If a state uses one category of funds to capitalize a SIB, does it have to assist only projects that qualify under that funding category? For example, if a state capitalizes its SIB with a portion of its National Highway System (NHS) apportionments, can the funds only be used to assist NHS projects?
Yes, a state may need specific state legislated authority to establish a SIB and issue SIB loans.
Applications should be submitted to the SIB within the sponsor's state and follow the established application procedures and deadlines. If no SIB has been established, contact the state DOT to discuss whether the establishment of a SIB is possible.
Any project that is eligible for Federal-aid funding under Title 23 (highways) is eligible to receive SIB financial assistance from the highway account. Essentially, if a project qualifies for Federal-aid under this program, it also qualifies for a loan or other credit assistance under the SIB program. SIB credit can therefore be provided to non-highway projects, such as freight projects and emissions reduction projects.
The Secretary is also authorized to designate projects for assistance, if the Secretary deems them to be appropriate. If a state is interested in supporting such a project, Prabhat Diksit at the Office of Innovative Program Delivery should be contacted to request such a designation.
SIBs authorized under TEA-21 of Section 610, Title 23 are required to subject all lending to Federal rules. Some of the applicable state and Federal laws, rules, and regulations include:
No, the use of funds from a specific category to capitalize a SIB does not limit a SIB's ability to assist all types of eligible projects. Once the funds have been drawn down into the SIB account, they "lose their identity." The SIB is the project for which those funds are obligated, and SIB funds may be used to assist any eligible project under Title 23.
Federal laws and regulations permit SIBs to assist any entity that constructs an eligible project. State SIB policies may vary. A state may choose, however, to provide credit assistance only to local governments or only to certain types of borrowers.
Federal legislation permits states to establish multistate SIBs. Many projects have significant effects across state borders. For example, installing Auxiliary Power Units (APU) on trucks that travel a particular corridor would have regional benefits. States can jointly capitalize a multistate SIB for a single project or purpose, or for long-term joint coordination.
A non-Federal share of 25% of the Federal capitalization amount (or the sliding scale ratio, if the state is eligible for such) must be provided at the time that the state capitalizes a SIB account. A state may choose to extend a non-Federal share requirement to borrowers as a condition of assistance, or may require a borrower to provide the non-Federal share for the SIB prior to its using Federal-aid funds to capitalize a SIB account.
SIB loans can be repaid with Federal funds or dedicated revenue sources such as tax revenues, special assessments, tolls, and other fees associated with the use of the project, such as fees for parking. However, the use of Federal monies to make loan payments subjects the monies to further Federal requirements.
Yes, Federal-aid funds, including Indian Reservation Road (IRR) funds, may be used to pay SIB loan principal and interest costs, as authorized under Section 122 of Title 23.
A leveraged SIB would issue bonds against its initial capitalization, significantly increasing the amount of funds available for loans. Rather than loaning Federal funds and state matching funds, these funds together with anticipated loan repayments can be pledged as security for the bond issue. The proceeds from this debt issuance can then be provided to project sponsors as with loans or credit enhancements.
Yes, a SIB could issue GARVEE bonds or transit GANs in the private capital markets on behalf of project sponsors.
A GARVEE is a bond or loan repaid with Federal-aid funds. A SIB can effectively serve as a GARVEE lender, making a loan that is repaid with Federal-aid funds. SIBs can provide credit assistance to a GARVEE transaction by providing lines of credit, subordinate lien loans, or loan guarantees. These forms of credit assistance can lower the interest rate on GARVEE financing.
The state will notify USDOT if it wishes to discontinue its SIB. Any Federal-aid highway funds which have not been used to assist a project must be returned to FHWA and credited to the appropriation from which the funds were transferred. Funds that have been used to assist projects and repaid to the SIB shall be used for Title 23 purposes and may be in the form of a grant. See the January 2014 SIB Guidance section on closing out a SIB program.
Yes. States can and have created state-only accounts with state monies in a SIB. Such a SIB account would not be subject to Federal rules.