National infrastructure bank boosters spread the word at the DNC

Supporters of a national infrastructure bank — and a bill by Rep. Danny Davis, D-Ill., that would establish one — pitched the idea to dozens of delegates and other politicos last week at the Democratic National Convention, to build on what they say is growing momentum for the issue.

Members of the National Infrastructure Bank Coalition held panels, put up a booth and talked at delegate breakfasts and caucuses to lobby for the federal financing tool.

“The entire week really was less about policy initiatives and more about Kamala Harris and Tim Walz and all the down-ballot positions,” said Nomi Prins, a member of the National Infrastructure Bank Coalition. “So the fact that we were able to even have the time and the space [to promote a national infrastructure bank] is one measure of the curiosity that exists out there.”

Their main message: A national bank authorized to float low-cost state and local loans and capitalized with existing Treasury debt is needed to raise up the nation’s ailing infrastructure especially as Infrastructure Investment and Jobs Act nears its expiration in 2026.

After the IIJA expires, “What do you do after that?” Prins said. “Regardless of what happens with the makeup of the House or Senate, it can be challenging to pass a ‘expensive’ infrastructure bill,” she said. “So this idea of a mechanism, that many other countries are using right now, is something that’s getting appeal because no matter what happens politically, we have a high amount of debt and great infrastructure needs.”

Introduced last June by Davis, H.R. 4052, the National Infrastructure Bank Act of 2023 would establish a $5 trillion national bank to provide loans to public entities—including states, utilities, and public-private partnerships—for financing, developing, or operating eligible infrastructure projects.

The bank would be capitalized by issuing stock that’s subscribed by holders of outstanding Treasury securities of three years or greater maturity or outstanding municipal bonds of states or municipalities of five years or greater maturity,

The debt holders would transfer the securities to the bank in exchange for the capital stock.

The Treasury Department would also be an “on-call” subscriber for up to $1 trillion in 30-year Treasury bonds and the bank would maintain a discount line of credit with the Federal Reserve System.

The bank would facilitate the organization of at least seven regional economic accelerator planning groups to, among other activities, identify infrastructure needs and priorities. It would finance projects in 20 infrastructure categories, including lead pipe replacement, affordable housing, inadequate bridges and a national high-speed rail system.

“Even though we passed a good infrastructure bill – Illinois got $17 billion off of the bill – we still have many unmet needs,” Davis told The Bond Buyer last year. “We’re making headway and we’re making progress but we still have miles to travel and roads to rebuild.”

The measure has gained 37 co-sponsors, all Democrats. Dozens of state legislatures and city councils have passed resolutions in favor of the measure, most recently California. Issuer groups like the National Association of Counties also support the idea.

“The momentum this year has been pretty significant,” Prins said. Since it’s unlikely the bill will pass this year, advocates hope to have it reintroduced next session with the existing support already in place.

The idea for a national infrastructure bank goes back decades, with President Obama proposing one in 2008 and in 2010. More recently, the IIJA would have created a bank, but the provision was stripped out at the last minute.

Some municipal market groups, like the Bond Dealers of America and the American Securities Association, have opposed the bank. They are skeptical of the need considering the muni market’s traditional role in infrastructure finance and believe federal lobbying efforts should focus on reinstating tax-exempt advance refunding bonds and expanding the current financing tools.