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USING INNOVATIVE FINANCING 

TO DELIVER HIGHWAY AND TRANSIT 

PROJECTS 

(111–101) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HIGHWAYS AND TRANSIT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

April 14, 2010 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SOLOMON P. ORTIZ, Texas 

PHIL HARE, Illinois 

JOHN A. BOCCIERI, Ohio 

MARK H. SCHAUER, Michigan 

BETSY MARKEY, Colorado 

MICHAEL E. MCMAHON, New York 

THOMAS S. P. PERRIELLO, Virginia 

DINA TITUS, Nevada 

HARRY TEAGUE, New Mexico 

JOHN GARAMENDI, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

VERNON J. EHLERS, Michigan 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

CONNIE MACK, Florida 

LYNN A WESTMORELAND, Georgia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

BRETT GUTHRIE, Kentucky 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

AARON SCHOCK, Illinois 

PETE OLSON, Texas 

(III) 

SUBCOMMITTEE ON HIGHWAYS AND TRANSIT 

PETER A. DEFAZIO, Oregon, Chairman 

NICK J. RAHALL II, West Virginia 

JERROLD NADLER, New York 

BOB FILNER, California 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

STEVE COHEN, Tennessee 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

GENE TAYLOR, Mississippi 

LEONARD L. BOSWELL, Iowa 

RICK LARSEN, Washington 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

SOLOMON P. ORTIZ, Texas 

PHIL HARE, Illinois 

JOHN A. BOCCIERI, Ohio 

MARK H. SCHAUER, Michigan, Vice Chair 

BETSY MARKEY, Colorado 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

JOHN J. DUNCAN, JR., Tennessee 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

CONNIE MACK, Florida 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

AARON SCHOCK, Illinois 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Bertram, Honorable Chris, Assistant Secretary for Budget and Programs 

and Chief Financial Officer, United States Department of Transportation .... 3 

Conti, Honorable Eugene A., Secretary, North Carolina Department of Transportation ................................................................................................................ 3 

Leahy, Arthur T., Chief Executive Officer, Los Angeles County Metropolitan 

Transportation Authority .................................................................................... 3 

Parker, Jeffrey A., President, Jeffrey A. Parker & Associates, Inc. .................... 3 

Washington, Phillip A., General Manager and Chief Executive Officer, Regional Transportation District, Denver, Colorado ............................................. 3 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Cohen, Hon. Steve, of Tennessee ............................................................................ 51 

DeFazio, Hon. Peter A., of Oregon ......................................................................... 52 

Duncan, Hon. John J., of Tennessee ...................................................................... 54 

Mitchell, Hon. Harry, of Arizona ............................................................................ 60 

Oberstar, Hon. James L., of Minnesota ................................................................. 61 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Bertram, Hon. Chris ................................................................................................ 65 

Conti, Hon. Eugene A. ............................................................................................. 82 

Leahy, Arthur T. ...................................................................................................... 91 

Parker, Jeffrey A. .................................................................................................... 105 

Washington, Phillip A. ............................................................................................ 134 

SUBMISSIONS FOR THE RECORD 

Bertram, Honorable Chris, Assistant Secretary for Budget and Programs 

and Chief Financial Officer, United States Department of Transportation: 

Response to request for information from Hon. Richardson, a Representative in Congress from the State of California ............................................. 32 

Response to request for information from the Subcommittee ....................... 71 

Conti, Honorable Eugene A., Secretary, North Carolina Department of Transportation, response to request for information from the Subcommittee .......... 88 

Leahy, Arthur T., Chief Executive Officer, Los Angeles County Metropolitan 

Transportation Authority, response to request for information from the 

Subcommittee ....................................................................................................... 99 

Napolitano, Hon. Grace, a Representative from the State of California, letter 

from Gateway Cities Council of Governments ................................................... 16 

Parker, Jeffrey A., President, Jeffrey A. Parker & Associates, Inc., response 

to request for information from the Subcommittee ........................................... 113 

Washington, Phillip A., General Manager and Chief Executive Officer, Regional Transportation District, Denver, Colorado, response to request for 

information from the Subcommittee ................................................................... 147 

ADDITIONS TO THE RECORD 

American Road and Transportation Builders Association, written testimony ... 188 

High Desert Corridor Joint Powers Authority, written testimony ...................... 191 

San Bernardino Associated Governments, written testimony ............................. 209 

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(1) 

USING INNOVATIVE FINANCING TO DELIVER 

HIGHWAY AND TRANSIT PROJECTS 

Wednesday, April 14, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HIGHWAYS AND TRANSIT, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2167, Rayburn House Office Building, the Honorable Peter A. 

DeFazio [Chairman of the Subcommittee] presiding. 

Mr. DEFAZIO. The Highways and Transit Subcommittee will 

come to order. 

Today’s subject is to discuss, or the formal title is Using Innovative Financing to Deliver Highway and Transit Projects. 

I am not going to revisit all of the statistics regarding the miserable condition of the Nation’s infrastructure. Suffice it to say that 

the United States used to lead the world in transportation infrastructure. For some time I have been saying we are losing so much 

ground we are falling toward third-world status, until one of my 

colleagues pointed out that most third-world nations invest a larger 

percentage of their GDP in transportation infrastructure than we 

do. So I have taken to calling it fourth-world; that is, formerly first 

world, now vaulting over the third-world backwards. 

Transportation investment is critical to the efficient movement of 

our people, our goods, our competitiveness internationally, and to 

our fuel efficiency. So many things go to it. We are trying to write 

a long-term bill to rectify these problems. The Administration is 

scared to death that we might actually make additional investments, so they don’t want to talk about it. And we, therefore, turn 

to this panel to talk about some other ways we might be able to 

increase investments without using the dreaded T word, and begin 

to address the Nation’s infrastructure investment deficit. 

I have read all the testimony. I assume other Members of the 

Committee have. So we would appreciate it if you, when you speak, 

you either summarize your most cogent points or respond to someone else on the panel if you have disagreements, and then we will 

go and move quickly into questions. I found some of the testimony 

very helpful and we will want to build on that as we go through 

the hearing. 

With that, I would turn to the gentleman from Tennessee, Mr. 

Duncan. 

Mr. DUNCAN. Well, thank you very much, Mr. Chairman, for calling this hearing on using innovative financing practices to deliver 

our surface transportation projects. I also want to thank all of our 

2 

witnesses for attending this hearing. Some of them have come from 

very long distances to be here and I look forward to hearing their 

testimony, because this is a very important hearing. The reauthorization of the highway and transit and safety programs has been 

stalled for almost a year now, and that is largely due to the fact 

that we are unable to agree on how we will fund all of these programs and projects in the future; and, of course, that is the megabillion question that we are all facing, particularly on this Subcommittee. 

Tax revenues are declining for all levels of Government and everyone is being asked to do more with less. As a result, innovative 

financing methods will play a bigger role in the next surface transportation reauthorization bill, a bigger role than they ever have before. 

In the past, innovative financing has been associated primarily 

with toll road projects but, in recent years, transit projects and 

highway projects that do not include tolls have benefitted from innovative financing. 

Today we will hear about Denver’s Union Station project, which 

will utilize two USDOT loan programs, and we will hear about a 

tunnel project in Miami that uses innovative financing but does not 

include tolls. 

As the number of transportation projects that are financed with 

loans, bonding, or with private sector funding grow, there are important policy issues that must be addressed. One is my concern 

that we need to make sure that today’s governors and, in some 

cases, mayors do not leverage so much of their future Federal funding that future governors do not have any Federal money available 

to address the problems they will face and will be left holding the 

bag, so to speak. 

At the same time, we do not want to give the Federal Government absolute veto power over every financing decision made by a 

State DOT or a local transit agency, because we need to have flexibility. 

It will be difficult to strike the right balance between these two 

perspectives, but I believe that the witnesses today can provide us 

with valuable information that will help us move in the right direction. 

Thank you, Mr. Chairman, for calling this hearing, and I look 

forward to hearing the testimony of the witnesses. 

Mr. DEFAZIO. I thank the gentleman. 

We will move now to the witnesses, and the first will be The 

Honorable Chris Bertram, Assistant Secretary for Budget and Programs, Chief Financial Officer, United States Department of Transportation. 

Mr. Secretary. 

3 

TESTIMONY OF THE HONORABLE CHRIS BERTRAM, ASSISTANT SECRETARY FOR BUDGET AND PROGRAMS AND CHIEF 

FINANCIAL OFFICER, UNITED STATES DEPARTMENT OF 

TRANSPORTATION; THE HONORABLE EUGENE A. CONTI, 

SECRETARY, NORTH CAROLINA DEPARTMENT OF TRANSPORTATION; PHILLIP A. WASHINGTON, GENERAL MANAGER 

AND CHIEF EXECUTIVE OFFICER, REGIONAL TRANSPORTATION DISTRICT, DENVER, CO; ARTHUR T. LEAHY, CHIEF 

EXECUTIVE OFFICER, LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY; AND JEFFREY A. 

PARKER, PRESIDENT, JEFFREY A. PARKER & ASSOCIATES, 

INC. 

Mr. BERTRAM. Chairman DeFazio, Ranking Member Duncan, 

Members of the Subcommittee, I am pleased to appear today to discuss the Department of Transportation’s efforts to use innovative 

financing techniques for surface transportation. My written testimony outlines the Department’s programs in this area. Let me just 

make a couple of observations. 

First, innovative financing is a response to the difficulty State 

and local governments face in funding major projects of regional or 

national significance through traditional grant programs on a payas-you-go basis. Today, such projects are rarely fully financed from 

just one source of funds; it is much more likely that a project sponsor will draw in multiple sources of revenue to move a project forward. 

The Denver RTD, which you will hear from today, is a good example of this approach. The Department is participating with the 

RTD through the Transit New Starts program, the TIFIA program, 

and the RRIF program; and we are also in discussions with Denver 

RTD about the use of private activity bonds. 

The Department has also begun discussions with Los Angeles 

about their 30-in-10 program, which envisions accelerating multiple projects by leveraging the sales tax revenue dedicated to transit. 

My second point: innovative financing is broader than just highway projects. There is heightened interest among transit and rail 

project sponsors in innovative financing. Although transit is traditionally less reliant on user fees, transit projects can leverage sales 

taxes and other revenue streams to repay project financing costs. 

For example, the Department recently provided a $171 million 

TIFIA loan for the Transbay Transit Center in San Francisco, a 

major transportation hub costing over $1.2 billion. The loan will be 

repaid by dedicated real estate tax increment revenues resulting 

from the economic benefits of the overall project. 

Thirdly, interest by State and local governments in such programs appears to be higher than ever. Last winter, the Department 

published a Notice of Funding Availability for the TIFIA program, 

with a deadline of March 1st, for letters of interest from project 

sponsors. Project sponsors submitted 39 letters of interest for almost $13 billion in credit assistance to support over $41 billion in 

total project costs. These letters of interest represent a range of different project types, including transit, highway, bridge, and freight 

intermodal projects. However, due to the limited funds available to 

4 

the Department, we will only be able to provide loans to a fraction 

of these requests. 

Finally, allow me to briefly discuss the proposal in the President’s budget to provide $25 billion over five years for a new Infrastructure Fund. This Fund would allow the Department to select 

major projects from around the Country and provide a variety of 

financial products—grants, loans, or a combination—to best fit a 

project’s needs. This proposal reflects an acknowledgment that the 

Federal Government needs to take a more active role in supporting 

major transportation infrastructure projects with targeted grants 

and credit assistance. 

I would be pleased to answer any questions you may have. 

Mr. DEFAZIO. I thank the gentleman. 

We turn, then, to the next witness, who would be The Honorable 

Eugene A. Conti, Secretary, North Carolina Department of Transportation. 

Mr. Duncan, would you care—— 

Mr. DUNCAN. Well, Mr. Chairman, I was going to mention I 

think our Committee Member, Mr. Coble, might like to introduce 

this witness from his home State. 

Mr. DEFAZIO. That would be great. 

Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman, Mr. Duncan. I am indeed 

pleased to recognize Secretary Conti. Mr. Chairman, I am scheduled to manage a bill on the Floor, so I may have to depart before 

I hear all the testimony, but Secretary Conti is no stranger to Capitol Hill; he served a good period of time here as the chief of staff 

for Congressman David Price. 

Gene, were you with any other Member besides David? 

Mr. CONTI. [Remarks off microphone.] 

Mr. COBLE. I thought there was another stint. 

But, Mr. Chairman and Mr. Duncan, Secretary Conti has served 

with distinction as the Secretary of the North Carolina Department 

of Transportation and I am indeed pleased to welcome him here, 

and thank you for letting me introduce Mr. Conti. Thank you. Yield 

back. 

Mr. DEFAZIO. Proceed. 

Mr. CONTI. Thank you, Mr. Chairman and Mr. Duncan. I certainly appreciate Mr. Coble’s kind comments. 

We fully support the use of these innovative financing programs, 

and I am going to talk a little bit in detail about some of our uses 

in North Carolina, a range of programs made available over the 

last 10 to 15 years and, as Secretary Bertram said, becoming increasingly important to the States as we seek to build on the basic 

user fee-based financing that comes through our Federal grant programs for both highway and transit. But we have found the need 

to supplement that grant program grant approach with these innovative financing tools. 

In North Carolina, as in many States, our traditional sources of 

financing are heavily constrained by gas tax revenue shortfalls and 

DMV fees and those kinds of things, so we have had to look at a 

number of these programs to move forward, and let me just tick a 

few of those off. 

5 

One, we have used the Value Engineering Project Clustering approach and we are very successful in replacing seven bridges on 

our Outer Banks in a 75-day period, something that, if we had 

taken the traditional approach, may have taken several years to do 

and probably would have cost us significant amounts of money, 

more than we actually ended up spending. So taking that approach 

was very important to getting it done. 

We have also gotten into the Design-Build and Design-Build Finance area. We have used those approaches on more than 25 

projects around the State and we have saved significant time in 

getting those projects done and also significant dollar savings getting them done earlier. For example, we are completing the Charlotte Loop project, which has been 20 years in the making. We are 

going to complete it five years earlier by using Design-Build Finance. 

We have gotten into the GARVEE Bond program very signifi- cantly, $530 million covering over 42 projects, and we have set that 

up to be kind of a revolving fund for us to keep those dollars flowing back into projects as we repay those GARVEE Bonds. 

We have also gotten into the tolling business. We have closed our 

financing on Triangle Expressway in the Raleigh area using a combination of Build America Bonds, Toll Revenue bonds, and a TIFIA 

loan. We will have that project as the first cashless electronic toll 

road in the Country. Starting cashless; I know a lot of places are 

converting to cashless. 

We are also working with a private sector partner on the MidCurrituck Bridge that is on the Outer Banks of North Carolina, a 

project that we wouldn’t do with public dollars alone, but we do 

have private sector interest in sharing the development costs and 

also sharing in the revenue stream after we get that built. 

We had a great example in Charlotte of a public-public partnership, if you will, the State, the Federal Government, and the local 

governments coming together to build a very successful light rail 

project in Charlotte. 

We are also moving forward with a public-private partnership in 

Charlotte built around a new inner city passenger rail station 

which will also service local buses and have mixed use development 

around it as well. 

Finally, we are working under the Value Pricing program to look 

at tolling all or parts of I-95, which is the main street of the East 

Coast; runs right through our eastern part of our State. 

A couple of areas where we have some questions and we would 

love to have some conversation today is about the TIFIA credit program. Again, we have used it; we intend to use it in the future, but 

there are a couple of concerns. 

