The America Fast Forward initiative is a four part initiative launched by Metro and advanced nationwide:
- Strengthening the Transportation Infrastructure Finance and Innovation Act (TIFIA) program – this was achieved in the America Fast Forward title of MAP-21;
- Creating a sixth class of qualified tax credit bonds for transportation projects – America Fast Forward Transportation Bonds – in the works;
- Reforming federal rules to permit local hiring for transportation projects using federal funds – achieved on March 3, 2015 with USDOT announcement of a one year local hire pilot program; and
- Bolstering funding for the federal New Starts program for new transit capital projects – in the works
America Fast Forward Transportation Bonds are a tax policy initiative designed to stimulate greater investment in the transportation sector. They provide a substantial subsidy to the issuer by having the federal government pay all or most of the annual “interest” due on the bonds in the form of an annual tax credit against the investor’s federal tax liability. On a long-term bond, the interest component of debt service represents 65 percent or more of the financial cost of borrowing. For tax purposes, the annual credit is treated by the bondholder as taxable interest income. America Fast Forward Transportation Bonds would be structured as a sixth class of “qualified tax credit bonds” (QTCBs) under section 54A of the Internal Revenue Code. Over the last decade, Congress has authorized over $35 billion of QTCBs to assist sectors such as public education, clean renewable energy generation and energy and forestry conservation.
America Fast Forward Transportation Bonds would represent the first application of QTCBs to the transportation sector. The bonds, if enacted, would differ from the other QTCBs in several respects. The maximum maturity could be as long as 35 years compared to a maximum maturity for other QTCBs currently of only 25 years. This longer maturity is necessary due to the long-lived nature of transportation projects which tend to be highly capital-intensive. The Treasury would establish a separate “interest” index for the tax credit rate on America Fast Forward Transportation Bonds, reflecting their longer maturity. Lastly, the list of taxes that the credit could be offset against would be expanded to include federal withholding tax on wages and benefits retained by employers and pension plan administrators. This is necessary because of the much larger scale of transportation projects, and would significantly broaden the market for the tax credit bonds to include pension funds.
America Fast Forward Transportation Bonds would be a $45 billion program, with eligible projects being surface transportation facilities eligible under title 23 or chapter 53 of title 49: highways, bridges and tunnels; transit and intercity passenger bus or rail; and intermodal freight transfer facilities and private freight facilities conferring a public benefit.