I
106TH CONGRESS
1ST SESSION
H. R. 2777
To fund capital projects of State and local governments, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 5, 1999
Mr. METCALF (for himself, Mr. HINCHEY, and Mr. CAMPBELL) introduced the
following bill; which was referred to the Committee on Transportation
and Infrastructure
A BILL
To fund capital projects of State and local governments,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Transportation Infra-
structure and Local Government Capital Enhancement
Act’’.
SEC. 2. FINDINGS AND PURPOSES DEFINITIONS.
(a) FINDINGS.—The Congress finds as follows:
(1) Citizens chronically complain about the
state of America’s public capital—about dilapidated
school buildings, condemned highway bridges, con-
taminated water supplies, and other shortcomings of
the public infrastructure.
(2) In addition to inflicting inconvenience and
endangering health, the inadequacy of the public in-
frastructure adversely affects productivity and the
growth of the economy, since public investment, pri-
vate investment, and productivity are intimately
linked.
(3) For more than 2 decades, the United States
Government has retreated from public investment as
the costs of entitlements and of the interest payable
on rapidly rising debt have mounted.
(4) State and local governments, albeit to a
lesser extent, have also slowed public investments
and State and local taxpayers are frequently reluc-
tant to approve bond issues to finance public infra-
structure.
(5) In the early 1970s, nondefense public in-
vestment accounted for 3.2 percent of gross domes-
tic product but it now accounts for only 2.5 percent.
(6) Widespread neglect of maintenance has con-
tributed substantially to the failure of the stock of
public capital assets to keep pace with the Nation’s
needs.
(7) Net of depreciation, the real nondefense
public capital stock expanded in the past 2 decades
at a pace only half that set earlier in the post-World
War II period.
(8) Evidence of failures to maintain and im-
prove infrastructure is seen every day in such prob-
lems as unsafe bridges, urban decay, dilapidated and
over-crowded schools, and inadequate airports.
(9) A congressional study found that education
is seriously handicapped by deteriorating school
buildings 
and 
that 
an 
investment 
of
$110,000,000,000 is needed to bring them up to
minimally acceptable condition.
(10) The problems take a toll in less visible and
perhaps even more important ways—in unsatisfac-
tory gains in private sector productivity and a di-
minished rise in the real income for the nation at
large.
(11) Seemingly endless traffic jams, disruptions
to commuter rail service, and backed-up airport run-
ways—everyday experiences for many Americans—
spell waste and inefficiency for the economy at large.
(12) Congestion on the Nation’s highways alone
costs the Nation some $100,000,000,000 a year ac-
cording to the Competitiveness Policy Council esti-
mate (1993), and that estimate does not include the
costs of added pollution and of wear and tear on ve-
hicles.
(13) This Act—
(A) is fiscally sound and follows the best
accounting practices of the private sector;
(B) is designed to help the Nation take a
significant step forward both in overcoming its
infrastructure deficit and in promoting the pro-
ductivity needed to meet the competitive chal-
lenges of the 21st century; and
(C) represents fiscally sound planning and,
in salient ways, advances sound fiscal operation.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To provide up to $50,000,000,000 a year
for mortgage loans, at zero percent interest, to State
and local governments for capital investment in
types of infrastructure projects specified by Con-
gress and the President in a way that would not af-
fect the conduct of a sound monetary policy based
on price stability.
(2) To cut the overall cost of investment in in-
frastructure projects about in half, depending on
prevailing interest rates, for State and local tax-
payers.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions
shall apply:
(1) BANK.—The term ‘‘Bank’’ means the Fed-
eral Bank for Infrastructure Modernization estab-
lished under section 4.
(2) BOARD.—The term ‘‘Board’’ means the
Board of Governors of the Federal Reserve System.
(3) DEVELOPMENT.—The terms ‘‘development’’
and ‘‘develop’’ mean, with respect to an infrastruc-
ture facility, any—
(A) preconstruction planning, feasibility re-
view, permitting and design work, and other
preconstruction activities; and
(B) construction, reconstruction, rehabili-
tation, replacement, or expansion.
(4) INDIAN RESERVATION.—The term ‘‘Indian
reservation’’ has the same meaning as in section
4(10) of the Indian Child Welfare Act of 1978, and
shall include land held by incorporated Native
groups, regional corporations, and village corpora-
tions, as defined in or established pursuant to the
Alaska Native Claims Settlement Act, public domain
Indian allotments, and former Indian reservations in
the State of Oklahoma.