One is the approach of requiring up-front payments for TIFIA, 

and North Carolina, I think was either the first or second to have 

to go through that experience. Coming up with that $10 million upfront payment did complicate the financing of our project and certainly would complicate the financing of our additional projects 

that we have put in for. Finally, we need much more clarification 

about some of the new features that the Administration has introduced around livability and sustainability, and how that applies to 

TIFIA projects. So we would like more definition around that. 

6 

Finally, on the I-95 issue, we are working very hard to develop 

the alternatives, kind of similar to what Maryland did on I-95 

north of Baltimore, where they developed about five or six different 

approaches in terms of pricing and financing, and then moved forward with the Express Lanes approach. So within a year or so we 

will have that study done; we will have those alternatives outlined. 

There is a lot of public involvement we are doing to make sure that 

our citizens understand what the options are and what the impacts 

might be. 

Thank you again, Mr. Chairman and Members of the Committee, 

for giving me the opportunity to be here today. I would be happy 

to answer questions. 

Mr. DEFAZIO. Okay. Thank you. 

Next we will have Mr. Phillip A. Washington, General Manager 

and Chief Executive Officer of the Regional Transportation District, 

Denver, Colorado. 

Mr. Washington, thank you for being here. 

Mr. WASHINGTON. Chairman DeFazio, Ranking Member Duncan, 

Members of the Committee, thank you for having me here. I also 

want to acknowledge my Colorado delegation representative—she 

is not here—Betsy Markey, who has been wonderful in helping our 

transit agency doing the projects that we are doing. 

The innovative financing tools that we have employed at RTD 

are very, very important. We encourage Congress to implement 

TIFIA, PABs, the things that we will talk about today. They have 

been very, very critical for us. We would not have been able to implement the projects or go down the road of implementation of the 

single, really, largest voter-approved transit expansion program in 

the Country without these innovative financing tools that we are 

talking about today. 

We are implementing the full load, as Secretary Bertram mentioned. The public-private partnership, which today, incidentally, 

the concessionaire teams that will be bidding on this Eagle P3 

Project, which consists of two and a half rail lines—commuter rail, 

maintenance facilities—those bids are due in today. So this is very, 

very timely that we talk about this. 

Private activity bonds, we are implementing TIFIA, railroad rehabilitation and improvement financing, and a lot of interagency 

cooperation and coordination with our State DOT and the Transit 

Agency. 

Also, there was some discussion about the livability cooperation 

between DOT, EPA, and HUD. We, of course, have a regional partnership and we are exercising that. We also, understanding this is 

a financing or innovative financing discussion, but there is some 

great innovative workforce initiatives that we are doing out in Denver, too, with this transportation investment program as an impetus. 

So, again, thank you for having me here. I look forward to the 

questions. 

Mr. DEFAZIO. Thank you. 

Mr. Arthur T. Leahy, Chief Executive Officer—oh, wait. Excuse 

me. Mrs. Napolitano would like to introduce the next witness. 

Mrs. NAPOLITANO. Thank you, Mr. Chair, and it is very brief. 

Just to welcome Mr. Leahy again to the Subcommittee. He has 

7 

been before us several times, formerly with the Orange County 

Transit, now with the Low Angeles, and we welcome him with open 

arms because he brings a new face, new ideas, and certainly a lot 

of brain thrust that we have sorely needed in the LA region. The 

only thing I have to say is that we put in that there is 10 million 

people in LA. There are more like 13 million just in the county 

alone. And that is a big job. So we welcome you and look forward 

to your testimony, sir. 

Mr. LEAHY. Thank you, Congresswoman. 

Mrs. NAPOLITANO. Thank you, Mr. Chair. 

Mr. LEAHY. Mr. Chair, Mr. Duncan, Members, I am pleased to 

be here with you. Los Angeles is what we call in California a selfhelp county. What that means is that there are three one-half 

penny sales tax measures—voter approved—the last one measure 

approved by a 68 percent level. Those funds generate about $1.5 

billion annually, which are used to pay for transit highway operations and capital. We very much look forward to working with you 

as partners using those funds as a basis for transportation development and economic development in Los Angeles and Southern California. 

My testimony cited a number of projects: the Alameda Corridor, 

using Federal loan guarantees guaranteed by container fees, a very 

successful project; the SR-91, an Orange County project, one of the 

best examples in the world of congestion pricing. Under that program, Orange County has now achieved, using transponders to collect the fares, the highest levels of speeds, revenues, passenger volumes, and average vehicle occupancy in the history of that road, 

a very successful model with no public money in the road; it is paid 

for exclusively by tolls. 

I will note also that our joint development projects in Los Angeles generate around $17 million per year in revenue. 

Measure R was passed in 2008. It generates about $30 billion 

over a 30-year period. It is going to be used to pay for highway and 

transit projects. The mayor of Los Angeles has recently advanced 

a notion of a so-called 30/10 program in which we would seek Federal loan guarantees and assistance to advance the 30-year program to be done in a 10-year period of time, the objective being to 

achieve the benefits from those projects, but also to stimulate the 

economy. The LA Economic Development Corporation estimates 

this would create about 500,000 jobs during the course of the 

project. 

We look forward to working with you on such things as a National Transportation Investment Finance Fund, Build America 

Fund, the Metropolitan Mobility Access Fund. Using the monies, 

the revenue stream that we have coming in Los Angeles to do transit and highways, we think that we can accomplish some wonderful 

things for Southern California, indeed. 

So we appreciate being here with you and look forward to working together in the future. 

Mr. DEFAZIO. Thank you. 

Then, finally, Mr. Jeffrey A. Parker, President of Jeffrey Parker 

& Associates, Inc. Mr. Parker. Make sure your mic is on there, Mr. 

Parker. 

8 

Mr. PARKER. Thank you very much, Mr. Chairman. It is an honor 

for me to be here today with such a distinguished panel. You have 

my testimony and we refer to a number of projects that we have 

worked on which I think demonstrate some innovation. Our company advises public agencies on innovative finance, and I must say 

that I share your interest in finding other ways beyond the T word 

to generate the revenues that we need to get the job done in this 

Country. We have been looking for it for 30 years; we haven’t found 

it yet. 

What we have found are ways to stretch the dollars that we do 

have available to get some better outcomes, to get more product for 

those dollars. The loan programs, the grant programs at the Federal level have been essential to advancing the edge of innovation 

in this area. Sometimes we fall off the edge a little bit, but hopefully we correct and we come back to where we need to be. 

I think the opportunities in front of us are significant, but so are 

the challenges during these difficult economic times, and I look forward to any questions that you may have. Thank you. 

Mr. DEFAZIO. I thank all the panel members, and hopefully now 

we can get into a little more interesting and thoughtful discussion 

among the members of the panel and the members who are here 

today. We have some pretty good participation. 

I would start with Secretary Bertram. You know, TIFIA suffers 

perhaps from being too successful; that is, you mentioned an extraordinary amount of potential demand and you are only going to 

be able to meet a fraction of that. Yet, at the same time the Administration is proposing this new I Fund. I mean, we have a plethora 

of programs. 

One question would be you have TIFIA, you have RRIF, you get 

PABs, you get BABs, you got GARVEEs, on and on and on, and 

now you want to have an I Fund. I mean, the question is at some 

point do we want to look at some sort of centralized clearinghouse 

that perhaps deals in different instruments which have different 

benefits? Because if you have a tax-exempt or not tax-exempt 

issuance, there are different markets for that. Some agencies have 

more capability of repayment than others, so that goes to what sort 

of financing they can access. 

I mean, do we really need to create a new I Fund, when we have 

something very successful like TIFIA, which is over-subscribed? 

Would it be better to put that money into TIFIA so that we can 

meet some of that already known demand? I am a little puzzled 

by—are we going to bring in some sort of rationalization to this 

process? 

Mr. BERTRAM. I think you are exactly correct. One of the points 

of having the Infrastructure Fund, is that you would have one entity within the Department of Transportation that a project sponsor 

could go to for loans, loan guarantees, grants, or a combination 

thereof. The vision of the Department is that TIFIA, RRIF, and 

other programs would eventually get folded into the Infrastructure 

Fund, so you wouldn’t be going to the Federal Transit Administration just to deal with New Starts and Federal Highways for TIFIA, 

but you would have sort of a central entity that people could go to 

that would provide planning and develop projects. Your point is exactly what we are trying to do. 

9 

Mr. DEFAZIO. Now, we tend to have stovepipes, many stovepipes, 

and, again, we just talked about that briefly, but RRIF is way 

under-subscribed and TIFIA is over-subscribed. 

Mr. BERTRAM. Right. You know, it is interesting because the 

RRIF program started out really as a method of credit assistance 

for small, short-line railroads after the deregulation of the railroad 

industry. The last highway bill, SAFETEA-LU, made a number of 

changes to the RRIF program, expanded the eligibility, expanded 

the amount of credit it could give, and the RRIF program is actually changing. We see a lot more demand for that. We actually are 

currently negotiating with the Port Authority of New York on—— 

Mr. DEFAZIO. With what? I’m sorry. 

Mr. BERTRAM. Port Authority of New York and New Jersey for 

a potential loan to buy new commuter railcars, which would be a 

loan of almost half a billion dollars. So you are right, currently 

TIFIA seems over-subscribed, RRIF seems under-subscribed, but 

the amount of interest we are, all of a sudden, getting in the RRIF 

program over the last year is really quite amazing. I think we will 

see the Department making many more RRIF loans not just for 

freight railroads, but also for commuter rail and possibly passenger 

rail. 

Mr. DEFAZIO. Okay. There was in the press—and Mr. Conti mentioned this, it was in his testimony, the first time I had seen it. 

They essentially had to pay points for their TIFIA loan. What was 

it called? It had a special name. It was some kind of fee. What did 

you call that? 

Mr. CONTI. While some of our folks called it an extortion fee, 

but—— 

[Laughter.] 

Mr. CONTI.—that is not the official name of it. In fact, I don’t 

know exactly what—— 

Mr. DEFAZIO. Okay. I don’t remember either, but, Mr. Bertram, 

would you care to comment on the extortion fee and why they were 

subjected to it, how it is going to be applied, what is the consistency of it? Because one concern I have about TIFIA is it seems like 

we have treated everybody the same. Are we now going to treat 

people differently; that is, say, well, you have more capabilities, 

therefore, we are going to charge you an up-front fee? And is the 

up-front fee limited? This one seems to have been about three percent of the value. Can you comment on that? 

Mr. BERTRAM. Sure. Let me comment on that. It is something 

that happened before I got to the Department, but basically because TIFIA is so over-subscribed, the Department, sometime last 

year or the year before, made a decision that they had a number 

of applicants for TIFIA loans and they had a limited amount of 

credit subsidy that they got from the highway bill, and they made 

a number of allocations that were essentially capped. So North 

Carolina got an allocation of $20 million for the credit fee. 

As the project developed and as the Department worked on calculating what the credit costs would be, that ended up being more 

than the $20 million. However, there was no additional credit subsidy because it had been allocated to other programs who also received a capped amount. So, as the loan went to closing, my understanding was that North Carolina paid more and then the DepartVerDate Aug 31 2005 13:50 Mar 23, 2011 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\DOCS\55967.TXT JEAN
10 

ment also increased its cap by some amount, I forget how much 

that was. 

But it is really due to the fact that the program is over-subscribed. 

Mr. DEFAZIO. Right. But, is this going to be consistently applied 

in the future? Is it going to be applied only to certain people? I see 

it as a way of extending the program; I understand that part. But 

the question is, is it a set percentage fee? In what circumstances 

might it be assessed? If one area is economically depressed and another is doing very well, will one fee be applied consistently? I 

mean, we weren’t trying to facilitate the 30/10 plan in LA, that is 

going to be a big use potentially of funds. How are you going to 

apply it? 

Mr. BERTRAM. I don’t know how we are going to apply that prospectively; we just got, as I mentioned, the 39 letters of interest. 

We are going to start working through those; look at the eligibility, 

look at the credit worthiness. I don’t know if this Secretary will 

want to apply a similar policy or not in order to stretch those 

TIFIA dollars. We only have about $108 million for 2010. 

Mr. DEFAZIO. How much for 2010? 

Mr. BERTRAM. About $108 million in contract—— 

Mr. DEFAZIO. But the total—okay, let’s just parse through this 

real quickly, then I want to get to other members of the panel. But 

your total requested amount is? You threw out that number. 

Mr. BERTRAM. Was $13 billion in loans. 

Mr. DEFAZIO. Okay. And what percent of that—I mean, what 

would be the credit part of that? 

Mr. BERTRAM. The rule of thumb is maybe 10 percent credit subsidy. 

Mr. DEFAZIO. Okay. 

Mr. BERTRAM. So that would be $1.3 billion. 

Mr. DEFAZIO. Okay. And you have how much? 

Mr. BERTRAM. One hundred eight. 

Mr. DEFAZIO. Okay, 108 or 80? 

Mr. BERTRAM. Eight. 

Mr. DEFAZIO. Eight. Okay. So you have somewhere about 12 percent of the demand. 

Mr. BERTRAM. Yes. 

Mr. DEFAZIO. That is kind of pathetic. Don’t you think we should 

be looking at somehow trying to increase the scope of that? Because, there is very little cost here to the Federal Government compared to the traditional program, and yet the economic returns, the 

investment returns are phenomenal. 

Mr. BERTRAM. Right. 

Mr. DEFAZIO. So you are asking for $4 billion in the President’s 

budget for the I Fund. 

Mr. BERTRAM. Right. 

Mr. DEFAZIO. If we had that $4 billion to apply to credit, we 

could more than cover those loans and cover the 30/10 plan, probably. 

Mr. BERTRAM. Absolutely, and of the $4 billion we would envision 

that some part of it would go to TIFIA types of loans. 

Mr. DEFAZIO. Well, maybe all of it should just go into TIFIA 

right now, and then we work toward consolidation. 

11 

With that, I turn to Mr. Duncan. Mr. Duncan. 

Mr. DUNCAN. Well, thank you, Mr. Chairman. 

Secretary Bertram, you mention in your testimony this National 

Infrastructure Innovation and Finance. How is this different from 

TIFIA or other things that we already have in existence? 

Mr. BERTRAM. As I mentioned earlier, it is different in that it 

would be broader than just TIFIA loans. We know TIFIA is capped 

at a third of the overall project cost. The I Fund could do more 

than that. It also would have grants that could be combined with 

loans or loan guarantees. 

It would also allow a project sponsor to come to one entity within 

the Department of Transportation and try to get a financing project 

as opposed to currently having to go to Federal Highways for a 

TIFIA loan and perhaps having to go to the Federal Railroad Administration for a RRIF loan and the Office of the Secretary to get 

a private activity bond. So it would be a consolidated place where 

people could apply. 

Mr. DUNCAN. Let me ask you another thing. In SAFETEA-LU we 

expanded the Railroad Rehabilitation and Improvement Financing 

program. There have been 24 loans made under that program for 

$851 million, but that is only a tiny fraction of the authorization. 

Mr. BERTRAM. That is correct. 

Mr. DUNCAN. Why is that? Is there just not that much demand 

or is there a problem of some type? 

Mr. BERTRAM. No, the demand is changing, as I mentioned earlier to Congressman DeFazio. We have a lot more interest in the 

RRIF program. The eligibility was changed in SAFETEA-LU, as 

well, and people are starting to understand that they can use RRIF 

loans. With Denver RTD, we are currently in discussions to do a 

RRIF loan for Denver Union Station, which is sort of their downtown transit hub, which would be combined with a TIFIA loan. So 

we actually are moving forward with the RRIF program, trying to 

find new innovative ways to use it not just for freight railroads or 

short lines, but actually using it to do transit and commuter rail 

projects. 

