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TIFIA was created because state and local governments that sought to finance large-scale transportation projects with tolls and other forms of user-backed revenue often had difficulty obtaining financing at reasonable rates due to the uncertainties associated with these revenue streams. Tolls and other project-based revenues are difficult to predict, particularly for new facilities. Although tolls can become a predictable revenue source over the long-term, it is difficult to estimate how many road users will pay tolls, particularly during the initial "ramp-up" years after construction of a new facility. Similarly, innovative revenue sources, such as proceeds from tax increment financing, are difficult to predict. TIFIA credit assistance is often available on more advantageous terms than in the financial market, making it possible to obtain financing for needed projects when it might not otherwise be possible.
The TIFIA credit program offers three distinct types of financial assistance designed to address the varying requirements of projects throughout their life cycles:
Secured (direct) loan - Offers flexible repayment terms and provides combined construction and permanent financing of capital costs. Maximum term of 35 years from substantial completion. Repayments can start up to five years after substantial completion to allow time for facility construction and ramp-up.
Loan guarantee - Provides full-faith-and-credit guarantees by the Federal Government and guarantees a borrower's repayments to non-Federal lender. Loan repayments to a lender must commence no later than five years after substantial completion of project.
Standby line of credit - Represent a secondary source of funding in the form of a contingent Federal loan to supplement project revenues, if needed, during the first 10 years of project operations, available up to 10 years after substantial completion of project.
The TIFIA credit facility, which must be senior or parity lien in the event of bankruptcy, liquidation or insolvency, can be subordinate as to cash flows absent such an event. The amount of Federal credit assistance may not exceed 33 percent of total eligible project costs.
Implementation of the TIFIA program is the responsibility of the Secretary of Transportation. A nine-member USDOT Credit Council provides policy direction and makes recommendations to the Secretary regarding the selection of projects for credit assistance. Credit Council members include six representatives from the Office of the Secretary of Transportation (OST): the Deputy Secretary of Transportation (Chair), the Assistant Secretary for Budget and Programs (Vice-Chair); the Under Secretary of Transportation for Policy; the General Counsel; the Assistant Secretary for Transportation Policy; and the Director of the Office of Small and Disadvantaged Business Utilization. The Administrators of the Federal Highway Administration (FHWA), the Federal Transit Administration (FTA), the Federal Railroad Administration (FRA), and the Maritime Administration (MARAD) also sit on the DOT Credit Council. Additionally, at-large members to the DOT Credit Council (DOT employees designated by the Secretary of Transportation) comprise the other three members.
Staff support to the USDOT Credit Council is provided by the TIFIA Joint Program Office (TIFIA JPO), which coordinates and manages the day-to-day responsibilities of implementing the program. Recognizing the crosscutting and multi-modal nature of the program, the TIFIA JPO regularly relies on the staff of the USDOT's operating agencies and secretarial offices to assist with TIFIA implementation.
Letter of Interest. Each potential applicant must submit a detailed Letter of Interest describing the project, detailing how the statutory selection criteria are met, and outlining the proposed financial plan and requested credit assistance.
Application. Applications may be submitted only after the TIFIA JPO confirms the project's basic eligibility and readiness.
Project Presentation. Applicants whose submission passes an initial screening are invited to make an oral presentation to the USDOT on behalf of the project.
Project Evaluation. Based upon the written application, the oral presentation, and any supplemental information submitted, TIFIA JPO staff prepare a project evaluation and recommendation for the USDOT Credit Council.
Project Selection. The USDOT Credit Council, in turn, provides a recommendation to the Secretary of Transportation, who makes the final determination regarding project selection. The USDOT will not obligate funds for a project that does not satisfy basic criteria such as obtaining environmental clearances.
Term Sheet Issuance and Funding Obligation. For each approved project, the USDOT issues a term sheet setting forth the basic terms and conditions of TIFIA credit assistance.
