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FEDERAL, STATE AND LOCAL PARTNERSHIPS 

TO ACCELERATE TRANSPORTATION BENEFITS 

HEARING 

BEFORE THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 11, 2010 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 
(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

FRANK R. LAUTENBERG, New Jersey 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

AMY KLOBUCHAR, Minnesota 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

ARLEN SPECTER, Pennsylvania 

JAMES M. INHOFE, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

DAVID VITTER, Louisiana 

JOHN BARRASSO, Wyoming 

MIKE CRAPO, Idaho 

CHRISTOPHER S. BOND, Missouri 

LAMAR ALEXANDER, Tennessee 

BETTINA POIRIER, Staff Director 

RUTH VAN MARK, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

MARCH 11, 2010 

OPENING STATEMENTS 

Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 1 

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 2 

Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey ........... 27 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 28 

WITNESSES 

Kienitz, Hon. Roy, Under Secretary for Policy, U.S. Department of Transportation ..................................................................................................................... 4 

Prepared statement .......................................................................................... 7 

Responses to additional questions from: 

Senator Boxer ............................................................................................ 13 

Senator Sanders ........................................................................................ 15 

Senator Inhofe ........................................................................................... 16 

Senator Voinovich ..................................................................................... 23 

Senator Vitter ............................................................................................ 26 

Villaraigosa, Hon. Antonio R., Mayor, City of Los Angeles, California .............. 38 

Prepared statement .......................................................................................... 42 

Responses to additional questions from: 

Senator Boxer ............................................................................................ 107 

Senator Inhofe ........................................................................................... 109 

Senator Voinovich ..................................................................................... 111 

Senator Vitter ............................................................................................ 112 

Inman, Max, Senior Advisor, Project Finance and Program Management Initiatives, Mercator Advisors ................................................................................. 116 

Prepared statement .......................................................................................... 118 

Responses to additional questions from: 

Senator Sanders ........................................................................................ 122 

Senator Inhofe ........................................................................................... 123 

Clary, Lowell R., Managing Partner, Clary Consulting, LLC .............................. 127 

Prepared statement .......................................................................................... 129 

Responses to additional questions from: 

Senator Sanders ........................................................................................ 139 

Senator Inhofe ........................................................................................... 142 

Hecker, JayEtta Z., Director, Transportation Advocacy, Bipartisan Policy Center .......................................................................................................................... 146 

Prepared statement .......................................................................................... 148 

Responses to additional questions from: 

Senator Sanders ........................................................................................ 161 

Senator Inhofe ........................................................................................... 163 

Senator Voinovich ..................................................................................... 169 

(1) 

FEDERAL, STATE AND LOCAL PARTNERSHIPS 

TO ACCELERATE TRANSPORTATION BENEFITS 

THURSDAY, MARCH 11, 2010 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m. in room 

406, Dirksen Senate Office Building, Hon. Barbara Boxer (Chairman of the Committee) presiding. 

Present: Senators Boxer, Inhofe, Carper, Lautenberg, 

Whitehouse, and Voinovich. 

OPENING STATEMENT OF HON. BARBARA BOXER, 

U.S. SENATOR FROM THE STATE OF CALIFORNIA 

Senator BOXER. Welcome. 

Is Mr. Kienitz here? Why don’t you take your seat. Thank you. 

Welcome, everybody. Last month, Secretary LaHood came to Los 

Angeles as part of his Surface Transportation Reauthorization Outreach Tour. Together we held a town hall meeting in L.A., where 

we heard from city, county and local officials and other interested 

parties from throughout California about issues we should consider 

as we work on the next surface transportation authorization bill, 

MAP–21. That stands for Moving Ahead for Progress in the 21st 

Century. 

Today’s hearing focuses on one of the ideas that was raised at 

that town hall: finding ways the Federal Government can build 

upon and encourage transportation investments made at the State 

and local level across the country and ways in which the benefits 

of those investments can be accelerated. 

For example, in 2008 the citizens of Los Angeles County—was it 

county or city, Mayor? County. The citizens of Los Angeles County 

approved a half-cent sales tax dedicated to transportation investments. This measure will generate an estimated $40 billion over 

the next 30 years. 

Mayor Villaraigosa, who I am so pleased has joined us today, 

suggested to me and to others that if the Federal Government 

could help Los Angeles complete a portion of the transportation improvements approved by the voters over 10 years rather than 30 

years, then our constituents could enjoy the benefit of their transportation investments sooner, and many more jobs would be created in the short term. 
2 

I am a strong supporter of investments in transit as a crucial 

part of a transformational transportation policy. I want to thank 

Mayor Villaraigosa for bringing the Los Angeles 30/10 initiative to 

my attention. 

I support the 30/10 initiative. I look forward to working with the 

mayor, my colleagues here in the Senate, and the U.S. Department 

of Transportation to find ways to help not only Los Angeles but 

also communities across this Nation. 

I think, Senators, if we can get this done, it is going to send a 

very strong signal to the citizens that if they step up and are willing to pay even a small amount over time, that that investment 

will pay off in the early years. It is a simple idea, it is a crucial 

idea, and I am all for it. 

I want to thank Roy Kienitz, Under Secretary for Policy at the 

U.S. Department of Transportation, for being here today, as well 

as all of the witnesses on our second panel. 

Today’s witnesses will discuss the Federal programs currently 

available to assist States and local governments with transportation investments as well as examples of how some States are 

partnering with private investors to provide additional investment. 

I look forward to hearing suggestions as we develop this idea and 

as we develop MAP–21. I am hopeful we will hear today that there 

are some programs already in effect that could step in and begin 

this 30/10 project, because it would be very helpful for us to just 

get started. 

With that, I want to call on my colleague and friend, who has 

been such a supporter of transportation programs in this country, 

Senator Voinovich. 

OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 

U.S. SENATOR FROM THE STATE OF OHIO 

Senator VOINOVICH. Thank you, Madam Chairman. I would like 

to thank the witnesses for being there today and for your hard 

work and leadership on highlighting the need for increased investment in our aging transportation infrastructure. 

Having served as a mayor, county commissioner, a member of 

the metropolitan planning organization in Cleveland, NOWACA, 

Governor, now Senator, I understand the different needs, concerns, 

and responsibilities that each level of government brings to bear on 

the challenges we face as communities and a Nation, and I really 

appreciate each of you being here today to discuss your vision and 

needs for the next reauthorization bill. 

With the next bill we have an opportunity to not only improve 

and repair our crumbling highways and bridges but to spur our 

economy at the same time, and that is why I encourage the big 

five—the National League of Cities, Conference of Mayors, NGA— 

to come together and reach consensus on what they want to see in 

this reauthorization bill. And Mayor, it would be very important 

that you work with them to make sure that they come back with 

the recommendations that would respond to the kinds of things you 

are going to be talking to us about today. 

It is no secret that the Nation’s transportation needs greatly exceed the investment at all levels. We authorize two commissions in 

SAFETEA-LU, and they came back—the National Surface Trans-
3 

portation Policy and Revenue Study Commission—and they called 

for investments of at least $225 billion annually, and right now, 

when you take the Federal money and the State money and the 

local money, we are doing about 40 percent of that. 

I believe the next reauthorization bill will provide fundamental 

and needed reforms to our system, projects of regional and national 

significance, consolidate programs, streamline project delivery, important. And I am happy to see a witness from the Bipartisan Policy Center. I spoke before your group a couple weeks ago, and I am 

pleased to hear that you are advocating for our national transportation system. 

Jobs. I think that we all know that the unemployment in the 

construction industry and transportation is about twice as bad as 

it is in the rest of the economy. In my State, we have had 35,000 

people who are not working that are in the construction industry. 

We also, I think, know that we are going to get a bigger bang 

for our buck if we move on this quickly because of the fact that people are hungry today, and our bids in Ohio are coming in at about 

10 to 12 percent less than they did a couple years ago. So it means 

we are going to get more for the money that we invest. And the 

other thing is that we are going to pay for it. 

Mr. Kienitz, I am very interested in your thoughts on that; and 

the mayor, I am very interested in your thoughts. I read your 

paper, and it is very impressive. There ought to be some way that 

we can encourage people to take on more responsibility. So I think 

that is something that we need to fold into this. 

Environment, I think, again, you know, I don’t know if we have 

weighed the measure of reducing greenhouse gases from some of 

the proposals that are there. It is fantastic. So it is another benefit. 

And last but not least, bipartisan—something that maybe the Republicans and Democrats can do this year that would be well received by the American people. And I think certainty. I think really 

what we are concerned about today is there is a lot of uncertainty 

out there. People aren’t sure where we are going, and they are 

holding back because they are not sure whether they are going to 

get a job or they are going to keep their job. 

And if we were able to move forward with this reauthorization 

and fund it robustly I think we would take a large segment of the 

economy of the United States and give it certainty, and I think 

that would then start to flow into other areas where we have uncertainty. 

So I am looking forward to the presentations today. 

Is it Mr. Kienitz, is it? 

Mr. KIENITZ. Kienitz, sir. 

Senator VOINOVICH. I wish that the day you came here and testified that we were recording what you had to say, because it was— 

some of the people behind you I thought got a little uncomfortable. 

But you did a fantastic job of outlining why it was that we needed 

a multi-year reauthorization of this bill to provide the certainty 

that is needed throughout this country, particularly for State governments that are right now holding their breath and trying to figure out where we are going. 

Thank you, Madam Chairman. 

Senator BOXER. Thank you so much. 
4 

Under Secretary, please proceed. 

STATEMENT OF HON. ROY KIENITZ, UNDER SECRETARY 

FOR POLICY, U.S. DEPARTMENT OF TRANSPORTATION 

Mr. KIENITZ. Thank you. Sir, I will try not to scare the people 

behind me quite so much today and yet still be helpful. 

Obviously, thank you, Chairman Boxer, for having us here, and 

Senator Voinovich, good to see you. 

I guess what I would like to do is talk about, first of all, some 

of the tools that DOT currently has that might be able to help very 

large transportation projects with loans or other types of credit assistance, but also about some tools that we don’t yet have that 

might be best suited to what we think is probably an emerging 

area of need here. 

Before I go into that, though, I would like to talk a little bit 

about Los Angeles. As you know, Madam Chairman, I was out 

there a couple weeks ago with Secretary LaHood, at your invitation, to hear about the needs of that region, and we met with the 

mayor in some depth, discussing his ideas for the 30/10 plan, and 

I think both the Secretary and I viewed that as a very valuable 

trip, and once again, thank you for hosting us. 

I know the mayor will describe the political forces that came together to create this long-term revenue stream in that region by a 

vote of the people, but the central issue here is really as the cash 

flow goes out over a great number of years, and I think the mayor 

has correctly identified a situation that will allow the projects to 

all be built, but not at the time in which they are needed. Everyone 

who has ever driven in L.A. knows that I think more and better 

transit in that region is a must, and the sooner it is in place the 

better. 

But I also think Los Angeles is probably not the only place that 

is pursuing a whole program of projects of this kind, rather than 

just individual spot investments. Just off the top of my head, I 

know that Denver, Salt Lake City, and Seattle are also in a similar 

situation where they have a network proposal that they have made; 

it is broken into individual pieces for the purpose of implementation, but their goal is really to create an entire network. And even 

with dedicated taxes it is decades until the program can be fully 

built out, and that means it is decades that the people have to wait 

to get the benefits of the program. 

So we have some tools to help in these cases, and they are useful, 

but they are designed to work on a project by project basis. The 

first of these is the TIFIA program, which this Committee had a 

major role in creating a dozen years ago, and it provides loans up 

to one-third of the cost of a major transportation infrastructure 

project. 

Its first utilization really was in the world of toll roads, and it 

has done well at that, but it is increasingly being looked at also as 

a major capital source for transit projects. I can tell you that in this 

Administration one of our goals is to make sure that that program 

is truly multi-modal in practice as well as in theory. It has always 

been multi-modal in theory, but we are trying to also make it 

multi-modal in practice. 
5 

And I will say, as an example, TIFIA recently provided a $171 

million loan to the Transbay Transit Center project in San Francisco, which is a major hub that is going to connect the city and 

the peninsula with the rest of the State. 