Mr. DUNCAN. Let me ask you this. The Administration earlier 

asked for an 18-month extension and we didn’t go quite that far. 

Does the Administration want to see a highway bill passed this 

year? Is that a goal of the Administration? 

Mr. BERTRAM. Secretary LaHood has said he wants to work on 

a highway bill. I don’t know exactly what the timing will be. We 

have until this December with the latest extension, as you know, 

and he is working internally on some proposals and some principles 

for the highway and surface reauthorization. 

Mr. DUNCAN. And without—I know you wouldn’t want to—you 

couldn’t come out in favor of it, I suppose, but do you think that, 

from what you have read and heard and so forth, do you think that 

most experts feel that there needs to be a—who have looked at 

this, feel that there needs to be an increase in the gas tax? 

Mr. BERTRAM. I think the Administration has been pretty clear 

that in this economic climate we don’t think a gas tax increase is 

appropriate. We do support extra investment in infrastructure; that 

is why we included the Infrastructure Fund in the President’s 

budget request. 

12 

Mr. DUNCAN. Well, I wasn’t asking you if the Administration favored it; I am just asking if you think, from what you have read 

and heard, that most people feel that, most of the people who have 

studied this, feel that there needs to be an increase in the gas tax. 

It is a little bit of a different question. 

Mr. BERTRAM. Yes, it is a different question. I don’t know if the 

majority of people who have studied this feel there should be an 

increase. I know there are people who have studied transportation 

that believe that there should be an increase in the gas tax, that 

is correct. 

Mr. DEFAZIO. If the gentleman would yield for just a second on 

that. 

But every study and every analyst who is credible out there has 

said we need additional investment and funding. 

Mr. BERTRAM. Right. 

Mr. DEFAZIO. There is not agreement on the form of it. 

Mr. BERTRAM. That is correct. 

Mr. DEFAZIO. But there is—we can quantify the deficit as being 

huge in terms of annual investment. 

Mr. BERTRAM. Right. 

Mr. DEFAZIO. Okay. I just wanted to clarify that. Thank you. 

Mr. DUNCAN. Well, I know you have done a lot of different things 

and you worked for this Committee for a while, and you also 

worked for the Senate Commerce Committee, I understand. I am 

tempted to ask you which you liked better, working for the House 

or Senate? 

[Laughter.] 

Mr. BERTRAM. They were both great experiences. 

Mr. DUNCAN. Secretary Conti, have you studied the proposed bill 

that we have in this Committee, the reauthorization bill? And what 

I am getting at, have you looked or consider what effect this proposed Office of Public Benefit would have on the projects that you 

have worked on in North Carolina? 

Mr. CONTI. Well, I think what we are concerned about in terms 

of the authorities in the outline that was put out is it seems to reduce a lot of the authorities that exist now, some of the things that 

I talked about that we are using or attempting to use. I think it 

would be useful to have some centralized evaluation process for 

how these tools work and which projects are creditworthy and all 

that, so I am not opposed to an Office of Public Benefit, but I think 

without having the Federal tools available to us, it would be very 

difficult to work in that structure. 

Mr. DUNCAN. All right, thank you. 

Mr. Washington, this Denver Gold Line and these corridor 

projects, $2.5 billion, how long did it take you to work that out 

from conception to actually starting on the project? 

Mr. WASHINGTON. I would think it took us about two years or so 

in various phases. The procurement phase, which we are in right 

now, as I mentioned, the technical bids are due back today. So I 

would say about two and a half years to put this together; dealing 

with the industry, dealing with the Federal Transit Administration, who has been great partners with us. Putting this designbuild-finance-operate-maintain public-private partnership together 

has been very, very huge. 

13 

As we move forward through this—and one of the lines that you 

mentioned includes the airport line. I was talking to some aviation 

friends of mine and we were talking about that Denver International Airport is the fifth busiest airport in the Nation, but the 

only one with no train from it to the downtown area. So this construction build-out, which will take about four years, and then the 

operation and maintenance piece of this that will be operated by 

the private sector for a 40-plus year period is huge. 

We have significant control, as the public sponsor, to include setting the fares, setting performance measures, the opportunity for 

liquidated damages if performances are not met. We believe that 

this PPP in transit, where the private equity partner is bringing 

up to $1 billion to the table up front and where we will pay back 

through availability payments, is really a model for the Country in 

transit in terms of public-private partnerships. So it took us a 

while to get to this point in working with FTA and our elected officials. 

And I see Congresswoman Markey has come in. Thank you for 

all your work helping with us. 

But it took us a while, but we are—— 

Mr. DUNCAN. What was the most difficult part to work out? 

Mr. WASHINGTON. I think the risk allocation piece, looking at the 

risk allocation and how much risk the public sector or the public 

agency takes on versus the concessionaire team was probably the 

most significant piece. 

Mr. DUNCAN. All right. Thank you. 

Mr. Leahy, I am very impressed that you got a 68 percent vote 

in favor of a tax increase. Somebody did a pretty good sales job, I 

would say. But you describe this SR-91 express lane toll road as 

the most successful toll road project, did you say, in the world? 

Mr. LEAHY. Sir, I think I referenced congestion pricing, one of 

the most successful congestion pricing models in the world. 

Mr. DUNCAN. I see. And the tolls run as high as $9.50 at times? 

Mr. LEAHY. Yes, sir. 

Mr. DUNCAN. And that is to go 10 miles? 

Mr. LEAHY. Yes, sir. 

Mr. DUNCAN. But did you also say that the tolls are higher not 

only at peak times, but they pay more the faster, the more speed 

there is? 

Mr. LEAHY. Yes, sir. If I might describe how the OCTA approached this. 

Mr. DUNCAN. Go ahead. 

Mr. LEAHY. We purchased the road from a private firm who had 

developed the project under a State franchise for a variety of reasons, fundamentally, a non-compete protection they enjoyed. It was 

very controversial. The OCTA sought to purchase the road, which 

we did, and negotiated price, and at the time we sought State authority for charging a toll because the purchase was going to be 

paid for out of tolls. 

Once we purchased, took possession of the road about six years 

ago, we then developed a tolling policy in which we looked at what 

the customers wanted, which was speed, that is, therefore, time. 

We then looked at traffic volumes and we discerned that when volumes—since two lanes in each direction came to 3200 cars per 

14 

hour, speeds became unstable, radically unstable; they would go 

from 60 or 70 down to 15. As a consequence, we developed a tolling 

policy which sets tolls by hour of day, by direction, and day of 

week. As a consequence, the tolls are very high. Let’s say, Thursday afternoon at 5:00 there might be $9.50. Friday morning, in the opposite or in that same direction it might be 

$1.5 to go the same trip. So what happens is the users, the customers, who use it voluntarily—remembering there is no taxpayer 

money in those lanes—manage their trip times around when the 

tolls are highest. So, as a consequence, the p.m. peaks became 

wider. So under this process we achieved the highest speeds, the 

highest volumes, the highest revenue, and because of the discount 

to car pools, the highest average vehicle occupancies in the history 

of that road. 

And, I guess to cap this off, I would note it took the profits, 

which are substantial, and used those profits to pay for improvements in the parallel free lanes, and Orange County paid for improvements in Riverside using the profits from the toll lanes. 

Mr. DUNCAN. Approximately how much profit are you making off 

that? You said the profits are substantial. 

Mr. LEAHY. Yes. The last year I was there, the last full year I was there for this, there were revenues of around $50 million and 

total expenses of around $30 million. 

Mr. DUNCAN. All right. I have some other questions, but the 

Chairman has asked me to go to other members, so we will save 

those for later. Thank you. 

Mr. DEFAZIO. Yes, we will have an opportunity for a second 

round. I would just like to, since there are a number of Members 

here, move along. 

Mrs. Napolitano. 

Mrs. NAPOLITANO. Thank you, Mr. Chair. 

I certainly find great interest in the information you have in your 

testimony, Mr. Bertram, and I certainly would hope, as you mentioned the 30/10 for Southern California, that you don’t forget that 

that is the mayor’s plan, not the county’s plan, nor MTA’s plan, nor 

the city’s plan. And they have to be taken into consideration when 

taking a look at the progress that it is making or not making. 

One of the major focuses of the mayor is to finish his lane to the 

sea, which is for tourism. We need mass transit, and the completion of the Santa Ana Freeway, the I-5. So, you know, there are 

things that need to be considered. And one of the reasons I believe 

that Mr. Leahy’s description of the passage of Measure R was because it was dedicated funding to transportation. The only problem 

was there wasn’t any defined—how would I say?—of who was going 

to benefit, what areas, whether it was bus transit or rail transit 

or highway building. 

I would love to have a letter into the record, Mr. Chair, from 

Gateway Cities, representing 20 cities. These are elected officials, 

Gateway COG, kind of outlining some of the concerns they have 

with the 30/10 plan. It is ambitious and it is a very good plan except if they take and build it out to the sea, it is already probably— 

how would I say?—over budget in planning, which will mean there 

won’t be very much funding left for any of the other projects, and 

that is some of the concerns that the cities have. 

15 

We look forward to being able to have more assistance to the 

communities themselves, who can determine what their needs are, 

rather than the State or the county, and direct ability for them to 

either bond local funding to be able to implement those local 

changes, and I look forward to talking to you and having possibly 

more of a knowledge for the communities. There’s the three councils of government that represent about 77 of the 85 county cities, 

and certainly they should have some input as to whether or not the 

plan, that is the 30/10 plan, is going to be something that is going 

to be helpful or detrimental in their eyes. 

I don’t have many questions other than to thank you for being 

here. As far as the gas tax is concerned, while I agree that it is 

probably not the time to do it, but if people see that it is dedicated 

to things that they feel are important, especially with the fact that 

so many new hybrids are on the road, there is less gas tax coming 

into the communities for them to be able to assist in addressing 

some of their local concerns. 

So while it may not be right now, timely now, I don’t want to— 

how would I say?—belabor it, but there hasn’t been a gas tax increase since 1993. That is a long time and I think it is time that 

we begin to at least consider it and have the general public understand the reason why and be able to move forward in the next few 

years. 

So, with that, thank you, Mr. Chair. I yield back. 

[The information follows:] 

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Insert offset folio 9 here 55967.009
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Insert offset folio 10 here 55967.010
18 

Mr. DEFAZIO. I thank the gentlelady. 

Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. Thank you for calling this 

hearing. 

Thank you all for being with us. 

Secretary Conti, good to see you again especially. I know that the 

North Carolina Turnpike Authority has tentative projects on its 

books that would require coordination with our neighboring States 

for collection purposes. Mr. Secretary, how would the motorists 

traveling through or in the State be affected should these projects 

move forward? 

Mr. CONTI. We are very active in a group called the Alliance for 

Interoperability. This is a critical issue as more and more States 

go to tolling as an option on some of the major highways, so we 

are trying to get a system where we can share information about 

license plate data so we can assess the tolls, if necessary, through 

video enforcement. We are going to need some help from the Federal Government on that effort, but it is something that we are actively leading in terms of a national coordination effort. 

Mr. COBLE. Thank you, sir. You and I are both thoroughly familiar with the infamous Yadkin River Bridge which spans the Yadkin 

River, and I think, Mr. Conti, the most heavily traveled corridor 

between Washington and Atlanta. I think I am right about that. 

Mr. CONTI. I think that is right, Congressman. 

Mr. COBLE. But recently it was announced that the NCDOT will 

use GARVEE funds to finance the first phase of the project, and 

I commend you for taking that step forward. But if you would, Mr. 

Secretary, walk us through what led NCDOT to determine 

GARVEE Bonds were the best option to get to work. 

Mr. CONTI. Well, we have had a very active GARVEE program 

for the last several years, using it for significant projects like the 

Yadkin River Bridge. We had applied for a TIGER grant for the 

$300 million that it will take to do the whole project. We were not 

successful in getting that amount of money out of the TIGER program, so we decided to do the first phase of the project, which is 

replacing the bridges, using our GARVEE Bond authority. Moving 

forward, we are also looking at ways to finance the second piece so 

we can get that under construction hopefully in the near term and 

get all the project done within the next three to four years. 

Mr. COBLE. Thank you, sir. Now, the Chairman asked you about 

the TIFIA loan. Did you want to say any more about that? You responded to the Chairman. 

Mr. CONTI. Well, I thought the Chairman’s questions were very 

appropriate. I think the key is we need to know what the rules are 

for this program so we can decide if that is the vehicle we want 

to pursue to finance some of these important projects. And if the 

rules keep changing or we are not sure what the up-front fee is and 

how that is going to be calculated, we just need a lot more transparency, a lot more definition about what the rules are for that 

program and, frankly, all these programs—Build America Bonds, 

GARVEEs. 

We have had great success with the GARVEE program because 

the DOT defined the program early on and worked with the States 

to refine it, improve it, make it workable. I think all of us are very 

19 

pleased with that. I think we need the same approach on TIFIA or 

any other of these financing programs. We just need to know what 

the rules are and how they are going to be applied, have a much 

more transparent process so we can understand how these decisions are made and what our financial liability might be. 

Mr. COBLE. Thank you, Mr. Secretary. 

Thanks to all of you for being with us today. 

Mr. Chairman, I yield back. 

Mr. DEFAZIO. Thank you, Mr. Coble. 

Still on your time, Mr. Bertram, could you respond to that? Because I think that is a key point and we seem to have created some 

uncertainty here. They were assessed a fee. That was the previous 

Administration. Could you—— 

Mr. BERTRAM. I totally agree with Gene. Putting these projects 

together is not cheap for an applicant; they require financial analysis, they have to go through preliminary engineering, the NEPA 

process. So I think people should have a better idea, before they 

put in a full application, what the rules are, and I think we will 

definitely keep that in mind for the next round of loans. 

Mr. DEFAZIO. Well, keep it in mind is one thing. The other is to 

have an expressed intent. It is like I will be advised by his concerns, it is like that doesn’t mean anything. So don’t you think 

there should be some guidance, perhaps a letter or something promulgated by the Secretary or your office that says, for this next 

round, these are the conditions we will apply? 

Mr. BERTRAM. Yes. I think in the next round, when we look at 

the letters of intent and we—or letters of interest and we go back 

to the applicants before they put in a full application, I think we 

will be very clear about what sort of the general outlines of those 

loans will be. I agree with you. 

Mr. CONTI. Mr. Chairman, if I could just add an additional comment. To the Administration’s credit, they had planned to have a 

public seminar, if you will, back in, I think, February. One of the 

snowstorms hit Washington that week, so it got cancelled. 

But I would be very supportive, and I think most of the States 

would be, if they would have some kind of a public discussion like 

that where we could come and present directly to the Administration and the leaders at DOT our views on how this program could 

be structured and have a good dialog, and then, of course, ultimately they need to make the decisions about how to structure it, 

but I think that kind of public exchange would be very helpful. 

Mr. DEFAZIO. That is a great idea. Have we rescheduled? 

Mr. BERTRAM. We haven’t rescheduled that; we plan to do that 

this summer. 

Mr. DEFAZIO. Okay. Should be able to, you know—— 

Mr. BERTRAM. With no snow this time. 

Mr. DEFAZIO. Then you have thunderstorms. 

Okay, with that, Mr. Carney. 

