Transportation Infrastructure Finance and Innovation Act (TIFIA) Program

Program Purpose:

The Transportation Infrastructure Finance and Innovation Act (TIFIA) of 1998 established a Federal credit program for eligible transportation projects of national or regional significance under which the U.S. Department of Transportation (US DOT) may provide three forms of credit assistance – secured (direct) loans, loan guarantees, and standby lines of credit.

The program's fundamental goal is to leverage Federal funds by attracting substantial private and other non-Federal co-investment in critical improvements to the nation's surface transportation system.

The US DOT awards credit assistance to eligible applicants, which include state departments of transportation, transit operators, special authorities, local governments, and private entities.

Program Products

The TIFIA credit program consists of three forms of financial assistance designed to address requirements throughout a project’s life cycle.

Secured Loans:

A debt obligation of the US DOT as the lender, and a non-Federal project sponsor as the borrower;

• May not exceed 49 percent of the reasonably anticipated eligible project costs;
• To date, due to the 33 percent cap provided in surface transportation authorizations prior to MAP-21, TIFIA secured loans have only covered up to 33 percent of reasonably anticipated eligible project costs in order to ensure other investors are sharing in project costs and associated risks. While MAP-21 and FAST ACT expanded the percent of costs TIFIA can fund to 49 percent, applicants requesting assistance in excess of this amount must provide a strong rationale for requiring additional assistance
• Interest rate on a secured loan will be equal to or greater than the yield on U.S. Treasury securities of comparable maturity on the date of execution of the credit agreement;
• The final maturity date of a secured loan must be no later than 35 years after the date of substantial completion of the project or the useful life of the project, whichever is less;
• Scheduled repayments must commence no later than five years after the date of substantial completion of the project.

Loan Guarantees:

A pledge by the US DOT to pay a third-party lender all or part of the debt service on a borrower’s debt obligation;

• May not exceed 49 percent of the reasonably anticipated eligible project costs.
• To date, TIFIA credit assistance has only covered up to 33 percent of reasonably anticipated eligible project costs and applicants requesting assistance in excess of this amount must provide a rationale for such additional assistance.
• Interest rate on a guaranteed loan will be negotiated between the guaranteed lender and the borrower, subject to consent from the DOT.
• The final maturity date of the guaranteed loan must be no later than 35 years after the date of substantial completion of the project or the useful life of the project, whichever is less;
• Scheduled repayments must commence no later than five years after the date of substantial completion of the project.

Lines of Credit

A TIFIA line of credit provides a contingent loan that may be drawn upon after substantial completion of the project to supplement project revenues during the first 10 years of the project’s operations.

• May not exceed 33 percent of the reasonably anticipated eligible project costs;
• The total combined TIFIA credit assistance for a project receiving a TIFIA line of credit plus a secured loan or loan guarantee may not exceed 49 percent of eligible project costs
• Interest rate on a direct loan resulting from a draw on a line of credit will be equal to or greater than the yield on a 30-year U.S. Treasury security on the date of the execution of the line of credit agreement;
• The final maturity date of a direct loan resulting from a draw on a line of credit must be no later than 35 years after the date of substantial completion of the project or the useful life of the project, whichever is less;
• Scheduled repayments of a draw on a line of credit must commence no later than five years after the end of the 10-year period of availability and be fully repaid no later than 25 years after the end of the 10-year period of availability.