(5) INDIAN TRIBE.—The term ‘‘Indian tribe’’
means any Indian tribe, band, pueblo, nation, or
other organized group or community, including any
Alaska Native village or regional or village corpora-
tion, as defined in or established pursuant to the
Alaska Native Claims Settlement Act, which is rec-
ognized as eligible for the special programs and serv-
ices provided by the United States to Indians be-
cause of their status as Indians.
(6) INFRASTRUCTURE
FACILITY.—The term
‘‘infrastructure facility’’ means a road, highway,
bridge, tunnel, airport, mass transportation vehicle
or system, passenger or freight rail vehicle or sys-
tem, intermodal transportation facility, waterway,
commercial port, drinking or waste water treatment
facility, solid waste disposal facility, pollution control
system, hazardous waste facility, federally des-
ignated national information highway facility, school,
and any ancillary facility which forms a part of any
such facility or is reasonably related to such facility.
(7) REGIONAL
OR
MULTISTATE
ORGANIZA-
TION.—The term ‘‘regional or multistate organiza-
tion’’ means an organization established by an inter-
state compact between 2 or more States which has
been approved by the Congress.
(8) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
(9) STATE.—The term ‘‘State’’ includes the
District of Columbia, Puerto Rico, Guam, American
Samoa, the Trust Territories of the Pacific Islands,
the Virgin Islands, the Northern Mariana Islands,
and any territory of the United States.
SEC. 4. FEDERAL BANK FOR INFRASTRUCTURE MOD-
ERNIZATION.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—There is hereby established
a corporation which shall be known as the Federal
Bank for Infrastructure Modernization.
(2) STATUS.—The Bank shall be—
(A) an instrumentality of the United
States Government; and
(B) under the general supervision and di-
rection of the Secretary of the Treasury.
(b) MANAGEMENT.—
(1) BOARD OF TRUSTEES.—The management
of the Bank shall be vested in the Board of Direc-
tors of the Federal Financing Bank.
(c) POWERS.—The Bank shall have the following
powers:
(1) To adopt, alter, and use a corporate seal.
(2) To issue nonvoting capital stock in accord-
ance with section 5.
(3) To enter into contracts and modify, or con-
sent to the modification of, any contract or agree-
ment to which the Bank is a party or in which the
Bank has an interest under this section.
(4) To appoint, by the board of directors, such
officers and employees as the board of directors de-
termines to be necessary to carry out the provisions
of this Act, to define their duties, fix their com-
pensation, require bonds of them and fix the penalty
thereof, and to dismiss at pleasure such officers or
employees.
(5) To make advance, progress, or other pay-
ments.
(6) To acquire, hold, lease, mortgage, maintain,
or dispose of, at public or private sale, real and per-
sonal property, using any legally available private
sector methods, and otherwise exercise all the usual
incidents of ownership of property necessary and
convenient to the operations of the Bank.
(7) To sue and be sued in its corporate capacity
in any court of competent jurisdiction.
(8) To use the United States mails in the same
manner and under the same conditions as other de-
partments and agencies of the United States.
(9) To prescribe bylaws that shall be consistent
with law.
SEC. 5. CAPITALIZATION OF THE BANK.
(a) ISSUANCE
AND SALE
OF STOCK.—The Bank
may—
(1) issue nonvoting capital stock under section
4(c)(2) only at such times and in such amounts as—
(A) the Secretary determines to be appro-
priate for the issuance of such stock; and
(B) the Board determines to be appro-
priate for the purchase of such stock; and
(2) sell such stock only to the Board or, at the
Board’s direction, a Federal reserve bank.
(b) PURCHASE OF CAPITAL STOCK BY FEDERAL RE-
SERVE BOARD.—
(1) IN
GENERAL.—Subject to subsection (c)
and the direction of the Federal Open Market Com-
mittee, the Board of Governors of the Federal Re-
serve System, acting directly or through any Federal
reserve bank, shall invest in nonvoting capital stock
of the Bank at such times and in such amounts as
the Board determines to be appropriate under this
section.
(2) MAXIMUM ANNUAL AMOUNT LIMITATION.—
The amount invested by the Board in the capital
stock of the Bank in any year may not exceed
$50,000,000,000.
(c) INTEGRATION
OF
STOCK
PURCHASES
INTO
OPEN-MARKET OPERATIONS.—
(1) IN GENERAL.—The investment of the Board
in stock of the Bank under this section shall be inte-
grated into the open-market operations of the Fed-
eral Open Market Committee under section 12B of
the Federal Reserve Act and the directions of the
Federal Open Market Committee to the Federal re-
serve banks with regard to open-market operations
shall take into account, and may include directions
with regard to, any such investment.
