Former DOT official: Simplify infrastructure financing rules
The U.S. government needs to streamline and ease bureaucratic rules that make it difficult for the private sector to access federal credit to build intermodal freight and other infrastructure projects, a former Maritime Administration official said last week.
Several financing programs available for railroads, port operators and other entities to invest in public or private infrastructure have not met their potential because the application process is too complicated and burdensome, Julie Nelson, who served as deputy administrator of MarAd from 2006 until last June, said in Houston at a conference on port infrastructure organized by Infocast.
“Right now the government is requiring more (financial) information from the private sector than would normally be required by a bank,” Nelson said.
The Transportation Infrastructure Finance and Innovation Act (TIFIA), the Railroad Rehabilitation and Improvement Financing Program and the Department of Transportation’s issuance of private activity bonds for tax-exempt borrowing authority are examples of underutilized programs that could help bridge the infrastructure funding and credit gap facing the nation, she said.
The RRIF program was established in 1998 to provide low-interest loans and loan guarantees for railroad projects, but bureaucratic reforms have been slow to materialize and few railroads have taken advantage of the assistance. TIFIA has mostly been used to finance large highway projects, but the regulations were expanded in the last highway bill to also make intermodal freight projects eligible for low-interest federal loans.
Nelson, who now directs fleet chartering for a diversified natural gas company, said federal financing mechanisms need better approval timelines, guidelines and reduced red tape.
The review process for loan applications takes too long because regulators often can’t reach a decision or repeatedly send the application back for more details, each time costing the company countless hours and thousands of dollars to respond, she said.
Nelson called for Congress to step in and mandate a shorter response time for loan applications to help ease access to federal and private funds for infrastructure projects. She said financing programs could take a lesson from MarAd’s Deepwater Port Program in which the permitting process for offshore liquefied natural gas terminals has a one-year completion deadline, not including environmental reviews.
The financing mechanisms, she said, would also benefit from better guidelines on the amount of information that the private sector has to provide because the red tape involved to comply with financial obligations far exceeds that required by private lenders. The information requirements are causing a backlog in the review process and discouraging companies from applying for aid.
Correcting these problems is especially important, she suggested, because the next surface transportation reauthorization bill is likely to emphasize loan guarantees that leverage public dollars to encourage private investment because money for traditional grant programs is in short supply. ' Eric Kulisch