Mr. CARNEY. Thank you, Mr. Chair. 

Over here, guys. 

Secretary Bertram, I had a quick question. I am from Pennsylvania, but we pay attention to what transportation issues are 

around the Country, and looking at the toll road near San Diego 

that got the TIFIA loan and then the private owner operator, and 

20 

it went bankrupt, what have we learned from that? Are there lessons that we need to be aware of as we apply this around the 

Country, this bankruptcy? Are we going to get the money back? 

How is this going to work? 

Mr. BERTRAM. You are referring to the South Bay project? 

Mr. CARNEY. Yes. 

Mr. BERTRAM. There was a—there is a dispute between the company that constructed the project and the project sponsor as to outstanding costs associated with building the road that were in the 

hundreds of millions of dollars, and the project sponsor decided to 

go into bankruptcy, which means that the court will now decide 

which of those construction claims are valid and will have to be 

paid. The Department of Justice is representing the Department in 

that case. 

There is a feature in TIFIA that people commonly refer to as the 

springing lien, which means that when a project sponsor goes into 

bankruptcy, the Federal Government is first in line to be repaid. 

This will be the first time that it is actually tested in a practical 

case, so I think whatever experience we get out of that, I think that 

will probably be the biggest lessons we get out of that. But there 

are risks to these projects, and that is why they want a TIFIA loan, 

because they could not get the whole project going without one. So 

we are working very closely with Justice and monitoring that. 

Mr. CARNEY. From your knowledge, do you anticipate this happening elsewhere where TIFIA money is involved? 

Mr. BERTRAM. On all of our loan programs we have sort of a 

portfolio monitoring process. I am not aware of any other TIFIA 

loan that is potentially in this situation. 

Mr. CARNEY. Okay. Thank you. 

Mr. Conti, I agree with you in your comments that innovative financing mechanisms are not the primary fund; we need to have a 

transportation bill, we need to have a full authorization bill. There 

is no question about that. That is the way to do this. But, from 

your perspective, what are some of the most efficacious of the innovative financing that would serve all of our needs, from your perspective? 

Mr. CONTI. Well, I think the GARVEE program has been a very, 

very successful program. We certainly would continue to support 

that. Build America Bonds, we have had some experience with that 

in the transportation area and I think again offers some significant 

opportunities for us, so we would be very supportive of that. Again, 

the TIFIA program, or something like it, very helpful. 

I think the important thing is to have a range of tools available 

and then to have a one-stop shop, if you will, at the Federal level 

so you could deal with one agency or one office that could help you 

walk through the alternatives and what might be most useful, because every State is different, every city is different in terms of 

their own capabilities and what kinds of packages could be put together. 

None of these projects anymore are very easy to do from a financial perspective, so you really have to be creative; you have to look 

at all the tools and then package them together. For instance, our 

first toll road in North Carolina, about a billion dollar project, we 

used Build America Bonds, we used the TIFIA loan, and then we 

21 

had something called State Appropriation Bonds, where the legislature committed resources over a 30-year period to repay those 

bonds. So that is a package of financing that made sense and it all 

worked, and we have that project under construction. 

Mr. CARNEY. Mr. Bertram, is the Department putting together a 

one-stop shop? 

Mr. BERTRAM. Yes, sir, that is one of the main concepts between 

our proposed Infrastructure Fund, is that there is one entity within 

the Department that major projects could go to to get information, 

get technical assistance, get planning help to do a combination of 

credit and grant programs, yes, sir. 

Mr. CARNEY. And the ribbon cutting on that will be when? 

Mr. BERTRAM. Well, we will work with you on developing that. 

Mr. CARNEY. Okay, thank you. 

No further questions, Mr. Chair. 

Mr. DEFAZIO. I thank the gentleman. 

With that, I would turn to the gentleman, Mr. Brown. 

Mr. BROWN. Thank you, Mr. Chairman. 

Thank you, gentlemen, for being here today. You know, I am 

from South Carolina, along the coast there, and roads is a major 

problem. In fact, Mr. Conti, we are your next door neighbor and we 

have several major projects that we are independently, I guess, depending on each other to connect those roads, particularly I-73 and 

I-74. 

Mr. CONTI. Yes, sir. 

Mr. BROWN. I notice, as I travel up 95, that you all are making 

some pretty good progress, probably much more than we are. How 

are you actually funding those projects? 

Mr. CONTI. Well, right now we are funding them through the traditional grant programs and State funding, but we are looking, on 

95, at tolling options on 95 for significant capacity expansion and 

modernization. We would not just toll the existing facility; we 

would have a significant effort to improve, modernize, expand capacity, and then toll it. 

And Secretary Limehouse and I have had several discussions 

about working together. Actually, we had a five State coalition several years ago, Virginia all the way to Florida, to look at that 95 

corridor and work together, and we continue to have good relationships up and down that corridor and we will be continuing to work 

in partnership on some of those efforts. 

Mr. BROWN. I know that it is just a matter of time when it has 

to go from two lanes to three lanes. I went to see the shuttle 

launch a couple weeks ago and that part in Florida is just the same 

way, it is just stop and go from time to time. 

Mr. CONTI. Exactly. Georgia has done a pretty good job of widening more than some of the rest of us. 

Mr. BROWN. Yes, South Carolina has been in that same ballpark 

too. 

Mr. Leahy, I was interested in listening to you that you could charge a total of $9.50 for a 10 mile ride. That is pretty amazing. 

Mr. LEAHY. Yes, sir, it is. Maybe I should describe the physical 

layout. The SR-91 connects Orange County, which is jobs ridge, 

with Riverside County, which has many people who come to Orange County and, indeed, LA County to work. There is a mountain 

22 

range which separates those two counties and this toll lane, the 91, 

goes over a pass through that mountain range. So it really operates 

just like a bridge like in San Francisco; thus, there are no really 

easy options. So I don’t know that I would argue that is applicable 

in all cases, but in this instance it works. 

Mr. BROWN. Does it have truck traffic also? 

Mr. LEAHY. Yes, sir, a great deal of truck traffic. 

Mr. BROWN. Well, we are trying to help you out a little bit on 

that with the Panama Canal being expanded. We think a lot of 

those tankers or big container boats, instead of stopping in Los Angeles, will actually go through the Canal and come up the East 

Coast to Charleston and some of the other places. So I am leading 

all this up to lobby the Secretary to recognize that pattern and 

shift in the transportation arena. But, anyway, that is interesting. 

And I heard the statement it is making $20 million a year or thereabouts? 

Mr. LEAHY. Yes, sir, and, again, no taxpayer money. I would just 

note there is major truck and rail traffic and logistic centers in Riverside and San Bernardino counties, major impacts of goods movement in Los Angeles on the 60 and the 10. So we do think that 

Federal support for goods movement and the like is very important 

to all States. 

Mr. BROWN. So you are looking for a little relief if we could help 

you out a little bit over that? 

Mr. LEAHY. Yes, sir. 

Mr. BROWN. Mr. Secretary, I noted in South Carolina we had to 

do a lot of creative things to be able to meet our transportation 

needs. I am kind of amazed as I sit on this Committee—and this 

is my tenth year—that we haven’t taken more of a proactive role 

in trying to address the transportation shifts in this Country. 

I don’t know that we really did much to update the interstate 

system basically since the 1950s or so, and it seems like to me it 

would be an ideal time with the unemployment around 10 percent, 

and we know that transportation, every billion dollars we spend 

creates 30,000 jobs or thereabouts. It seems like to me it would be 

a good match, with the economy down, that this would be a spark 

to create jobs in this down-turned economy. 

Mr. BERTRAM. Okay. And the Recovery Act included almost $27 

billion with the highway funding, which I think has now been obligated by all the States and most of those projects are underway. 

Mr. BROWN. But most of those went to resurfacing and doing 

some other stuff. I don’t know what we—we haven’t done anything. 

I know the gentleman from North Carolina, we are trying to do 

some things within our own structure to extend the interstate system. In fact, we have about 30 miles built in Myrtle Beach which 

is all local money. 

So we just need some relief, and we were hoping that the reauthorization bill would be more available than postpone another 18 

months. We felt like that ought to have been a jump start to create 

the jobs and the economy. We are just looking for some help. I 

know in South Carolina, when I chaired the Ways and Means Committee, we created an infrastructure bank, and that was our hope, 

and we actually have under construction about $3 billion worth of 

construction jobs because of it. 

23 

So I was hoping that on the national level that somebody would 

be creative enough to create a similar kind of device and fund it 

with some additional funding so we could address just our major 

projects. Do you have any thoughts about that? 

I know my time has expired, Mr. Chairman. I apologize. 

Mr. BERTRAM. As said before, I think the Infrastructure Fund 

that we have proposed, which could do credit projects, would be 

sort of the leveraging you are sort of talking about, where you 

would have a certain amount of Federal money, would turn by a 

multiplier of whatever the credit subsidy is into a loan, and then 

also get local and State matching funds. So we would be interested 

in working with you. 

Mr. BROWN. Okay, thank you very much. 

I have one other issue, Mr. Chairman, I was going to talk to the 

Secretary after the meeting. 

Mr. DEFAZIO. There will be an opportunity for a second round 

also. 

Ms. Markey, you have already been mentioned twice by Mr. 

Washington. 

Ms. MARKEY. Thank you. 

Mr. DEFAZIO. So go right ahead. 

Ms. MARKEY. Thank you, Mr. Chairman. This is my first hearing 

on this Subcommittee, and I look forward to working with all of 

you. 

And thank you for being here, Mr. Washington. You have done 

an incredible job. I have a couple of questions. The FasTracks expansion was originally funded back in 2005 with a sales tax increase. Can you talk a little bit about how you cultivated public 

support for that tax increase? We are talking about other funding 

mechanisms like a gas tax increase. How did you get really overwhelming public support for it? 

Mr. WASHINGTON. Yes. The transit agency, RTD, went out to voters in, actually, 2004 to ask that a four-tenths of a cent be put on 

the ballot to build out the FasTracks investment program. It was 

extraordinary support from the Metro mayors, some 34 Metro mayors came together and supported that initiative; it was passed on 

the ballot. Some of the highlights of that successful campaign had 

to do with jobs and congestion relief and mobility, so all of those 

things came together for a 58 percent success on the vote. But I 

think the biggest piece had to do with the Metro mayors that came 

together in a nonpartisan way to support that investment program. 

Ms. MARKEY. Well, I want to congratulate you on that. Of course, 

then, unfortunately, with the recession, sales tax revenues have 

gone down and you have, I think, a $2 billion funding gap, and 

Denver RTD I think is the only transit agency to successfully utilize the public-private partnership program. So can you talk a little 

bit about what are some of the benefits and impediments of that 

program? And do you think that the pilot program should be continued in the next reauthorization? 

Mr. WASHINGTON. I do think it should be continued. That publicprivate partnership program, we were honored to be selected by the 

Federal Transit Administration to be in the Penta-P Program. The 

Penta-P Program—and I always get tongue-tied when I try to say 

what that is—the public-private partnership pilot program, the 

24 

Penta-P Program. So we were one of the agencies to be selected to 

be in that program, which came with very streamlined processes 

for the New Starts process. So where a lot of the processes take 

maybe five to seven years, in that program we were able to get 

from point A to point B, where we are now, about to pick a concessionaire team, in about two years. So that was very, very key. 

I do and would encourage Congress to continue with those 

streamlined approaches, whether it be the Penta-P Program or 

some of these innovative financing pieces that we are talking about 

today. But we would not be able to pursue as we have the publicprivate partnership to this degree without having those streamlined approaches. 

Ms. MARKEY. Do you think that your participation in the pilot 

program helped at all working through the FasTracks? I am sorry, 

the New Starts program? 

Mr. WASHINGTON. Yes. Yes. They helped tremendously. I think 

some of the substantial savings resulted from being able to lessen 

some of the risks and impacts of future inflation. When you look 

at construction costs, being able to get through the NEPA process, 

being able to get through some of the risk assessment pieces really 

helped us in terms of being able to go out now in this economy, 

where we are getting bids in 15, 20 percent below internal estimates, that has helped us a great deal being able to speed that up. 

So, yes. 

Ms. MARKEY. Thank you very much, Mr. Chairman. 

Mr. DEFAZIO. If I could follow up. I am a little confused, Mr. 

Washington, because I had asked about your testimony and the 

Penta-P Program yesterday, and I was told you don’t have your 

grant yet. You said it took you from five years to two years. I 

mean, do you have assurances that you are going to get it and 

could you just give me a little more detail? 

I am very frustrated with the bureaucracy and the length of 

time, as is the Chairman of the Full Committee, to get through this 

process, and we are looking at legislative streamlining in our bill, 

but since the Administration doesn’t want to do the bill, we are not 

making a lot of progress there. And I am not going to give them 

things they want until they do what I want, which is talk about 

how the heck we are going to pay for our transportation infrastructure. So we are not changing the law. 

But how is it that you could have gone from five years to two 

years? What different processes were adopted and why wouldn’t we 

just apply all these processes to every FTA grant? But there is this 

other question where staff says you don’t have the grant yet, so we 

don’t know if it worked. 

Mr. WASHINGTON. Yes. We do not have the grant yet, but we 

have great assurances that we will get the grant. 

Mr. DEFAZIO. In what time period? 

Mr. WASHINGTON. In 2011 or whenever the next transit transportation reauthorization bill. So—— 

Mr. DEFAZIO. Okay. So it didn’t actually go from five to two, it 

has gone to five to maybe three. 

Mr. WASHINGTON. Yes, I would agree with that. 

Mr. DEFAZIO. But you are saying that somehow—but you are 

saying you are at a point of just waiting for the final approval and 

25 

money; you are not grinding through having to go through the cost 

benefit analysis for the 172nd time for some bureaucrat at FTA, 

right? 

Mr. WASHINGTON. Yes, sir. Yes, sir. And if I could elaborate. Because of the timing of the FFGA and the new transportation reauthorization bill, we phased this project, where the private equity 

funders brought the money, that private equity up front in the 

project. So we are using that private equity money up front to build 

one of those lines, which we hope to break ground on in August. 

Then with the timing of the FFGA do phase two of the program. 

So that is how we are structuring that. 

Mr. DEFAZIO. Okay. But they did develop for you and apply, and 

you did go through a process that was streamlined in terms of the 

normal shuffling of paper back and forth in assessing the benefits 

and all that. 

Mr. WASHINGTON. Yes, sir. 

Mr. DEFAZIO. So we do have a model to streamline there. 

Mr. WASHINGTON. Yes, sir. 

Mr. DEFAZIO. Okay. All right. 

Okay, Mr. Schauer. 

Mr. SCHAUER. Thank you, Mr. Chairman. 

I am from Michigan and, needless to say, it is very difficult to 

take advantage of these innovative financing programs without 

State match, without local public dollars, let alone private dollars. 

In fact, at 2:15 I have a meeting with some Members of the Michigan delegation that are on the full T&I Committee with some DOT 

officials and representatives from the governor’s office, trying to 

figure out some innovative ways to not leave about a half a billion 

dollars of Federal road funding on the table for fiscal year 2011 

that would be distributed to other States. I am also working with 

some communities on transit projects. 

So I am intrigued by the ideas of the Assistant Secretary and 

those of you who have also commented on these, and I am just 

wondering if you have ideas that I can take back, short of the legislature stepping up and doing what it has to do on the revenue side 

or through financing to draw down these Federal dollars. It is a 

jobs issue for my State. Certainly, it is a jobs issue from the standpoint of providing mobility for urban areas for intermodalism that 

is desperately needed. And the reason I am on this Committee is 

to help our State make these key investments, and there are opportunities for public-private partnerships in a number of these, so I 

wonder if you can say something that will give me some hope or 

take back to my State. 