(2) TREATMENT OF STOCK.—Capital stock of
the Bank shall be treated as obligations of an agen-
cy of the United States for purposes of section
14(b)(2) of the Federal Reserve Act.
(d) USE OF CAPITAL.—The capital of the Bank may
be used only for making loans under section 6.
(e) RETIREMENT
OF
STOCK.—Nonvoting stock
issued under this section shall be repurchased and retired
from amount received from the repayment of loans under
section 6.
SEC. 6. ISSUANCE OF INFRASTRUCTURE LOANS.
(a) IN GENERAL.—The Bank may make loans to eli-
gible borrowers for the development of infrastructure fa-
cilities, if the Bank obtains such assurances as the Bank
determines to be appropriate from the borrower that—
(1) the funding of the project by the Bank was
approved by—
(A) a State certifying officer, in the case of
an infrastructure facility development project
proposed by a governmental unit within such
State;
(B) the Secretary of the Interior, in the
case of a project proposed by an Indian tribe;
or
(C) the State certifying officer of each
State involved, in the case of an infrastructure
facility development project proposed by a re-
gional or multistate organization.
(2) the proceeds of such loan will be used solely
for the purpose of funding the development of any
infrastructure facility;
(3) the borrower will establish and maintain
over the life of the loan a sinking fund or other am-
ortizing mechanism that would ensure that the re-
payment of the principal of the loan will be made in
accordance with the repayment schedule contained in
the loan documents; and
(4) the Bank will have full access to such books
and records of the borrower as the Bank may, from
time to time, determine to be necessary to audit the
borrower’s compliance with the terms and conditions
of the loan.
(b) NO INTEREST.—Any loan made under this Act
shall bear no interest.
(c) ALLOCATION.—
(1) IN GENERAL.—The Secretary shall establish
an allocation formula, on the basis of the total popu-
lation of each State and Indian reservation, to deter-
mine the manner in which the total amount of loan
disbursements which may be made in any year shall
be allocated among the States and Indian tribes.
(2) REGIONAL
OR
MULTISTATE
ORGANIZA-
TION.—In developing an allocation formula, the Sec-
retary shall provide for the allocation of loans to re-
gional or multistate organizations through appro-
priate adjustments of allocated amounts to the
States which established any such regional or
multistate organization.
SEC. 7. BORROWER ELIGIBILITY.
(a) IN GENERAL.—Subject to subsections (b) and (c),
any State, any unit of general local government of a State,
any Indian tribe, and any regional or multistate organiza-
tion shall be eligible to borrow from the Bank under this
Act to fund the development of infrastructure facilities.
(b) STATE CERTIFYING OFFICER.—No loans may be
made to any State or any unit of general local government
of any State, or to any regional or multistate organization
to which such State is a party, unless the State has au-
thorized an officer of the State to—
(1) review all proposals by any officer or agency
of the State or any unit of general local government
to develop an infrastructure facility for which fund-
ing is sought from the Bank; and
(2) select and approve the proposals which meet
the requirements of this Act for funding by the
Bank consistent with the allocation formula estab-
lished by the Secretary of the Treasury, including
requirements of the Bank with regard to—
(A) the establishment of sinking funds or
other amortizing mechanisms to ensure timely
repayment of any loan; and
(B) the auditing of the books and records
of the recipient of the loan.
(c) SECRETARY OF THE INTERIOR.—No loans may
be made to any Indian tribe unless the Secretary of the
Interior undertakes to—
(1) review all proposals by any Indian tribe to
develop an infrastructure facility for which funding
is sought from the Bank; and
(2) select and approve the proposals which meet
the requirements of this Act for funding by the
Bank consistent with the allocation formula estab-
lished by the Secretary of the Treasury, including
requirements of the Bank with regard to—
(A) the establishment of sinking funds or
other amortizing mechanisms to ensure timely
repayment of any loan; and
(B) the auditing of the books and records
of the recipient of a loan.
SEC. 8. ADMINISTRATIVE PROVISIONS.
(a) MINIMUM
PHASE-IN
PERIOD.—Loans made
under section 6 shall be disbursed by the Bank imme-
diately or over the construction or development period of
the project as needed so as to accommodate more loan
requests. The payout in any given year shall be no less
than 20 percent of the total amount authorized.