Challenges and Opportunities for Innovation in the Public Works ...

the economy was growing are now faced with severe problems of their own. Proffers, exactions,
and other developer contributions for infrastructure were available a few years ago, but, now the
developer or the businessman may be looking for governmental assistance rather than helping
to pay for public infrastructure.
Conclusion
The discussion of the barriers to infrastructure finance has presented a somewhat
dismal picture, however, this discussion does serve as a step towards governments taking the
pro-active approach that has been missing. Clearly, infrastructure financing has changed over
the last several decades, with the rise and decline of federal involvement and the increasingly
debt-financed state and local government efforts. But the dimensions of the problem have
continued to steadily expand. The eventual solutions will have to come through the involvement
of all levels of government, as well as an educated commitment by the citizenry and business.
While state and local governments have borne the brunt of infrastructure provision, at
the federal government level, there finally appears to be a growing awareness of the importance
of infrastructure and national economic health. The various studies linking infrastructure
provision and worker productivity have drawn particular attention. As a result of this increased
awareness, initiatives such as those contained in the Intermodal Surface Transportation
Efficiency Act of 1991, the current efforts on an economic stimulus package in Washington, and
Congressional interest in proposals such as GFOA's Mandated Infrastructure Bonds (MIFs) 1 I
indicate that some progress is possible and that the national, and specifically federal
commitment, to infrastructure may finally be changing for the better.
1 The Government Finance Officcrs Association's Committee on Governmental Debt and Fiscal Policy has
proposed that a new category of municipal debt, known as "Mandated Infrastrucaure Bonds," be created. These
bonds would be issued by governments for projects mandated by federal laws such as the Clean Water Act,
Clean Air Act, Resource Conservation and Recovery Act and others. These bonds would be fully qualified taxexempt
bonds and would be exempt from certain restrictive provisions of the Tax Reform Act of 1986.
Specifically, they would be "bank qualified" so that banks could deduct 80% of the cost of purchasing and
carrying them, and be subject to the pre-1986 25% private use test rather than a 10% test. They would also be
exempt from the statewide volume caps and the arbitrage rebate requirement. All of these would have the
effect of lowering issuance and debt service costs for the issuing governments and increase the number of
infrastructure facilities that could be provided.
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