Transportation Infrastructure Finance and Innovation Act (TIFIA)
The Transportation Infrastructure Finance and Innovation Act (TIFIA) program was authorized in 1998. The program was created because state and local governments that sought to finance large-scale transportation projects with tolls and other forms of user-backed revenue often had difficulty obtaining financing at reasonable rates due to the uncertainties associated with these revenue streams. <ref> Federal Highway Administration. "TIFIA Defined." </ref> TIFIA provides federal credit assistance with fixed rates that are often lower than what most borrowers can obtain in the private market. By providing greater access to capital, TIFIA can help advance qualified, large-scale projects that might otherwise be delayed because of size, complexity, or uncertainty over the timing of revenues.
Changes Under MAP-21
MAP-21 greatly expanded TIFIA's lending capacity, when Congress authorized $1.75 billion in budget authority for the program. Each dollar of federal funds can provide up to $10 in TIFIA credit assistance; under the new MAP-21 funding level, the USDOT expects to be able to offer about $17 billion in credit assistance. That in turn could leverage $20-$30 billion in transportation infrastructure investment. <ref> Department of Transportation. “MAP-21 and Transportation Financing Under the TIFIA Credit Program.”2012.</ref>
Most eligible project types and project costs retain their previous TIFIA eligibility. There are new provisions for "rural infrastructure projects", which include a reduced interest rate as well as lowering the minimum project cost from $50 million to $25 million. The maximum loan amount has been increased. Other changes include a rolling admissions process and removal of discretionary selection criteria.
One change to the TIFIA program allows the loans to be subordinated to pre-existing debt in some cases. This has been criticized by some, since it exposes the federal government to more risk, but it could help transit agencies by making it easier to attract private capital for the matching dollars <ref> DC Streetsblog. "Under New Bill, America’s Transpo Loan Program Ignores National Goals." 2012 </ref>
Credit Assistance and Benefits
The TIFIA program offers three types of financial assistance.
- Direct Loan - Offers flexible repayment terms and provides combined construction and permanent financing of capital costs. Maximum term of 35 years from substantial completion. Repayments can start up to five years after substantial completion to allow time for facility construction and ramp-up. Up to 49% of total cost.
- Loan Guarantee - Provides full-faith-and-credit guarantees by the Federal Government and guarantees a borrower's repayments to non-Federal lender. Loan repayments to lender must commence no later than five years after substantial completion of project.
- Standby Line of Credit - Represents a secondary source of funding in the form of a contingent Federal loan to supplement project revenues, if needed, during the first 10 years of project operations, available up to 10 years after substantial completion of project. Up to 33% of total cost.
TIFIA loans are negotiated between the USDOT and the borrower and are based on the project's economics and characteristics. The amount of credit assistance cannot exceed 33% of total anticipated eligible project costs.
Program Eligibility and Requirements
Any project eligible for federal assistance through existing surface transportation programs is also eligible for the TIFIA program. Examples of eligible projects include:
- International bridges and tunnels
- Freight rail facilities
- Intelligent transportation systems (ITS)
- Intermodal projects, including those that facilitate access into and out of a port
- Projects eligible for assistance under title 23 or chapter 53 of title 49
Cost requirements include a minimum capital cost of $50 million (or 33.3% of a state's annual apportionment of federal-aid funds), $25 million for "rural infrastructure projects", or $15 million for ITS. Also, the project must be supported by user charges or other non-federal funding sources.
Examples of TIFIA Funded Projects
- The Staten Island Ferries and Ferry Terminals project consisted of construction and acquisition of three ferry boats and redevelopment of two ferry terminals. The project received $159.2 million in direct loans, which was paid off in 2006, 27 years ahead of schedule. This project introduced to transportation finance the structure of scheduled and mandatory debt service. It was the first time such a structure was used for a transportation project and has since become a standard provision of many TIFIA loans that have uncertain revenues pledged, such as toll road revenue. <ref> Federal Highway Administration. "Project Profiles. Staten Island Ferries and Terminals" </ref>
- In 2010, the Transbay Joint Powers Authority (TJPA) in the Bay Area secured $171 million from the TIFIA program to build a new Transbay Transit Center, a multimodal transportation hub that houses 11 transportation systems, including BART, Caltrain, and Greyhound. <ref> Transbay Joint Powers Authority. "Transbay Transit Center" </ref> Sources for repayment of the TIFIA loan include tax increment from state-owned parcels (98% of revenues) and passenger facility charges (PFCs) from AC Transit (2% of revenues). This is the first TIFIA loan secured by value capture revenues from real estate taxes on surrounding transit oriented development. <ref> Federal Highway Administration. "Project Profiles. Transbay Transit Center" </ref>
- Since the passage of MAP-21, the Los Angeles Metropolitan Transportation Authority (LACMTA) has made plans to use the TIFIA program to expedite twelve important transportation projects. By using TIFIA funds in conjunction with Measure R funds, LACTMA expects to complete the twelve Measure R projects within 10 years, as opposed to 30. <ref> Northridge-Chatsworth Patch. "Congress OKs Transportation Bill Expected to Speed Up L.A. Projects" </ref> Currently, Metro is seeking for TIFIA funds to pay for the first phase of the Westside Subway Extension to La Cienega Boulevard and also the Regional Connector. <ref> The Source. “Metro sends inquiry to Washington about use of TIFIA loans for two projects.”2012.</ref>
DOT's TIFIA Program Page. Contains additional information in transit project eligibility, financing structure, and sample transit projects.
USDOT Federal Highway Administration Fact Sheet. The FHWA provides a fact sheet containing the basics of the TIFIA program.
Direct Loan Current Interest Rate Website provides the up-to-date interest rate for a 35-year loan.
TIFIA Guidance and Application Forms Innovative Program Delivery website provides the TIFIA program guide, letter of interest form, and application forms.