By Ron Thaniel
May 24, 2010

Conference of Mayors Vice President Los Angeles Mayor Antonio R. Villaraigosa called for “an infrastructure bank or an I-fund to allocate new, Congressionally-authorized tax preferred bonding authority for transit investments,” when he appeared before the Subcommittee on Select Revenue Measures of the U.S. House Committee on Ways and Means on May 13.

“Such programs have been extremely valuable in stimulating investment in other infrastructure sectors, such as public schools,” said Villaraigosa. “Given the environmental, energy independence, safety and livability benefits of major public transportation investments, we think a compelling argument can be made for a similar targeted program for transit, while volume capping it for fiscal control.” He continued, “Even though the bonds would be issued locally, the volume cap could be allocated by the infrastructure bank or the I-Fund to those major projects and programs offering the highest societal return on investment.”

Villaraigosa told members of the subcommittee who have played a lead role in financing infrastructure investments through dedicated taxes and trust funds that, “Public transit plays a vital role in cities, relieving traffic congestion, improving air quality, and providing lifeline service to the transit dependent so that they have access to full range of opportunities they need to prosper, from jobs and shopping to medical services, education, and recreation.”

He said, “Los Angeles needs a greatly expanded rail system to remain competitive in the 21st century and if we are to grow into a truly sustainable metropolis made up of livable communities.”

“We are investing heavily in transit, retrofitting our city and region with new systems that provide clean, reliable alternatives to driving,” said Villaraigosa. “At the same time, we are working to create sustainable communities around our rail stations, neighborhoods where walking, cycling, and transit can connect people to places they want to go and the people they want to see.” Between 2005 and 2009 over 40 percent of new construction in Los Angeles has occurred near rail stations.

Last year, the MTA Board of Directors, on which Villaraigosa serves as a member, adopted a new Long Range Transportation Plan that serves as the blue print for transportation investments over the next 30 years. “We will be able to expand our rail system dramatically, building 12 new rail and bus rapid transit (BRT) lines and adding an estimated 78 miles of new service,” said Villaraigosa. The Long Range Transportation Plan is possible because in 2008 Los Angeles voters said “yes” to cleaner air, jobs, and livable communities and supported what is known as Measure R, a 30-year half cent sales tax dedicated to transportation investments. It will generate an estimated $36 billion in revenue over the next 30 years and is a multi-modal funding source, dedicating 20 percent of revenue for highway improvements. “But the majority [65 percent] of funding is dedicated to transit capital projects and transit operations,” said Villaraigosa. “And the construction of Measure R projects will create thousands of new, high quality jobs.”

“Unfortunately, 30 years is too long to wait if we can find a way to build these projects faster,” said Villaraigosa. “Our 30/10 initiative is a proposal to accelerate construction of 12 new mass transit lines and build these projects over the next decade.” Benefits of the 30/10 initiative include 16,000 construction jobs annually in Southern California, 1.8 times less carbon monoxide and 2.4 times less nitrous oxides over the next 30 years. “And we would see an expanded rail network connecting many of the most important employment and population centers in our region,” Villaraigosa added.

“We believe that there is a compelling local and national interest in getting the jobs and environmental benefits of our transit program as quickly as possible,” said Villaraigosa.

To bridge the funding gap of up to $8 billion, Villaraigosa said, “We have explored using existing federal programs, such as the Department of Transportation's TIGER discretionary grant program and the Transportation Infrastructure Finance and Innovation Act [TIFIA] credit program. But there is insufficient capacity in these programs to accommodate the 30/10 initiative.”

Villaraigosa said we have followed with great interest recent proposals for establishing a National Infrastructure Bank and have noted the President's FY 2011 budget proposal to establish a National Infrastructure Innovation and Finance Fund, designed to assist major investments of national and regional significance. “Each of these programs would substantially expand federal lending capacity beyond the existing TIFIA levels,” he said. “We support any approach that can provide lendable funds at the same rates and flexible terms as the existing TIFIA program.”

“Los Angeles voters have made the major commitment of approving the new Measure R funding stream, but we need federal assistance in monetizing it in a cost-effective manner,” said Villaraigosa.