I. BACKGROUND INFORMATIION–CONCEPTUAL AND REAL WORLD PROBLEMS RELATING TO FEDERAL FUNDING HAVE TO BE RECOGNIZED:

https://www.enotrans.org/article/op-ed-private-activity-bonds-fuel-innovative-infrastructure-projects/ A. Here are some recent big projects that are of interest in terms of how they were funded; the article also has projects that were in trouble–a learning curve issue for ALDOT given what we have already seen from them in terms of failing in vetting potential players and failing in the PR arena! https://www.governing.com/topics/transportation-infrastructure/gov-5-biggest-us-infrastructure-projects-plus-5-at-risk.html

 B. Accountability issues for grassroots groups trying to find information can be found in a couple of places:

  1. The Peer Review of U.S. Toll Roads provides an annual snapshot of the Fitch-rated U.S. toll roads portfolio: https://www.ibtta.org/sites/default/files/documents/2018/201804%20Managed%20Lanes%20Peer%20Review.pdf. This report sets out key rating factors (KRFs) for Fitch Ratings’ portfolio of rated U.S. toll roads, bridges and tunnels (toll roads) to ensure each individual rating factor assessment is consistent and comparable with the rest of the U.S. toll roads portfolio; any such changes are addressed in this report. Certain selected performance and debt metrics are also presented to aid comparability. • Fitch-rated U.S. toll roads included in this report are financed with debt primarily secured on toll road net revenues. Fitch’s toll road portfolio is presented in two parts: large networks and monopolistic urban bridge systems, and small networks and stand-alone toll road facilities. • Fitch focuses on six KRFs: Completion Risk (for projects in the construction phase only); Revenue Risk — Volume; Revenue Risk — Price; Infrastructure Development/Renewal; Debt Structure; and Debt Service. Taken together, they address the main qualitative and quantitative aspects of the operating and financial profiles for most projects, and reflect an assessment of both past performance and future expectations. In certain specific cases, additional factors not fully addressed by these six KRFs may apply, and additional KRFs may also be taken into consideration. • Metrics included comprise 12 statistics and ratios calculated from fiscal 2016 annual audited financial statements, forward-looking Fitch rating case scenarios for each project and other supplemental data received directly from toll road authorities. These metrics, when considered relative to peers, constitute an important component of Fitch’s credit analysis.
  2. Accountability Scorecard: The Accountability Scorecard evaluates agency performance and overall progress in processing environmental reviews and authorization decisions for major infrastructure projects (as defined in Section 3(e) of Executive Order 13807) and achieving the objectives of the Modernize Infrastructure Permitting Cross-Agency Priority Goal. See FY19 Quarter 2 permits. https://www.permits.performance.gov/scorecard/2019/2
  3.  The Brookings Institute (generally considered to be a ‘liberal’ think tank) published this study and found some interesting things we should know about: https://www.brookings.edu/blog/the-avenue/2019/02/28/why-is-federal-infrastructure-policy-so-difficult/ a) “Our path to a new federal infrastructure policy is blocked by irrational expectations around limited funding, a failure to appreciate the diversity of needs, and misaligned incentives.” b) “While the federal government excelled in delivering the Interstate System, it is not well positioned to help with the broad diversity of infrastructure issues vexing our communities in the 21st century.” c) “Improving our nation’s infrastructure not only helps spur economic growth, but also dramatically improves our quality of life. Repeated public opinion surveys have shown that the vast majority of Americans want better infrastructure. People are tired of wasting time in traffic, worrying about water quality, or living without broadband.”
  4.  Reason Foundation: https://reason.org/wp-content/uploads/files/7227d934ecfa04d5db576c126f0385a6.pdf a) Reason begins in its Executive Summary by saying there is a crisis and it is getting worse: “Traffic congestion in America is bad and getting worse. Our road system is not being maintained and expanded commensurate with our growth, despite being the most important means of moving goods and people from here to there. Because of a lack of proper investment in road capacity, congestion costs Americans at least $168 billion each year. Worse, buried in those costs is the reality that congestion is clogging the arteries of our cities. If we don’t solve the problem our cities will begin to die as centers of economic productivity, as centers of culture, and as pleasant places to live.” b) Reason decries the present system arguing among several issues that the system is overly susceptible to political influence: “As more and more fuel-efficient vehicles have allowed us to reduce gasoline consumption per mile driven, the revenues