Section 129 of Title 23 allows Federal participation in a state loan to support projects with dedicated revenue stream including tolls, excise taxes, sales taxes, real property taxes, motor vehicle taxes, incremental property taxes, or other beneficiary fees.
Similar to State Infrastructure Banks, Section 129 loans allow states to leverage additional transportation resources and recycle assistance to other eligible projects. States have the flexibility to negotiate interest rates and other terms of Section 129 loans. When a loan is repaid, the state is required to use the funds for a Title 23 eligible project or credit enhancement activities, such as the purchase of insurance or a capital reserve to improve credit market access or lower interest rate costs for a Title 23 eligible project. One important distinction between SIB and Section 129 loans is that projects that receive assistance from repaid Section 129 loans are not required to meet the same number of Federal requirements as those using SIB loans.
Section 129 of Title 23 was originally amended by ISTEA to allow federal participation in a state loan to a toll project. In response to experience under TE-045, the 1995 NHS Act further expanded Federal-aid eligibility to include state loans to non-toll projects with a dedicated revenue stream.