SERVICES

Policy Analysis and Research

Mercator helps clients evaluate the practical application of various finance approaches, such as concessions and tax credit bonds, and assists with the development of enabling legislation and public-private partnership programs. We have undertaken research and prepared reports for a broad array of government agencies and project sponsors.

Federal Highway Trust Fund Modeling

AASHTO has tasked Mercator Advisors with a series of special research projects related to federal funding and financing issues. One such project involves developing and operating a sophisticated financial model of the federal Highway Trust Fund (HTF). This model estimates the impact on future-year Highway Account and Mass Transit Account balances resulting from various assumptions concerning revenue and spending patterns. Drawing upon our knowledge of federal budgetary practices, Mercator has designed the model to quickly assess the impact of the latest revenue forecasts of the Treasury and the Congressional Budget Office, and differing federal program funding and spending levels. Mercator also assists AASHTO in developing its own forecast of receipts and modeling HTF scenarios implied by different legislative proposals.

National Surface Transportation Infrastructure Financing Commission

Mercator principal Bryan Grote was appointed to the National Surface Transportation Infrastructure Financing Commission (Finance Commission) in 2007 by the Ranking Member of the Senate Finance Committee. Congress established the Finance Commission under SAFETEA-LU to assess the HTF funding crisis and make recommendations to address the growing transportation infrastructure investment deficit. Specifically, the Finance Commission was charged with analyzing alternative approaches to funding and financing surface transportation infrastructure, and reporting back to Congress within two years (by April 2009).

The Finance Commission consists of 15 individuals from diverse backgrounds—economics, finance, government, industry, law, and public policy. In charting its course, the Finance Commission was mindful of the important work of the National Surface Transportation Policy and Revenue Study Commission (Policy Commission). Given the Policy Commission's thorough treatment of how investments should be prioritized and delivered, the Finance Commission focused its efforts primarily on the question of how revenues should be raised, including whether there are other mechanisms or funds that could augment the current means for funding and financing highway and transit infrastructure. The Finance Commission's final report, which was unanimously approved by the bipartisan appointees and is accessible through the link below, contains the following:

Click here to download Finance Commission's Report

• Principles for surface transportation funding and finance reform;
• Investment needs and revenue forecasts;
• Evaluation criteria that the Commission developed and the results of a preliminary screening of a comprehensive range of alternative funding mechanisms;
• Results of in-depth analyses of motor fuel tax mechanisms, freight-related funding options, and facility-level tolling and broad-based pricing mechanisms;
• Assessment of alternative financing approaches, including private-sector financial participation, that can help meet the investment challenge; and
• Specific policy recommendations to help narrow the federal funding gap and transform the overall funding and finance framework for the nation's investment in surface transportation infrastructure.

Project Finance

Mercator has served as financial advisor to governmental, corporate and non-profit sponsors of infrastructure projects. Our principal focus is the transportation sector; representative engagements have included a marine cargo facility acquisition, a major new transit line, and a state turnpike authority capital program.

Policy Analysis and Research

Mercator helps clients evaluate the practical application of various finance approaches involving federal or state credit assistance and tax incentives, both existing and proposed. Our work ranges from modeling the status of the federal Highway Trust Fund under various funding scenarios to examining the suitability of public-private partnerships for new transportation initiatives. Indicative assignments include position papers and summary reports on transportation financing techniques for groups such as the National Surface Transportation Policy and Revenue Study Commission, the National Surface Transportation Infrastructure Financing Commission, the U.S. Chamber of Commerce, the Pennsylvania Turnpike Commission, the Washington State Joint Transportation Commission, the CEO Council of Greater Philadelphia, the American Association of State Highway and Transportation Officials, the American Public Transportation Association, and the Airports Council International – North America.

Professional Development in Transportation Finance

Mercator helps design and present continuing education workshops for transportation finance professionals and other senior policy makers.

In 2008, Mercator collaborated with the American Association of State Highway and Transportation Officials (AASHTO) and the Wharton School of the University of Pennsylvania in obtaining federal funding through a cooperative agreement with USDOT to establish the Center for Excellence in Project Finance (CEPF). The CEPF was authorized in section 5309 of SAFETEA-LU. The mission of the Center is to provide support to State Departments of Transportation in the development of finance plans and project oversight tools, and to develop and offer training and state-of-the-art finance methods to advance transportation projects and leverage funding. The Center draws upon the expertise of both academicians and practitioners in exploring policy issues and “cutting edge” practices in the following areas:

• Developing comprehensive plans of finance for major transportation investments.
• Determining when and under what terms partnerships with private sector entities may be appropriate.
• Understanding the role of the capital markets as a funding source.
• Employing non-traditional project finance and development techniques.

Each year since 2008, the Center has offered an intensive 3-day program on the Wharton campus at which senior federal, state and local officials explore key financial management issues facing the transportation sector with Penn faculty, Mercator staff and other instructors.