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Obama Administration Announces New Steps to Spur Private Investment in Infrastructure Projects

Last July, President Obama introduced the “Build America Investment Initiative,” an initiative designed to facilitate the use of innovative financing and private capital to help state and local governments deliver needed infrastructure projects. On Jan. 16, 2015, the Obama administration announced additional new steps that it is taking to support the Initiative. This Alert provides an overview of these steps and the ongoing implications for public-private partnerships (P3s).

First, the administration has established a new Water Finance Center in the Environmental Protection Agency (EPA) that is dedicated to helping state and local governments use innovative financing, such as P3s, to replace aging drinking water, storm water, and wastewater infrastructure, which the administration estimates needs more than $600 billion in investments over the next 20 years for maintenance and improvement. Similar to the Department of Transportation’s Transportation Investment Center that the administration announced in July 2014, EPA’s Water Finance Center will match investors with infrastructure projects and provide state and local governments with information and resources to guide governments on using innovative financing for water projects. The administration has also launched the Rural Opportunity Investment (ROI) Initiative within the U.S. Department of Agriculture that will work to attract greater private investment in water, energy, and broadband infrastructure projects in rural communities.

Second, President Obama issued a memorandum to the heads of executive departments and agencies directing them to provide predevelopment assistance to facilitate construction of state and local infrastructure projects. Specifically, the memorandum directs federal agencies to actively support predevelopment activities, such as planning, feasibility studies, design, engineering, financial planning, permitting, environmental review, and community outreach, with grants, technical assistance, and regulatory changes. This new federal policy covers roads, bridges, and other forms of surface transportation; drinking water, wastewater, and storm water infrastructure; landside ports; schools; and, other community facilities.

Third, as part of his fiscal 2016 budget request to Congress, President Obama is also proposing the creation of Qualified Public Infrastructure Bonds (QPIBs), which would allow P3s to take advantage of tax-exempt financing. QPIBs would expand the scope of Private Activity Bonds (PABs) that are currently available to support P3s for the financing of highway and surface freight transfer facilities to also include financing for airports, ports, mass transit, solid waste disposal, wastewater, and drinking water projects. QPIBs would also enjoy certain advantages over PABs: the QPIB program would not expire, there would be no caps on the number of QPIBs that may be issued, and bonds would not be subject to the alternative minimum tax (AMT). If enacted into law, these bonds would represent a new financing option for project sponsors wishing to enter into P3 agreements.

Finally, in keeping with the administration’s efforts to serve as a matchmaker between the public and private sectors, the Obama administration announced that it will use the SelectUSA Investment Summit, scheduled for March 2015, as a platform to showcase the nation’s P3 market to global companies and connect global investors with U.S. infrastructure projects.

The administration’s initiative to facilitate partnerships between federal, state and local governments and private sector investors, as well as its focus on innovative financing mechanisms, continues as Congress faces the challenges of developing a new, long-term transportation funding bill and addressing infrastructure investment and the Highway Trust Fund. We can expect to see further discussion of P3 tools and innovative financing mechanisms, such as the QPIB program, as Congress tackles these issues.

© 2019 Varnum LLP

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About this Author

Diane Blagman, Greenberg Traurig Law Firm, Washington DC, Government and Corporate Law Attorney
Senior Director

Diane J. Blagman serves as Senior Director of the firm's Government Law & Policy Practice in the Washington, D.C. office. Diane has more than 20 years of experience working on Capitol Hill, serving as a Chief of Staff to a senior Member of Congress who was Chairman of the House Transportation Appropriations Subcommittee and as Associate staff on the House Appropriations Committee.

Diane brings her knowledge of the political and budget process to Greenberg Traurig and provides strategic advice to various major municipalities, corporations,...

202-331-3121
Shareholder

Robert S. Brams Co-Chairs the firm's Government Contracts & Projects Practice and focuses his practice on procurement law matters as well as providing counsel on the development and delivery of major infrastructure and other construction projects. He advises clients on claim and risk management issues arising on major projects and litigating and otherwise resolving the disputes arising on those projects. Bob also serves as a mediator and arbitrator. His clients include developers, governments and other owners, engineers, architects and contractors in a wide variety of international and domestic matters, including facility and infrastructure development, procurement, project management, public private partnerships, the preparation and negotiation of complex supply and service contracts, and project delivery.

Bob is experienced in dealing with bid protests as well as the litigation, arbitration, and mediation of construction and engineering project performance disputes, both foreign and domestic. He serves as lead counsel in project development and dispute resolution matters, including those related to: rail, light rail, highway, airport, bridge, and other transportation and infrastructure projects

202-331-3147
Bruce Giles-Klein, Greenberg Traurig Law Firm, Miami, Transportation and Public Finance Attorney
Shareholder

Bruce Giles-Klein advises on a wide range of public finance matters, including transportation, industrial development, resource recovery, airport, electric power, water and sewer, single family housing, multifamily housing, sports facility, university, health care, and traditional municipal finance, as well as the public finance aspects of tax-exempt money market funds, credit enhancement and synthetic securities. Key clients include the State of Florida, Division of Bond Finance; Florida Housing Finance Corporation; Miami-Dade County; and the Cities of Hollywood, Davie, Sunny Isles Beach...

305-579-0573
Yosbel Ibarra, Greenberg Traurig Law Firm, New York and Miami, Corporate Law Attorney
Shareholder

Yosbel A. Ibarra serves as Co-Managing Shareholder of Greenberg Traurig’s Miami office, and as Co-Chair of the Latin American and Iberian Practice, which has been recognized as a leading Latin American practice by several publications, including Chambers & Partners. In 2014, the firm was named “Corporate/M&A – Law Firm of the Year” by Chambers Latin America.

Fluent in Spanish, Yosbel has spent his career advising clients doing business in the United States, Spain and across Latin America. He is consistently recognized...

305-579-0706