Denver Union Station is a project of a similar kind where TIFIA 

might also be useful. 

But unfortunately the TIFIA office is currently evaluating proposed loans and loans that are expected to close in the near term 

that will consume a large portion of its available funding sources. 

Even if that were not true, TIFIA is just not sized to deal with 

something of the magnitude of what is being proposed in Los Angeles. It could be adapted to help with that, or it could offer a first 

step in a multi-step process, but right now that is probably all it 

could do. 

Another option is the TIGER program, which I know the Senators are familiar with. It can offer grants but also support for 

TIFIA loans to, once again, a wide variety of projects—highways, 

transit, and others. As such, added increments of TIGER funding 

are one way, for example, to add more money to the supply available to TIFIA without going over and above the current appropriated level. So that could potentially be a tool for making funds 

available to this purpose. 

The competitive nature of the TIGER program has led a lot of 

project sponsors to get creative, and in particular bring a much 

higher level of local resources to the projects being proposed so that 

they can compete better than you tend to see under the formula 

program, and that could make it in some ways a good fit for the 

Los Angeles experience where there are so many local resources. 

But once again, magnitude may be an issue. Although we were 

able to fund many valuable projects in the first round of TIGER 

funding, the average grant size was $30 million, and $30 million 

sounds like a lot of money, but in Los Angeles you know they are 

talking about $40 billion, and that amount of money, I am not sure 

it really moves the needle in what they are trying to do. 

Third, of course, I would refer you to the President’s 2011 budget, which proposes $4 billion for what we are calling a National Infrastructure Innovation and Finance Fund, and this can be viewed 

as a new iteration of the original infrastructure bank proposal. And 

once again, this would create funds to invest as grants or loans in 

projects of regional or national significance. 

These three programs—TIFIA, TIGER, and the proposed new Infrastructure Fund—could be used to help Los Angeles get started, 

but once again, even these are all project based programs. As such, 

to get started, to take that first step, we will need to work with 

the mayor and the MTA in Los Angeles to identify which projects 

potentially could be accelerated first, their state of readiness, and 

the other routine information that DOT needs to have whether we 

are advancing something through a grant or a loan. 

We have obviously begun initial discussions on this; we have received some materials from them, and then this is going to need 

to continue so that we can try to discern if there is a pathway to 

move forward here. We have become, I think, much more familiar—certainly Secretary LaHood has—about the various proposals, 

be they the Regional Connector or the Crenshaw Line or Subway 
6 

to the Sea, so now we are going to need to get down into the details 

to figure out where the best pathway might be. 

That said, it is not clear that any of these programs, either existing or as currently proposed, can fully support the vision that has 

been articulated. This is both due to the structure of what is proposed and its sheer size. Full Federal support for an effort of this 

size may need to be directly addressed in the reauthorization of 

surface transportation programs, and obviously we pledge to work 

with you, Chairman Boxer, and the entire Committee on that to 

see how we can as a group best support not just Los Angeles but 

regions all over the country that are trying to take big steps forward in transportation. 

Once again, thank you for the opportunity. I am happy to stay 

for questions. 

[The prepared statement of Mr. Kienitz follows:] 
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Senator BOXER. Well, I just want to thank you for that, because 

you are such a positive person, and you are giving us some hope 

here that we can get started as we work on this longer-term project 

of the reauthorization. 

I know Senator Lautenberg would like to make an opening statement. It would be appropriate now if you would like to do that. 

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM THE STATE OF NEW JERSEY 

Senator LAUTENBERG. Thank you. I appreciate it, Madam Chairman. And my Republican colleague, who will be missed when he 

leaves here, I am glad to share the hearing with him. 

Forgive me for a moment, Madam Chairman. This is kind of momentous for me because I had kind of a health siege, and things 

worked out very, very well, and just as an indication of support 

from my team, David Gardner and two other members of my staff 

shaved their heads as I lose my hair. So it is solidarity all the way, 

and I thank you for the opportunity to get personal for a minute, 

personal and up front, by the way. 

Madam Chairman, my home State of New Jersey is situated at 

the crossroads of some of the most traveled paths for moving people 

and goods in the country—the New Jersey Turnpike, the Garden 

State Parkway, the northeast rail corridor, plus a major seaport 

and airport—and there is no doubt that transportation is the life 

blood of my State and our country. 

Our transit system is the largest statewide transit system in the 

country, our workers are the third highest users of public transportation in the country, and the George Washington Bridge, which 

connects our State to New York, is the busiest crossing in the 

world. I think there is a poll that exists that says how long will 

you have to wait to cross this incredible bridge. It is just an indication of what it is that we need to do with our transportation system. 

This hearing is critical because of the focus on the essentiality 

of Federal, regional, and State partnerships joining together. And 

if we really want to do more than fill potholes and fix traffic lights 

and actually tackle the enormous transportation challenges we 

face, we have no choice. We have to work together. 

Right now the construction of a brand new tunnel under the 

Hudson River is moving forward in New Jersey. It is the largest 

transit project in the country, and it came to life because the Port 

Authority of New York and New Jersey, and local, State, and national leaders joined forces and created a plan to cut traffic, reduce 

pollution, and put people to work. When the tunnel is finished, it 

will take 22,000 cars a day off the roads. What is more, when completed this tunnel will create 44,000 new jobs—permanent jobs. In 

the meantime work on the tunnel will generate 6,000 construction 

jobs a year. We are ready to go to work. 

The Hudson River tunnel is a terrific example of what can be accomplished when we all work together, and it should be a model 

for future transportation investments. 

But as important as these partnerships are, they are not a substitute for a national transportation policy, and that is why Senator 

Rockefeller and I have introduced the bill that moves us into a new 
28 

direction. Our bill establishes clear, measurable goals for our national transportation system. This national policy will pave the way 

so that we can ease traffic, save lives, break our dependence on foreign oil, help clean the environment, repair our crumbling infrastructure, and build the cutting edge transportation systems of the 

future. That is a win-win-win-win. 

The truth is we have to get beyond the status quo. Simply building more highways—while critical—will not solve our Nation’s 

transportation problems. It will not make us more competitive, and 

it will not prepare us for the economy of the future. We have to 

make substantial investments in mass transit, passenger rail and 

high speed rail. At the same time, we also must modernize and expand our freight rail service. 

I want to thank the witnesses, Madam Chairman, for coming 

today. I look forward to hearing their views, and we listen with interest to Mr. Kienitz on how we can work together to rebuild our 

country, expand our economy, and create jobs, and I thank you 

very much. 

Senator BOXER. Thank you so much, Senator Lautenberg. We are 

so glad to see you. 

Senator Inhofe. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA 

Senator INHOFE. Thank you, Madam Chairman. 

The members of the Committee know this, but some in the room 

may not, there is a conspiracy going on, actually. It is between the 

Armed Services Committee and this Committee. Because every 

time we have a hearing I find I have to be down there, and I am 

second ranking on that. So I apologize for that because this is so 

significant. 

I believe our Federal infrastructure spending is one of our very 

primary concerns, second only to defending America. That is just 

my personal feeling. Given our enormous needs, however, it is just 

difficult to imagine that the next highway bill could ever meet all 

of them if we follow the traditional way. 

I remember how successful we were, Madam Chairman, back in 

2005, and yet what we passed didn’t really even maintain what we 

had already. 

SAFETEA was a 38 percent increase over TEA–21 and was one 

of the largest non-defense spending measures ever passed. But as 

I have often said, it wasn’t enough money to even maintain the existing roads and bridges, let alone improve them. We can’t expect 

to spend our way out of this crisis with Federal dollars alone; we 

need a true public-private partnership if we are going to accomplish something, and that is the reason that we are having this 

hearing today. 

One of the most frequently discussed ways to leverage non-Federal investment is through public-private partnerships and with 

the State and local governments entering into an agreement to 

transfer risks to the private sector and raise private capital. This 

is a way to unleash an enormous amount of private money, especially from pension funds. Investors are attracted to private-public 
29 

partnerships because they offer stability over long periods of time, 

often 75 or 95 years. 

I must point out that although these long-term concession agreements can work, as evidenced by the Indiana toll road, there are 

many different applications of these partnerships that we are just 

beginning to understand. We can no longer overlook this financing 

source to help address our problem. 

So, in addition to the private sector playing an active role in a 

project, there are always Federal Government ways that we can 

lower borrowing costs. These include capitalizing State infrastructure banks, increasing opportunities for bonding, and Federal loan 

programs. 

So we have tried some things that have worked to varying degrees in States like Indiana and Virginia and Texas, and I think 

we need to. We recognized this problem back in 2005 when we did 

our reauthorization bill, so we had a commission that was formed 

to explore all these other opportunities. I wasn’t satisfied with the 

product that came out of it, but perhaps from this point forward 

we can find something better. We are going to have to do something about our crumbling infrastructure in America, and particularly in Oklahoma. 

[The prepared statement of Senator Inhofe follows:] 

STATEMENT OF HON. JAMES M. INHOFE, 

U.S. SENATOR FROM THE STATE OF OKLAHOMA

I believe in Federal infrastructure spending and see it as one of the primary purposes of Government. Given our enormous needs, however, it is difficult to imagine 

that the next highway bill could ever meet all of them if we follow the traditional 

way of paying for transportation. According to the Administration, our backlog of 

deferred road and bridge maintenance is $600 billion and growing. Clearly, we need 

to think about how we can do things differently. Not only do we need to get the 

most for our Federal highway dollar, but we also need to encourage State and local 

governments and the private sector to invest as much as possible in roads and 

bridges. 

SAFETEA was a 38 percent increase over TEA–21 and was one of the largest nondefense spending measures ever passed. But as I’ve often said, it wasn’t enough 

money to even maintain our existing roads and bridges—let alone improve them. We 

can’t expect to spend our way out of this crisis with Federal dollars alone; we need 

a true public-private partnership if we are going to accomplish what needs to be 

done. 

One of the most frequently discussed ways to leverage non-Federal investment is 

through public-private partnerships, or PPPs. With PPPs, State or local governments enter into an agreement to transfer risks to the private sector and raise private capital. This is a way to unleash an enormous amount of private money, especially from pension funds. Investors are attracted to PPPs because they offer stability over long periods—often 75 or 95 years. I must point out that although these 

long-term concession agreements can work, as evidenced by the Indiana Toll road, 

there are many different applications for PPPs that we are just beginning to understand. We can no longer overlook this financing source to help address our infrastructure funding shortfall. 

In addition to the private sector playing an active role in a project, there are ways 

the Federal Government can lower borrowing costs. These include capitalizing State 

infrastructure banks, increasing opportunities for bonding, and Federal loan programs, such as those made possible by the Transportation Infrastructure Finance 

and Innovation Act (‘‘TIFIA’’) program. To date, all of these have been initiated at 

the State or local level. 

I am interested in hearing from our witnesses today on how changing the structure of the Federal program can encourage more transportation investment at the 

State and local level. 

I look forward to the testimony. 
30 

Senator BOXER. Senator, you know, as we often say, this is one 

area where we really see eye to eye, and that bodes well for the 

country, and I think we can all unite around this notion that a 

great country needs a great infrastructure. 

Now, Mr. Under Secretary, again, I appreciate your testimony 

very much, it is a can-do type of testimony; it is not we can’t do 

this and we mustn’t do that. So I really appreciate your laying out 

the programs that exist today that could leverage the funds. As 

Senator Inhofe said, that is crucial here. 

Now, here we have a confluence of interesting issues. We have 

Los Angeles County, whose people voted to tax themselves, and it 

is a 30-year program, 30-year program of $40 billion. So that is 

done, and those funds will come in. And as the mayor will so eloquently testify, these projects are needed much sooner than 30 

years from now. So how do we work together, given that that 

source of funding is real? As we say, we can take it to the bank, 

to the infrastructure bank because it is real. 

Then the other issues are, as Senator Voinovich said, we are at 

a time now where the costs have gone way down due to the recession and for bad reasons. You know, the construction industry is 

hurting, so the costs are coming in—how much did you say, Senator Voinovich, how much lower are some of the costs coming in? 

