertainty.
If there’s a silver lining, it’s that the American people could see very clearly that the work of government matters and makes a difference in their daily lives.
I not only endorse that idea, but I also encourage it among our team at FHWA.
I always urge people to look at roads and bridges as more than steel or concrete, and see them instead as links to jobs, school, health care and other services.
Our new transportation secretary, Anthony Foxx, calls them “ladders of opportunity.”
One of his top priorities as secretary is to continue building ladders of opportunity for people, whether it’s by roads, rails, transit or air.
Of course, his top priority is making sure that however people travel, they do it on a system that’s as safe as it can be.
And he wants to make sure our transportation system continues to support our economy – creating good jobs today and supporting economic growth and competitiveness tomorrow.
But, as I mentioned earlier, there’s general agreement around those goals. And there’s broad agreement about the need to deliver projects – and their benefits – sooner.
But our ability to deliver projects more efficiently means little if we don’t have a way to pay for projects in the first place.
And so we all face the challenge of finding ways to pay for future improvements to our infrastructure.
As much as we celebrated the signing of MAP-21 and the two years of certainty it offered, we’re now in the final year of that bill.
By the end of 2014, the Highway Trust Fund will be nearly depleted, while the demands on our nation’s infrastructure will only increase.
All you have to do is look at the history of our TIGER program to see how great the demand is for funding.
Through five TIGER rounds, we received more than 5,200 applications for more than $114 BILLION in funding – about THIRTY TIMES the $3.6 billion we were able to provide.
We welcome all ideas for funding our system in the future. And we look forward to sitting down with Congress to find solutions that are politically and financially acceptable.
Transportation has always been an area where there was a great deal of bipartisanship. That spirit helped make MAP-21 possible. And we hope it will continue in the future.
But we also know that the private sector will have to play a part.
America works best when everyone plays a role in building what the President calls “an America built to last.”
Through proposals for a National Infrastructure Bank and a Partnership to Rebuild America, the President has supported the need to attract private investment in our nation’s infrastructure.
Over the past several days of this conference, you’ve heard a lot about TIFIA. And, there’s a good reason for this.
The new TIFIA program that was created in MAP-21 is well positioned to support up to $50 billion in public and private investment.
TIFIA can now lend up to $17 billion for transportation projects across the country, making it the largest transportation credit program in history.
With TIFIA, we can make possible the big transportation projects that will create the jobs we need today and help our country prosper in the future.
Since its launch in 1998, TIFIA has helped 36 projects with $12 billion of credit assistance. These projects account for more than $48 billion in critical highway, transit, and intermodal freight investments.
And, we’re rapidly adding to the TIFIA portfolio.
In just the past 6 months we’ve closed half-a-dozen loans. And, we expect to maintain this pace over the next 6 months.
There’s no shortage of good projects that can use the resources and flexibilities that TIFIA provides.
I look around the country and I see projects that were made possible because of TIFIA:
- I see signature projects like the Presidio Parkway in California – a project that might not have happened without TIFIA.
I’ve visited this very important project. It provides a new access road to the Golden Gate Bridge that’s able to withstand a major earthquake, connecting San Francisco and Marin Counties with a safe and modern roadway.
- In Virginia, public and private project sponsors are using TIFIA to improve the commute between Norfolk and Portsmouth – a rapidly growing area.
- Most recently, I see the $1.5 billion Goethals Bridge project that we helped with a $474 million loan.
This project will replace a bridge that’s nearly 100 years old. More than $33 billion in regional goods pass across the bridge each year. The new bridge will better serve commuters and improve freight transportation today and for years to come.
Each of these projects is being advanced as a public-private partnership.
As many of you know, TIFIA has been key to the success of just about every P3 project in the United States. Without TIFIA, there would be fewer P3 projects in the country today.
When Congress expanded TIFIA’s lending capacity, it was also sharpening a tool in the project finance toolbox – that is, public-private partnerships.
