The question arose in response to my December post (“HOT Lanes on the Capital Beltway Only Five Years Away“) about the role that Uncle Sam is playing in the financing of the $1.4 billion HOT lane project on the Interstate 495 Beltway. According to Quintin Kendall, deputy assistant secretary for management and budget at the Department of Transportation, TIFIA loans and PABs “were a large part of the deal all along.”
For those unfamiliar with federal acronyms, TIFIA stands for the Transportation Infrastructure Finance and Innovation Act. That program provides direct loans, loan guarantees and lines of credit for surface transportation infrastructure projects.
PAB stands for Private Activity Bonds. Federal law allows the federal government designate private companies to issue up to $15 billion in tax-free for qualifying projects.
What this means for Virginians is that we are the beneficiaries of an indirect form of federal boodle. While the Beltway HOT lane project will not be subsidized through direct cash outlays, the Fluor-Transurban partnership building the HOT lanes will be able to line up financing on highly advantageous terms. How much of the implied subsidy will flow through to HOT lane riders and how much will bolster the bottom lines of Fluor and Transurban is not a topic upon which I am willing to hazard a guess.
From the perspective of federal transportation policy, the Bush administration very much wants to get some demonstration congestion pricing projects up and running. HOT lanes on the beltway around the national capital would serve that aim nicely.