To address the second question, the innovative tax-credit bonds proposed by the HR 3700 can be a very effective capital funding tool for intercity passenger rail needs. Second, HR 3700 benefits from other recent legislative efforts to expand the use of tax-credit bonds for infrastructure needs. Perhaps most importantly, by providing that the state match be used to fund an escrow for the repayment of principal on the bonds at maturity, HR 3700 will create a high credit quality financial instrument that should find greater investor appeal. Questions necessarily remain. It is not clear how large the market of investors for these high-speed rail bonds will be.
Every market grows with use.
The proposal is well structured however, to begin the process of market development. In expanding the usefulness of this measure, it would be helpful to address certain implementation issues. For example, it would be useful to make it clear that states can use tax-exempt debt to fund their state match requirement. Overall, let me say that HR 3700 will not answer all of the capital funding challenges faced by Congress, Amtrak, the states, transit authorities and private investors as they jointly face the financing needs of infrastructure for intercity high speed rail. However, this legislation does represent a significant commitment of governmental support that will sustain and accelerate the investment and effort that has already been made.