Virginia is the latest state to create its own state capitalized infrastructure bank. In 2005, the federal highway authorization bill, known as SAFETEA-LU, gave all states, territories and the District of Columbia the authority to establish state infrastructure banks. Operating much like other kinds of banks, these infrastructure banks offer loans and credit assistance to public and private sponsors of surface transportation projects like highway construction, transit or rail projects.
Other states are taking advantage of this tool, as well. The Federal Highway Administration reported that through the end of 2008 (the latest year for which complete data is available), 32 states and Puerto Rico have entered into 609 state infrastructure bank loan agreements totaling $6.2 billion.
Virginia is using $283 million from a 2010 fiscal year surplus and savings from a performance audit of the Virginia Department of Transportation to provide its bank’s initial capitalization. Virginia Transportation Secretary Sean Connaughton, the incoming vice chairman of CSG’s Transportation Policy Task Force, said his state established the bank because, among other reasons, federal funding programs have become oversubscribed and infrastructure loans are increasingly difficult to obtain by states.
“We have so many projects in Virginia that we think we can actually move forward on with some sort of credit enhancement that we have gone ahead and established our own bank,” he said.