Annual Privatization Report 2013

Private Activity Bonds

Subsection of Annual Privatization Report 2013: Surface Transportation

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The SAFETEA-LU legislation authorized the U.S. Treasury to approve the issuance of up to $15 billion in tax-exempt bonds for PPP-type surface transportation projects. As the state-by-state recap below makes clear, the extent of such projects is on a strong uptrend, raising the question of when the $15 billion total may be reached. The July-August 2012 issue of Public Works Financing provided a useful recap, summarized here.

By autumn 2012, according to Jack Bennett of U.S. DOT, seven project sponsors had issued $2.815 billion in PABs for the following projects:

  • I-495 Capital Beltway, VA: $588M
  • North Tarrant Express, TX: $400M
  • LBJ Express, TX: $615M
  • Denver Eagle Rail, CO: $398M
  • CenterPoint Intermodal, IL: $150M
  • Midtown Tunnel, VA: $664M
  • I-95 Express Lanes, VA: $261M

Six projects had been allocated $4.696 billion in PABs that had not, as of then, been issued:

  • Knik Arm Bridge, AK: $600M
  • CenterPoint Intermodal, IL: $1,190M
  • I-80 rail port, IL: $576M
  • CenterPoint Intermodal, MO: $475M
  • Ridge Port Logistics Ctr., IL: $555M
  • Northwest Corridor, GA: $700M

Were all of those in the second list to be issued in the amounts shown, that would leave $7.5 billion to be allocated to future projects. When this article appeared, $4 billion worth of requests already awaited DOT’s credit committee review and approval. That would leave just $3.5 billion of available bond capacity, with less than two years to go until the next reauthorization (assuming Congress enacts a successor as soon as MAP-21 expires on Sept. 30, 2014). With so many PPP megaprojects in the pipeline and Congress having experienced multi-year delays in passing both SAFETEA-LU and MAP-21, it is likely that demand for this kind of PAB will have reached or exceeded the current $15 billion cap well before the next reauthorization.

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Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy





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