Eligible TIFIA Sponsors and Projects

TIFIA Requirements

• Projects must be reasonably anticipated to total at least $50 million, or, alternatively, equal 33 1/3 percent or more of the state's Federal-aid highway apportionments for the most recently completed fiscal year, whichever is less. For intelligent transportation system (ITS), eligible project costs must be reasonably anticipated to total at least $15 million.
• FAST ACT sets a lower eligible cost threshold for some specified project types:
  • for a transit-oriented development project (as defined), $10 million;
  • for a rural infrastructure project (as defined), or for capitalizing a rural project fund (as defined) $10 million (but not exceeding $100 million); and
  • for a local infrastructure project (as defined), $ 10 million.
• Project must be in STIP.
• For all projects, the total Federal assistance, including TIFIA credit assistance, provided cannot exceed 49% of the total project cost.
• All projects receiving TIFIA credit assistance must comply with generally applicable Federal laws and regulations, including title VI of the Civil Rights Act of 1964, the National Environmental Policy Act of 1969, the Disadvantaged Business Enterprises (DBE) Program (49 C.F.R. Part 26), and the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970.
• Must meet applicable Federal laws (Title VI of the Civil Rights Act of 1964, National Environment Policy Act (NEPA) of 1969, Uniform Relocation Assistance & Real Property Acquisition Policies Act of 1970, Title 23 of the U.S.C. – Highway Projects, and Title 49 of the U.S.C. – Transit Projects).
• State/Local approvals (transportation plans and permits).

Funding

Funded by contract authority, to remain available until expended, the funds are subject to the overall Federal-aid obligation limitation. Funds cover the subsidy cost (similar to a commercial bank's loan reserve requirement) of TIFIA credit assistance. The annual amount of available credit assistance is a function of available contract authority.

FAST ACT Annual Authorizations for TIFIA Credit Assistance ($ in Millions)

The TIFIA program is governed by the Federal Credit Reform Act of 1990, which requires the US DOT to establish a capital reserve, or “subsidy amount,” to cover expected credit losses before it can provide TIFIA credit assistance. Congress places limits on the annual subsidy amount available.

Submission of Letter of Interest (LOI) and Invitation to Submit an Application: TIFIA Application Process

Each potential applicant must submit a Letter of Interest. Following the initial eligibility review of the LOI, the U.S. DOT will conduct an in-depth creditworthiness review of the project sponsor and the proposed revenue stream. In connection with that review, the U.S. DOT will ask the project sponsor to provide a preliminary rating opinion letter and $100,000 to enable the U.S. DOT to hire outside financial and, as and when necessary, legal advisors to complete its review of the project. In addition, the U.S. DOT will request that the potential applicant give an oral presentation to the U.S. DOT followed by a question and answer session.

Upon receipt of the LOI, the U.S. DOT will commence its initial review with respect to preliminary eligibility and timing requirements, including:

• Project Cost
• Planning Requirements
• Credit Assistance Request
• Project Readiness

After concluding its initial review of the LOI and upon making a determination that the project is reasonably likely to satisfy all of the eligibility requirements of the TIFIA Program, the U.S. DOT will conduct an in-depth creditworthiness review of the project sponsor and the proposed revenue stream. This review focuses on the following eligibility criteria set forth in MAP-21 and FAST ACT:

• Repayment Source
• Rating Opinion
• Creditworthiness
• Foster Partnerships that Attract Public and Private Investment to the Project
• Ability to Proceed at an Earlier Date or Reduced Lifecycle Costs (Including Debt Service Costs)
• Reduces Contribution of Federal Grant Assistance for the Project

After concluding its review of each LOI and related information submitted by the potential applicants, along with the independent financial analysis report from the U.S. DOT’s independent financial advisor, and after the project sponsor’s oral presentation, the U.S. DOT will invite sponsors of eligible projects to submit complete applications. In addition to the foregoing requirements to be reviewed in connection with Letters of Interest, project sponsors must have completed, and must be in compliance with, the following prior to submitting an application:

• Environmental Review
• TIFIA Compliance Certifications
• Other Compliance Issues

Federal Highway Administration (FHWA) Links:

TIFIA Program Guide

TIFIA Fact Sheet

TIFIA SAFETEA-LU Fact Sheet

TIFIA MAP-21 Fact Sheet

TIFIA FAST ACT Fact Sheet

State Legislative Authority for TIFIA:  AB 1171, Chapter 907, Statutes of 2001, added Streets and Highways Code sections 31070(d) and 31072 to authorize Caltrans to obtain a TIFIA loan for the SF Oakland bay bridge seismic retrofit program.  Ab144, Chapter 71, Statutes of 2005, voided this TIFIA authorization.  Currently there is no state legislative authority for Caltrans to utilize the TIFIA program.