from gas taxes drop and the need for pavement construction and maintenance continues to grow. The tax-and-grant system does a poor job of targeting investment to where road capacity is truly most needed and where it would yield the greatest returns, resulting in an inefficient use of scarce capital. It is also unfair, as the discretionary grant element in the system indulges politically well-connected constituencies at the expense of others with less political clout.” c) Reason offers a solution: “Fortunately, there is a better way. The first key to reform is to begin to break free of the stifling pay-as-you-go doctrine embedded in the tax-and-grant system. Rather than make marginal improvements to the system as the funds become available, a better public policy would finance new highways and bridges, so that they can get built promptly today and then be paid for by their users over the useful life of these projects. This is the principle of toll finance that is being rediscovered in this country, as technical revolutions in toll collection technology have swept away the limitations of stopping at tollbooths or even slowing down.” d) Reason makes the case for a tolling model incorporating public and private partnerships:  “A more promising model is the long-term toll concession agreement, used extensively in Europe and Australia, and only recently introduced to the United States. In exchange for a long-term, franchise-type agreement (called a lease and concession agreement), a competitively selected private firm or consortium designs, finances, builds, operates, and maintains a tolled project for a long period (anywhere from 35 to 99 years). Because the private concessionaire is willing to invest its own money on a long-term basis, it is willing and able to manage risks that public toll authorities are ill-equipped to handle. Also, by being able to pool risks and deploy expertise across multiple jurisdictions and countries, the private concessionaire can operate more efficiently. The evidence from innovative jurisdictions that have introduced long-term toll concession agreements through public-private partnerships, such as Chicago, Indiana, Texas, and Virginia, suggests that this model can deliver a substantially larger investment of resources for a given toll project than the conventional state or local government toll authority model. Private concessions operating within broad performance guidelines are also better suited for the management of “value-priced” electronic tolling for congestion relief….” “Tolls can only answer part of the funding needs for our transportation system over the next 25years. Toll finance is not the answer for all future highway projects, nor are long-term concessions the only model that can deliver such projects. But the successes of such models are so striking that they should rapidly become an important part of our transportation system.” e) Reason urges looking at another model not often looked at: “Almost ignored has been yet another model: revenue-risk ETLs financed directly by the public agency that will be the owner/operator. Thanks to the 2018 edition of Fitch Ratings’ Peer Review of U.S. Managed Lanes, we now have details on four such projects: Colorado DOT’s C-470, Riverside County Transportation Authority’s SR 91 and I-15 projects, and Texas DOT’s I-35E project. These four plus the original Orange County SR 91 project (developed as a revenue-risk P3 but now owned and operated by the Orange County Transportation Authority) are all revenue-bond financed and rated by Fitch, along with eight revenue-risk P3 concessions.” f) Reason concludes along these lines which in my view offers an alternative to a P3 approach that inevitably will draw criticism for the possibility of excessive profit taking: “Overall, the Fitch report provides a set of guidelines for viewing ETLs as business entities, regardless of whether they are developed and operated as public-sector projects or P3 concessions. DOTs and MPOs that plan to develop whole networks of ETLs will almost certainly have to toll-finance much of that network since it will involve large amounts of new construction (additional lanes plus flyover connectors at freeway interchanges, and in some cases direct-access ramps). Maximizing revenue, consistent with public-sector traffic management and throughput goals, will be essential to financing these megaprojects. And that means taking seriously Fitch’s recommendations for configuration, pricing, and other factors needed for investment-grade ratings.