Credit Agreement and Disbursements. The credit agreement is the definitive agreement between the USDOT and the borrower, specifying all terms and conditions of the TIFIA credit assistance and authorizing disbursement of funds. Prior to its execution, the borrower must satisfy all program requirements-including receipt of an investment grade rating on the project's senior debt obligations and a rating on the TIFIA credit instrument. For all credit assistance, the USDOT will disburse funds only to reimburse eligible project costs.
The TIFIA program is governed by the Federal Credit Reform Act of 1990 (FCRA), which requires the USDOT 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. Through SAFETEA-LU, Congress authorized $122 million for each Federal fiscal year from 2005 through 2009. Extensions of the surface transportation reauthorization act have been enacted, continuing highway programs that were authorized through fiscal year 2009. TIFIA has received an equivalent amount of budget authority in each extension, as in prior years. After reductions for administrative expenses and application of the annual obligation limitation, TIFIA has approximately $110 million available annually to provide credit subsidy support to projects. Although dependent on the individual risk profile of each loan, collectively, this budget authority could support approximately $1.1 billion in annual lending capacity.
The maximum maturity of all TIFIA credit instruments is 35 years after a project's substantial completion.
Yes, in many cases TIFIA credit instruments are junior (i.e., subordinate) to the project's capital markets or commercial bank debt in the priority of its lien on the project's cash flow. However, in the event of bankruptcy, insolvency, or liquidation, the USDOT is required by statute to have a parity lien with respect to other creditors. The credit agreement will clearly specify the USDOT's interest in the pledged security relative to other creditors.
The figure below shows a typical repayment structure for a TIFIA credit instrument. In this case, the USDOT has granted a deferral of the first TIFIA payment until five years into the operation of the project and after substantial completion. This is midway through the initial 10-year ramp-up period. The figure shows a maximum TIFIA term, with the credit being repaid in full 35 years after the completion of construction.
The TIFIA statute, codified at 23 U.S.C. §601, defines eligible project costs as those expenses associated with the following:
Development phase activities, including planning, feasibility analysis, revenue forecasting, environmental review, permitting, preliminary engineering and design work, and other pre-construction activities;
Construction, reconstruction, rehabilitation, replacement, and acquisition of real property (including land related to the project and improvements to land), environmental mitigation, construction contingencies, and acquisition of equipment; and
Capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses, and other carrying costs during construction.
Capitalized interest on TIFIA credit assistance may not be included as an eligible project cost. Applicants may not include any of the fees described below - or any expenses associated with the application process (such as charges associated with obtaining the required preliminary rating opinion letter) - among eligible project costs for the purpose of calculating the maximum 33 percent credit amount.
Highway, transit, passenger rail, certain freight facilities, and certain port projects may receive credit assistance through the TIFIA program.
Eligible highway facilities include interstates, state highways, bridges, toll roads, international bridges or tunnels, and any other type of facility eligible for grant assistance under Title 23, the highways title of the U.S. Code (23 U.S.C.). This also includes a category specifically permitted under the TIFIA statute, i.e., a project for an international bridge or tunnel for which an international entity authorized under Federal or State law is responsible.
Eligible transit projects include the design and construction of stations, track, and other transit-related infrastructure, purchase of transit vehicles, and any other type of project that is eligible for grant assistance under the transit title, Chapter 53 of 49 U.S.C. Additionally, intercity bus vehicles and facilities are eligible to receive TIFIA assistance.
Rail projects involving the design and construction of intercity passenger rail facilities or the procurement of intercity passenger rail vehicles are eligible for TIFIA assistance.
Public freight rail facilities, private facilities providing public benefit for highway users, intermodal freight transfer facilities, projects that provide access to such facilities, and service improvements (including capital investments for intelligent transportation systems) at such facilities, are also eligible for TIFIA assistance. In addition, a logical series of such projects with the common objective of improving the flow of goods can be combined in order to reach the minimum cost threshold for eligibility.