Senator VOINOVICH. Ten to 12 percent. 

Senator BOXER. Ten to 12 percent. So it would be foolish that we 

have this opportunity now to save these funds, that we just didn’t 

speed up this whole idea. 

And by the way Los Angeles is now what we are talking about, 

but I think this is an issue for Oklahoma and everywhere else. 

Where the locals or the private sector are willing to come up to the 

plate we ought to have a way to accelerate it; Federal Government 

gets paid back. 

I wanted to just probe on the current programs, because you said 

that TIFIA will lend a third of the cost of the project and that the 

problem with it is that it is not funded at a high enough level. 

What is the funding of TIFIA? 

Mr. KIENITZ. I believe the annual appropriation has been in the 

$100 million to $200 million range. Now, what that covers is the 

subsidy cost, as we call it, so you figure you can offer assistance 

that is 8, 10, 12 times that amount. 

Senator BOXER. Good. In other words, it scores at $100 million 

to $200 million, but in essence it is much more than that. 

Mr. KIENITZ. A billion, billion and a half, depending on the quality of the repayments that are pledged. 

Senator BOXER. OK. So that is a program that essentially allows 

for a billion to a billion and a half loans for specific projects, which, 

by the way, I think is fine. I mean, they know what they want to 

do, and they have specific projects. We are not going to give money 

for some non-specific project. 

Mr. KIENITZ. Right. 

Senator BOXER. I don’t think I could go home and support that. 

So that is a program where—let me just ask you this. If we were 

to simply just—I don’t know what it is authorized at. 

Do you know, Bettina, what it is authorized at, TIFIA? 
31 

If we were able to authorize it at a higher level and fund it at 

a higher level, theoretically, would we be able to take care of Los 

Angeles? Let’s just say we are able to fund it way up. 

Mr. KIENITZ. Right. I would say, as a matter of theory, yes. What 

has happened is that the tightening of credit markets in the last 

2 years has led to a huge spike in demand for TIFIA resources. 

TIFIA used to be a program where they would provide $100 million 

or $200 million a year in authority, and we were lucky if, any given 

year, that was actually used, and there were lots of carryover 

funds. Now that the municipal bond market and other private markets are tight, we have recently sent out a solicitation for possible 

interest for TIFIA loans in 2010, and a huge number of people have 

responded to that. 

Senator BOXER. Right. But that is why I am saying if we were 

able to dramatically increases the funding—— 

Mr. KIENITZ. Yes. 

Senator BOXER [continuing]. Given the situation, or to say if a 

local government, a State government came to us with a plan for 

private sector involvement, local government involvement, State 

government involvement—I mean, I am a person who doesn’t like 

to have to write new laws if we have laws on the books. So I am 

just pressing you. Assuming that we were able to fund TIFIA at 

an appropriate level, which we will leave what that is later, would 

that law give Los Angeles what it needed, assuming we could make 

these loans a third of the cost of the project? Would that go a long 

way to solving the problem? 

Mr. KIENITZ. The answer is yes, with some asterisks. The asterisks are it is only legally allowable up to a third of the cost, so if 

they have a $3 billion project, we could loan them $1 billion; where 

the other two billion comes from is an issue. The second is that the 

process by which you determine the interest rate on a TIFIA loan 

is a well described process. I don’t know that it could get the number down to low enough for what you are looking at or not, but 

there are a lot of market conditions that go into that. 

Senator BOXER. Is the loan rate a market rate from the Federal 

Government, or is it lower than a market? 

Mr. KIENITZ. It is based on a Treasury rate, so it is generally almost always much better than you can get in the private market. 

Senator BOXER. Right now the Treasury coupon is what? 

Mr. KIENITZ. I don’t know. 

Senator BOXER. It is low. 

Mr. KIENITZ. Low. Two. Under two, I think. 

Senator BOXER. Which is another interesting issue. 

Well, I am going to come back for a second round and ask you 

about the TIGER grant program that you mentioned and the National Infrastructure Fund, but my time has run out, so I will turn 

to Senator Inhofe. 

Senator INHOFE. Thank you, Madam Chairman. 

Again, I apologize for not being here when you gave your statement; however, we have read it. 

Well, we know the problem. We talked about the fact there is 

about $600 billion out there, and it is growing every day in terms 

of just maintenance backlog that we have, and we have to do something about it. Some things are not much fun to talk about, but in 
32 

looking at some of the options, some have proposed changing the 

formula, maybe lowering the Federal—did you talk about that in 

your opening statement? Is that something you want to talk about, 

changing the formula, in order to accomplish more of these 

projects? 

Mr. KIENITZ. This is the match rate for Federal—— 

Senator INHOFE. Yes. 

Mr. KIENITZ. It is not something I have certainly discussed. I 

know it has been much discussed over many years here. Many 

States already provide much more local funding than the requirement is, so California and New York, Illinois, big States like that, 

are already probably doing their highway programs at 50/50. An individual project might legally be at 80/20, but they have way more 

State funds that they are using. 

The issue there becomes the States without a lot of their own resources, and I know just from my time here that Montana, Wyoming, Idaho, South Dakota, States like that are the ones that tend 

to particularly resist that because they have much less in the way 

of local revenue to make that higher match. 

Senator INHOFE. Yes. Well, you know, we talk—when the Senator from Minnesota is here, she talks about the horrible thing that 

happened, the bridge up there. 

I would suggest, Madam Chairman, that—and I am reading now 

from 2004—a football size piece of concrete fell from a bridge and 

crashed through Yvonne Osborne’s windshield. This was in Oklahoma City, I–35. A mother of two, and she died. I mean, this is not 

just a matter of convenience; it is a matter of life and death. And 

I am not very proud that we have a record, from indications that 

I have seen, in my State of Oklahoma we are dead last in the condition of our bridges, and yet we have I think one of the most quality secretaries of transportation of any of the States. We talk on almost a daily basis over doing something about this. 

I understand that—and I don’t know much about it, but very 

broadly speaking I heard Secretary LaHood, who is one of my best 

friends I have served with in the House, talked about that you plan 

to release the principals in the next 90 days. Now, I don’t know 

what we are talking about here. Can you enlighten me as to what 

principals will be released in the next 90 days? 

Mr. KIENITZ. I don’t think I can. That is something that we are 

actively discussing internally to try to make sure we are on the 

timetable that you all are on, to the degree that we can be. So, unfortunately I don’t really have anything to offer. 

Senator INHOFE. These principals, are these principals going to 

relate to funding mechanisms like the subject of this hearing? 

Mr. KIENITZ. I am not sure that has been finally determined. 

Senator INHOFE. OK, it has been 16 years since the Federal aid 

program authorized the use of State infrastructure banks, which 

enables the States to use Federal funds to capitalize revolving loan 

funds and so forth. Now, since then only a handful of States have 

taken advantage of this program, and I really wonder why. Why do 

you think that is the case, that so few have—the program hasn’t 

caught on. Why not? 

Mr. KIENITZ. I actually have some experience with this program 

when I worked in State government in Pennsylvania. Pennsylvania 
33 

was one of the States that did establish this program. During my 

time there, usage of that program was based entirely on demand, 

and what we offered essentially was advance payments to local 

governments or counties or other communities who had transportation projects they wanted to do quickly; they had revenue sources 

coming in slowly over time, so they would agree to get the money 

up front and then take their revenue and turn it back over to the 

State infrastructure bank to eventually repay the amount. 

The real issue was that the amount of ongoing funding available 

to those project sponsors was so constrained it was a very difficult 

thing for them to pledge future year money, because they needed 

that future year money to take care of urgent needs ongoing or underway. So our program was a few tens of millions of dollars. In 

the course of a year we never turned anyone away, but when you 

have to pay it back—— 

Senator INHOFE. That is my point. This has been available to everyone, and you haven’t turned them away. I think you have answered it very well. 

You deal probably more than we do with a lot of the private sector initiatives. We hear a lot of the problems with it; we hear a lot 

of the misunderstandings by people, particularly in Texas—that is 

where I zero in on—that don’t really understand it, and they don’t 

think it will work. Of all the different programs that you have 

heard, are there any that you have established in your mind that 

are better types of partnership programs than any other that you 

could share with us? 

Mr. KIENITZ. Well, I think what has happened is actually there 

has been an evolution over time. When this started out I think the 

State of Indiana was probably the first one that did one of these 

arrangements with the private sector, and since then the deals that 

have been proposed in Pennsylvania—we proposed a lease of the 

Pennsylvania Turnpike, which I worked on extensively—Texas, 

other States, the contract between the government agency and the 

private sector has grown a little bit more. Some lessons have been 

learned. For example some of the original agreements included 

what is called a non-compete clause. The government would be prohibited contractually from going out and building a roadway within 

a certain distance of the new privately leased roadway, and I think 

in subsequent iterations people have said it is not appropriate to 

tie the hands of government about what is or isn’t in the public interest; government has a responsibility to undertake things in the 

public interest, and if that means building another road, then so 

be it. 

So there have been some other things like that that were controversial in the early proposals that have been less so recently. I 

would say the underlying issue of ‘‘are you turning over what appears to be a public asset to private management’’ is still controversial. We were able to be very comfortable with it in the administration side in Pennsylvania; our legislature was not comfortable with 

it and they did not approve that lease. But the amount of money 

that deal could have yielded, for example, was really quite large 

and could have done a huge amount of road repair, bridge repair, 

and transit investment in the State. 

Senator INHOFE. All right, thank you very much. 
34 

Sorry about that. 

Senator BOXER. No, that is fine, Senator. 

Senator Lautenberg. 

Senator LAUTENBERG. Mr. Kienitz, thank you for your testimony. 

I want to get squarely to a question that we are looking for answers on and that is the President’s budget includes $200 million 

for the mass transit tunnel in New Jersey. The President also 

prioritized the project for a full funding grant agreement. Does this 

budget signify that the President and the Administration are fully 

committed to building a new rail tunnel under the Hudson River? 

Mr. KIENITZ. As you know, Senator, from extensive conversations 

between yourself and Secretary LaHood, we have been, since many 

months ago, and continue to be committed to keeping that project 

moving forward as fast as possible. The amount of resources that 

were committed earlier in the year and in the President’s budget 

are designed precisely to make sure that it stays on track, because 

as you know the usage of that facility, when eventually completed, 

is going to be so terribly high it really competes very well under 

any criteria. 

The constraint we are under, is that the way that the New Starts 

program works is you don’t put 100 percent funding, or even 100 

percent of the Federal share up front. We try to enter into a plan 

whereby slowly, over time, the Federal share of the project gets 

paid, but it is year by year, and that can be quite a drawn out process. 

We have had many project sponsors in transit who get their full 

agreement to go out to private banks and borrow to cash-flow the 

project because the Federal funds come in so slowly, and that is 

precisely because there are $20 billion and people wanting to transit New Start funds for every $2 billion of funds we have. So that 

leads of a very long line out the door and a very slow payout. Hopefully, that is something that can be addressed in the reauthorization process. 

Senator LAUTENBERG. Well, I am sure you are fully aware of the 

fact that somewhere over 60 percent of the funding is already committed for by the State and the Port Authority, so we are putting 

our dollars where the pick and shovel should be. So reassurance 

that we can continue, get what the Federal Government is committed to, and the full funding agreement is critical in this moment. There are lots of people armed with picks and shovels and 

spirit and ready to go, and we have to give them the [unclear] to 

say, OK, here you go. 

Without funding for the transportation needs we provided in the 

Recovery Act, unemployment rates would even be higher. As the 

Senate debates the series of jobs bills, what might be the significant contribution that additional investment in transportation infrastructure beyond just extending existing programs, what influence might that have on the job market? 

Mr. KIENITZ. A very positive one, we hope. We have a lot of experience in the Recovery Act funding of getting that funding out the 

door really as quickly as we could, more quickly than we did in the 

underlying programs, and creating jobs. I think inevitably transportation investment, if you are doing big projects, occurs over a 
35 

couple of construction seasons, and that is what we are seeing with 

the Recovery Act. 