  5. The Conservative think tank, Heritage Foundation, has a different view about what should be done about infrastructure:https://www.dailysignal.com/2019/06/19/how-trump-can-get-a-better-deal-on-infrastructure/ a) This Heritage Foundation analysis shows how the president and Congress can work together to implement spending and regulatory reforms that would unlock more than $1 trillion in additional infrastructure value without adding another cent to deficits or raising taxes.  b) The private sector and state and local governments currently own and maintain most of the nation’s roads, airports, and utilities. The vast majority of infrastructure serves limited areas and specific populations. In general, the people who benefit the most should be the ones who have ownership over infrastructure and who assume the costs.  c) Proposals from congressional Democrats have repeatedly sought to turn the funding and ownership structure upside down by imposing federal control over more of the nation’s infrastructure. Supporters of the Green New Deal, for example, want to throw untold billions of dollars into rail projects that are incompatible with the nation’s geography and how most Americans live day to day. d) Some Heritage solutions:      1. First, Congress should stop the wasteful diversion of massive amounts of gas tax money. The Highway Trust Fund, which receives federal gas tax revenue, runs chronic deficits.      2. Second, Congress and the administration can act to eliminate rules that unnecessarily drive up the cost of infrastructure projects. For example, when the federal government provides a grant to a state government, the Davis-Bacon Act dictates worker pay, inflating labor costs. Repealing Davis-Bacon would save billions of dollars every year.      3. Similarly, project labor agreements mandate collective bargaining agreements that cover work rules and hiring practices on federally funded projects, further increasing costs. This rule stems from President Barack Obama’s Executive Order 13502, and Trump can overturn it.      4. Red tape also hinders privately funded infrastructure. 5. Duplicative reviews and permits tie down the energy sector in particular, costing the economy tens of billions of dollars per year. This often harms investments in renewable energy alongside fossil fuels.
  6.  Yet another view of the “infrastructure issue and how to address it:https://www.enotrans.org/article/op-ed-private-activity-bonds-fuel-innovative-infrastructure-projects/
  7. SUMMARY OF BACKGROUND DISCUSSION. A. It is clear from the above review that, as with everything, opinion is split on how to approach the infrastructure problem/solution—here are a few thoughts as we deal with the I-10 Mobile Bay Bridge Project in the context of the above discussions on such issues: B. Reason’s argument that needs are growing is certainly seen in our own predicament—general consensus we need to do something about I-10, but the issue is how to pay for it in a fair manner that doesn’t overburden this region’s citizens and businesses.  C. Brookings is correct that the Eisenhower Interstate Highway Program model cannot be duplicated because the needs are far too great and the available finances are far too inadequate; D. Heritage is correct that local ownership should be preserved, but I don’t agree that costs should be borne by those who own a project and benefit the most—I-10 tolling at the possible rates quoted by ALDOT are a disaster for this region. E. Technological advances have made it possible to “toll with ease” thus keeping traffic flowing to avoid congestion; we have also seen how in the Elizabeth River Tunnel project, EZpass was used to reduce local charges for using the tunnel—something we have already proposed ALDOT review. (http://pwfinance.net/wp-content/uploads/2017/01/Virginia%E2%80%94Midtown-Tunnel-case-study.pdf,P.6 E. Creative financing approaches are required and are being discussed, but ALDOT was turned down on a $250M INFRA grant and is waiting to hear on a TIFIA grant for $150—which means that absent some sort of funding plan that will relieve Baldwin and Mobile Counties from at least the highest toll quoted by ALDOT, $6, killing the project has become the default position. As mentioned below, why hit our area with a high toll when other areas in the state with expensive infrastructure projects are not tolled and, critically, why go first before we know what the Trump Infrastructure Plan looks like? F. Meanwhile the region is in political turmoil as recently reported by WKRG’s Bill Riles—see his report here: https://www.wkrg.com/top-stories/toll-opposition-for-mobile-bridge-and-bayway-project-is-mounting/. ALDOT woes grew when it was thrown under the bus by Congressman Bradley Byrne who said that ALDOT has always wanted to toll the new bridge and did not seek out other funding sources, which simultaneously threw gas on the already growing fire over the tolling issue! If you did not hear it on 106.5,read it here:https://yellowhammernews.com/bradley-byrne-aldot-officials-declined-federal-funding-for-mobile-bayway-they-were-set-on-tolls/undefined and then go to this link and listen: https://www.fmtalk1065.com/podcast–MIDDAY MOBILE – THURSDAY, JUNE 13 – HOUR 2–FM Talk 1065 Podcasts Episode 2057 G. While ALDOT waits to receive proposals from the bidders for the project, the public can get more information by going to our link: https://stopthetoll.com/–we have links to various news stories on the issue; go also to Jim Zeigler’s FB page: https://www.facebook.com/groups/1276861619188737/ 