In fact, the program’s fundamental goal is to leverage Federal funds by attracting substantial private and other non-Federal co-investments.
It was good to see Congress confirm a path that Federal Highway was already pursing.
Almost exactly five years ago, FHWA established the Office of Innovative Program Delivery. We recognized the need for leadership in the P3 arena.
We’re committed to helping state and local governments learn about P3s and then assisting them as they work to evaluate candidate P3 projects.
We also support these agencies as they implement a P3 project.
We do all of this from the position of honest broker.
We want to see projects happen, but at the same time we want to make sure they are the right projects that will provide good value to the public now and in the future.
We do an enormous amount of education:
- Every year, we deliver dozens of webinars on project finance that routinely reach thousands of people.
- We have a website that serves as an educational tool. Thousands of people visited the site last year.
- We’ve also developed analytical tools and technical resources to help transportation officials compare the P3 procurement model with the traditional approach to delivering projects.
- And, we’ve delivered considerable innovations and technical assistance to project sponsors working to overcome the funding challenges facing their projects.
With MAP-21, Congress gave us the authority and the resources to do even more when it comes to public-private partnerships.
In addition to expanding TIFIA, Congress also said that, for projects costing more than $100 million, project sponsors “shall assess the appropriateness of a public-private partnership to deliver the project.”
Congress went on to say that the result of this assessment must be reflected in the finance plan submitted to FHWA for approval.
Let me take a moment and talk about this new finance plan requirement. It’s really very significant.
As you know, just exploring the possibility of a P3 can be a politically charged endeavor. With this requirement, Congress essentially removed some of the politics from the discussion. It’s no longer a “local call” whether a P3 will be considered.
In the near term, then, the P3 option will be on the table when procurement decisions are being made.
I look forward to the day when the P3 option will be routinely considered for all projects, early in the planning process. We’ll be working toward that goal.
We’re now finalizing guidance on how this requirement will be implemented. And we’ve already developed a tool to help with the assessment.
So, Congress, through MAP-21, established P3s as an important and powerful tool in the project delivery toolbox.
But, Congress also said the P3 tool must be used carefully, particularly with respect to ensuring the public good.
As a result of MAP-21, we’re now developing model provisions for P3 toll concession and availability payment contracts.
The provisions will serve as an educational tool that will assist transportation agencies in developing their own project-specific agreements.
We’re also working on best practices to ensure that the interests of the traveling public and state and local governments are protected when agreements are entered into with the private sector for developing, financing, building and operating transportation facilities.
We’re establishing a Center for Excellence in Project Finance, also called for in MAP-21, to encourage consideration of the model contract provisions as well as the best practices.
The Center will be the go-to place for technical assistance, sharing of best practices, and training in the use of tools and decision-making processes that will assist states in effectively implementing surface transportation programs and projects.
We’ve taken a very open approach in developing these resources and have a strong commitment to obtaining industry input.
We’ve sponsored “listening sessions” and solicited input on our draft documents through Federal Register Notices.
And, while we’ve already made great progress in satisfying the MAP-21 requirements, we still have more to do.
If you haven’t already engaged with us, please think about doing so in the future. We value input from the community and want our efforts to result in comprehensive, accurate and useful resources.
I always close my remarks with a few words about the Number One priority of the Department – and that’s safety.
We’ve made tremendous progress in this country in reducing the number of deaths and injuries on our roads. Safer roads and bridges play a major part.
But the driver plays an important role as well.
Distracted driving remains a serious problem in this country. Driving demands our full attention, and that’s impossible to provide if you’re talking on the phone or sending a text.
41 states and the District of Columbia have laws on the books that ban texting behind the wheel. I’m pleased that our host state of Illinois is one of them.
But we also need to use common sense.
And so, in closing let me urge you to always buckle your seat belt, put away your cell phone when you’re driving, watch out for pedestrians and people riding bikes, and simply drive safely.
Thank you very much!
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