That said, this recovery is going to be a long one—that is what 

all the experts say—so having something that lasts for two construction seasons is probably what the country needs. The Administration I know is in dialogue with the House and Senate leadership about potential future jobs bills and has certainly been a supporter of additional infrastructure funding—— 

Senator LAUTENBERG. It is hard to imagine a more ready environment than investments in transportation for jobs. I want to ask 

you this. Funding for high speed rail in the Recovery Act, good 

start, but our investment in high speed rail still lags way behind 

other countries. In 2009 China invested $80 billion in high speed 

rail, and we have seen huge investments by Germany and other 

countries across the world in high speed rail. Last summer China 

announced it plans to build 42 high speed rail lines by 2012. 

Now, if we are going to compete with countries like China in the 

international marketplace, shouldn’t the development of high speed 

rail receive dedicated Federal funding just like our interstate highway system does? 

Mr. KIENITZ. Obviously, as you know, Senator, this Administration is very interested in high speed rail, and the President has 

made it a personal priority of his. That unfortunately has not led 

us to solve the underlying resource limitation for high speed rail 

any more than it has for the highway program or the transit program. That is unfortunately a problem that spreads across the 

breadth of all transportation investments. 

So I think while we would agree entirely with your stated goal, 

it is going to have to be a group effort to find the politically difficult 

but necessary method of closing the gap so that all of the programs 

can be on a stable—— 

Senator LAUTENBERG. Well, I think that this hearing suggests 

ways of getting things done, including not only regional organizations, but the private sector as well. 

Thanks very much, Madam Chairman. 

Mr. KIENITZ. Thank you, sir. 

Senator BOXER. Thank you, Senator. 

Senator Voinovich. 

Senator VOINOVICH. The Administration originally took the position that they did not want to see the reauthorization of the Surface Transportation Act done this year and were very strong to say 

we should extend it for 18 months. I hope it is clear to the Administration that we indeed are going to get the job done now, this 

year. 

And I think it is real important that you folks get to the table. 

We are starting out with looking at the work that Jim Oberstar 

has done to try to figure out where there is agreement, and then 

from there we are going to get into the nitty-gritty on things. But 

we are going to really need your participation; you have to be at 

the table. 

I want to underscore—and I had a chance to speak to the President about it—if you really want to do something about making an 

impact in this country in terms of jobs, the reauthorization of this 

bill, robustly funded, is going to have an enormous impact on jobs 
36 

in this country. And as I mentioned in my opening statement it 

give us this kind of 5-year continuity or confidence that something 

is going to happen. 

One of the big challenges of course is this issue of financing, and 

you touched on some of the tools that are available in Ohio. We 

were the first State to use the State infrastructure bank to get Port 

Washington done down in the Cincinnati area, but I really would 

like, for my benefit and for the members of this Committee, a very 

good memorandum on the programs that are currently available, 

how they work, some detail. 

Now, you have scratched the surface; you couldn’t go into all the 

detail, but I particularly would be interested in that. I may even 

come over and talk to some of your folks. Then you mentioned in 

your words that there were other tools that you would like to see, 

and I would be very interested in those other tools. 

Senator Inhofe mentioned some other things. There is tolling 

that is going on. We had some people in from Texas that are using 

pension funds, and they are borrowing from the pension funds, and 

they do a toll, and then they repay the money to the pension. There 

is a whole variety of things that are out there that we should be 

looking at. 

But I think that you have to recognize that all of these things 

we are talking about are not going to be adequate and that we do 

definitely need to have an increase in the gas tax. And the fact of 

the matter is just about every group that I have talked to in the 

last 8 months have basically said we will support an increase in 

the gas tax. 

Now, there is some concern about when that would happen, but 

I would suggest that you go back—in fact, I will send you a memorandum on it—and look at what Drew Lewis did in 1982. At that 

time I was mayor of Cleveland and going through the chairs with 

the National League of Cities, and they really worked hard to get 

all of the details worked out. They looked at the various financing 

and then President Reagan supported a 5 cent increase in that gas 

tax. I have to tell you something. If they hadn’t done that and come 

up with an emergency jobs bill, we would have had a very, very 

bad situation in this country. 

So I think we have to look at all of this, but I think that you 

and others have to recognize that all these other things that we 

have, we are going to have to come up with the money. That is a 

reality, and the sooner I think it sets in the better. And I think the 

other thing I wanted to mention to you is that you have a chance 

here to do something bipartisan, and I have to tell you something. 

Think about this a little bit. We may not have anything else we 

can do this year on a bipartisan basis; the health thing is blown. 

God only knows where that is going. We have the climate change; 

I am trying to work on that. That may blow up. But this is something that we could do all together. 

The other thing that I think all of us need is to find out about 

this infrastructure bank you are talking about. What part of the infrastructure bank anticipates things like the mayor might want to 

do in terms of loans and how does that all work, or is it just across 

the board in terms of loans to a bunch of things over in the Depart-
37 

ment of Energy and so on? But somebody has to look at the whole 

big picture here and see what has to be done. 

Now, Senator Lautenberg talked about high speed rail. Well, we got $400 million. There is a big controversy in Ohio right now 

about whether we can use that $400 million. Can the State really 

use that money? Couldn’t we use that money for something else 

that would make more of a difference? What are our priorities? Is 

it more important to deal with what the mayor wants and our cities, and come up with a better transportation system? 

Is it better for us to build that tunnel under the Hudson River 

than it is to, say, take on high speed rail, which many of us know 

is going to be a ton of money down the road? There has to be some 

prioritization here. You can’t do it all; there are only so many assets. 

So I really would urge you to start to think about some of these 

big picture things and get back to this Committee about what your 

thoughts are and how this can be done. It is really important. It 

is very important to the future of our country right now. We are 

in a very, very fragile position. If we can get started with some of 

these things, people have confidence in the future, we have a 

chance of maybe turning this thing around and going in another 

direction. 

And I am sorry I didn’t ask you questions, but I really would like 

you to respond to some of the things that I have talked about. 

Mr. KIENITZ. Yes, certainly, Senator. I take your point entirely 

about the long-term value to the country and to all of the needs 

that we have discussed here today of getting a long-term bill, and 

I saw with interest your statement that you issued after the passage of the recent jobs bill here in the Senate on cloture, and also 

Senator Boxer has been very strong in her statements about trying 

to proceed down a similar path this year. We are very aware of 

that, as is the Secretary, and we hope to find a way to engage with 

you that meets your objectives. 

The Secretary has been fairly clear that during a period of deep 

recession it was his view that it was not the right time to raise the 

gas tax, but obviously we will have to work with everyone here 

going forward to see what the choices are. 

Senator BOXER. Well, let me just say Senator Voinovich has been 

an extraordinary partner as we—because he was not thrilled with 

the long-term extension; he wanted us to write the long bill this 

year. I mean earlier, way earlier. And we are going to do it this 

year. We are going to get it done before the end of the year. 

And what we are going to do—Senator Inhofe is very strong on 

this as well—is we are going to look at all the funding recommendations. It is up to Senator Baucus and Senator Carper, 

who serves on Finance; they are going to find the way to do the 

long-term funding. We are going to look at it all and forward every 

good idea. But we are going to write a bill here, because Senator 

Voinovich is right; it is going to lift people’s spirits up. 

In my State—and I am sure it is true in other States—the construction industry is flat on its back because of the housing crisis, 

which has hit most of our States if not all. And construction jobs— 

these are important good paying jobs; they can’t be exported. When 

you build a road in Ohio or Delaware or California, when you run 
38 

a transportation system, it is in America. So we have to get this 

going. 

What I am going to do now, instead of asking you more questions, because we want to get to the mayor—and I know Senator 

Carper said he has questions for the next panel; he will be back— 

is just say I would like to get your word. You have already said 

yes to this, and Secretary LaHood is one of my favorite ever transportation secretaries. I just want to get it on the record that you 

will work with us—— 

And Mayor, I think this is important for you to hear. 

I want to get it on the record that you will work with us and 

with the Secretary and with our staff to examine all the laws that 

now you have IDed, which can be potentially helpful to Los Angeles 

and other places where they have made a commitment either 

through the ballot box or through the private sector. And from your 

testimony it looks like it is TIFIA, it is the National Infrastructure 

Fund, and it is the TIGER grant program. Can they make loans 

through TIGER? 

Mr. KIENITZ. Yes. One of the great features of TIGER is that it 

can do either really in any amount. 

Senator BOXER. Good. 

Mr. KIENITZ. So even if we are unsuccessful in increasing appropriations for the TIFIA program, for example, the TIGER grants 

recently announced actually were a $50 million increase in TIFIA 

because those projects ended up being high priority. So TIFIA immediately grew outside of the normal budget process. So that is one 

other window. 

Senator BOXER. OK. So I have your word that you will work with 

us to help Los Angeles? Because I think if we could get a project 

that is ready to go and build the confidence there and get it started, I think it would send a really great signal. So you will work 

with us on this? 

Mr. KIENITZ. Absolutely. You have my commitment and our commitment. 

Senator BOXER. Thank you. Thank you, Under Secretary. We 

very much appreciate your testimony. 

Mr. KIENITZ. Thank you. My pleasure. 

Senator BOXER. And we are pleased now to call up our second 

panel, Hon. Antonio Villaraigosa, Mayor, city of Los Angeles; Lowell Clary, Managing Partner, Clary Consulting, LLC; Mr. Max 

Inman, Senior Advisor for Project Finance and Program Management Initiatives, Mercator Advisors; and Ms. JayEtta Hecker, Director of Transportation Advocacy, Bipartisan Policy Center. 

And we are going to begin with the mayor, and we are going to 

go right down the row. And Mayor, we welcome you here. You have 

been an ardent advocate for your city and for the same constituents 

I represent, and I really appreciate it. And I am really happy you 

are here today because I think your message to us is a good message, so please proceed. 

STATEMENT OF HON. ANTONIO R. VILLARAIGOSA, MAYOR, 

CITY OF LOS ANGELES, CALIFORNIA 

Mr. VILLARAIGOSA. Thank you, Madam Chair, for that introduction. But let me say how fortunate we are in the city and the coun-
39 

ty of Los Angeles and the State of California to have you as an advocate not just on the issue of transportation, the environment, the 

many jobs related issues which are so important in these times, 

and I want to thank you for inviting me here today. 

Senator Voinovich, thank you for your remarks. Maybe it is because you are a former mayor, but clearly you know and understand just how important this issue of infrastructure, particularly 

in our cities and our metropolitan areas, is, not just to those areas, 

but to the Nation. Your comments regarding the need for publicprivate partnerships and innovative financing mechanisms are 

music to my ears, so I want to thank you for your comments. 

And Senator Carper, it is good to see you as well. I know that 

Senator Inhofe and Senator Lautenberg had to go back to committee. As a former member of the California legislature and 

speaker of the assembly, I can tell you I understand having to be 

in two places at the same time. 

I want to thank you for the opportunity to address you today. 

Your leadership, support, and interest in transportation infrastructure are crucial to the future of the city. In hearing each of you 

speak, all of you talked about this important issue of infrastructure, what it means for the economic vitality of America, its future, 

and I can tell you that for me those words couldn’t be any truer. 

Your focus on leveraging Federal investment comes at just the 

right time. 

As American cities continue to grow, we are struggling with traffic congestion and air pollution. It makes life harder and more expensive for people. Congestion burdens our economy, increases the 

cost of goods movement, and affects the mental and physical health 

of our communities. So that you understand, we are the congestion 

capital of the United States of America, and we move more goods 

than any area in the United States of America. We move 44 percent of all the seaborne goods that enter the United States through 

our ports. 

When you look at those ports, they generate jobs in every single 

congressional district in the United States of America. At the same 

time we are facing a staggering unemployment rate. In Los Angeles 

the unemployment rate is at 14 percent, as high as 35 percent in 

the construction trades. We believe there is a way to address both 

issues head-on through an innovative, Federal-local partnership. 

