The transportation reauthorization process has inspired many bills, and one of the policies receiving attention is that of a national infrastructure bank. Infrastructure banks provide loans and credit assistance, much like commercial banks, to infrastructure projects. Supporters claim that infrastructure banks improve the efficiency and effectiveness of investment outcomes by selecting projects based on performance criteria, not by formula or political processes. These advocates believe that, because loans must be repaid, an infrastructure bank would make disciplined investment choices when evaluating proposals.

The Obama administration first proposed a $5 billion infrastructure bank in 2009, continued to support the concept in 2010, and included a $30 billion version in its FY 2012 budget request. Infrastructure banks already exist in several states and in Europe. Two current Senate proposals, each discussed in this post, support the idea.

The debt and credit assistance offered by infrastructure banks is particularly useful for large, complex, multijurisdictional transportation projects, which are often difficult to finance using traditional transportation revenues. After their initial capitalization, infrastructure banks can rely on loan fees and interest to be self-supporting. Additionally, as early loans are repaid, the bank can lend those funds to new projects in the form of a revolving loan fund.

Beyond these broad criteria, the current infrastructure bank proposals vary widely in terms of initial capitalization, ability to raise and distribute funds, degree of independence from either the executive or the legislative branch, and the bank's intended portfolio. Senators Kerry (D-MA), Hutchison (R-TX), and Warner (D-VA) have sponsored the BUILD Act, which proposes a $10 billion American Infrastructure Financing Authority, an independent entity with a broad infrastructure portfolio and a charge to support large projects of regional or national significance. Senators Rockefeller (D-WV) and Lautenberg (D-NJ) sponsored the American Infrastructure Investment Fund Act of 2011(AIIF Act), which would create a similar institution, although with a smaller initial capitalization of $5 billion, grant-making authority, and that would be housed in the U.S. Department of Transportation. The AIIF Act would allowthe bank to cover a larger share of certain project costs, according to DC.StreegsBlog.

Infrastructure bank proposals seek to leverage investment with limited federal dollars, encourage private participation in transportation finance, and improve the process of capital financing. Awardee projects must repay their loans in time, often using revenue from tolls or other user fees. As such, a national infrastructure bank could support GO TO 2040's mobility goals of supporting more innovative project finance and strategic investment.