R.G. Edmonson | Mar 15, 2011 4:30PM EDT
Sen. John Kerry, D-Mass., will file legislation in the next two days to create the American Infrastructure Financing Authority with an initial capitalization of $10 billion.
Under the bill, an independent authority would channel private investment money for U.S. transportation, water and energy infrastructure, Kerry told reporters on Tuesday.
Kerry said the bank will be able to attract billions in private equity to fund infrastructure projects of $100 million or more, or $25 million in rural areas. Any investment will have to have a discrete revenue source for repayment.
"This bill is a statement about not only where we are today, but where we need to be in the future," Kerry said. "Government budgets at all levels are tight, but that does not eliminate the need for new infrastructure. Reliable modern infrastructure isn't a luxury. It's the lifeblood of our economy. In the face of global competition, our growth in exports is directly tied to the modernity of our infrastructure. And the reality about that infrastructure couldn't be more stark."
Americans have been living on infrastructure that was built in the 1950s, Kerry said. The U.S. annually invests 2 percent of GDP in infrastructure while China invests 9 percent and Europe invests 5 percent.
Kerry said the infrastructure authority would be run by professionals who would make the investment decisions. He was quick to separate the would-be AIFA from Fannie Mae and Freddy Mac. The infrastructure bank would be a not-for-profit institution, issue no stock and operate transparently under careful congressional oversight.
Congress will raise seed money for the bank from existing sources. It could draw the funds from the Obama administration 2012 Department of Transportation budget, which provides $30 billion for competitive grants.
The infrastructure bank would issue no grants, but Kerry and co-sponsor of the bill Sen. Kay Bailey Hutchison, R-Texas, said that its operation will complement DOT'S TIFIA loan program. Lawmakers have embraced TIFIA as a successful government program. The AIFA bill will likely be a significant piece of surface transportation legislation that Senate and House are working on.
Kerry's staff said the bill will be filed within two days. Kerry and Hutchison were joined at the conference by Sen. Mark Warner, D-Va., and Thomas Donohue, president of the U.S. Chamber of Commerce, and Richard Trumka, president of the AFL-CIO, who praised the infrastructure bank as a job-creator.
-- Contact R.G. Edmonson at bedmonson@joc.com.