New municipal bond part of President’s initiative
A new municipal bond geared toward increasing municipalities’ access to public funds for much-needed infrastructure projects is part of President Barack Obama’s initiative to find alternative financing tools to ensure adequate investment in the nation’s infrastructure. The proposed Qualified Public Infrastructure Bonds (QPIBs) would allow municipalities seeking to enter into public-private partnerships (P3s) to take advantage of the benefits of municipal bonds. Today, P3s that include public ownership and some form of private-sector management and operations do not qualify for those benefits. The Administration sees this as a way to lower borrowing costs and attract new capital from the private sector.
The presidential initiative seeks to ensure an adequate infrastructure throughout the nation, knowing that infrastructure is at the heart of economic growth. It also creates jobs and allows this country to compete globally. This initiative builds on Obama’s 2014 Build America Investment Initiative that urged federal agencies to find alternative financing tools to ensure adequate investment in the nation’s infrastructure. Additional capital, including that from the private sector, is being sought for projects related to roads, bridges and broadband networks.
Among the provisions of the new initiative is creation of a Water Finance Center to be located at the Environmental Protection Agency. It will assist local and state governments as well as utilities and private-sector partners in accessing federal grant and loan programs to give them more revenue options. Among its goals are to bring together investors and project sponsors and point out promising partnerships.
Another arm of the initiative is a U.S. Department of Agriculture Rural Opportunity Investment Initiative that will help identify investment opportunities in rural water, energy and broadband projects and help connect private-sector investors to the projects. A Transportation Investment Center at the U.S. Department of Transportation will work with local and state governments on project planning and attracting foreign investors through the SelectUSA Program. Also, infrastructure tax proposals will provide incentives for projects that include both public- and private-sector investments.
With the private sector bringing both capital and expertise to the table, the White House anticipates more local and state government projects can be completed at a lower cost and more efficiently. However, the President is cognizant that not all of the responsibility for capital can be placed with the private sector, and has pledged to continue to seek congressional assistance in making more public funding available as well as use his own authority to facilitate more infrastructure investment.
The White House has produced a fact sheet with more information on this new initiative.