I already mentioned that we are famous for being the car capital 

of the world. This also makes us the most congested city, with 

some of the worst air quality in the country. But we are doing 

something about that: we are investing in car pool lanes, in congestion pricing, synchronizing our traffic signals, and most importantly investing in public transportation. Our current transit program includes construction of 12 major new lines over the next 30 

years. We will double the rail system in Los Angeles County. And 

although I am the mayor of the city, I come here representing the 

entire county, 10.5 million people. 

These projects include an extension of our subway, the subway 

to the sea that some have referred to; light rail lines in the 

Crenshaw District, the San Gabriel Valley, and to Los Angeles 

International Airport, the No. 1 destination airport and the fifth 

busiest airport in the world. Our overall goal is to connect the com-
40 

munities where we live with the major job centers in the region. 

As an example, this subway to the sea would connect the two largest job centers in the State of California, downtown and the west 

side. We need to get people where they need to go sustainably and 

efficiently. 

Building these 12 projects will create 166,000 high quality construction jobs in a 10-year period; will create at least 2800 permanent operating and maintenance jobs. I want to point out that 

these are career jobs, jobs that can support a family. These projects 

also will take 570,000 pounds of pollutants out of the air each year, 

make our communities more sustainable and livable, and secure 

our energy future by reducing our dependence on foreign oil. 

Now, we can pursue such an aggressive and far reaching transit 

program because of Measure R. Measure R was approved overwhelmingly by 68 percent of the voters in Los Angeles County in 

November 2008. We did that in the midst of an economic recession. 

It is a 30-year half-cent transportation sales tax. It is also the third 

transportation sales tax approved by our voters. Measure R alone 

will generate $40 billion in new revenue and together with our 

other three local sales taxes generate almost $2 billion a year for 

the region, money that we are investing in transportation infrastructure and the future of our region. 

But the reason why we are here is we have a unique opportunity 

to build our transit projects sooner; create the jobs and capture the 

environmental benefits in the near future. We want to build our 

transit projects in 10 years instead of 30. We call our accelerated 

plan the 30/10 Initiative. It is 100 percent consistent with the Consensus Transit program adopted locally and approved by our voters. It would accelerate our transit program; will save billions of 

dollars, reducing the cost from $18.3 billion to $14.7 billion. Now, 

we also believe that we can cut costs even further by taking advantage of market conditions, public-private partnerships for design 

and construction. 

Now, right now we are working to identify a funding strategy to 

build these projects sooner. We think we can meet most of our 

funding needs by financing the project costs up front using tax exempt bonds and by tapping, as was mentioned a few minutes ago, 

Federal programs such as Build America bonds and TIFIA. These 

two programs as well as the potential in National Infrastructure 

Bank are all very good starting frameworks. 

We are looking to expand our partnership with the Federal Government, a more aggressive Federal program of interest rate subsidies, loan guarantees, direct loans, and/or innovative repayment 

terms. This would help us build our program in 10 years and jump 

start our region’s economic recovery. 

I mentioned that I used to be speaker, and the reason why we 

came up with this issue is because when I was speaker of the California State Assembly localities would always come to the legislature and ask us for money, and I would always ask them, what are 

you doing to invest in your infrastructure? It is nice to ask us for 

money, but we don’t have unlimited pots of money. 

Well, the same is true in the Federal Government. At a time 

when the Senate just passed—and the House has approved—the 

$15 billion jobs bill, we all know while that was a good starting 
41 

point it is a long way from what we need to do right now to get 

people back to work to make investments in our infrastructure program that is so important. 

This is not just L.A. coming with an empty hand; this is Los An- geles coming with money in hand, approximately $40 billion, and 

an offer for a Federal partnership with the other hand. And importantly—and I was very heartened to see all of the Senators make 

comments—importantly, it is a template for what we ought to be 

doing across the country. 

I am Vice President of the U.S. Conference of Mayors, and one 

of the things I am arguing with my colleagues, or advocating for, 

I am saying, look, at a time of very limited resources at the Federal 

level, with the deficit and the debt as high as it is today, we need 

to think about innovative public-private partnerships and opportunities for us to partner to leverage what localities are doing. It will 

incentivize localities across the country to pass their own bonds 

and/or funding efforts in the way that New Jersey has done, where 

they are spending, I think Senator Lautenberg said, about 60 percent of the money for that tunnel locally, and it will allow all of 

us to accelerate the generation of jobs and the infrastructure that 

we need. 

So as we get closer to finalizing our funding strategy we look forward to working with you to forge a new Federal-local partnership 

that will create quality jobs, increase sustainability, and build livable communities. 

I want to thank you again, Madam Chair, for allowing me to be 

here today. I took the red eye as I usually do when I come here. 

I will be leaving in a couple hours back to Los Angeles. And if you 

saw both the Washington Post article, the L.A. Times opinion article in the opinion section, and the Wall Street Journal article, everybody is talking about what we are trying to do here. It is a template for what we need to do in times when there is a limited 

amount of Federal funds, an opportunity for us to partner in an innovative way. 

Thank you very much. 

[The prepared statement of Mr. Villaraigosa follows:] 
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Senator BOXER. Thank you so much, Mayor. 

Our next speaker we are going to call on is Max Inman, Senior 

Advisor for Project Finance and Program Management Initiatives 

at Mercator Advisors. 

Could you tell us a little bit about the company and where it is 

located? 

STATEMENT OF MAX INMAN, SENIOR ADVISOR, PROJECT FINANCE AND PROGRAM MANAGEMENT INITIATIVES, MERCATOR ADVISORS 

Mr. INMAN. Yes. Mercator Advisors is headquartered in Philadelphia. It is a very small firm that provides transportation finance 

consulting, primarily with public agencies, State and local governments primarily, and also with the U.S. Department of Transportation. 

Prior to joining Mercator, I was the Chief of the Federal Aid Financial Management Division at the Federal Highway Administration; I spent 33 years at Federal Highway. And I would like to 

thank the Chairman and members of the Committee for the opportunity to testify. 

In the mid-1990s, FHWA, under the leadership of Deputy Administrator Jane Garvey, began to explore innovative finance techniques that would help State and local governments advance transportation projects. With the assistance of this Committee many of 

these techniques were included and authorized in legislation, helping to accelerate projects through more efficient use of Federal 

funds. At FHWA during that time, I saw firsthand the value of 

Federal, State, and local agencies, along with Congress, working together to find solutions to financing transportation projects. 

Many project sponsors have taken advantage of initiatives such 

as the State infrastructure banks, the GARVEE bonds, the TIFIA 

loans, the enhanced advance construction procedures and more 

flexible State matching share provisions. We have made great 

progress in the last decade by providing a much wider array of financial tools than the standard 80 percent grant program that was 

the mainstay of the Federal highway program until just a few 

years ago. But we need to continue developing other financial techniques and looking for ways to improve the current techniques, so 

I would like to direct my comments this morning to some of the existing Federal transportation programs. 

First, the State infrastructure banks. Since their inception in 

1995 only eight States have exceeded $100 million in executed loan 

agreements. However, these States have shown how successful the 

banks can be, especially in providing assistance to local governments, often resulting in local projects being completed well ahead 

of the projected date and at overall lower cost compared to using 

a pay as you go strategy. I think Congress should provide incentive 

grants to encourage States to create or expand State infrastructure 

banks and also provide States with more flexibility in using the 

bank funds for any eligible transportation project. 

The Grant Anticipation Revenue Vehicles, known as GARVEE 

bonds, have been very successful in allowing States to advance 

large projects without seriously impacting their current program of 

projects. Allowing States to use Federal funds to pay debt service 
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payments conforms to the standard business practice of paying for 

capital improvements over the life of the asset. 

It is important, though, to recognize that GARVEE bonds depend 

on the prospect of a long-term and reliable source of Federal funds. 

Recurring short-term authorizations or temporary disruptions to 

Federal payments because of shortages in the Highway Trust Fund 

could raise the risk of a default on a bond payment and therefore 

may impact the State’s ability to issue GARVEE bonds on favorable 

returns. 

The TIFIA program that was authorized in 1998 provides credit 

assistance to major transportation projects. The flexibility of the 

program that allows subordinate claims on pledged revenues and 

loan payments to be deferred until 5 years after the project is completed is tailor made for long-term transportation projects. Unfortunately, the program, as you have heard, is now unable to meet the 

demand for credit assistance due to program funding constraints. 

Because of its ability to help advance projects of national or regional significance, as well as its favorable budget scoring, the 

TIFIA program is a prime example for increased funding to help 

leverage Federal resources. I believe the program would benefit 

from some technical changes, such as increasing the loan size to 50 

percent of the project cost or perhaps eliminating the so-called 

springing lien provision. 

Just to mention a few other Federal policies that might contribute to assisting in this effort, I would like to suggest perhaps 

a reduction in the number of Federal programs, currently over 100; 

increase the flexibility of States to use those programs for their 

highest priorities; consider providing States with greater flexibility 

and matching funds on a program basis, as opposed to a project 

level basis; reducing streamline that Federal restrictions on tolling 

interstate highways; and allow States to privatize interstate highway rest areas. 

In conclusion, the legislation initiated by this Committee has significantly enhanced the financing options available to State and 

local governments, allowing for the acceleration of projects and 

more opportunities for participation by the private sector. This results in reduced construction costs and expedited benefits to the 

users of the transportation systems. But the effectiveness of any of 

these finance techniques depends on the establishment of a reliable 

and substantial source of funding. I am confident that the Committee will meet this challenge. 

Thank you for the opportunity to testify. 

[The prepared statement of Mr. Inman follows:] 
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Senator BOXER. Thank you for those good ideas. 

Now we are going to hear from Lowell Clary, Managing Partner, 

Clary Consulting. 

And if you would tell us about that firm, where it is, and what 

you do. 

STATEMENT OF LOWELL R. CLARY, MANAGING PARTNER, 

CLARY CONSULTING, LLC 

Mr. CLARY. Thank you, Madam Chair. 

I am Lowell Clary. Clary Consulting is an advisory firm based 

in Tallahassee, Florida, and I am also a founding member of P3 

Development Company, which is based in Tallahassee, Miami, and 

Denver, around the country. 

I have been I the private sector about 2 years, and since that 

point in time we have been developing projects and advising on 

projects. I bring that experience, as well as prior to that I was chief 

financial officer for Florida Department of Transportation and developed many of these projects. I am going to briefly talk about 

some specific projects that were developed in Florida that have 

used many of these tools to accelerate projects. 

The Miami Intermodal Center is a major intermodal center, about $1.5 billion in Miami; involves all modes of transportation. 

It was a major partnership among multiple Federal agencies, State 

and local agencies; at times a bit like herding cats to get it done. 

It used the first TIFIA loan that was ever implemented by USDOT 

and also has a second TIFIA loan in it as well as multiple private, 

State, local, and Federal funding sources. 

The second project is a design-build-finance. I–75 in southwest 

Florida has been highly congested. The Florida DOT had many 

projects scheduled over about a 10-year period, with construction 

going longer than that. They moved an ability to advance those 

projects up with the private sector providing the funding up front, 

and then the Department is paying them back over time in a term 

called design-build-finance. It advanced that project by about 6 

years in total. Florida DOT has put out a number of projects totaling over $2 billion with the use of this tool that has advanced a 

number of projects forward. 

95 Express is a project in Miami, and that was copied after a 

State Road 91 in California as a HOT lane. It basically created a 

new lane in each direction out of the existing footprint of I–95 in 

Miami-Dade County, and they added that to the HOV lane and 

have created two high occupancy toll lanes. It was hotly debated 

for several years. The Urban Partnership Program with Florida 

DOT brought that forward, and it is now in operation and getting 

rave reviews. 

Availability payment structure was used on the Port of Miami 

Tunnel and I–595. The Port of Miami Tunnel was about a $1 billion project; I–595 is about $1.3 billion. And availability payment 

structure essentially is where the private sector provides the funding up front and the government pays it over time from multiple 

funding sources. Both of those projects have toll revenues in them. 

Excuse me, in the case of the Port Tunnel, have user fees; and they 

also have State and Federal and local funds in those. The Port 

Tunnel moved from probably never happening to a real project 
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through this concept. I–595 moved forward and advanced about 15 

to 20 years in that. 