II. THE FEDERAL FUNDING MAZE–TEASING OUT WHO, WHAT, HOW

A. Let’s begin with the U.S. Department of Transportation (DOT) since it handles projects such as the I-10 Mobile Bay Bridge (https://www.transportation.gov/ ).Here are a few facts to consider from DOT website: 

  1. MISSION: The mission of the Department is to: Serve the United States by ensuring a fast, safe, efficient, accessible and convenient transportation system that meets our vital national interests and enhances the quality of life of the American people, today and into the future Statutory Authority: The Department of Transportation was established by an act of Congress on October 15, 1966. The Department’s first official day of operation was April 1, 1967.
  2. Since money is what we need, here is a link to the DOT budget highlights and its budget with a few extractions so everyone can gain a sense of the scale of DOT operations and their philosophy: ***https://www.transportation.gov/mission/budget/dot-budget-and-performance-documents#BudgetHighlights
  3. The Department’s discretionary programs are funded at $15.6 billion, which is about $2.9 billion less than FY 2017. This primarily reflects reductions in Amtrak, the elimination of funding for the National Infrastructure Investments (otherwise known as TIGER) grant program, and cuts to the transit Capital Investment Grants program. The President’s Budget includes $200 billion to support his Infrastructure Proposal. This funding is not included with the Department of Transportation funding recommendations but is included in the President’s overall request.
  4. INFRASTRUCTURE PLAN PRINCIPLES: (COMMON SENSE VIEW): This is important to look at since it outlines the guidance that will be used in providing funding support for competing projects. It does not calculate the impact of politics on awarding money to projects, WHICH CAN BE CONSIDERABLE IF SHELBY WANTED TO ACT!) a.The President has called for at least $1 trillion in infrastructure investment nationwide that will connect people to jobs, increase the efficiency of delivering goods, and improve the safety and well-being of all Americans. This goal will not be achieved by Federal investment alone, but rather requires States, local governments, and the private sector to share responsibility and accountability in contributing to our Nation’s future. To achieve the President’s target of at least $1 trillion in infrastructure investment, the Administration has proposed $200 billion in Federal funding for core infrastructure. The Administration’s proposed investments and reforms will modernize our infrastructure, strengthen our economy, increase our international competitiveness, and improve the quality of life of all Americans. The Administration’s plan makes targeted investments and reforms designed to transform our transporta¬tion system. Key actions include:  b. Dedicate Federal Funding to Rural Needs: The Administra¬tion is committed to addressing the infrastructure needs of rural America by dedicating at least 25 percent of the proposed Federal infrastructure funding to grants that support rural projects, including funding to U.S. territo¬ries and Tribal communities. By improving upon and expanding existing programs, the Admin¬istration will be able to improve economic competitiveness, and quality of life for rural Americans.  c. Establish an Infrastructure Incentives Initiative: This competitive program will provide targeted Federal funding to projects that demonstrate innovative reve¬nue generation, life-cycle cost management, and cost-effective approaches to project delivery. This initiative will begin to address the challenges presented by our outdated funding structure, developing projects that will accelerate the modernization of our infrastructure. d.Initiate a Transformative Projects Program: This com¬petitive program would provide Federal investments and tech¬nical assistance to private firms and nonprofit organizations that use transformative technologies and techniques to improve or reduce the costs of transportation services. This program will quickly fill innovation gaps, and yield technologies that may solve our critical issues surrounding safety, congestion, and efficiency.
    B.HERE ARE TWO PROGRAMS OF INTEREST TO US (SEE MORE DETAILS BELOW):  This past summer, DOT launched the Infrastructure for Rebuilding America (INFRA) Grant program with criteria that aims to increase investment by non-Federal stakeholders. The INFRA Grant program also ensures that at least a quarter of available INFRA Grant funding will be awarded to deliver critical infrastructure projects benefiting rural communities. 1.FTA’s newly proposed Private Investment Project Procedures for capital transit projects will lead to more effective approaches in encouraging private investment in areas such as project planning, construction, mainte¬nance, and operations.

B.HERE ARE TWO PROGRAMS OF INTEREST TO US (SEE MORE DETAILS BELOW):  This past summer, DOT launched the Infrastructure for Rebuilding America (INFRA) Grant program with criteria that aims to increase investment by non-Federal stakeholders. The INFRA Grant program also ensures that at least a quarter of available INFRA Grant funding will be awarded to deliver critical infrastructure projects benefiting rural communities.

  1. FTA’s newly proposed Private Investment Project Procedures for capital transit projects will lead to more effective approaches in encouraging private investment in areas such as project planning, construction, mainte¬nance, and operations.

III. WITH THAT SHORT BACKGROUND INTRODUCTION TO DOT, LET’S LOOK MORE CLOSELY AT SPECIFIC PROGRAMS THAT HAVE AN IMPACT ON THE I-10 MOBILE BAY BRIDGE PROJECT

A. Federal instruments we hear most about and have links to I-10 Mobile Bay Bridge Project: https://www.fhwa.dot.gov/ipd/finance/    
A. Public Private Partnerships (P3s) are contractual agreements between a public agency and a private entity that allow for greater private participation in the delivery of projects. In transportation projects, this participation typically involves the private sector taking on additional project risks such as design, construction, finance, long-term operation, and traffic revenue. Learn more about P3s on website of FHWA’s Center for Innovative Finance Support. 

