Several industry experts analyzed the $50 billion infrastructure plan that Obama announced last week in Milwaukee. It is designed to strengthen the U.S. economy, create jobs, and shape long-term vision for transportation investments. (see Sept. 10 AASHTO Journal story)

"This plan has the potential to start reforming the way we think about infrastructure improvement," said Brookings Institution senior fellow Robert Fuentes, who moderated Thursday's forum, "Obama's Infrastructure Agenda: Understanding the Pillars."

Among the ideas put forward in Obama's plan is something that has circulated before but is beginning to gain a bigger following: the president last week again proposed the establishment of a national infrastructure bank that would leverage federal dollars and encourage private investment to complete projects that don't always qualify for existing federal funding programs.

"This is an important moment for the concept of infrastructure investment and the ways we finance it," said panel member Rep. Rosa DeLauro, D-Connecticut. "I sincerely believe that an infrastructure bank can be the center of activity in our future economy."

The administration has thus far encountered resistance from Congress to the concept of an infrastructure bank because it would be vastly different than the way projects are currently funded, panelists observed. There are few existing government programs that specifically analyze a project before deciding if it is worthy of federal funding. But if private dollars begin to fund these projects, more assurance that the project will have a high rate of return from tolls or other revenue sources would be necessary.

"It's a big change to move to an infrastructure bank; it would be a real evolution for DOT," said Polly Trottenberg, assistant secretary for transportation policy at the U.S. Department of Transportation. "Currently we don't really ask anything about the project" when a state seeks federal funds.

Infrastructure banks are also being considered at the state level as an additional way to leverage state dollars and fund more transportation improvements.

"We are considering creating a state infrastructure bank and modeling it after the [federal Transportation Infrastructure Financing and Innovation Act] program," said Matt Strader, an assistant transportation secretary in Virginia. "We hope to leverage private-sector assets to complete all of the projects that we need, but don't have the state funds for."

Bank Would Be a New Way to Fund Infrastructure

Most federal infrastructure money, including the vast majority of dollars provided by the American Recovery and Reinvestment Act of 2009, is distributed to states based on formulas. But an infrastructure bank could be more beneficial because it would consider cost/benefit ratios and pick projects that will have a higher rate of return, panelists remarked.

The recovery act's Transportation Investments Generating Economic Recovery discretionary fund program known as "TIGER" received praise during the forum as a system that considered the quality of the project rather than just giving out money based on a formula. By creating a system that is more selective about where the money goes, panelists said, it encourages states to make more of an effort during the project planning stages to put their best projects forward so they have the best chance of getting funding.

"TIGER was a prototype effort of doing merit-based selection," Trottenberg said. "We need more programs that are project-by-project and we need to migrate into something that is less reactive and more reform-minded."

The problem with the current federal programs TIGER and TIFIA is that they do not offer enough money to fund major projects. An example that was brought up at the forum was the "30/10" initiative created by Los Angeles Mayor Antonio Villaraigosa.

Los Angeles voters have approved a half-cent sales tax for transportation that is expected to raise $13 billion over the next 30 years. While these transit projects might be able to qualify for TIFIA loans, that program it is currently only authorized by Congress for $122 million per year -- not nearly enough to cover the federal matching dollars that Los Angeles is seeking to accelerate 30 years of transit projects into one decade of construction.

Trottenberg and others said they believe if a larger financing system could be created out of Obama's latest infrastructure plan, then it would allow huge projects that states can't even begin to pay for to finally be taken off the shelf and actually built -- greatly improving mobility around the country.