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Barbara Boxer's Transportation Bill Would Drop Environmental Criteria In Much-Touted TIFIA Loan Program

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NEW YORK -- A bipartisan transportation bill sponsored by Sen. Barbara Boxer would dramatically expand a federal program that finances "innovative" transportation projects. But in order to secure the expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA), Boxer had to introduce new rules that would strip away current criteria favoring environmentally sustainable projects, progressive transportation advocates say.

Boxer's transportation bill sailed through the Senate Environment and Public Works committee in an 18-0 bipartisan vote on Nov. 9. But critics say it came at a price for the TIFIA program, which would no longer give environmentally sustainable projects a leg up in the selection process.

"At a time when the nation's transportation system is starved for funds and there is a consensus that dollars need to be spent more wisely, it is outrageous that the one program that would be massively increased would no longer try to deliver the best bang for each buck," said Phineas Baxandall, a senior analyst at US PIRG, a nonprofit public interest advocacy group.

TIFIA has recently been touted by both Democrats and Republicans as an example of how to prop up infrastructure financing in a time of budget deficits. About $110 million a year in federal funds is turned into $1.1 billion in federally-supported loans, which then go a third of the way toward leveraging loans from private sources.

Because TIFIA is a loan program, projects have to find some way of paying back the federal government. The revenue stream is most often a toll or other "user fee," but sometimes it's something like Los Angele's 2008 Measure R sales tax. Although TIFIA is run through the Federal Highway Administration, its loans have been used to support everything from toll roads in Texas to light rail in Denver.

The only problem: At a time when private financing is hard to come by, everybody wants in on the action. This year there were 34 requests for $14 billion in loans -- 14 times more than what the program could support. A lot of cities and states wound up empty-handed.

So when the Senate's Environment and Public Works Committee met to hammer out a deal on a new transportation bill, consensus was quickly reached on vastly expanding the size of TIFIA's annual funding from $122 million to $1 billion a year. That money could in turn support up to $10 billion in federal loans.

It was something of a breakthrough in the transportation world. For years Congress has patched together short-term extensions of the transportation bill. The EPW proposal sponsored by Boxer offers a way out -- and, she hopes, a way to finance LA Mayor Antonio Villaraigosa's dream of building 30 years of transportation projects in a decade.

But the bipartisan consensus on the transportation bill appears to have come at a price. One apparent sticking point for Senate Republicans, led by outspoken climate change denier James Inhofe (R-Okla.), the ranking member on EPW, was the 20 percent weight TIFIA puts on "the extent to which the project helps maintain or protect the environment."

That criterion, introduced by the Obama administration, gives mass transit a leg up against toll roads and highways. But it's anathema to critics like the libertarian Reason Foundation's Robert Poole, who argued that the emphasis on environmental sustainability "has apparently led to toll projects that add highway capacity getting aced out."

"Senator Boxer's working in an environment where she's got to get support from people on the other side of the aisle, and these are the types of issues she's hammering out," said Raffi Hamparian, director for federal affairs at the Los Angeles County Metropolitan Transportation Authority.

Phineas Baxandall, a senior analyst at U.S. PIRG, said he thinks Boxer may have cut a bad deal. He argues that doing away with TIFIA's selection criteria means the U.S. Department of Transportation will be forced to give money to any transportation project that meets bare-bones financial eligibility requirements. Under this rolling selection process, when the $1 billion annual federal credit support is gone, it's gone for the year.

Toll roads, backed by private investors looking to make a buck off of "public-private partnerships," will be first in line, he argued, since they have plans that are "just ready to go off the shelf."

"Those companies are going to likely get the lion's share of TIFIA funds. And those companies have a lot of power on Wall Street and make a lot of campaign donations, and just have a lot of power," he said.

Los Angeles hopes it will get some of that TIFIA money. Not so fast, Baxandall said. "Places like Atlanta and L.A. are hoping that the new bounty of TIFIA will allow them to finance public transit expansions, but they are likely to find the money already claimed by private toll road projects in places like Florida and Texas."

Others aren't so sure that mass transit and toll roads are mutually exclusive. Although the selection criterion will be gone, environmentally friendly transportation secretaries will still find ways to make sure sustainable projects head to the front of the line, they argue.

A spokesperson who is a staff member of the Senate EPW committee said, "This provision continues to enable the secretary to ensure that each project receives careful consideration. We believe that strong projects will succeed in the new program."

Roy Kienitz, who was until recently the Department of Transportation's under secretary for policy, said he thought the program's vastly expanded size might mean there will be plenty of space for all of the projects that meet the eligibility requirements.

Although TIFIA was vastly oversubscribed this year, Kienitz said, not all of the applications were truly eligible. "Of the people who are applying, I would say at least half of them fall into the criteria of either a) they just don't have a realistic idea of a project for a whole host of reasons or b) they may have realistic criteria for a project, but they just haven't done their homework."

Hamparian, of LA's Metro, is sure that his city's project, at the least, will win if TIFIA is expanded.

"We're pretty confident that we're in a good position to present our project for consideration for TIFIA loans," he said. "Our bottom line is that we've worked very closely with Senator Boxer and we're very supportive of the final product."

Boxer's bill is still far from passage. More Senate committees will take a shot at the transportation bill soon, and then the GOP-controlled House will also have its say. Some observers predict the long-awaited arrival of a new transportation bill could simply get pushed off for an additional year in favor of another short-term extension.

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