Projects located within the boundary of a port terminal are also eligible to receive TIFIA assistance, so long as the project is limited to only such surface transportation infrastructure modifications as are necessary to facilitate direct intermodal interchange, transfer, and access into and out of the port.
In addition, surface transportation projects principally involving the installation of intelligent transportation systems are eligible for TIFIA assistance.
Public or private entities seeking to finance, design, construct, own, or operate an eligible surface transportation project may apply for TIFIA assistance. Examples of such entities include state departments of transportation; local governments; transit agencies; special authorities; special districts; railroad companies; and private firms or consortia that may include companies specializing in engineering, construction, materials, and/or the operation of transportation facilities.
All applicants must demonstrate relevant experience, strong qualifications, a sound project approach, and financial stability, as each of these items ultimately has bearing on the project's creditworthiness. Applicants also must meet various Federal standards as well as modal-specific requirements among other factors to receive TIFIA credit enhancements.
Yes, projects must have eligible costs reasonably anticipated to total at least $50 million to be considered for TIFIA credit instruments, or alternatively, eligible project costs must equal 33⅓ percent or more of the state's Federal-aid highway apportionments for the most recently completed fiscal year, whichever is less. The USDOT revisits apportionments to states annually, to determine if any states qualify under the alternative test.
For projects that principally involve the installation of an intelligent transportation system (ITS), eligible project costs must be reasonably anticipated to total at least $15 million. This $15 million threshold applies only to projects for which the ITS component is the central.
In all cases, the principal amount of the requested credit assistance must not exceed 33 percent of eligible project costs. Applicants should calculate and represent all costs, including both eligible project costs and the credit assistance request, on a cash (year-of-expenditure) basis.
Yes, there are four other threshold requirements in addition to project cost thresholds that all TIFIA projects must meet to be considered for TIFIA credit assistance.
Application Submission. Applicants for Federal credit assistance must compete at the Letter of Interest stage to secure an invitation to submit a formal application. Each applicant seeking TIFIA assistance must demonstrate their ability to meet the requirements related to satisfying project fundamentals and addressing the statutory TIFIA evaluation criteria at the Letter of Interest stage to receive an invitation to submit a formal TIFIA Application to the USDOT by a date certain. The USDOT has reinstated the application cycle originally utilized to compete projects for limited funding.
Transportation Planning Process. The TIFIA statute conditions a project's receipt of TIFIA assistance on the project's satisfaction of all applicable planning and programming requirements. That generally means inclusion in both the state's long-range transportation plan and the approved State Transportation Improvement Program (STIP).
State transportation plans extend as far as 20 years into the future and are often geared to setting general priorities rather than listing individual projects. Therefore, at the time of submitting an application, each applicant must certify that the proposed project is consistent with the transportation plan(s) of the affected state(s). For projects in metropolitan areas, the applicant must also demonstrate that the project is or can be included in the metropolitan transportation plan.
In contrast to the long-range state transportation plan, the STIP focuses on specific projects to be funded in the near term; STIPs typically look ahead from three to five years years. The TIFIA statute requires that the project satisfy planning and programming requirements of §134 ("Metropolitan Planning") and §135 ("Statewide Planning") of Title 23, at such time as a TIFIA credit agreement is executed. Therefore, the applicant must demonstrate that the proposed project is part of the appropriate STIP(s) before the USDOT will select the project, issue a term sheet, and obligate funds.
Dedicated Revenue Sources. The TIFIA statute states that the TIFIA credit instrument shall be repayable, in whole or in part, from tolls, user fees or other dedicated revenue sources that also secure the senior project obligations. The USDOT interprets "dedicated revenue sources" to include such levies as tolls, user fees, special assessments, tax increment financing, and any portion of a tax or fee that produces revenues that are pledged for the purpose of retiring debt on the project. The Secretary may accept general obligation pledges or corporate promissory pledges and will determine the acceptability of other pledges or forms of collateral as dedicated revenue sources on a case-by-case basis. Without exception, the Secretary will not accept a pledge of Federal funds, regardless of source, as security for the TIFIA credit instrument.
