A Complimentary Infrastructure Funding Solution: The Federal Infrastructure Bank
Despite the Bipartisan Infrastructure Bill’s historic $1.2 trillion investment in U.S. infrastructure, the American Society of Civil Engineers estimates an additional $2 trillion is needed to repair our deteriorating infrastructure. The federal government cannot address U.S. infrastructure funding needs alone. The Federal Infrastructure Bank (“the Bank”) would work directly with states and localities to identify priority projects and secure private capital to advance infrastructure needs across the United States.
The Bank is a nimble, efficient, and sustainable investment structure that will create an avenue for private infrastructure investment. The Bank would be privately owned, managed, and funded and established by Congress to complement existing government funding programs. As a market tool designed to advance U.S. infrastructure regardless of project cost, the Federal Infrastructure Bank will:
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Create new funding streams for states and municipalities to redirect Federal Formula Funds for projects that do not have a pledged revenue source.
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Help States fulfill the Match Requirement to secure Discretionary Grants and complement existing federal funding programs
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Require a minimum investment in rural areas
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Raise $100 billion in equity, leveraged at a 10:1 debt-to-equity ratio to support $1 trillion in infrastructure investment
The infrastructure bank concept is not new as over thirty state infrastructure banks (“SIB”) were created in the late 1990’s but only a handful remain successful today. A central reason for the lack of SIB success is due to reliance on government funding and an inability to attract private capital. Similarly, multiple national infrastructure bank proposals have been introduced in Congress but have not advanced – largely due to issues such as reliance on annual federal funding, excessive government oversight, and the inability to tap into private funding necessary to propel U.S. infrastructure investment. Conversely, the Federal Infrastructure Bank will leverage investor interests by securing investment from pension funds, sovereign wealth funds, and institutional investors.
On January 24, U.S. Representatives Daniel Webster (R-FL) and Colin Allred (D-TX) introduced the bipartisan Federal Infrastructure Bank Act of 2023 (H.R. 490), a bill to support capital access for infrastructure projects throughout the United States.
H.R. 490 would establish the Federal Infrastructure Bank as national bank charter “to facilitate investment in, and the long-term financing of, economically viable U.S. infrastructure projects.” The Bank would complement federal and state infrastructure investments by creating additional avenues to secure project financing. For example, Bank funds could be used to satisfy federal matching requirements, fully unlocking additional federal opportunities currently out of reach for many state and local governments and other public sector entities. Further, the Bank would serve as a resource for state and local partners attempting to navigate complex federal financing and programmatic requirements.
