The federal government says an estimated 237,600 watermains break every year, and America loses more than 46 billion gallons of water per day through leaking pipes. Furthermore, the nation needs $600 billion in investments in water infrastructure over the next 20 years to keep the nation’s faucets flowing and source waters clean. In an effort to take on the nation’s infrastructure issues, the Obama Administration recently announced new steps that federal agencies are taking as part of the “Build America Investment Initiative” to bring private sector funding and expertise together to fund desperately needed projects.
The Build America Investment Initiative aims to help local and State governments complete projects by bringing together the public and private sector to identify challenges and explore creative financing strategies for water, transportation, energy, and broadband infrastructure. A key part of the initiative is the proposed creation of an innovative new municipal bond, identified as the Qualified Public Infrastructure Bond (QPIB). Currently, public-private partnerships that combine public ownership with private sector management and operations expertise cannot take advantage of the benefits of municipal bonds. QPIBs would extend the benefits of municipal bonds to public-private partnerships, such as those that involve long-term leasing and management contracts, which would lower the cost of borrowing and attracting new capital. A similar program, Private Activity Bond (PABs), is already being used to support financing of over $10 billion of road, tunnel, and bridge projects. However, QPIBs would expand the scope of PABs to include financing for water and sewer projects, as well as solid waste disposal and other important utility infrastructure needs. Unlike PABs, the QPIB bond program will have no expiration date, no issuance caps, and interest on these bonds will not be subject to the alternative minimum tax. According to a White House fact sheet, these changes will increase the proposed bond’s impact as a permanent lower cost financing tool to increase private participation in building the nation’s public infrastructure. QPIBs would not be available for privately-owned facilities or the privatization of public facilities.
The Build America Investment Initiative is also responsible for the creation of a Water Finance Center at the U.S. Environmental Protection Agency (USEPA). The new Center will promote models of public-private collaboration to address the infrastructure needs of cities and towns to provide safe water, rebuild sewer systems, and keep streams and rivers clean. It is projected to work with States to maximize the benefits of more than $3 billion in annual federal water investments while working with on-the-ground partners to provide financial training and technical assistance to small communities and rural water systems.
The Department of Agriculture’s “Rural Opportunity Investment Initiative” is another example of the Build America Investment Initiative. It will provide opportunities for local and State governments to access federal loan and grant programs for infrastructure projects. The program will identify opportunities for investment in promising rural water and other types of projects, as well as reduce barriers to investment, and connect projects with investors.
Click here to access additional information about the Build America Investment Initiative’s two-year action plan.