Build America initiatives include new bond to increase P3s at municipal level; increased investment in water systems and rural America
President Barack Obama has unveiled plans to create a new kind of municipal bond designed to increase opportunities for municipalities seeking to undertake P3s.
The White House has published further details of its Build America plan, including the launch of the Qualified Public Infrastructure Bond (QPIB).
“Today, public private partnerships that combine public ownership with private sector management and operations expertise cannot take advantage of the benefits of municipal bonds,” explained the White House. “QPIBs will extend the benefits of municipal bonds to public private partnerships, like partnerships that involve long-term leasing and management contracts, lowering the cost of borrowing and attracting new capital.”
The initiative is similar to the private activity bonds (PABs) program, which has already supported over $10bn or road, tunnel and bridge schemes.
However, the QPIBs will expand the scope to include airports, ports, mass transit, solid waste disposal, sewer, and water, as well as for more surface transportation projects.
“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,” the White House explained.
It is thought that the new program will ensure QPIBs will offer a permanent lower cost financing tool to increase private participation in infrastructure schemes.
Further details on the new bonds will be published in the upcoming Budget.
Meanwhile, the Obama administration also unveiled plans to create a new Water Finance Center within the Environmental Protection Agency to help tackle over $600bn in needs for drinking water and wastewater infrastructure.
Furthermore, the US Department of Agriculture is to develop a Rural Opportunity Investment Initiative to support rural water, energy, and broadband projects, reduce barriers to investment and connect projects with investors
President Obama launched the Build America Investment Initiative in July 2014, which included the creation of the Build America Transportation Investment Center.