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This report makes a big deal about the Trump 2.0 delays, but the arguments that these caused, or could cause if repeated, actual project construction inception delays or higher costs for ratepayers are pretty…slight. The report is more a declarative ‘narrative’ (the pitch is summarized in the title) than the kind of detailed and fact-based analysis you’d expect from Moody’s.
It struck me later that a WIFIA report with an emphasis on Trump 2.0 delays was perhaps requested or suggested by the credit agency’s water authority clients as part of the ‘pressure campaign’ described in The Zeldin Letters post a few days ago. If that’s the case, I think the analysts did the best they could with scant evidence of any past or future material impact of the delays.
Still, a few interesting points:
- The report acknowledges, though it doesn’t highlight, the facts that WIFIA volume has consistently declined since 2022 and that new annual appropriations for the Program don’t get fully utilized. The chart showing WIFIA’s rise and decline 2018-2024 speaks for itself.
- For once — finally! — there is a direct comparison to tax-exempt bonds as the baseline against which WIFIA’s constantly touted ‘low cost’ should be measured. As usual, undiscounted numbers and some high-side approximations are used in the quick comparison. Even so, the numbers, described narrative-style as ‘significant cost savings’, aren’t exactly compelling. At all. Which kind of undercuts the whole ‘costly Trump 2.0 delay’ narrative, no? I’m sure the analysts knew this — but business is business and the client is always right. We’ve all been there.
- Much better was the discussion about how a WIFIA loan’s non-rate features (slower amortization, deferral, sculpting, etc.) help issuers to manage more affordable rate increases — including details about a great real-world example in the recently closed City of Joliet loan. I got the distinct impression that the analysts would have preferred to spend more time on this area if the ‘costly Trump 2.0 delays’ narrative wasn’t the report’s apparent priority.
- Overall, what comes out is this: The ‘costly delay narrative’ is unpersuasive and easily forgotten, but the discussion of WIFIA’s non-rate features hints at much more substantive things about how well-designed federal finance can facilitate infrastructure affordability. That’s something that Moody’s with its huge base of experience and data in the public sector could expand on very constructively, including considering WIFIA amendments for the 55Y loan term and small project combinations. Wouldn’t the analysts have more fun with that?