Reform and Bolster Infrastructure Financing Tools
Remove Water and Sewer Bonds from Volume Cap
Exempting water and sewer private activity bonds from state volume cap requirements would allow states and municipalities to finance more infrastructure projects through bond issuance than are currently possible. In 2015, $12.25 billion of the $13 billion in national volume cap available went toward financing projects other than water and sewage infrastructure. The demand for bond financing creates a bottleneck with other political priorities using most of the cap. Water projects simply cannot access this resource on a level playing field. Freeing water and sewage infrastructure form volume cap constraints would drastically increase state and local capacity to finance essential water and sewage projects. Legislation to remove these bonds from volume cap restrictions was introduced on a bipartisan basis in both the House and Senate in 2016.
Aid and Support Implementation of the Water Infrastructure Finance and Innovation Act
The Water Infrastructure Finance and Innovation Act (WIFIA) program provides credit assistance in the form of loans for large water infrastructure projects and is modeled off of the highly successful TIFIA program. The goal of the WIFIA program is to accelerate investment in water infrastructure by providing supplemental credit assistance to creditworthy projects of major importance. WIFIA works separately from, but in coordination with, the State Revolving Fund (SRF) programs to provide subsidized financing for large dollar-value projects. WIFIA was authorized in 2014 and was appropriated funding to establish the program and the WIFIA office at the U.S. EPA.
Learn more about WIFIA
Launch a Federal Urban Tax Increment Finance Program
Congress should consider legislation that enables targeted urban tax increment financing (TIF) at the federal level. Under TIF local governments can redirect specific, future estimated tax revenue to pay the present cost of development. These funds can only be used for public infrastructure like roads, bridges, sewers, utilities, etc. A federal urban TIF mechanism would allow the government to redirect very specific federal income tax revenue to catalyze urban revitalization efforts. These taxes would only be redirected for the period of time needed to pay off the debt service on the investment. Once the debt is paid off, the taxes would once again flow to the federal government. With federal resources involved, the urban TIF program would help lower the cost of capital for some of the nation’s most difficult revitalization and redevelopment projects. Tax increment finance is used in 48 states and the District of Columbia and is highly effective and efficient.
Read the 2017 Policy Agenda