During the period of the Commission's investigative efforts, there has been a series of significant shocks and dislocations to the credit markets in the United States and worldwide, to a degree unprecedented in recent decades. This disruption continues and has made it difficult to finance many types of infrastructure projects, even for established issuers with usually reliable revenue streams and credit ratings. The length and severity of the current downturn are unknown. Indeed, the financial system may continue to experience stress and undergo adjustment for some time to come. It is reasonable to expect, however, that the functioning of the financial system will eventually improve over time. And the long- term outlook is positive for infrastructure financing, which many investors continue to view as a sound investment category. This longer-term perspective is the backdrop for the Commission's finance-related findings and recommendations.
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Over the last three federal transportation legislation authorization periods- since enactment of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)-federal policy makers have developed or facilitated various project financing tools to enhance authorized funding levels for surface transportation investment. These federally facilitated techniques, including direct and indirect credit support, tax subsidies, and a variety of other financial incentives, have become important tools in helping states and other project sponsors stretch limited resources and accelerate critical investments.
This chapter reviews the range of current federal policies and programs aimed at facilitating financing and non-federal investment, including by the private sector. It also offers the Commission's assessment of the potential role of new and emerging financing tools and approaches, providing the context for the finance-related recommendations offered in Chapter 8. (As background, see Box 7-1 for commentary on terms of art in this field.)