On July 27 U.S. Transportation Secretary Ray LaHood announced the availability of over $16 billion in TIFIA credit assistance for critical infrastructure projects across the country as a result of the recently enacted MAP-21. The notice of funding availability can be found here. The TIFIA Joint Program Office is conducting a web conference tomorrow, August 1, on its plans for TIFIA implementation under the new law.
MAP-21’s TIFIA amendments provide $1.75 billion in budget authority over two years for the TIFIA credit assistance program and will be the largest transportation infrastructure finance fund in the USDOT’s history. Each dollar of federal funds (except funds to pay program administrative costs) can provide approximately $10 in TIFIA credit assistance (or approximately $16.1 billion) and can leverage up to $20-$30 billion in transportation infrastructure investment. As a whole, the federal loan program could support up to $50 billion in Federal, state, local and private sector investment.
To date, the TIFIA program has used $9.2 billion in funding to leverage more than $36.4 billion in capital to help build 27 major transportation projects around the country. The new funding will build on this impressive record and stimulate the development of necessary highways, bridges, tunnels, passenger rail projects and other transportation projects and provide a significant boost to the American economy.
A variety of transportation projects are eligible for the funding and many qualified, large-scale projects that where previously postponed may be able to progress due to the flexibility provided by the TIFIA program.
Although the TIFIA amendments do not take effect until October 1, the USDOT is acting with urgency to encourage early submissions of letters of interest, which start the process for obtaining TIFIA financing. The USDOT has adapted its form of letter of interest to the amended eligibility criteria. However, the notice also requires a preliminary rating opinion on senior and TIFIA debt and a $100,000 fee in order to conduct a robust initial screening of projects before inviting the project sponsor to submit a formal application. The USDOT intends to retain financial and legal advisors at this early stage to help determine whether the eligibility criteria, especially creditworthiness, are satisfied.
MAP-21 ushers in a paradigm shift in the TIFIA program, from a merit-based project selection and evaluation system to a system of objective eligibility criteria under a rolling application process. Nevertheless, the USDOT seemingly is unable to complete this shift and still clings to the role of arbiter of what projects deserve TIFIA support and in what amount. The notice of funding availability requires that the letter of interest include quantitative or qualitative information on the project’s public benefit so that the USDOT can evaluate each Letter of Interest to determine whether it would be in the public interest to provide credit assistance to the proposed project. The letter of interest also must contain the rationale for the amount of TIFIA credit assistance requested to help DOT ensure that it allocates TIFIA’s budget authority effectively. Apparently, the USDOT intends to place the burden on the project sponsor to justify assistance greater than 33% of eligible capital costs, even though Congress expressly authorized loans up to 49%. These provisions in the notice may generate controversy.
Secretary LaHood also announced the creation of the Project Finance Center (PFC), which will help state and local government project sponsors analyze financial options for highway, transit, rail, intermodal and other surface transportation projects facing funding challenges. Through the PFC, the USDOT will have an opportunity to provide technical assistance to state and local sponsors of surface transportation projects seeking financial support and make the development process easier for all parties involved.
The notice of funding availability invites public comments by September 1. The comments may broadly address any aspects of USDOT’s implementation of the TIFIA amendments in MAP-21.
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