WASHINGTON, D.C. – U.S. Reps. Rodney Davis, R-Ill., and John Delaney, D-Md., today introduced the Partnership to Build America Act, which creates a fund to provide financing to state and local governments for new infrastructure projects.
The legislation encourages public-private partnerships and uses bond sales to finance the fund.
“If our country is going to invest in infrastructure and spur job creation, we need innovative, bipartisan funding solutions like this legislation that brings public and private entities together to leverage investments,” said Davis. “Local governments in my district are always looking for opportunities to advance new projects and fix their infrastructure but too often come up short because of a lack of funding. I am encouraged by President-elect Trump’s interest in passing an infrastructure bill and I hope the Partnership to Build America Act will be part of it.”
“If the next president and leaders in Congress want to rebuild America in a fiscally-responsible way that has deep bipartisan support, we’ve given them a blueprint. A bold infrastructure-tax deal that combines legitimate support for new projects and pro-growth reform would be transformative for the country, for our economy and our quality of life,” said Delaney. “Congressman Davis and I represent different districts and bring different perspectives to Washington, but we see the same set of facts and we’re excited to lead the effort to get a smart and fair infrastructure-tax deal done.”
Davis has been a cosponsor of the Partnership to Build America Act, which has received bipartisan support of more than 40 Republicans and Democrats, in the past but is now leading this bill with Delaney.
Davis provided the following breakdown of how the Partnership to Build America Act works:
The American Infrastructure Fund
• The Partnership to Build America Act creates the American Infrastructure Fund to provide financing to state and local governments for new infrastructure.
• Transportation, energy, communications, water and education projects are eligible to receive AIF financing. Local governments would apply directly to the AIF for support.
• To encourage public-private partnerships 35 percent of AIF supported projects must have at least 10 percent of their financing be private debt or equity.
• The AIF will be capitalized by $50 billion in infrastructure bond sales and leveraged at a 15:1 ratio to provide up to $750 billion in loans or guarantees.
Funded by an Infrastructure Bond Sale
• Rather than using appropriated funds out of the federal budget to establish the American Infrastructure Fund, the Partnership to Build America Act uses a bond sale.
• AIF bonds would have a 50-year term, pay a 1 percent fixed rate return and would not be guaranteed by the U.S. government. These bonds are not intended to be a good investment on their own and are transferable after purchase.
• To incentivize companies to purchase these bonds, U.S. companies would be allowed to repatriate a certain amount of their overseas earnings tax free for every $1 they invest in the bonds. This multiplier will be set by a “reverse Dutch auction” – which allows the market to set the rate, ensuring that enough funds are raised.
• Assuming a 1:4 ratio is set by the auction; a company will be able to repatriate $4 tax-free for every $1 in AIF bonds they purchase.