Sunrail is a commuter rail project in central Florida. And while, 

Chairman, I know this is not a purview of your Committee, this 

project will eliminate the need for a lane in each direction on I– 

4, which certainly is a reduction in the need to fund highway improvements and comes in at a cost less than that and is moving 

forward. 

Some programs that may be under consideration, Florida created 

the Strategic Intermodal System, which brings all modes together 

in a strategic fashion and focused funding on those collectively, and 

I would encourage you to take a look at that as you are developing 

your bill. 

In addition, Florida has high speed rail essentially ready to go. 

It is the only system in the country that is a closed system, which 

would allow the system to operate with true high speed rail. The 

initial phase is a fairly modest investment and would allow a lot 

of testing and ability to move this forward at a modest investment 

to test out high speed rail without expending significant State and 

Federal dollars into it. 

Florida has tolling in the State. About $1.2 billion a year is generated; about 10.5 cents equivalent of State gas tax. And they are 

moving forward with 100 percent free flow traffic on those. They 

have 70 percent penetration of electronic tolling today and will 

eliminate cash pay toll booths in a few years. 

State infrastructure bank in Florida has been very successful. Twenty-nine projects under the Federal SIB, about $1 billion total 

with $300 million in loans; 36 projects from a State-created SIB, 

about $7.2 billion in total projects with $761 million in loans. That 

State SIB was the first SIB in the country that was bonded with 

the repayment stream from the loan portfolio of the SIB loan supporting that bond and allowed it to grow in its overall structure 

and allow a lot more loans. It also revolves loans back into it, 

which keeps it active. 

Florida also has an efficient environmental process which allows 

projects to move forward more timely. 

Chairman, in some recommendations, I would encourage flexibility in both the funding structure and also in the ability for 

States and local governments to raise fees in multiple methods, 

similar to sales tax, as well as tolling. I do believe that public-private partnerships can be a tool for the future, and I would encourage that that be not limited in Federal law, that it can be allowed 

to move forward. I also encourage you to continue with the TIFIA 

program, but you might consider making it multi-modal so that it 

can accommodate seaports, airports, and other modes, as well as 

just highways and transit. 

Thank you very much. 

[The prepared statement of Mr. Clary follows:] 
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Senator BOXER. Thank you very much, Mr. Clary. 

And last but not least, Ms. JayEtta Hecker, Director of Transportation Advocacy, Bipartisan Policy Center. 

Welcome. 

STATEMENT OF JAYETTA Z. HECKER, DIRECTOR, 

TRANSPORTATION ADVOCACY, BIPARTISAN POLICY CENTER 

Ms. HECKER. Thank you very much, Madam Chair. Very pleased 

to be here. Senator Voinovich. I am speaking on behalf of the National Transportation Policy Project, which is a major effort of the 

Bipartisan Policy Center. 

The BPC was actually developed just a few years ago to develop 

pragmatic, bold, but doable ways for moving forward that are politically viable and that are pragmatic to solve the Nation’s problems. And in line with that our transportation project was put together to bring fresh thinking, new views with business leaders, 

academics, civic leaders; kind of not all just the usual system owners and managers but the real users of the system and the parts 

of the economy that are so affected by it. 

So this group worked for 2 years. We had comprehensive research supporting our work; deliberations of this very mixed and 

different group, and reached a consensus report that we issued in 

June. 

Our principal message actually aligns so well with the hearing 

today because the core of our observation was that resources will 

always be scarce and that achieving national goals will require a 

fundamentally new performance based partnership between the 

Federal Government and its State, local, regional, and private partners. 

To share a little bit more detail, I have organized my remarks 

around three points. The first is that the Federal Government 

needs to be restructured to assure accountability for wise transportation investments that are scarce and that achieve specific and optimized results. The second is that we need to provide direct incentives to non-Federal partners for developing sustainable funding 

strategies. And finally, we have a caution about the new financing 

mechanisms and the need for very new real revenue. 

The first topic, that assuring Federal dollars are invested wisely, 

stems from what is a very widespread observation that the Federal 

program has lost its direction since the completion of the interstate. We have no overarching or consensus based national goals 

and that the program essentially functions as a block grant mechanism with very little accountability. We have no national plan 

today; we have no national priorities, and this lack of direction results in a fundamental failure of the $40 billion—minimum—that 

we spend each year to leverage non-Federal funds. 

Accordingly, our group recommends that transportation be clearly focused on outcomes, national outcomes, not transportation outcomes, and they are not really controversial: promoting economic 

growth; providing for national connectivity; assuring the mobility 

in our metropolitan regions; integrating energy and environment 

into our transportation decisions; and of course improving the safety of our system. 
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But moving to such a performance driven approach actually is 

more than just setting these goals. We have had similar goals, lofty 

goals, in almost every transportation legislation, but they are precatory language. They don’t govern the programs; they don’t guide 

where the money goes. Our main recommendation is that Congress 

needs to begin an aggressive transition to a performance based system with comprehensive testing and refining of outcome oriented 

national metrics. And I can discuss that more in the Q&As. 

The second broad topic, our policies need to directly incentivize 

investment. I start with something that may sound a little off topic, 

but we actually think it is extremely germane, and that is 

incentivizing investments begins with assuring that the Federal 

dollar does not displace or substitute State or local funds and that 

it is indeed focused on true national interests. 

So our recommendation is that the Congress—this is a very sensitive issue; it needs to broaden the definition of the national system to include critical freight corridors and rail corridors, which 

are so vital to our Nation, obviously needing partnerships with private parties, but it has to narrow the definition on highways which 

is too inclusive and muddies the water of who is really responsible 

for what. 

So we need a redefinition of the national system to focus what 

will always be scarce Federal dollars on the national interest and 

then clarify and motivate and incentivize State and local areas to 

be very clear what their direct inherent responsibilities are. 

Now, more directly to the topic of incentivizing non-Federal investment, I won’t repeat because you have heard excellent comments here about the importance—— 

Senator BOXER. I have to tell you your time is out, so if you want 

to just quickly tick them off, because your time has run out, and 

we have to ask questions. 

Ms. HECKER. New efforts to support State efforts to implement 

direct user charges with incentive grants; capital cost funding; remove restrictions on road pricing; expand and increase the flexibility of TIFIA; and directly facilitate private investment. 

So I will leave it there. 

[The prepared statement of Ms. Hecker follows:] 
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Senator BOXER. Thank you very much. I appreciate your summing up. 

I will start with the questions. You know, I was taken by what 

you said, Ms. Hecker, about don’t displace local funds. Well, doesn’t 

this example of Los Angeles taking the lead, going there, passing 

a bond issue, voters saying this is it, we are going to bond ourselves for the next 30 years to the tune of $40 billion through the 

sales tax, isn’t that an example of action that ought to be 

incentivized in the new bill? 

Ms. HECKER. Precisely. That whole point of incentivizing sustainable local funding, which they took the initiative to. I am talking 

about a program that would more generally incentivize regions to 

take those tough decisions in advance. 

Senator BOXER. Exactly. That is what I think so fits in. In other 

words, they have done now what you are talking about more communities doing. 

Ms. HECKER. Right. 

Senator BOXER. And I think to incentivize this is important. And 

I think on both sides of the aisle we understand very well how urgent it is to build an infrastructure that works in this country, and 

we also understand very well we have to leverage, leverage, leverage funds. That is key. Local, State, regional, private, everything. 

I mean, that is what we have to do in this bill in order to reach 

for the numbers that we need to build the kind of infrastructure 

and transportation systems of the future. 

So, Mayor Villaraigosa, I guess I want to thank you very much 

because when I heard this proposal, as you know, I was very taken 

with it, and it made a lot of sense to me. And it really in many 

ways exemplifies what we try to do in America; we get a basic 

source of funding, and we figure out how can we help either the 

homeowner or how can we help the businessman or woman carry 

out that dream if we believe that we will get paid back for it, and 

what you have is the proof. 

So I guess what I need to ask you is I think this notion of moving 

quickly, we have already established that it makes sense just because of the confluence of issues hitting us—the recession, the need 

for more jobs, the lower costs that are coming in on these 

projects—have you calculated in any way some of the savings and 

some of the increases in jobs if we were to be able to help you to 

do in 10 years what you would otherwise do in 30? 

Mr. VILLARAIGOSA. Yes, we have, Madam Chair. And by the way 

Senator Voinovich talked about reduction currently in costs about 

10 to 12 percent. Over the last 18 months, CalTrans, which is our 

State Highway California Transportation Department, the bids 

have been 18 percent lower. In the city of Los Angeles, our public 

works bids have been—I am sorry, that was 18 percent. 

Our public works bids are down 16 percent lower. So we think 

we can generate almost $4 billion in savings in a 10-year period of 

time due to the soft market, the fact that the unemployment rate, 

in the construction industry particularly, is as high as it is. So that 

is the number. 

Senator BOXER. Well, thank you for that. That is really—$4 billion less, that is huge savings. 
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Mr. VILLARAIGOSA. And by the way these aren’t my estimates; 

these are estimates that I think that we provided in our testimony. 

These are expert analysis of what we could save. 

Senator BOXER. Well, that is why this is so timely. Now, in addition, as we all know you were eloquent about the quality of the air 

and the fact that we need to clean up the environment. It seems 

to me that is another cost that I don’t know whether you have 

quantified it, but we know what asthma does to kids. We know 

what living near congested areas, the impact of that; it is hardening of the arteries way earlier. That has been proven by health 

experts. So have you looked at the benefits of the environment of 

moving forward with these projects which will alleviate some of the 

terrible congestion? 

Mr. VILLARAIGOSA. Yes. As I said, just moving from 30 to 10 

years will reduce about 500,000 tons of carbon emissions from the 

region. I don’t have—and I know that the American Lung Association is supporting this effort, as is virtually every environmental 

organization. The Chamber of Commerce will be here next week 

advocating for 30/10—— 

Senator BOXER. Good. 

Mr. VILLARAIGOSA [continuing]. Because of its job creation, as I 

said, 165,000 jobs. I can quantify this. At the port alone—not the 

whole region, just the port—we know there are about 2400 premature deaths that are caused, a million lost school days that are 

caused just with the diesel emissions and pollution at the port. So 

take that across the region. Remember, this is the most congested 

area in the United States of America, and its air quality is always 

in the top three or—well, in the bottom three or four. It is one of 

the—— 

Senator BOXER. Worst. 

Mr. VILLARAIGOSA. I guess one of the worst in the United States 

of America, yes. 

Senator BOXER. Mayor, thank you very much. I am very anxious 

to move forward very quickly. I have one last question for you. 

Mr. VILLARAIGOSA. Yes. 

Senator BOXER. In terms of the legislation we have that could be 

helpful that many of our experts here on this panel and our under 

secretary cited, TIFIA and some others, it is necessary to be able 

to show us one or two projects that are already pretty much laid 

out. So I guess my last question to you is do you have on your list 

of projects a couple of projects that you feel will be ready to go in 

terms of all the planning and the environmental work on them and 

all the rest in the next 12 months or so, or is it a longer period? 

Mr. VILLARAIGOSA. Yes, we do. There are a number of projects. 

The foothill extension, the exposition line phase 2 are two of them. 

I think 8 of the 12 projects have substantial environmental review 

work. All of the projects, according to the experts that we have 

talked to, construction managers and the like, can be done within 

the 10-year period of time. 

Senator BOXER. Excellent. But I am asking you shovel ready. 

Mr. VILLARAIGOSA. Yes, two. 

Senator BOXER. And you are saying there are two? 

Mr. VILLARAIGOSA. There are two. 
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Senator BOXER. There are two shovel ready. And do you know 

the cost of those off the top or not? 

Mr. VILLARAIGOSA. Off the top of my head, the cost of—— 

Senator BOXER. Just within a range. It doesn’t matter. 

Mr. VILLARAIGOSA. About $2.5 billion for the two of them. 

Senator BOXER. OK. Well, this has been extremely helpful. And 

if I don’t get to see you, have a safe and good trip back, and I will 

see you soon. And thanks to the rest of the panel, too. 