Mr. BERTRAM. I know you have met with the Secretary, Secretary Ray LaHood, on this issue. He has asked Victor Mendez, 

who is the Administrative—— 

Mr. SCHAUER. Yes. Victor has been a part of those meetings, yes. 

Mr. BERTRAM. I don’t think we are going to find one silver bullet 

to help you; I think Victor is looking at a number of different alternatives that we are working on that hopefully we can take back to 

the State fairly soon, like I said, not one solution, but a couple of 

maybe different steps to deal with the match issue for Michigan 

this year. We are very aware of it and want to work with you on 

it. 

26 

Mr. SCHAUER. Great. 

I don’t know if anyone else has any advice or comments. Yes, sir. 

Mr. LEAHY. In California, the law permits a county to seek a 

sales tax for a limited period of time, up to 30 years, but it might 

be 10 years, and it requires a two-thirds vote. In order to get a 

measure passed—and I mentioned we received 68 percent approval 

in Los Angeles during the recession—but in order to get that level 

of support, that requires a detailed set of projects in different categories with a schedule for delivering those projects. In California, 

typically, agencies, county commissions like the MTA have an oversight committee, a taxpayers’ oversight committee which are independent of the Authority, which can then make independent annual reviews and reports to the taxpayers. And then the tax expires. 

The point of all of that was to create assurances to the taxpayers 

that the money will stay in the local area, that it will go where it 

is promised to go, and that there will be independent oversight to 

assure the voters that in fact has happened. Because the tax will 

expire, that really motivates the local authority, of course, to deliver on the promises so that the voters might give consideration 

at some point in the future. 

Mr. SCHAUER. Well, thank you for that. That is an interesting 

model. The Michigan Department of Trans—actually, the State 

Transportation Commission has pulled 243 State projects from its 

five-year plan as a result of our current situation, so we have to 

figure out a way to put those projects back in the plan and do it 

now. I am very concerned about this construction season. I am 

pleased that we reached agreement with the Senate on a 15-month 

bill. We certainly need a longer term bill. 

But one of the provisions that I supported, and actually initially 

introduced, that was in the Jobs for Main Street bill that we 

passed just before the end of the year, the Senate has not acted on, 

would waive the State match for 2011. Now, some States may 

choose not to do that because that, in fact, reduces the overall size 

of the pie. But in a State like Michigan, where we are about $85 

million short for fiscal year 2011, that would give us the fungibility 

to avoid, again, leaving half a billion dollars on the table. 

So, Mr. Secretary, I appreciate your efforts. Please extend my 

thanks to Secretary LaHood, and we will continue to work. 

I yield back. Thank you, Mr. Chairman. 

Mr. DEFAZIO. Okay, Mr. Brown has, on behalf of Mr. DiazBalart, a request. 

Mr. BROWN. Mr. Parker, this is a couple of questions for you, and 

I note, for the sake of time, I am just going to read you the questions, submit them in writing, and let you respond. 

One is the Port of Miami Tunnel project is interested because it 

highlights the benefits of transfer and risks associated with the 

project to the private partners in the project. Would Florida DOT 

have moved forward with this project if they were not able to 

transfer the potential risks associated with construction costs and 

overruns to the private sector? Is that a yes or no? 

Mr. PARKER. Very definitely No, it would not have gone forward 

without risk transfer to the private sector. 

27 

Mr. BROWN. Okay. Both the I-5 and 95 project and the Port of 

Miami Tunnel project used public-private partnerships with availability payments. Can you talk a little more—I won’t ask you to 

elaborate, but, but you can give me this in writing—can you talk 

a little bit more about the availability of payments and how they 

are applicable to highway projects that are not tolled and how they 

are applicable to transit projects? And I guess if you can just submit those to him. And I know that time is moving along pretty 

quickly—— 

Mr. DEFAZIO. Well, I think there would be general Committee interest if you can answer that question right now, the second one. 

The first one was a little more specific geographically, but the 

availability issue that he just raised, could you address that? 

Mr. BERTRAM. Was that to me? 

Mr. DEFAZIO. Mr. Parker? I thought he was addressing it. Okay, 

Mr. Parker. Both. Both of you. Because that is a very interesting 

question. 

Mr. PARKER. It is a tool that we found very attractive for both 

projects to gain the benefit of the risk transfer without imposing 

certain economic consequences on the Port of Miami and in order 

to preserve State priority in the I-595 corridor in maximizing 

throughput, rather than maximizing the revenue that those tolled 

lanes would yield. And what we found is that the market was extremely interested in that concept. Basically, it is an annual payment which covers the initial construction costs, the ongoing operations and maintenance costs, and it covers the capital renewals 

that occur over a 35-year concession period. And there are some 

variations on a theme in there. 

In the Port of Miami Tunnel, there is no toll whatsoever charged; 

these are monies that are forthcoming from the State of Florida 

and from the local jurisdictions, some of which are paid through 

the availability payment and others of which have been paid up 

front. The risk transfer is enormous. These are the largest bored 

highway tunnels that have ever been built in the United States; 

they are being built in the worst geotechnical conditions that are 

imaginable. 

And the bids that the State received by doing this through a public-private partnership resulted in construction costs that were half 

of what the State’s independent engineers had anticipated. The 

reason for that was that there were new entrants to the market 

who were attracted to the PPP, the public-private partnership 

structure. They did not need the revenue. They were not looking 

for the revenue upside; they were looking for the compensation in 

the form of a long-term revenue stream. 

And I think this is a model that addresses many of the policy 

concerns that have been out there relative to negotiating a fixed 

rate of return, of isolating the revenues between the public and the 

private sector. About one-third of the cost of the I-595 project 

would be covered by tolls. The State of Florida does is it sets the 

toll to maintain the traffic flow—just as in the SR-91 project—it 

collects it physically through the Florida Turnpike Enterprise, and 

it retains those monies. The State uses that revenue to pay the 

availability payment, and whatever shortfall there is it makes up, 

and if there is an upside, the public benefits from that upside. 

28 

Mr. DEFAZIO. But as I recall from your testimony, there was a 

lump sum payment upon completion; there was also some benchmark payment in the interim. So it wasn’t that it all was put in— 

there were some fairly substantial payments there. And those came 

from State funds? 

Mr. PARKER. They come from a combination of State and Federal 

funds in the I-595 case. In the Port of Miami Tunnel case, what 

emerged was that the State and the City of Miami and MiamiDade County forged a partnership to pay for the project. MiamiDade County wanted to pay for their share up front and to finance 

that through a municipal bond. 

Mr. DEFAZIO. Okay. 

Mr. PARKER. So we injected, upon completion, a $350 million 

final acceptance payment in the Port of Miami Tunnel, and that 

still maintained the risk transfer, because that check is not written 

until the project is actually built. 

Mr. DEFAZIO. I have a question both to you and to Mr. Bertram 

in terms of when we are looking at risk transfer. If the availability 

payments depend upon pledging future revenues from State and 

local entities—let’s say we are dealing with California today; no offense to Mr. Leahy—how would we assess risk in terms of their future capability to produce a non-dedicated revenue stream from apparently general fund resources? How did that work in Florida and 

how would it work—I ask you that and then I am going to ask Mr. 

Bertram how that would work generally. 

Mr. PARKER. Well, this is a very critical question for us because 

it also raises an issue that Mr. Conti was addressing regarding the 

subsidy for TIFIA loans. In the case of Florida those future payments are actually financed through a TIFIA loan by the concessionaire, and in Florida there is a statute that absolutley limits the 

amount of the State’s surface transportation trust fund which can 

be committed to public-private partnerships at 15 percent of the 

annual outlays. And those outlays come off the top in terms of 

making funds available for meeting the obligations of the State. 

The State of Florida is roughly a AA credit, and this is an appropriations risk issue; however, by isolating that 15 percent and taking it off the top, there was a great deal of comfort that can be 

given that those appropriation obligations will be met. There is also 

a history of appropriations obligations being met. 

The difficulty we encountered in the TIFIA process is that despite this very certain source of annual revenues from an AA credit, the initial run at scoring the TIFIA loan subsidy put it very 

close to a rather speculative toll road kind of project. This posed 

a lot of issues for the State, as well as the concessionaire, in terms 

of being able to finance it because, again, our loan was capped at 

a $20 million subsidy, and some of the initial numbers that we 

were looking at had ranged up to $35 million, which would have 

meant the State or the concessionaire would have had to subsidize 

the loan up to $15 million. 

We were, fortunately, able to work with the Federal Highway 

Administration and indirectly through OMB to rethink the scoring 

and to say, well, look, this is essentially a AA credit rather than 

a speculative toll road, and got that subsidy way down, but still enVerDate Aug 31 2005 13:50 Mar 23, 2011 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 P:\DOCS\55967.TXT JEAN
29 

countered some of the transparency and mechanical difficulties 

that North Carolina did at the time. 

Mr. DEFAZIO. Mr. Bertram or Mr. Conti. I realize that I am 

interjecting here, but I think this is a key point, because the availability stuff seems very attractive, but we need to know how it is 

going to work consistently over time and how the Feds are going 

to look at it. So, Mr. Conti, do you want to say something else? 

Mr. CONTI. Well, I just wanted to add we haven’t gone as far as 

Florida in terms of use of that tool, but our State treasurer is very 

concerned about some of the debt affordability issues that Mr. 

Parker just outlined, so whatever we do will be constrained by the 

leadership of our State in terms of how comfortable they are in 

committing future revenues to support those kinds of payments, 

and we are very much engaged in that process of dialogue. So that 

is a financing issue within each State that would be important as 

you consider whether that is a tool you want to make available 

more broadly. 

Mr. DEFAZIO. Right. And just one other question, Mr. Parker. 

That 15 percent, is that by statute in Florida? 

Mr. PARKER. Yes. 

Mr. DEFAZIO. So, theoretically they could change that. But we 

take it as a—okay. 

Mr. PARKER. And what we have actually done in explaining that 

process is gone through a very detailed process both with the banks 

who financed against those possible payments and TIFIA; and 

there was language specifically crafted, there was report language, 

there was a pledge to budget the monies. So I think this—— 

Mr. DEFAZIO. About as good as you can get. 

Mr. PARKER. Yes. 

Mr. DEFAZIO. Outside being constitutionally dedicated somehow. 

Mr. PARKER. Exactly. And we are working with the California 

Transportation Commission right now on analyzing some of their 

P-3 projects, and this is a very real issue out there. 

Mr. DEFAZIO. Sure. 

Mr. Bertram, anything the Department would like to add? 

Mr. BERTRAM. Just one quick comment. The Miami Tunnel 

project was the first time that TIFIA actually considered availability payments; we had not done that before. We don’t have any 

other projects that we have approved since we approved that last 

September, so it is a new vehicle, but it seems promising. I think 

other potential applicants have been interested in maybe using 

that as well. But it is something new, not—— 

Mr. DEFAZIO. So at this meeting we are going to reschedule, 

where you bring in all the DOTs and other entities to explain to 

them what kind of programs you are interested in and how they 

are going to be applied, you will have some discussion of the future 

of availability payments as relates to TIFIA and/or other Federal 

ways to—— 

Mr. BERTRAM. Sure. 

Mr. DEFAZIO. Okay. I think it would be key to get there. 

Okay, Ms. Richardson just came in. Ms. Richardson. 

Ms. RICHARDSON. Thank you, Mr. Chairman. 

Mr. Bertram, I am a few minutes late; I came from a Homeland 

Security Committee meeting, so I apologize if my question might 

30 

be duplicative. A lot of discussion so far, me being here, has been 

about TIFIA, which seems to be expiring. I guess the last time of 

turning in requests was March 1st, 2010. Is there any intention on 

the Administration’s part to expand this program or to continue it, 

or is there something we need to do legislatively to help you do 

that? 

Mr. BERTRAM. Currently, the program is authorized through the 

end of December; it was reauthorized as part of the overall highway extension. It is funded through contract authority through the 

Highway Trust Fund, so there will have to be some sort of—if we 

are going to continue to do this with contract authority from the 

Trust Fund, there will have to be some extension at some point. 

Ms. RICHARDSON. Okay. And then I come from California, so you 

heard some of Mr. Leahy’s ideas. In California, in particular, we 

are looking at the 30-in-10 program, which needs Federal financing 

support. What did you think about what Mr. Leahy shared today? 

Mr. BERTRAM. I think we want to work with Los Angeles, with 

all the sort of interested parties in Los Angeles. And there is a 

dedicated stream of funding that was dedicated to transportation, 

and that is the sort of stream of funding and revenue that lends 

itself to doing some of the innovative financing projects and approaches we have discussed today, and the Department is very interested in working with Los Angeles to see where we can be helpful. 

Ms. RICHARDSON. Is there anything on the Federal level congressionally we can do that would help you to do that sooner rather 

than later? 

Mr. BERTRAM. I think it is going to depend sort of which projects 

are going to be ready from LA sooner rather than later. I think reauthorizing the TIFIA loan, maybe taking a look at the Administration’s proposal for the Infrastructure Fund, which also has loans 

and grants in it would be helpful for projects like LA’s. 

Ms. RICHARDSON. And, Mr. Bertram, are you familiar with— 

when I was on the city council a few moons ago, with HUD we had 

a program with the CDBG loan program, it was called the Section 

108; it is a loan guarantee program provision within CDBG programs, and essentially what it would allow you to do, most cities, 

local governments receive a certain amount of CDBG funds on a 

formula basis each year. The City of Long Beach receives approximately $10 million per year. What we were able to do was take the 

$10 million per year and talking about risk base, and I think we 

didn’t borrow on more than 40 percent of it or something. So we 

were able to do $40 million worth of park development projects in 

the advance of what we were planning on doing. Have you considered doing a similar program, or do you consider that is what 

TIFIA is? 

Mr. BERTRAM. No, there is a similar program in the transit program called Grant Anticipation Notes, which basically someone 

who receives Formula Transit funds can pledge future revenues to 

those bonds. It is similar to GARVEE Bonds in the highway case, 

but it can be done in transit. A lot of transit authorities also use 

it for discretionary programs like the New Starts Program, where 

they have a full funding grant agreement over five or six years, but 

31 

they want to sort of accelerate the construction over two. So we do 

have those tools available for transit. 

Ms. RICHARDSON. Do you foresee us being able to extend that, for 

example, to bond programs, since many cities are beginning to do 

bonds like what Los Angeles did? 

Mr. BERTRAM. They are bond—it essentially is a bond program. 

The State or local entity floats the bond and pledges the future 

Federal either formula or discretionary grants against those bonds. 

Ms. RICHARDSON. But what happens if the State can’t float the 

bond or is in delay of floating the bond? 

Mr. BERTRAM. I am sorry, if it is delayed? 

Ms. RICHARDSON. Given a State’s financial situation—— 

Mr. BERTRAM. Sure. 

Ms. RICHARDSON.—particularly California is what we are talking 

about, what if we are delayed in doing that? Do you foresee that 

this might be something the Department could do on its own? Are 

you familiar with this program? 

Mr. BERTRAM. I am not familiar with the HUD program, but 

there is a program, like I said, in transit and highways that basically lets you pledge future Federal funds to pay those bonds. I am 

not familiar enough with the bond market right now to know if a 

State would have trouble issuing those sorts of bonds with future 

Federal pledges; I just don’t know. I would have to get back to you 

on that. 

