New Innovative Financing Proposed in Clinton FY 2001 Budget

President Clinton proposed more billions of dollars in new and existing innovative financing programs in his FY 2001 budget proposal just transmitted to Congress. The budget proposes $96 million in the existing Transportation Infrastructure Finance and Innovation Act (TIFIA) Program funding to leverage as much as $2.2 billion in additional state and private financing for transportation projects. Recently, Secretary Slater announced a $600 million loan guarantee for the Washington Metropolitan Area Transit Authority (WMATA) to begin a $2.3 billion capital improvement program. The loan guarantee to WMATA is the first to be made possible by TIFIA. Lehman Commercial Paper, Inc., New York, is the lender. WMATA will use this loan guarantee to expedite upgrading and modernizing of the original 103-mile Metrorail system, some parts of which are more than 20 years old. These upgrades will include rehabilitation of the entire railcar fleet, overhaul of buses, purchase of over 1,000 buses over the next 10 years, replacement of the automated train control system, installation of protective canopies over outdoor escalators, rehabilitation of escalators and elevators system-wide, and installation of a new automated traveler information system. The rehabilitation also will enable Metrorail to work together more effectively with the Metrobus and other county and local bus systems in the metropolitan region. WMATA’s is the first of five projects announced by Secretary Slater last September to receive the innovative financial assistance. The other four are State Route 125 in San Diego; Miami Intermodal Center; Tren Urbano, San Juan, Puerto Rico; and the Farley-Pennsylvania Station Redevelopment Project, New York. In addition, the President’s budget will propose $10.75 billion in bonding authority over five years for Better America Bonds – more than a $1 billion increase over last year’s proposal. Under the proposal, the Environmental Protection Agency, in consultation with other agencies and based on competitive applications, would authorize state, local and tribal governments to allocate $2.15 billion in annual bond authority in FY 2001 to preserve green space, create or restore urban parks, protect water quality, and clean up brown fields. The tax credit bonds mature in 15 years and the Federal Government would provide tax credits in lieu of interest payments to bondholders – making the bonds interest free for local communities. The tax credits will total almost $700 million over five years.