Mr. VILLARAIGOSA. Thank you very much. Again, Madam Chair, 

thank you. And Senator Voinovich, thank you as well. I really enjoyed hearing the bipartisan support for innovative ways to address 

this tremendous infrastructure need that the Nation has. Thank 

you very much. 

Senator BOXER. Absolutely. 

Senator Voinovich, questions. 

Senator VOINOVICH. Does the city run the transit system? 

Mr. VILLARAIGOSA. We do have a DASH system, a local 

circulator, if you will, in the city, but no, we are part of a regional 

system, the Metropolitan Transit Authority. I sit on that board as 

either the chair, the first vice chair or second vice chair of it. There 

is a consensus around—— 

Senator VOINOVICH. Forgive me for interrupting, but is the county also an MPO, you know, metropolitan planning agency? 

Mr. VILLARAIGOSA. No, I think SCAG, the Southern California 

Association of Governments, is the MPO, but the Metropolitan 

Transit Authority is the organization whose responsibility it is to 

address the regional transportation needs. 

Senator VOINOVICH. So what happened in order to put your plan 

together, you got everybody at the table and you worked it out, 

and—— 

Mr. VILLARAIGOSA. Yes. 

Senator VOINOVICH [continuing]. Dotted the Is and crossed the 

Ts. It is terrific. That is great. And I am sure that that has—— 

Mr. VILLARAIGOSA. Unanimously, by the way. 

Senator VOINOVICH. I am sure that is has had an impact on the 

people who supported the increase in the tax. One of the things 

that we are trying to do on the national level is to talk about these 

projects of regional significance dealing with congestion, freight 

areas, which you have there, and just trying to build the need for 

this. So that is one thing. 

The problem we have here is that this country is so different, 

and Mr. Secretary, you are talking about having a performance 

based responsive program, and in some States the major issue in 

terms of their Federal funding would be—I know one, for example, 

they have the worst bridges in the United States, and they would 

like to have some flexibility in terms of how they spend their 

money. 

And one of the things that I am concerned about is to have some 

bureaucracy in Washington created to kind of oversee what is going 

on and having people having to come here and touch base. It would 

seem to me that if an MPO or a regional transit system or whatever it is came together like you did, that that would be enough 

to indicate that this is something that makes sense, and by the 

way, they are willing to pay for it. This leveraging thing I think 
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you should be rewarded for this kind of thing. So I am interested 

in that point of view. 

The other thing that I am interested in is Congressman Oberstar 

has done a great deal of work and spent 2 and a half years on it, 

on his work, and we are trying to get people’s opinion about what 

they think of that legislation. We are trying to get a consensus. I 

talked with Don Borut of the National League of Cities, and I was 

talking to the U.S. Conference of Mayors to come to us and kind 

of come together and say, this is what we think is good and what 

we don’t think is good. 

And Mayor, I would really be interested in—you put so much 

work in this, I am sure you have a tremendous amount of staff 

work, people there that are backing you up. I would be real interested in getting your input on that. 

All I do is talk. What is your opinion about what would be the 

most effective thing to help you right now in terms of your situation? 

Mr. VILLARAIGOSA. Well, we are heartened to know that by the 

end of the year we are going to get a surface transportation bill out 

that I think all of us are looking forward to that. But even in that 

bill, the fact is there is not unlimited money, and the reason why 

we have come forward with offering some innovative ways to 

stretch those Federal dollars is because we think that ultimately 

this is the best route to add value and create leverage between localities, States, and the Federal Government. 

Senator VOINOVICH. The real issue is what is the vehicle on the 

Federal level that your folks have looked at as being the most effective way to get the job done? I asked Mr. Kienitz about—— 

Mr. VILLARAIGOSA. Yes. 

Senator VOINOVICH [continuing]. The state that the national infrastructure bank, and I don’t know, what are they going to use 

that for? Is three-quarters going to be for transportation and transit, or are they going to spread it out all over the country? 

Mr. VILLARAIGOSA. Well, there are a number of vehicles that are 

currently configured. There could be others. But as I mentioned, or 

as was mentioned, TIFIA, Build America bonds, a demonstration 

project for an infrastructure bank, loan guarantees, loan subsidies. 

There are a number of mechanisms to make something like this 

work and/or to really incentivize localities to put up some of the investment that we are asking the Federal Government to do. 

Senator VOINOVICH. One of the things that I have been advocating since last year is that in spite of the fact that there are some 

creative financing mechanisms out there—and I am not as familiar 

with them as I should be. 

I know in Florida you have done—I am really impressed with 

what you have done in Florida, and congratulations, Mr. Clary, for 

your role in it. If you weren’t there it wouldn’t have happened. I 

hope you feel good about that. 

We had some folks in from Texas that have talked about tolling 

and borrowing money from their pension funds, et cetera. So I 

think we need to understand all of these opportunities that are 

there. But the real question is many of us feel that we do not have 

enough money coming in the till, and I have advocated at least a 
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10 cent increase in the gas tax, with indexing, to create a backdrop 

for all of this. 

You are a politician. What would the folks in Los Angeles have 

to say if your representatives voted for increasing the gas tax but 

making sure that the way it is done is that the program fits in 

with what you are trying to do? Or would they say, hey, we have 

done enough and—— 

Mr. VILLARAIGOSA. I think the region—remember, we have taxed 

ourselves three different times, a penny and a half. Measure R, 

this last penny—— 

Senator VOINOVICH. By the way we have done that in Cuyahoga 

County. 

Mr. VILLARAIGOSA. I believe they would support it is the answer, 

Senator Voinovich. 

Senator VOINOVICH. Mr. Inman, what do you think? 

Mr. INMAN. My view is that a gas tax increase would be generally supported. I think what we have seen is if you offer improvements to the system, as the mayor is doing—he is going to offer 

improvements in the short term—these are valuable assets to the 

American public. 

Senator VOINOVICH. Mr. Clary. You have been there. 

Mr. CLARY. I have been there, and I will offer an observation. 

And the mayor certainly knows his constituents much better than 

I do, but I was at a meeting last week in California where a group 

sponsored—there were State and local officials there, and there 

was a gentleman there that polls for tax initiatives all over California, and he said in his surveys he had done over the past 2 

years the level of support for a gas tax had been steadily dropping 

and was in the single digit range. 

And what surprised him is user fees. I think the disconnect that 

has happened is the public doesn’t see that as a user fee as much 

anymore. The user fees that they looked at was a pricing model of 

a tolling, and he said what surprised him was that was getting 

much higher and was approaching 50 percent. 

Senator VOINOVICH. If you have that, send it to me. 

Mr. CLARY. I will get that, yes, sir. 

Senator VOINOVICH. Ms. Hecker. 

Ms. HECKER. I would concur with all of the research that has 

been done. The only way to get the revenue to really beef up the 

program to begin to address the Nation’s needs is to in the short 

term raise the gas tax. But it is only a short term. And longer term 

we need to be looking at more sustainable approaches that are actually more equitable and more user based than the gas tax really 

is these days. 

The other thing I would observe is that the public has lost the 

trust that the Trust Fund has been spent well, and I think that 

is part of the reason we are so focused on getting some performance focus and accountability. I think that will be a key part of the 

communication to the public that this is needed, but we have clear 

focus, just like it has been at the local level. Local measures that 

are very clear about what the outcome is pass, and when they are 

vague they don’t pass. 

Senator VOINOVICH. Thank you. 

Senator CARPER. Those were very good questions. 
179 

If I may ask a question of Ms. Hecker there. There was once a 

woman who worked at GAO for a number of years; she was one of 

the top people there. And she left maybe a year or so ago, and I 

think her name was also JayEtta, and I think her middle initial 

was Z. Was that you? 

Ms. HECKER. Yes. 

Senator CARPER. I remember the first time I ever saw your name 

when you were at GAO, I thought it was like the name of a rapper, 

JayEtta Z. 

[Laughter.] 

Senator CARPER. And you really are cool. You have the neatest 

name, and every time I see your name I think of that first thought, 

how could a rapper end up with a senior position at GAO? And 

here you are now being one of the leaders on the bipartisan front. 

So good for you. Thanks for the work that you did there, and 

thanks for what you are doing today. 

Welcome all of our panelists. Mayor, it is great to see you, especially. But each of you, thank you for coming and sharing your 

thoughts and ideas and advice with us. 

Question, if I could, for Ms. Hecker. For maybe there-quarters of 

a century the gas tax has been used, as you know, as really the 

primary funding mechanism—not the only funding mechanism, but 

the primary funding mechanism for Federal transportation 

projects. I believe that continued reliance on the gas tax is really 

not sustainable because, and at least one of you made this point 

already, good news, cars are becoming more efficient; bad news, because they have become more efficient we will have less gasoline 

tax to derive from their operation unless we just drive more and 

more miles and continue to see vehicle miles traveled that escalate. 

About a month or two ago we had a chance to drive a Chevrolet 

Volt down here. It goes about the first 40, 50 miles on battery, then 

after that it has an auxiliary engine to help charge the battery to 

run the car. But we are going to be building in Delaware—Automotive is going to launch in about 18 months a vehicle that gets 

about 100 miles per gallon, another flex fuel plug-in hybrid car— 

not flex fuel, but a plug-in hybrid car, and a beautiful car. So we 

see just around the horizon the prospect of vehicles that not just 

meet the CAFE standard, 36.36 miles per gallon by 2016, but go 

way, way beyond that, and that is wonderful news, but it is going 

to undermine our ability to raise taxes over time from the gas tax. 

There are a lot of, I guess, political and technical questions which 

need to be answered before a new system can be adopted to begin 

to replace the fuel tax, and the transition is obviously going to 

occur over not just 1 year but over a number of years. Having said 

that, this is something that we can’t ignore here in Washington. 

I would just ask what steps you might recommend that we here 

in the Congress take in our next transportation bill to recognize 

this truth and also to prepare for it. 

Ms. HECKER. Well, first, let me agree with all you have said. It 

is not a sustainable strategy, and in many ways I think the Congress would really be irresponsible not to begin planning now for 

a post-gas tax environment. It is losing its credibility; it is losing 

its utility as a proxy for use; and while in the short term it is our 
180 

only way to really get the kind of revenue to support a bill, we 

have to start now. 

And the tools, interestingly, that we have talked about today, are 

all about financing; they are not new money in many ways; they 

are borrowed money. I mean the new money is a sales tax, or a 

new money is an actual source of revenue. But these tools to loan 

and have funds funded by the General Fund, those aren’t the new 

money. The new money needs real revenue. We have to begin a national process of rigorous and comprehensive planning as soon as 

possible. 

Frankly, I think it should begin before you pass a bill if it passes 

in December. This is urgent enough; it can be well defined. The 

tests we have underway are very small, they are not scalable, they 

haven’t cut across States, and there are fundamental questions. 

And connecting back to the hearing today, it would provide a fundamentally new and efficient platform for States to also transition 

to a more efficient user based fee. 

So all of the reasons are go ahead, structure the tests. We have 

specific recommendations of the kinds of robust testing that is 

needed and would be happy to share that with you, the Finance 

Committee, but it is also a policy issue. How you raise the money 

affects performance. So this Committee has an interest as well in 

the sustainability of a user pay system which, frankly, is deteriorating. 

Senator CARPER. All right. Thank you very much. Thanks for 

your comments. Thanks for your willingness to share some further 

insights with us as we prepare to face this challenge. 

If I could, Mayor Villaraigosa, your experience—it is great to always have somebody before us who actually does things in the public sector and is responsible for getting things done and achieving 

results, and as a recovering Governor it brings back some wonderful, wonderful memories, and challenges, too. But your experience 

in L.A. demonstrates the challenges that we face in our metropolitan areas, and although I am told only about 60 percent of Americans actually live in large urban areas, those areas represent 

maybe 90 percent of traffic congestion, maybe 90 percent of transit 

riderships, and I am told about 90 percent of population that is exposed to auto related air pollution. 

Let me just ask this. Do you believe that the Federal transportation policy is well suited to address metropolitan transportation 

needs? And if not, what recommendations do you have for improvement? You have already made some, but feel free to reinforce those 

again. 

