State Infrastructure Banks are revolving infrastructure investment funds for surface transportation that are established and administered by states. A SIB, much like a private bank, can offer a range of loans and credit assistance enhancement products to public and private sponsors of Title 23 highway construction projects or Title 49 transit capital projects. The requirements of Titles 23 and 49 apply to SIB repayments from Federal and non-Federal sources. All repayments are considered to be Federal funds.
SIBs give states the capacity to increase make more efficient use of its transportation funds and significantly leverage Federal resources by attracting non-Federal public and private investment. Alternatively, SIB capital can be used as collateral to borrow in the bond market or to establish a guaranteed reserve fund. Loan demand, timing of needs, and debt financing considerations are factors to be weighed by states in evaluating a leveraged SIB approach.
SIBs are capitalized with Federal-aid surface transportation funds and matching State funds. (Several states have established SIBs or separate SIB accounts capitalized solely with state funds.) As loans or other credit assistance forms are repaid to the SIB, its initial capital is replenished and can be used to support a new cycle of projects.
The current SIB program was established by SAFETEA-LU, as a permanent title 23 program, under which all states and territories are authorized to enter into cooperative agreements with the Secretary of Transportation to establish infrastructure revolving funds eligible to be capitalized with Federal transportation funds authorized for fiscal years 2005-2009. MAP-21 did not extend the date, 2005-2009, authorized by SAFETEA-LU (probably through an oversight).
SIBs were initially authorized under the 1995 NHS Act. With this initial pilot program, 10 states were selected for participation to use a portion of their Federal-aid funds as "seed" money, matched with non-Federal funds, to establish a SIB. In 1997, that year's USDOT appropriations act provided $150 million in Federal general revenue funds for further SIB capitalization, and the SIB pilot program was expanded to 39 states (including Puerto Rico), 31 of which were actually established.
In 1998, TEA-21 established a new SIB pilot program, allowing new funding. Florida and Missouri created SIBs under the TEA 21 program. States that established SIBs under the NHS Act and TEA-21 have been allowed to continue those SIBS, under SAFETEA-LU and MAP-21.
States participating in the current SIB program may capitalize the account(s) in their SIBs with Federal surface transportation funds for each of fiscal years 2005-2009 as follows:
Highway account - up to 10 percent of the funds apportioned to the state for the National Highway System Program, the Surface Transportation Program, Interstate Maintenance, and the Highway Bridge Replacement and Rehabilitation Program
Transit account - up to 10 percent of funds made available for capital projects under Urbanized Area Formula Grants, Capital Investment Grants, and Formula Grants for Other Than Urbanized Areas
Rail account - funds made available for capital projects under subtitle V (Rail Programs) of Title 49
A state must match the Federal funds used to capitalize the SIB on an 80-20 Federal/non-Federal basis, except for the highway account where the sliding scale provisions apply. States also have the opportunity to contribute additional state or local funds beyond the required nonfederal match.
MAP-21 has not allowed new 2013-2014 funding to be used to capitalize SIBs.
SIBs may provide the following forms of assistance:
Loans at subsidized rates and/or with flexible repayment provisions
Short-term construction or long-term debt financing
Capital reserves and other security for bond or debt instrument financing
Letters of credit (direct pay or stand-by)
Lines of credit
Bond insurance and loan guarantees
Other Forms of Assistance:
Other forms of proposed of debt financing and methods of leveraging funds as approved by the Secretary may also be sought. Such requests should be submitted in writing to FHWA.