Passage of legislation such as that provided by HR 3700 would provide the evidence of long-term federal support that private investors would find of greatest value. As a result, HR 3700 can provide not only direct capital assistance for Amtrak, but it can strengthen Amtrak's ability to use the capital markets independently and cost-effectively as well. 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.