Financing with the Maritime Administration’s Capital Construction Fund

Background

In Europe and the United States the past half dozen years have born increasing witness to highway traffic congestion concerns and to the use of water transportation as a possible supplement and alternative. The U.S. Maritime Administrator speaks of the need to access “America’s Marine Highways.” However, the means for financing the vessels necessary to access this alternative have remained uncertain. Congress is now moving to make the existing Maritime Administration (“MARAD”) financing guarantee and tax deferral programs available for these America’s Marine Highways vessel financings.

Neither MARAD program has enjoyed significant use during the current decade. While the Title XI financing guarantee program is well known, the Administration has opposed its use and the enabling Congressional authorizations as unnecessary in the existing credit environment. While the less well known Title VI capital construction fund tax deferral program has been available for the domestic Great Lakes and non-contiguous trades since 1970, the Bush Administration has opposed all efforts to extend this program’s use to vessels in the domestic coastwise ocean trades as an unjustified tax expenditure.

Congress has now proposed authorization for $2 billion of new Title XI financing guarantee authority for Short Sea Transportation project use, and the extension of the Title VI capital construction fund program to container and rollon/ roll-off (“ro/ro”) coastwise ocean services and inland waterways nationwide. Perhaps it is time to look briefly at both of these programs, and then to examine in some detail the potential financing opportunities that the capital construction fund program may offer?

This is only an excerpt of Financing with the Maritime Administration’s Capital Construction Fund

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.