[The information follows:] 

32 


Insert offset folio 11 here 55967.011
33 

Ms. RICHARDSON. Okay, I would like to work with you. 

Mr. Leahy, did you want to add anything? 

Mr. LEAHY. Yes, Congresswoman. I am going to the committee of 

the MTA Board tomorrow and then the full Board next week to ask 

them to support the 30/10 approach with a number of provisos as 

to how that would work. We would then look forward to working 

with the host communities around Los Angeles County, but also 

with, of course, USDOT. We are now working on a number of transit projects, a dozen rail projects that we think we will be able to 

advance and, as you know, we have a very strong revenue stream. 

I know there is some interest on the board that we will be discussing having to do with seeing whether we might be able to also 

accelerate the highway program. 

Ms. RICHARDSON. Yes. 

Mr. LEAHY. That dialog will just now be starting. 

Ms. RICHARDSON. Okay. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. DEFAZIO. Mr. Diaz-Balart, one of your questions was asked 

by Mr. Brown earlier, but I understand you may have another, so 

go ahead. 

Mr. DIAZ-BALART. Yes. Thank you, Mr. Chairman. I apologize, I 

had to step out. I apologize to you, Mr. Chairman, and the Members. 

Mr. DEFAZIO. No problem. 

Mr. DIAZ-BALART. I had to manage some time on the Floor. 

Just quick comments. Mr. Chairman, as you know, Florida has 

been a leader in innovative financing, taking advantage of really, 

I guess, all available options to leverage much needed funding. A 

few of the examples, if I may, the I-75 widening in Lee and Calder 

Counties, which expanded 30 miles of highway using the DesignBuild Finance approach. That, Mr. Chairman, advanced the project 

by five years and allowed the project to actually be completed 

ahead of schedule. 

The I-95 express lanes. We have had some conversation about 

congestion pricing. I-95 express lanes or HOT lane project, which 

used that concept to provide increased traffic flow, has actually 

been very well received. 

The Miami Intermodal Center, which was financed through 

TIFIA. The Port of Miami Tunnel and the 595 corridor improvements. When I walked back in, I know that is what you were talking about. 

So I think it is important that we need to obviously encourage 

further innovation. Our infrastructure, I guess everybody understands, needs repair, and with our national debt skyrocketing and, 

frankly, no end in sight, I think it is imperative that we look at 

alternative options to fund our future infrastructure needs. 

So, again, thank you for already asking one of my questions, and 

I am sure a few others that I had have already been asked. So let 

me just ask one, if that is all right, Mr. Chairman. I want to ask 

the following. 

Considering the already difficult financial environment that we, 

by the way, the Federal Government and also State governments 

are facing, it is imperative that we avoid any actions that might 

further impair the ability to access private resources. So to you, 

34 

gentlemen, what actions should we talk to avoid that or, frankly, 

what actions should we not do to avoid that? And I don’t know who 

wants to take that, maybe Mr. Parker. You want to start with 

that? Then we will see if anybody else wants to take a stab at it 

as well. 

Mr. PARKER. Well, I think the interest of the private sector in infrastructure, and transportation infrastructure in particular, is 

keen and remains so. The financial markets have been very challenging, so we have to be taking a somewhat nuanced approach in 

how we present those opportunities. On the one hand, there is a 

concern that valuable federally funded assets will be sold off and 

come under the jurisdiction of private entities who will control the 

tolls. I think that we have amply demonstrated in some of the examples that you cited that there are many other types of publicprivate partnerships that we could pursue and that don’t have 

those kinds of dire implications or connotations. 

The critical issue is the allocation of risk and the fair compensation for risk. The financial situation as it has evolved over the past 

couple years has taught us that revenue risk is something which 

is going to be very difficult to share with the private sector at this 

time. Whether the projects are in Texas or Florida, Virginia, California, and whether they are in the airport sector or the road sector, the experience has been pretty clear that the private financial 

markets have stepped back from accepting revenue risk, which is 

why we have gained some acceptance with availability payments. 

That situation is stabilizing at this time, and it is possible we 

could revisit it. Long-term financing is really the key. TIFIA provides 35-year financing, so we have been able to marry together 

relatively short-term bank financing of 8 to 10 years with 35-year 

TIFIA debt to make these long-term commitments. If we can access 

the capital markets with Build America Bonds, with private activity bonds, then I think we can open up some new doors for private 

investment, and that is a capital markets issue. 

Mr. DIAZ-BALART. Thank you. 

Mr. LEAHY. I would note that as regards—in Los Angeles we 

have a fair number of public-private partnerships and we lack 

those joint development activities around mostly our rail lines. I 

think that to a private firm, of course, risk and time are money, 

so at the current time, what the FTA will do—and they are cooperative with us, they are good partners—but what they will want to 

do is to approve a joint development project at the end of the negotiation process between, in this case, the MTA and the private developer. We would suggest that an earlier FTA approval, so that 

we can conclude the negotiations without being at risk of something going wrong, might be helpful. 

In addition, I think to get projects speeded up and to reduce the 

time required for getting things going, we would suggest creating 

a presumption on the part of TOD projects, which are near transit 

locations with high density transit services. There should be a presumption that those projects will have less traffic and air quality 

impacts than a project which is not around a transit center. That 

would be a way of speeding up those sorts of TOD projects and encouraging them to occur faster. 

Thank you. 

35 

Mr. WASHINGTON. And, Congressman, I would just sort of piggyback on the private sector involvement. I think that is very key, 

but retaining control, the public sector retaining control of fares, 

tolls, and that sort of thing. I think, as we look to rebuild our infrastructure, we need a Marshall Plan. We are looking at our highways and roads and bridges very old. I think we have an opportunity here to rebuild our infrastructure, at the same time retrain 

workers and job creation. 

So we are coming at a point in time in our history, I think, where 

we have to rebuild our infrastructure, and at the same time we 

have high unemployment. That is coming together. I think we can 

create these jobs knowing that we have to rebuild that infrastructure. So I think it is a combination of all the tools in the toolbox, 

as Mr. Conti said, a range of tools available, whether it is publicprivate partnerships, whether it is railroad rehabilitation loans, 

whether it is TIFIA, all of these things. And, also, as we are doing 

in Denver, making sure that all of our lines are construction-ready 

even though we have a funding gap, just in case manna from heaven does fall. 

Mr. DIAZ-BALART. Okay, thank you. 

Mr. DEFAZIO. I thank the gentleman. The gentleman’s time has 

expired. 

I just want to follow up on his line of questioning because this 

goes back to—because time is money, and we all know that in 

terms of these projects. We had an earlier discussion of Penta-P 

and Mr. Washington says that they think they have gotten through 

the process and will get approval from FTA in a substantially reduced time period, but staff tells me we have never seen any guidance or gotten anything out of FTA in terms of how did they do 

that for Denver. 

And if they could do it for Denver, why can’t we do it for everybody and save the whole Nation tens or hundreds of billions of dollars as we try and rebuild our infrastructure? So that I am going 

to direct to Mr. Bertram, but first I want to hear briefly from Mr. 

Parker, because he has been involved in a Penta-P project, the 

Oakland Airport Connector project, that hasn’t gone forward, and 

I am wondering what was your experience with the Penta-P. 

Mr. PARKER. It has been troubling. Basically, the experience was 

that our involvement with Penta-P was sort of curtailed and a decision was made to allocate Federal funding below $25 million so 

that the New Start process was avoided entirely. BART went 

through the NEPA process, but not the formal New Start process, 

and the project was originally put out to bid as a P-3. 

At that time there were insufficient funds to cover the true cost 

of the project and it was pulled back. With ARRA it was resubmitted to the marketplace as a design-build-operate-maintain on a 

very fast-track schedule with a $70 million ARRA commitment. It 

proceeded as one of the fastest procurements that has ever been 

done in the history of mass transit; got four bids, three of which 

were deemed responsive, one of which was $60 million under the 

budget. 

The BART board was very happy with that. There was a huge 

amount of State and regional funding committed to the project to 

fill the original funding. After the project was submitted to the 

36 

BART board, FTA conducted an audit, found that there were certain exceptions to the Title VI program and basically pulled back 

the $70 million of ARRA funds. 

Mr. DEFAZIO. What does that mean, exceptions to what? Oh, civil 

rights? 

Mr. PARKER. There are certain civil rights procedures and there 

was an audit conducted which found certain exceptions, and FTA 

decided to withhold its approval of any funding for the project. So 

the status now is that BART is trying to fill the $70 million hole 

that was created when that money was pulled back. A civil rights 

plan is pending in front of FTA right now. BART is working feverishly with its stakeholders and funding partners to fill that hole 

and to retain the $24 million that was originally from Penta-P, but 

really is just hanging fire. 

We have also put in for a TIFIA loan, and BART has been looking for a response on that TIFIA loan for over a year. They have 

been through two cycles with it. So it is really a very complex relationship with the Federal Government on that project right now. 

Mr. DEFAZIO. And I guess, to Mr. Bertram, that is something we 

are going to deal with in our bill whenever we can get the Administration to sit down and talk about getting our bill done, but the 

issue he raises at the end there. Well, there are a number of issues 

imbedded in that, but when you talk about a TIFIA loan and it is 

for BART, but this is a spur of BART, but we have to consider it 

like a New Start—this is like BART doesn’t exist, it hasn’t been 

there for 30 years, it doesn’t have an operating history, it doesn’t 

have a history with the FTA, and they have to come in as though 

they are a greenfield project in some other city somewhere else. 

That is something we want to deal with in our bill, to say, look, 

you have to look at the history of this institution, BART, and that 

expedites things. 

So there are two things. One is we have the civil rights rewrite 

hanging, waiting for approval; and, B, this other exception. We 

would really like to have some explanation of how Penta-P worked 

so well for Denver. Why it isn’t working for BART; what is generally applicable from Penta-P that may have used—I shouldn’t say 

very well for Denver because, who knows, some bureaucrat somewhere may still find some deficiency in Mr. Washington’s application and say, well, yes, we were going to give you the money, but 

now we are not. But that comes back to Mr. Conti in terms of certainty, transparency, and all those things. 

Could you just comment on that? Then we have to move on. 

Mr. BERTRAM. I am not that familiar with the Penta-P process. 

If the staff or you have certain questions about that, I think we can 

get the Federal Transit Administration to explain that to you better; I really don’t have enough background to really comment on 

that. 

Mr. DEFAZIO. We will submit a question for the record, but, in 

my experience, I have never had an answer to any one of them, but 

we will be happy to try that. We will go right ahead. 

With that, we are going to go to Chairman Oberstar. I am also 

going to hand him the gavel because I have to step out briefly. 

Mr. OBERSTAR. [Presiding] Before you leave, Mr. Chairman, let 

me express once again my admiration for your persistence in folVerDate Aug 31 2005 13:50 Mar 23, 2011 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 P:\DOCS\55967.TXT JEAN
37 

lowing through on the financing issue. All the other issues are difficult, but this is the hardcore, the hard wood of the issue of surface transportation. You have held numerous hearings over the 

past three years and again this year. This is another critical issue. 

Thank you for your persistence, for your creativity. Great idea that 

you had that I think would have solved all of our problems except 

the Joint Tax Committee people didn’t think we could impose a fee 

on speculators. That would have solved a great many of our problems. But thank you very much for your persistence. 

Mr. DEFAZIO. Thank you, Mr. Chairman. 

Mr. OBERSTAR. And thank you, Mr. Petri, for your participation 

here and your great contribution during all the deliberations on 

SAFETEA, SAFETEA-LU. 

How many on this panel would support continuation of the Highway Trust Fund and the user fee as it is currently established? 

Just raise your hands. Think it is a good idea? Got a couple of dissenters. You don’t think the Highway Trust Fund, Mr. Leahy, Mr. 

Washington, is a good financing mechanism? 

Mr. LEAHY. Well, my hesitation was that obviously the revenues 

are not adequate to demand—— 

Mr. OBERSTAR. That is not the issue. Do you think the Highway 

Trust Fund as a principle, as a concept is viable? 

Mr. LEAHY. Yes, sir. 

Mr. OBERSTAR. Mr. Bertram? 

For the record, let it be noted that the panel all nodded or raised 

assent. 

Second, in the current situation, at 18.3 cents, is the current 

level of revenue into the Trust Fund sustainable, viable for the 

needs of transportation, highway and transit? No. The value of the 

construction dollar has eroded 47 percent in just the last five years; 

more if you go back ten years. The revenues into the Highway 

Trust Fund have declined over the past year and a half; actually, 

beginning in December of 2007, when the recession started. 

So we are now at a revenue-in of roughly 36, $38 billion, with 

a program authorization of $53 billion. Stimulus money has come 

in to make up some of that shortfall, but stimulus is going to run 

out by the middle of August. We will have probably 400 or so 

projects yet to be built. An enormous success, by the way, enormous success. The $34.2 billion highway and transit funding under 

the jurisdiction of this Committee has produced—that and the 

Clean Water Revolving Fund produced 1,200,000 direct and stimulated jobs. 

But direct jobs, those on construction sites and those in the supply chain, as I call it, the sand and gravel pit, the asphalt producers, the cement producers, the ready-mix producers, the steel, 

the rebar, high beam, fence posts, fencing, even landscapers all got 

jobs because of this; 1,200,000 jobs. 

Just those on direct jobs, the 330,000 onsite construction jobs, 

that has produced $1.7 billion payroll as of our last hearing at the 

end using figures reported as of March 12. A $1,700,000 payroll. In 

addition to which the workers on job sites paid $393 million in Federal taxes and avoided $253 million in unemployment compensation checks. Those are stunning figures. 

38 

In the process, State DOTs have built, rebuilt, expanded 34,000 

lane miles of highway. That is equal to three-fourths of the interstate highway system which took us 50 years—we did it in one 

year. And transit agencies purchased over 10,000 transit vehicles, 

in addition to a few thousand railcars for intercity passenger rail. 

That is an extraordinary accomplishment in a year. People forget 

the recession didn’t start January 21st, 2009, it started December 

2007. So we have gone from losing 750,000 jobs a month to creating 

some 6,000-plus jobs last month. 

But it is not sustainable unless we continue the investment, and 

the genius of the Highway Trust Fund was the user fee adopted 

in 1956. Of all the portraits on the wall here, only that gentleman 

in the corner, John Blatnik, my predecessor, was present at the 

creation. There is another one in the Democratic receiving room, 

Charlie Buckley from New York. He and Blatnik and George Fallon 

and Jerry Cooper. I forget who the other was, the five coauthors 

of the Interstate Highway Program in 1956. 

The first proposal to finance this new highway system was from 

George Humphrey, Eisenhower’s Secretary of Treasury, who proposed to finance it with bonding; we will just float bonds on Wall 

Street. That was his background before he came to Treasury. And 

the five wise men thought about it for a while and said, well, wait 

a minute. 

First of all, you don’t have a road map showing us where these 

highways are going to be built and, secondly, you mean we are 

going to pay the interest on the bonds, pay the capital on the 

bonds, and pay fees to the bond traders and build highways with 

that? And John Blatnik told me—we shook our heads and said, no, 

that is not sustainable. 

In those days, Congress sensibly adjourned the end of June, beginning of July, and went home for six months. Members had only 

one paid trip back to their districts, by the way, in those days, so 

they had to use that judiciously. And over the summer and the fall 

they thought about it, convened, they talked by phone. Phone calls 

were very important in those days, you had a dial phone, you 

know? Didn’t have touch tone phones, didn’t have cell phones. Conversations were much more substantive. And they came back with 

a plan—connect all towns 50,000 population or greater—and with 

a user fee, 3 cents, to finance, deposit in a trust fund, to be used 

only for highways, not part of the general revenues of the Federal 

Government. 