Mr. VILLARAIGOSA. Well, there is, as I had mentioned earlier, I 

am also the vice president of the U.S. Conference of Mayors, and 

I can tell you that last year—— 

Senator CARPER. Let me ask you a question. In the National 

Governors Association you become vice chair and then become 

chairman. 

Mr. VILLARAIGOSA. Yes. Next year. 

Senator CARPER. OK. It is like having another job, you know. 

Mr. VILLARAIGOSA. Right. One of the issues that was a great deal 

of concern to us last year was, if you recall, historically with respect to what they called the STIP funds, metropolitan areas re-
181 

ceive about two-thirds of the money—and by the way the numbers 

I have from the U.S. Conference of Mayors is that in metropolitan 

areas, about 82 percent of the population lives in the metropolitan 

areas of the United States. That is the number we have been given 

over the years. 

So, historically the metropolitan areas receive two-thirds of the 

funding and the State one-third. Last year they changed that formula with the ARRA funding, and the States got two-thirds and 

the metropolitan areas got one-third. 

The problem with that—I mentioned I used to be speaker of the 

Assembly, so I went to the legislature and the Governor and convinced them that in California we should turn it back to the way 

it used to be. So the metropolitan areas did get two-thirds in California, but not everybody was able to do that. 

The problem with that is, what I mentioned back then at the 

White House, was that while you are still going to build a road, it 

is a road—when you do it that way it is a road that is going to connect the ducks to the geese, and in the case of an area like mine 

connect the two largest ports in the United States of America. 

There is a difference in terms of infrastructure, the impact of that 

infrastructure. 

So I would say, from my vantage point both as mayor of the city 

of L.A. and representing a large metropolitan area, that making 

sure that metropolitan areas get the majority of the money, if you 

will, makes a lot of sense, and it is the way the STIP funds have 

historically been distributed but weren’t last year. 

Senator CARPER. Thanks very much. 

We have been joined by Sheldon Whitehouse, a senior Senator 

from Rhode Island, and he is going to proceed and grill each of you 

until it is time to go to lunch. 

Senator WHITEHOUSE. The junior Senator from Rhode Island. 

Nice to see you, Mayor, and welcome to the other witnesses. 

Mayor, I wanted to explore an idea with you. We have considerable infrastructure in this country that is decrepit, that is in urgent need of repair and replacement; highways, bridges, water systems, wastewater systems. There is a great deal of it. And we have 

an urgent need for jobs, and we have legitimate serious concerns 

about the deficit that got run up in the last Administration in particular. 

It strikes me that there is a real convergence around the decrepit 

infrastructure. If it can be put into the category of infrastructure 

that is going to have to be replaced anyway, then to get onto that 

job now, first of all, puts jobs into the economy now, while they are 

desperately needed. And as anybody who has been involved in 

maintenance and repair understands, ordinarily the quicker you 

get after maintenance and repair the less expensive the job ultimately is. 

So it is sort of a double whammy on the deficit argument. First 

of all, you are going to have to spend it sooner or later anyway, so 

it doesn’t really add to the deficit if you move the repair or maintenance forward; and second, you are probably actually saving hard 

dollars against that future liability by getting to the repair or the 

maintenance or replacement sooner. So I see that as sort of a frame 

for our infrastructure and jobs argument. 
182 

Against that I see our efforts in order to avoid anything resembling an earmark with the stimulus funds, which everybody hates 

when they are called stimulus funds, but everybody loves as soon 

as they hit a particular project. I think that there has been a great 

number of Governors and Members of Congress who have campaigned against the stimulus and gone to every ribbon cutting they 

can find because they love the projects; they just hate the ideology 

of it. But the projects work. 

But what I have seen is that it has been slow going getting the 

funding out. It has to go through the Federal bureaucracy first; 

then in very significant measure, by and large it goes through a 

State bureaucracy, and then only then, finally gets to the project 

itself and to putting boots on the ground and jobs in the field. 

I would love to hear your thoughts on whether the mayors might 

be in a position to try to build an accelerated process so that you 

could come to Congress and say, look, if you really want these jobs 

out there, I can prove to you, one, that our process will be transparent and honest and fair, and two, that we will hit those projects 

that are clearly going to need to be done sooner or later anyway. 

It is a bridge under an existing weight restriction; it is a viaduct 

that has been declined further maintenance because it is in such 

terrible shape; it is a wastewater treatment facility that is spewing 

sewage into our waters. These are things we are not going to tolerate for long. We are not going to let those bridges fall down. We 

have to get on it. 

But I don’t see a mechanism in our governmental apparatus for 

directing funding through to jobs that allows that to happen in any 

kind of immediate and transparent way, and clearly the existing 

bureaucracy isn’t the way to do it. Can the mayors come up with 

a truly transparent local mechanism for saying, look, these are the 

real projects we need so that you can get around the sort of concern 

that this is earmarking, this is special dealing, this is whatever, 

but also get around the bureaucracy, and that we could, with confidence in that program, find ways to direct funding directly to 

mayors directly for projects that meet those standards and that are 

transparent? 

Mr. VILLARAIGOSA. I think we can. First of all, Ms. Hecker mentioned performance based funding. I am all for it. Earlier in my testimony we talked about the fact that in our county—the most congested county in the United States, the car capital of the world— 

that we have put together a half-penny sales tax that generates 

$40 billion over a 30-year period of time. We have come up with a plan to accelerate the 30-year $40 billion investment in a 10-year period of time, and what we have said 

is there are a number of creative financing opportunities, publicprivate partnerships, cost savings that come with the fact that the 

construction industry currently has an unemployment rate in our 

county of about 35 percent; to be able to generate the wherewithal 

to create about 165,000 jobs, reduce about 500,000 tons of carbon 

emissions in that 10-year period of time. 

My hope is that this could be not just something for L.A., an 

‘‘earmark,’’ but a template for what we all need to be doing. I mentioned earlier that I was the speaker of the California State Assembly, and I always had people come up with their hand out and ask 
183 

for State funding, and I would always say to them, what are you 

doing to match that, to demonstrate the community resolve that 

this is a priority? 

So in an era of limited funds, with a debt that is the largest in 

our history and a deficit that is going to be a priority beginning 

next year to address, I think it is very important to come up with 

these kinds of innovative ways to say, look, we are putting up our 

own money; we would like the Federal Government to partner 

through a guarantee, through a loan subsidy, through an infrastructure bank these efforts; and say this isn’t just for L.A., this 

is a template that could work for Rhode Island, that could work for 

New Jersey, that could work for Oklahoma, and Ohio and some of 

the other States that are represented by the members here. 

I believe that that is a way for us, in a time of limited funds, 

to leverage these investments and to accelerate, as you said, these 

jobs, which are so critical in these times. 

Senator WHITEHOUSE. My point is also about the transparency of 

the selection process. I think in Rhode Island, for instance, we have 

a number of bridges that are in urgent need of repair. Highway 95 

goes right through the middle of Rhode Island; it is the most traveled east coast artery; it goes through the city of Pawtucket over 

the river. 

The Pawtucket River Bridge is now under a weight restriction so 

that trucks have to go around it onto another access highway, but 

is much longer than the Route 95. And I think if people were able 

to see that this bridge in my community that I know needs to be 

replaced is on the list, and I know how it got there, and I know 

that it was transparent and clear and public, everybody had a 

chance to have their say, I think there would be a lot of confidence 

that the kind of infrastructure spending that we need to do is the 

right thing to do, and deficit concerns can be allayed because in 

fact we have an infrastructure deficit. And if we really accounted 

for this stuff properly we would count that as a liability, and by 

fixing it you would reduce the liability and the books would still 

balance. 

So I just encourage you, through the mayors, to try to look at a 

way to create a sufficiently transparent process at the mayoral 

level that everybody can have confidence in it, that we could have 

enough confidence to fund it directly and get you out of the loop 

of being at the tail end of the funding running through first the 

Federal bureaucracy, then the State bureaucracy, then finally you 

get the pickings of what is left or the leavings of what is left. 

And I know that Mayor Cicilline from my capital in Rhode Island 

is interested in this as well and has been working on these issues 

trying to find ways to put the mayors more directly into the infrastructure equation. 

But it strikes me that that is sort of a sweet spot. If it is really 

transparent, if people really get that that is truly decrepit infrastructure, and if that is attached to, wait a minute, this is OK to 

do even when there is a deficit because it is going to cost more 

later anyway, then I think there is a lot of room to move, and clearly we have an infrastructure gap that needs closing in a big, big 

way. 
184 

Mr. VILLARAIGOSA. Well, I think you hit the nail on the head. Remember, the half-penny sales tax that we passed, we did it in November 2008, in the beginning of the recession. We did it with a 

68 percent vote because we were transparent. We identified all 12 

public transit projects, all the highway projects. We addressed the 

entire region. Using standards developed by the Metropolitan Transit Authority, which is our regional transportation authority, we 

identified them based on congestion and air quality and the number of people that they would move and the entire needs of the region. 

I think you are absolutely right, and you hit it on the head. What 

we have seen is, at the State level there is much less support for 

State bonds than there are for local, because people see more of a 

direct connection between their tax dollars and those investments. 

Senator WHITEHOUSE. Well, I would urge you to take that template, try to expand it as widely among the mayors as you can, and 

attach it to the appeals you make to the Federal Government and 

not just to your local constituents for bond support. 

Mr. VILLARAIGOSA. I will heed that advice and certainly make 

those arguments. Thank you very much, Senator. 

Senator WHITEHOUSE. Let me ask one more question, then I will 

let everybody go. I know it is noon, and I apologize. 

I was interested, Mr. Inman, I your thoughts on the grant anticipation revenue vehicles as a sort of de facto capitalization of infrastructure investment, and I would be interested in your thoughts 

on exploring other ways in which Federal transportation policy can 

support treating these capital investments as the capital investments that they are rather than effectively expensing them every 

year. Front loading against future borrowing is the way the 

GARVEE notes do it, but I would be interested in your thoughts 

on capital budgeting more generally and in national infrastructure 

bank in particular. 

Mr. INMAN. I think the tools that we put into place when I was 

at the Federal Highway Administration—as I mentioned earlier, I 

was the Chief of Financial Management at Federal Highway before 

joining Mercator. Certainly our objective, as the mayor has indicated, is to try to move projects forward, particularly in this environment. This is such an opportune time to move projects up. As 

you indicated, they have to be built anyway. If you build them now 

you build them cheaper. The public has use of the facilities many 

years in advance. It can increase your economic recovery from economic benefits that occur. It is just many, many issues, and 

GARVEE bonds have been very successful in that. Now, there may 

be some advantage to a capital budget, for example, because you 

are not looking at—you are really looking at providing a basis for 

the economic strength of the country. 

As far as the infrastructure bank, my personal view—and this is 

my personal view—I am not exactly sure how that is a big advantage over an existing TIFIA program. The TIFIA program is very 

suited to transportation type improvements based on the flexibility 

of the program; whereas, the infrastructure bank, I am not sure 

how that might be administered. Would it be outside the Department? There are so many issues that would have to be resolved. 
185 

I managed the TIFIA program for some time when I was at Federal Highway, and one of the advantages we had was the support 

of the USDOT as well as the field offices because we have to monitor those projects. We need people, we need engineers, we need 

other folks monitoring those projects that are being funded through 

TIFIA, and that was such a good, I think, fit for the TIFIA program, is you had that other resources already available within the 

Department to help you provide that support. And with the infrastructure bank I am not sure where all that would come from. 

Senator WHITEHOUSE. Gotcha. 

Mr. INMAN. Thank you. 

Senator WHITEHOUSE. Well, I won’t hold anybody longer. I will 

recess the hearing. 

Mr. Clary and Ms. Hecker, if you would like to provide a written 

response on the capital budgeting or national infrastructure bank 

question, I would be delighted to hear from you, but I don’t want 

to keep the mayor and all of you any longer. 

The record of the hearing will remain open for another week if 

anybody wishes to add anything to it. I thank you all for your testimony. 

Without further ado, the hearing is adjourned. 

[Whereupon, at 2:35 p.m. the Committee was adjourned.] 

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