B. Private Activity Bonds (PABs):Private Activity Bonds (PABs) are debt instruments authorized by the Secretary of Transportation and issued by a conduit issuer on behalf of a private entity for highway and freight transfer projects, allowing a private project sponsor to benefit from the lower financing costs of tax-exempt municipal bonds. https://www.fhwa.dot.gov/ipd/finance/tools_programs/federal_debt_financing/private_activity_bonds/ ***The law limits the total amount of such bonds to $15 billion and directs the Secretary of Transportation to allocate this amount among qualified facilities.
***Current Status: As of May 31, 2019, approximately $10.13 billion in PABs have been issued to date for the projects listed below. PAB allocations approved by U.S. DOT total approximately $1.73 billion to support the projects shown in the second table below [not included here]. 

C. The Transportation Infrastructure Finance and Innovation Act (TIFIA) program (>https://www.transportation.gov/buildamerica/programs-services/tifia) provides credit assistance for qualified projects of regional and national significance. Many large-scale, surface transportation projects – highway, transit, railroad, intermodal freight, and port access – are eligible for assistance. Eligible applicants include state and local governments, transit agencies, railroad companies, special authorities, special districts, and private entities. The TIFIA credit program is designed to fill market gaps and leverage substantial private co-investment by providing supplemental and subordinate capital. For more information, please see the TIFIA Credit Program Overview, which summarizes the basic purpose, processes and historical activity of the program.

D. Infrastructure For Rebuilding America: The INFRA Grants program provides dedicated, discretionary funding for projects that address critical issues facing our nation’s highways and bridges. INFRA grants will support the Administration’s commitment to fixing our nation’s crumbling infrastructure by creating opportunities for all levels of government and the private sector to fund infrastructure, using innovative approaches to improve the necessary processes for building significant projects, and increasing accountability for the projects that are built.
***The INFRA program will make approximately $855-902.5 million available to projects that are in line with the Administration’s principles to help rebuild America’s crumbling infrastructure – a priority for this Administration. (NOTE—WE JUST LOST A $250M GRANT)

IV. CONCLUSIONS

A. UNDERSTANDING THE FINANCIAL WORKINGS OF U.S. DOT IS NOT AN EASY THING TO DO,BUT IT IS IMPORTANT TO COME TO GRIPS WITH A BASIC UNDERSTANDING OF THE PROCESS SO WITH THAT KNOWLEDGE WE MAY BE ABLE TO DISCOVER WHAT IS REALLY GOING ON THUS LEADING US TO A DECISION ON WHAT WE NEED TO DO GOING FORWARD.

B. ONE CONCLUSION THAT IS APPARENT FROM THE “U.S. DOT” DOCUMENTS IS THAT THERE WILL BE AN “INFRASTRUCTURE” PLAN THAT IS FORTHCOMING AND THAT UNTIL WE SEE WHAT THAT LOOKS LIKE AND HOW MUCH MONEY MIGHT BE AVAILABLE, THEN IT MAKES MORE SENSE FOR ALABAMA TO DELAY GOING FORWARD WITH THE I-10 MOBILE BAY PROJECT SINCE THE PRESENT PLAN ESSENTIALLY IS ASKING THE LOCAL CITIZENS TO BEAR A SIGNIFICANT PORTION OF THE COST INCLUDING TOLLING TO COVER THE LACK OF MONEY FROM OTHER SOURCES. ***A BETTER STRATEGY IS TO WAIT AND SEE IF MORE FEDERAL FUNDS MAY BE AVAILABLE BEFORE RUSHING HEADLONG INTO A FUNDING SCHEME WHICH WE SEE AS FUNDAMENTALLY UNFAIR GIVEN OTHER STATE PROJECTS (BIRMINGHAM/HUNTSVILLE) THAT DO NOT HAVE TOLLS ON THEM!

C. WE ARE CURRENTLY WORKING WITH OUR CONGRESSIONAL DELEGATION AND STATE DELEGATION FROM BALDWIN CTY TO FIND OUT HOW MUCH MONEY MIGHT COME FROM OTHER STATE SOURCES THAT WOULD ALLOW US TO BOND OUT THE WHOLE PROJECT, PLUS, WE NEED TO FIND OUT WHAT MONEY REMAINS IN PLAY IN THE U.S DOT BUDGET AND THE STATUS OF THE TIFIA GRANT ALDOT SENT IN BACK IN MARCH.

D. GO TO THESE TWO SOURCES FOR MORE INFORMATION:

stopthetoll.com

Block the Toll Facebook Page