It passed the House, the Senate; Eisenhower signed in June of 

1956; the first projects were underway in September. Talk about 

stimulus; they were ready to go. And two years later the Bureau 

of Public Roads came back to the Congress to say that 3 cents isn’t 

enough; we need another penny to sustain what was then a 42,500 

mile system, $22 billion. And that one cent passed the House on 

a voice vote. 

Now, I don’t think you could pass the prayer on a voice vote. You 

certainly can’t do it in the Senate; someone will put a hold on it. 

But we need that same spirit in the Congress today that we had 

54 years ago. A greater good, a good greater than your own immediate re-election, your own outlook for your district; a greater good 

for the Country. That is what the Highway Trust Fund represents. 

39 

I have visitations by parliamentarians from all over the world, 

ministers of transportation. They marveled at our highway system. 

How do you do it? I explained the Highway Trust Fund. No one has 

anything like it; no other government, no other nation, no other 

transportation program. They collect their dollars, put them all in 

one pot, then redistribute the dollars. In 1956, our gross domestic product was $345 billion. Today it is over $13 trillion. In 1956, we averaged one car per household. 

Household we have three cars today. That one car drove, on average, 6,000 miles. We are driving 15,000 miles on average. We had 

a million trucks. We have 7 million trucks on America’s roads 

today. And the trucks and the cars are pounding the daylights out 

of the highways. Highway speed was just under 50 miles an hour. 

That is why we had those very attractive, very beautifully designed 

cloverleaf interchanges. Now they all have to be rebuilt, so you 

have diamond interchanges, faster access and egress. 

To sustain this system and to sustain this economic growth, we 

have to invest, and we have been caught up for 12 years—12 years 

before we won the majority—and 8 years of the Bush Administration of saying taxes are bad, taxes are awful. Even the current 

President ran on a platform, we are not going to raise your taxes. 

So an increase in the user fee is contrary to his campaign pledge. 

I have become an equal opportunity complainer. I complained about the Bush Administration not doing the $375 billion transportation bill; now I am complaining about this one not doing a $450 

billion transportation bill. 

Either we invest, as two national commissions have proposed,— 

and they have studied the issue for over two years, with ample extensive documentation—or we do nothing and be ever more mired 

down in congestion, traffic jams, fatalities, and huge costs to our 

economy. The costs are real. 

General Mills, in the Twin Cities, according to a study done by 

the Minnesota Chamber and a business alliance group and building 

trades just three years ago, to support an increase in the user fee 

gas tax in Minnesota, did a study of goods movement in Minneapolis-St. Paul, and General Mills spends $654 million a year 

moving Wheaties and Betty Crocker products in the Metro area. 

But for every mile an hour their trucks traveled below the speed 

limit, they lose $2 million. Overtime charges for drivers, late delivery fees to customers. 

UPS did a survey, which reported that for every five minutes 

delay their trucks experienced nationwide, they lose $100 million. 

Try to get a plumber. Well, we will be there between 8 and noon. 

Contractors are telling us we used to do eight calls a day; now we 

are doing four. 

There is a business cost; there is a consumer cost; there is an 

economy cost to inaction. But now we need to come to a consensus. 

We can’t ask people to pay more for what they are getting now because the current structure of our surface transportation program 

is not delivering projects in a timely fashion. It has caught up with 

complexities internally, and we have a bill that will address those 

issues; transform the Department, transform the agencies, create 

an office of project expediting, do a lot of things to move things better. But now we need a way to finance it, a way to pay for it. 

40 

These hearings that have been conducted in this Committee for 

the last three years have exposed a number of financing options, 

but nothing that is a sustainable financing mechanism as the Highway Trust Fund is and the user fee. 

So among the financing facilities, at least 11, tax-exempt bonds, 

tax credit bonds,—you have discussed some of those during this 

hearing today—loans, loan guarantees, GARVEE Bonds, the GAN 

Bonds, lines of credit, public-private partnerships, congestion pricing, tolls, private activity bonds, State infrastructure banks. But 

my experience is that while those are targeted facilities, they don’t 

add up to a sustainable program. You would agree with that? GARVEE Bonds have generated $9.3 billion in financial activity, revenue activity. SIBs, $6.2 billion. That is against an overall program of $53 billion. We need to go much higher than that. 

So while I think we need to retain all those financing facilities, 

as they are quaintly called in the language of the trade, we need 

to go beyond that. 

Apart from how we would manage TIFIA, the questions are 

should there be a limit on the amount of interest; should there be 

no limit, but only the discipline of the marketplace, the lowest bidder wins. A good deal for the public provided there is enough competition, more than two, at least, competitors. There are those internal issues. The real question is how do we get over this hump. 

We need $140 billion over current revenue stream over the next six 

years, so a mechanism. And we have had a robust discussion. 

I see Mr. Mica has joined us at the hearing. I thank him for his 

participation. He has been deliberate and thorough and 

participatory. He has several ideas of his own that we have tried 

out. We all come acropper with our ideas. 

So a proposal that I initially thought was not viable but may be the answer, is to direct the Treasury to deposit $130 billion in 

Treasury notes into the Highway Trust Fund—it can be done at 

once or it can be done successively over a period of years—to be repaid with future revenues out of the Highway Trust Fund with a 

moratorium on repayment for, say, the first four years, giving the 

economy time to recover, the surface transportation program to become more robust. And then have an increase in the gas tax or 

user fee four years hence. 

What is your reaction? Mr. Parker, we will start with you. You 

are on the firing line, the private sector. 

Mr. PARKER. Well, my speciality is spending the money, not necessarily how to raise it. But I would say that that is a very complex 

question. It has to do with the budgetary processes of the government; it has to do with the credit markets ultimately. I think it is 

a concept that we are familiar with that we use in the private sector, but how it plays out in terms of governmental accounting is an 

area that I am just not an expert in. And I think that is really 

where a concept like that would need to be vetted, is really how 

it affects governmental accounting processes. 

Mr. OBERSTAR. Mr. Leahy? 

Mr. LEAHY. Thank you, sir. I think that, as you alluded to earlier, it is quite clear that revenues are not adequate to do the work 

which is needed to be done. I think the other activities that we 

have described, which you just listed, although important, do not 

41 

solve the problem. So I think we do face the stark options which 

were referenced, which is we either shrink the program or we expand the revenues. 

Speaking for myself now, I think that it is imperative for the 

good of the economy and for the transportation system, for the reasons that you referenced, to expand the revenue so that we can 

maintain and expand the program. I won’t make an opinion about 

how that revenue expansion should occur, but it is clear that it has 

to occur. 

Mr. OBERSTAR. Well, if it was good enough for President Ronald 

Reagan in 1982 to sign the authorization bill with a 5 cent increase 

in the user fee, then it ought to be good enough for President 

Obama. And at the time President Reagan said this user fee, this 

gas tax, does not increase the deficit; secondly, it is users of the 

system paying for its investment and upkeep and expansion; and 

third, he said at that time, the cost to the users of the system 

would be the equivalent of two shock absorbers over a year. You 

might save that money if your roads are improved. 

Mr. Washington? 

Mr. WASHINGTON. I agree with the approach. I do not think we 

can afford to do nothing. I think that our infrastructure is in bad 

shape, and I applaud the idea to raise revenues and, as you say, 

the gas tax. So I agree. I think we pay now or pay later. As we 

see our infrastructure fail all over the Country, as we see the maintenance in some of our older transit systems start to fail, I do not 

think we can afford to do nothing. So I agree with the approach. 

I think we need to raise revenues. If it is a gas tax, so be it; if it 

is user fee, so be it. I think we have to develop a plan and a strategy to address our issues here in America. 

Mr. OBERSTAR. Thank you. 

Mr. Conti? 

Mr. CONTI. Thank you, Mr. Chairman. I think you have hit a 

very important point. We are looking for stability and predictability 

for long-term investment, so anything that is done at the Federal 

level to give us assurance that those dollars will be there over the 

next five to six years would be very critical to us being able to 

move forward at the State and local level to develop these projects 

and to deliver them in a timely way. So I would support anything 

that would guarantee that kind of long-term stability in the program, just as the Highway Trust Fund has for the last has for the 

last 50 years, as you said. 

Mr. OBERSTAR. Thank you. 

Mr. Bertram? 

Mr. BERTRAM. I agree with you. Innovative financing techniques 

are limited financing options that can be used in certain types of 

projects that have revenue streams. There is heightened interest, 

but it is not sort of a solution to every transportation program. 

They have their place; they have been very useful; they have allowed sponsors to bring in projects more quickly and on time and 

also cheaper, but it is not this one-size-fits-all magic bullet for all 

of our problems. 

I think the Department and Secretary LaHood has been clear, 

has been very supportive of the Highway Trust Fund as a mechaVerDate Aug 31 2005 13:50 Mar 23, 2011 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 P:\DOCS\55967.TXT JEAN
42 

nism. We support it, keeping the efforts to keep the Trust Fund 

solvent and to keep the highway and transit programs going. 

Mr. OBERSTAR. He certainly has. He has done a great job as Secretary. 

Well, Mr. Mica, I know that you concur in the view that we cannot afford to do nothing, but the something is a vexing issue, and 

I appreciate your partnership and participation in this quest for financing mechanisms. The floor is yours. 

Mr. MICA. Well, thank you. I have to compliment you and Mr. 

DeFazio. He has gone? Jim, make sure you tell him that I complimented him on holding the hearing. But it is an important hearing, all kidding aside, and I do really appreciate Peter, you, Mr. 

Chairman, your interest in looking at these innovative financing 

means. I think we have come a long way. 

I still think we have a long way to go in looking at some creative 

options in financing. I come from the private sector and you have 

heard me say a hundred times if you can finance the deal, you can 

do the deal. In business we say that term, and the same thing as 

it relates to building the infrastructure. We certainly know the 

need; American Society of Civil Engineers is estimating $2.2 trillion now over the term of the bill. 

We have had some things that have been successful; the Build 

America Bonds and I was pleased to see some of that up. 

Interested a bit in the Administration’s proposal on their little 

fund and I have a question. 

Mr. Conti, I have written you a letter at least ten times, but it 

has never gotten from my brain to paper, and I will cite it to you 

very briefly. I have a summer home in North Carolina, up in Blowing Rock, which is about as close to heaven as you can get without 

developing wings. 

Mr. OBERSTAR. You don’t have to worry, he doesn’t vote there, 

though. 

Mr. CONTI. I think Mr. Coble is a neighbor of yours up there, 

isn’t he? 

Mr. MICA. Yes, Howard, and Virginia Foxx is my Congresswoman. 

Mr. CONTI. Right. 

Mr. MICA. But I have been up there thirty-some years and I just 

admire what you have done in two areas. One is some of your bypass systems. Was some of that financed under GARVEE Bonds? 

Mr. CONTI. I am sure we financed some of our bypasses with 

GARVEEs, yes. 

Mr. MICA. But absolutely wonderful model of how the State has 

taken charge and done some things remarkable on some of the 

roads. 

And then the other thing, Mr. Chairman and everyone else, 

North Carolina does one of the best jobs on enhancements, and 

they just beautify their highways, especially the springs. I can almost just go to North Carolina right about now and start looking 

at the right-of-way. 

Mr. CONTI. We are very proud of that, Congressman. 

Mr. MICA. It is absolutely magnificent. So that is the ten letters 

all in one—— 

Mr. CONTI. Thank you. 

43 

Mr. MICA.—complimenting you on what you have done in my 

part of my spare time home State. My kids are both Appalachian 

State graduates. 

Mr. CONTI. Great. 

Mr. MICA. Well, in any event, enough of the small talk here. 

Actually, Mr. Bertram, your $4 billion a year, $25 billion over a 

couple years I think is sort of peanut sized thinking in what we 

need in infrastructure. Projects today, I can name you right now 

20 projects that exceed the $4 billion mark. Don’t you think that 

is small in terms of what size—and then why wouldn’t we do with 

more of the infrastructure bank and use it in maybe a GARVEE 

Bond method of repayment of a small Federal stream back? And 

of course, if you have revenues coming in on any projects that have 

any revenues, transit or others, you can even expand that capacity. 

What is your thinking? 

Mr. BERTRAM. Absolutely. I think—— 

Mr. MICA. What is the reason for your small thinking? I am a 

right wing conservative. 

Mr. BERTRAM. You know, I think as we discussed at the hearing 

before—— 

Mr. MICA. But I don’t think you have enough money. 

Mr. BERTRAM. The TIFIA program I think currently is sort of a 

great demonstration of what the demand is for Federal financing. 

Mr. MICA. And that is over-subscribed, I understand? 

Mr. BERTRAM. It is absolutely over-subscribed. We currently have 

39 letters of interest—— 

Mr. MICA. Totaling what? 

Mr. BERTRAM. $14 billion. 

Mr. MICA. See? So—— 

Mr. BERTRAM. Absolutely. 

Mr. MICA.—again, $4 billion a year doesn’t get us. I am thinking 

more in the $200 billion range fund. 

Mr. BERTRAM. Well, I think, once again, the Infrastructure Fund 

wouldn’t just be grants; the Fund would be able to make loans or 

loan guarantees to buy—— 

Mr. MICA. Right. Mr. Brown is gone, but Mr. Brown told me that 

they leveraged some of their State money for every public dollar, 

$6 to $8 leveraging. 

Mr. BERTRAM. They have a very successful State infrastructure 

bank where they—— 

Mr. MICA. How about us adopting that one at the Federal level? 

Mr. BERTRAM. Well, I mean, a State infrastructure bank program 

is a national program. I am not sure how many States are currently participating in it; I think the majority are. Some of them 

use it—— 

Mr. MICA. Thirty-two? 

Mr. BERTRAM. Excuse me? 

Mr. MICA. Thirty-two? 

Mr. BERTRAM. Thirty-two or 34, yes. Some of the use—— 

Mr. MICA. How about taking that model, South Carolina, instead 

of your measly little stingy proposal and getting some real money? 

Mr. BERTRAM. You know, I said before I think the $4 billion, once 

you leverage it and use it for loans and loan guarantees, would acVerDate Aug 31 2005 13:50 Mar 23, 2011 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 P:\DOCS\55967.TXT JEAN
44 

tually be able to support a substantial amount of projects, depending on what the applications are between grants and loans. 

Mr. MICA. Well, again, it is not always how much we spend, it 

is how we spend it, too, and how we utilize that revenue stream. 

Tell me, Mr. Parker, the RRIF loans have not been that successful. Have you dealt at all with those, and why, and what could we 

do to make them more successful? 

Mr. PARKER. Actually, as Mr. Bertram indicated earlier, there 

are a number of applications of RRIF now. We work with the Port 

Authority in New York and New Jersey in buying about $500 million of railcars using that as a financing mechanism, and we see 

much greater application in public transit for the use of those monies. 

Mr. MICA. I know, but is there anything we can do to make it 

even more attractive to utilization by the private sector or by public entities? 

Mr. PARKER. Well, right now, this up-front risk premium is a 

challenge to a lot of projects. 

Mr. MICA. Up-front risk premiums? 

Mr. PARKER. Yes. 

Mr. MICA. That is something that would help, an adjustment in 

that? 

Mr. PARKER. Some adjustment there would be helpful. 

