U.S. Proposes New Bank System to Finance Transit Projects

Transportation Secretary Federico Pena launched an initiative Thursday to form a system of government-sponsored banks to create more money for transportation projects and more work for private construction companies.

The plan would allow states to use a portion of their federal highway funding to set up banks to lend the money to public agencies and public-private partnerships for construction of roads, bridges and other transportation projects.

The agency said the loans would support projects that could benefit such companies as Washington Construction (formerly Kasler Holding Co.), based in Highland, Calif.; Boise, Idaho-based Morrison Knudsen Corp.; and privately held Parsons Brinckerhoff Inc. in New York.

“What it means for the companies is that there will be more business available,” said Andrew Paven, a spokesman for the federal agency.

Under the project, participating state governments could use 10% of the federal funds provided under the National Highway Act to establish the banks, known as State Infrastructure Banks.

“You can get a lot more money available for transportation projects” with the banks, said Cindy Nichol, vice president at Apogee Research, a Maryland-based consulting firm that advises construction companies on how to raise capital.

To get the project rolling, President Clinton has requested an additional $250 million for the banks in fiscal 1997. Although the project enjoys support in the business community, the Republican-led Congress hasn’t indicated whether it will support the president’s request.

Pena said government officials must find more efficient ways to improve the nation’s infrastructure since the federal government is curtailing spending.

“We can no longer rely on a single way to pay for infrastructure improvements. . . . At a time of limited federal resources, we have to consider all options for funding important transportation projects,” Pena said in a prepared statement released Thursday.

Although the pilot project would operate in only 10 states, it could eventually spread to all 50 states. So far, the Transportation Department has selected Arizona, Ohio, Oklahoma, Oregon, Texas, Florida, South Carolina and Virginia to participate.