Mr. MICA. Some adjustment. Is that set by Federal or is it Federal administrative law or rule? 

Mr. PARKER. It is a calculated number. 

Mr. MICA. But we could impact that through specific language. 

Mr. PARKER. Yes. But it has remarkable flexibility. 

Mr. MICA. No, the RRIF loans, we have been having trouble getting some of those out and I said what could we do that would enhance the attractiveness and potential expanded utilization of 

RRIF. 

Mr. OBERSTAR. The problem—if the gentleman would yield. 

Mr. MICA. No, go right ahead. 

Mr. OBERSTAR. The problem on the RRIF loan was it took five 

years to get rules in place, to get it established, so some of the good 

projects that were envisioned at the outset just went away. Now 

they are coming back. And it is showing the ability to repay, and 

those have been impediments. 

Mr. MICA. Well, he said the risk premium is—— 

Mr. OBERSTAR. There are a number of operational issues that I 

think we can resolve. Yes, I think we can address it. 

Mr. MICA. The standard required for the risk premium is one 

thing. Anything else you can think of, Mr. Parker? We have things 

in place; TIFIA has been successful, the Build America Bonds successful. How do we make RRIF more successful? 

Mr. PARKER. Well, I think RRIF right now is extremely attractive 

because of the flexibility that it offers and the possibility of doing 

100 percent financing, and that really is something that has captured everyone’s attention. It is being looked at in projects as diverse as Denver Union Station and the acquisition of railcars. We 

are looking at it in Atlanta in terms of an intermodal center. We 

are looking at it in Miami for the Grand Central Station portion 

of the Miami Intermodal Center. 

45 

And I think even in terms of some of the rail improvements in 

the Tampa-Orlando area I think there is option to incorporate 

those kinds of financing mechanisms. So we like it because it is extremely flexible right now, and we would like to retain that flexibility and take a look at the way the risk premium is calculated. 

Mr. MICA. Okay. Well—— 

Mr. OBERSTAR. But—if the gentleman would yield again—RRIF 

is a rail infrastructure, which has been expanded now beyond 

freight rail, which I think is appropriate to do, but we may need 

to clarify that authority in our legislative language. 

Mr. MICA. Well, again, I am looking for anything from folks that 

have dealt with this that they see as an impediment to actually 

getting even more money out there. 

Then, again, my point with the Administration is thinking bigger 

in terms and maybe adopting more of a South Carolina infrastructure bank plan, which would give us much greater capacity, because we go through these projects. The tunnels in New York, the 

one to Long Island is $7.2 billion; the 2nd Avenue subway $7 something billion; the New Jersey Transit is $8 billion; the intermodal 

center at Miami is $1.7 billion. 

I mean, I could just name projects in the multi-billion dollar category, and to build high speed rail we are using little pinking 

shears around the edges, and unless we use innovative financing— 

and I think some of these projects, for example, true high speed 

rail. I go back to the Northeast Corridor. The Administration proposal right now has $15.7 billion over the next 20 years, get us to 

2030. We would be doing about 100 miles an hour, on average, up 

from 83 in the northeast corridor. 

When we don’t have high speed rail, we have used all Federal 

money in their proposal. Wouldn’t you think it would be attractive 

to the private sector, with the potential revenue stream of millions? 

I mean, they have half the business of Amtrak right now. Amtrak 

has 28 million passengers and half of them are in the northeast 

corridor. I bet you could double or triple the number of passengers 

if you had a true high speed train. 

I would just take 120 miles an hour, which is a slow high speed 

train. But couldn’t we leverage 15.7 and get us to a higher speed 

a lot faster? 

Mr. PARKER. I just returned from a trip to China and I took the 

train from Beijing to Tianjin at 350 kilometers per hour, and it was 

extraordinary and the ride was smoother than what I experienced 

going from Stanford, Connecticut to Providence; and it is something 

where I think if we can attract that kind of investment—— 

Mr. MICA. The vision we have right now is we are going to spend 

15.7 or whatever it is, $15.2 in the next 20 years with Amtrak and 

end up at around 100 miles an hour, on average, in our busiest, 

most congested corridor that we would have the most beneficial results. For aviation we would free up a lot of the most congested corridor in the Nation. And if I took even $10 billion and leveraged 

it with the private sector with some innovative financing, I sure as 

hell know we could—am I smoking the funny weed here, Mr. 

Parker? 

46 

Mr. PARKER. No. I think there are private partners out there 

that would welcome that opportunity, particularly in the northeast 

corridor. 

Mr. MICA. Mr. Washington? 

Mr. WASHINGTON. Yes, sir. Thank you. 

Mr. MICA. If you want to agree with me, you are recognized. 

Mr. WASHINGTON. Well, I won’t agree on the funny weed thing, 

but—— 

Mr. MICA. I don’t do those things. 

Mr. WASHINGTON. I just wanted to comment on the RRIF loan. 

Mr. Parker mentioned and Mr. Bertram also mentioned that we 

are using the RRIF loans for Denver Union Station. Denver Union 

Station is our hub where all of our lines for the FasTracks program 

will come into, our downtown hub. We were successful in working 

with the Department of Transportation to get both TIFIA and 

RRIF loans approved to the tune of about $150 million apiece. So 

the increased flexibility, the favorable rates, all of those things that 

have to do with the RRIF loan was very, very key to us in getting 

Denver Union Station off the ground. 

Mr. MICA. Well, we welcome all of you, especially our guests that 

have dealt with some of these projects, to give us at the Federal 

level the input that we can improve what we have, expand innovative financing. We have a big shortfall and we need to bridge the 

gap. 

Thank you, Mr. Chairman. I apologize, I have to run. 

Mr. OBERSTAR. Oh, don’t apologize. Apologize for running, but 

don’t apologize for your presence. That was very valuable, very constructive. 

Mr. MICA. Well, I apologize because I have to go downtown to a 

meeting. You know how it is. 

Mr. OBERSTAR. I know. We are all pulled in different directions. 

Mr. MICA. This is a good hearing and I appreciate these guys 

coming in. But anything you see, too, you can give us or the Committee as ideas, anything we can tweak to make what we have better or what we don’t have implemented, it will help. 

Mr. OBERSTAR. Well, we have pulled together all the financing 

mechanisms that we can to put into the Metropolitan Mobility and 

Access Program, and we have provisions in our bill to speed up and 

increase the capacity for TIFIA and for SIBs. The difference in our 

passenger rail system and that of China—or France, Spain, Italy, 

Germany—is they built new line. They are not sharing with 

freight—they didn’t take aging infrastructure. In France it was all 

blown up in World War II. Seventy-five percent of the train stations were blown up. Two-thirds of all the rail lines were destroyed 

by Allied, as well as Nazi, bombing, and what the Allies and the 

Nazis didn’t bomb, the Nazis pulled up the rail and melted it to 

make tanks. So they, in effect, started with a clean slate. 

Mr. MICA. But—— 

Mr. OBERSTAR. And there was 100 percent capital funding from 

their governments. 

Mr. MICA. Some of the Europeans, though, have gone through 

some of the most congested areas and achieved high speed rail. 

Mr. OBERSTAR. Absolutely. 

47 

Mr. MICA. I think we can learn from the guys that have done it 

successfully. Some of them have screwed it up. Of course, we 

weren’t exactly the bastion of the best rail service; the Federal Government ended up taking over freight and passenger rail, which 

was left in disarray, and have worked our way out of that at least 

partially. 

But there are models, I believe, coming out of major densely populated metropolitan areas around the world where we have examples, and if we put out an honest RFP to construct in the northeast 

corridor with Federal participation—we don’t even have to go to 

the $15 billion mark. I know sure as heck that we could achieve 

high speed 120 to 150 miles an hour on average in that corridor, 

and transform it dramatically. If the Government takes it over, 

takes 20 years to spend the money and do it in a half-baked fashion and get us to 100 miles an hour on average in 2030, I just 

think it is the wrong way to go. Amen. 

Mr. OBERSTAR. Well, we are all in this enterprise together to get 

there and do this, taken your ideas, putting them into the Amtrak 

authorization bill, and now we want this Administration to implement them. But you didn’t vote for the gas tax increase. 

Mr. MICA. You want to get on the gas tax? [Remarks off microphone.] 

[Laughter.] 

Mr. OBERSTAR. So we can use all these other financing mechanisms, all these financial facilities that I cited and Mr. Mica cited. 

They don’t add up to a program, do they? They don’t add up to sustainable financing. If, in the end, to be successful, a credit facility 

has to show ability to repay, you are greatly limited in the number 

of projects you can finance, correct? 

Mr. Conti, you have had extensive experience in government at 

the Federal level, the State level. This is not putting you in the position of being an advocate for, but what do you think would be the 

public reaction to, in North Carolina, a 5 cent increase in the user 

fee, a 10 cent increase in the user fee in the current context—Highway Trust Fund walled off, firewalls around it, not used for anything else, only for highways and transit? 

Mr. CONTI. Well, I don’t know what the polling would tell you. 

I will tell you that if you tell people what you are going to do with 

the money and you actually deliver on it, I think that is where you 

get the buy-in from the voters for that kind of increase. And if you 

use the example of the recovery program, which you outlined how 

successful it has been, I think you specify: here is what we are 

going to ask you to support, this kind of increase in the revenue 

stream, and out of that we are going to do these specific projects 

and build these facilities, which will then make your commute easier, make getting your kids to school easier and safer and all that. 

So I think you have to tie the revenue stream to specific actions 

and then be held accountable for delivering on that. 

Mr. OBERSTAR. Well, that is my view. I have always trusted the 

collective wisdom of the public. I know that people generally don’t 

know where their tax dollars go, what benefits they can point to 

specifically. But in the transportation arena they know when they 

are buying the fuel they are paying the gas tax, it is going to the 

road they drive away on, and it is going to be improved and it is 

48 

going to make their lives better, and they can see the improvements as they drive away on them. So that is my view. 

Mr. Brown, did you have anything further that you would like 

to comment on? 

Mr. BROWN. I was here earlier today and we had a good exchange. I just saw Mr. Mica as he was leaving, and he was espousing my infrastructure bank plan that we had in South Carolina, 

which we would like to see get some national attention, and I know 

my good friend from North Carolina certainly understands some of 

the benefits that we have received from the northern part of South 

Carolina that connects up to Interstate 73 and Interstate 74, Mr. 

Chairman, which we have talked about a goodly amount of time on 

this Committee, and thankful for you and some others for helping 

us get some funding to make that move along. 

But it is a big undertaking and I was hoping that we would have 

a vision that somehow or other we would go back and revisit the 

interstate system, which is getting overcrowded even at its capacity, but we need some new routes along the way. 

I appreciate your leadership on this and I appreciate the input 

from these very responsible and intellectual members of this team. 

I don’t know who put the panel together, but I commend whoever 

did, because it has been a good learning experience for me too. 

And thank you, Mr. Secretary, for being part of the process and 

trying to solve some of these amazing problems we have here in the 

United States. 

Thank you, Mr. Chairman. 

Mr. OBERSTAR. Thank you, Mr. Brown. I regret your announcement to leave public service and return to private life. The only 

comfort I take out of that is the guarantee that you will be smiling 

more often. You will look more relaxed. They all do when they 

leave here. 

Mr. BROWN. Mr. Chairman, nothing would make more smiling 

than the reauthorization bill. 

Mr. OBERSTAR. We are going to try to do that, and with your help 

we will get there before the end of this session. 

So we have a mix of financing mechanisms targeted to specific 

purposes and needs: tax-exempt bonds, credit bonds, loans, loan 

guarantees, the GARVEE Bonds that are actually repaid out of future revenues from the Highway Trust Fund, lines of credit, congestion pricing, tolls, private activity bonds, SIBs, public-private 

partnerships. All those targeted to specific maybe high-profile 

project needs. But the State Infrastructure Bank, the National Infrastructure Bank, or all these other loans and tolling are not going 

to repave that road in front of your home or on your drive home 

that is filled with potholes, because you can’t generate a revenue 

stream from that. 

So we need to continue the Highway Trust Fund and we need to 

increase the revenues into that Highway Trust Fund, even as driving declined for the first time since the Highway Trust Fund was 

established in 1956, over the last year and a half. It was the first 

time we had 62 billion fewer vehicle miles traveled than in any 

previous year. That is starting to come back now. There is a little 

more confidence in the economy; creating more jobs. And as that 

confidence returns to be some increase in revenues into the Trust 

49 

Fund, may get back to the $53 billion. But we need to go above 

that to compensate for the erosion of the value of the construction 

dollar and to accommodate the needs for just simple state of good 

repair, which is the engineering term for resurfacing our roadways. 

I mentioned earlier the 34,000 lane miles, as of a month ago, rebuilt with stimulus funds; 1200 bridges. That is 4 percent of the 

need, 4 percent of the critical asset investment category that we 

have created for the future of surface transportation. At that rate, 

we would be here for a very long time trying to do resurfacing, and 

that is why we put $100 billion over six years into the critical asset 

investment or state of good repair category funding. You are going 

to pick, States are going to pick the projects, going to make the 

choices, make the determinations, but we need to attack this issue, 

as well as creating additional revenue streams for expansion of capacity in our surface transportation system and for freight goods 

movement in an uncongested fashion. 

So with your thoughts at this hearing and good will, I know we 

can move a bill in this body; I am not so sure about the other. But 

if we do, then I think they might just come along with us. 

Do any of you have—Mr. Brown, do you have further comment? 

Mr. BROWN. Mr. Chairman, I just want to give some affirmation 

to what you said about financing. I know Mr. Conti lives next door 

to Horry County, which has 14 million visitors come in a year. 

They passed a penny option sales tax for roads. I represent Berkley 

County; they passed a penny option sales tax for roads. Dorchester 

County passed a penny option sales tax for roads. Charleston 

County passed a half a cent. 

You are exactly on target, Mr. Chairman. If you can convince 

those people that they are going to be doing something about the 

roads, I think they are willing to pay more, which is evident in 

those four referendums in those four different counties. 

Thank you. 

Mr. OBERSTAR. Thank you. Those are very, very compelling examples. But we shouldn’t be—is that a sales tax? Does that include 

food and clothing and other articles? We shouldn’t be taxing your 

Cheerios and milk to pay for your roadways. 

Mr. BROWN. I am not so sure it includes groceries, Mr. Chairman, but, you know—— 

Mr. OBERSTAR. Okay. Nonetheless, we shouldn’t be in that position. The Highway Trust Fund revenue stream should be keeping 

pace with the cost of construction, with the capacity needs of the 

system, and we should be increasing that revenue stream, because 

the users are paying for what they are getting. 

Mr. BROWN. Well, and that is exactly my sentiment, too. It is a 

user fee, but, Mr. Chairman, what concerns me with all the hybrids 

coming onboard, they are going to be riding free unless we find 

some way to charge them for their access to the highways. The 

electric cars, you know. 

Mr. OBERSTAR. Well, the electric cars, I have a scheme. I have 

talked to a number of research firms on how we can charge them 

through their electric bill as they hook up their electric car at home 

or wherever the hell else they hook it up. But they have to pay too, 

because that car is rolling over the roadways and exacting its own 

50 

toll on the roads and bridges of this Country. Everyone has to pay 

their fair share, you are right. 

Does our panel have any closing comments? Observations? Disclaimers? Thank you. You made a wonderful contribution to our inquiry and to the furtherance of our cause of improving transportation in this Country. 

The Committee is adjourned. 

[Whereupon, at 12:45 p.m., the Subcommittee was adjourned.] 

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Æ 


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