Public Approval of Privately Sponsored Project. The final threshold requirement requires any private entity applying for TIFIA assistance to demonstrate state support for the project through the project's inclusion in the state's planning documents (the long-range plan and the STIP), as noted above.
To comply with the National Environmental Policy Act (NEPA), each proposed TIFIA project must be evaluated to determine its impact on the environment. The USDOT will not obligate funds for a project until it has received a final agency decision, including (if necessary) a Record of Decision (ROD). The three scenarios for addressing NEPA requirements are outlined below.
Categorical Exclusion. Some projects, such as minor widening, rehabilitation, safety upgrading, or bus replacements, do not individually or cumulatively affect the environment significantly. These projects are termed Categorical Exclusions, and thus are exempt from the requirement to prepare an Environmental Assessment or an Environmental Impact Statement (EIS).
Environmental Assessment. An Environmental Assessment is usually prepared for a project that does not qualify as a Categorical Exclusion. The Environmental Assessment may reveal that the project's impacts are not significant, in which case a Finding of No Significant Impact (FONSI) is issued for the project.
Environmental Impact Statement and Record of Decision. Assuming that a project does not qualify for a Categorical Exclusion or FONSI, the applicant is required to prepare a draft EIS. For highway projects, this is typically done in cooperation with the state department of transportation. For major investments, the draft EIS must include an analysis of various alternative solutions.
A variety of agencies and the public at large have the opportunity to comment on the draft EIS. These comments are addressed during the preparation of the final EIS. This second iteration ensures that adequate consideration has been given to public comments and the anticipated effects of the project. Depending on the nature of the project, the FHWA, FRA, FTA, or MARAD issues a Record of Decision to signify Federal approval of the final EIS.
At the time of the Letter of Interest, the applicant must have circulated a draft EIS, unless the project has received either a FONSI or a Categorical Exclusion. The USDOT will not obligate funds for a project before a ROD (if required, or the equivalent final agency decision) has been issued for that project.
Yes, the TIFIA statute requires each applicant to provide with its application a preliminary rating opinion letter from at least one Nationally Recognized Statistical Rating Organization, indicating that the project's senior obligations have the potential to achieve an investment grade rating. If the TIFIA debt is intended to be the senior debt, it must receive an investment grade rating. Projects approved for TIFIA assistance must obtain an investment grade rating on their senior debt. The TIFIA debt cannot exceed the amount of the senior obligations unless the TIFIA assistance receives an investment grade rating.
According to Title 23, "the term rating agency means a credit rating agency identified by the Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization." The SEC identifies firms such as: Standard and Poor's, Moody's Investor Services, and Fitch Ratings.
Throughout the life of the TIFIA credit instrument, the borrower must obtain annually, at no cost to the Federal Government, current credit evaluations of the project, the project obligations, and the Federal credit instrument. The current credit evaluations must be performed by a rating agency. By "current credit evaluation," the USDOT means: (i) in the case of a project with a published rating, either a current rating or the borrower's certification stating that the rating and outlook are unchanged from the previous year and (ii) in the case of a project without a published rating, a current rating of the project obligations and the Federal credit instrument.
Yes, the USDOT currently requires four different fees from TIFIA participants. These are not considered as eligible project costs.
A non-refundable application fee, currently $50,000. For successful applicants, this fee will be credited toward final payment of a credit processing fee (also referred to as a transaction fee), to be assessed at financial close.
A transaction (credit processing) fee, typically between $300,000 and $400,000, for projects selected to receive assistance. The credit processing fee may be higher, depending on the complexity of the project's financing structure and the extent of related loan documents, such as the intercreditor agreement, compliance agreements, equity funding agreements, etc. This fee is equal to the actual costs incurred by the USDOT in negotiating the credit agreement through execution of the credit agreement(s) and satisfaction of all funding requirements of those agreements. This fee reimburses the government for its out-of-pocket costs for its outside legal counsel and financial advisors needed to negotiate and close the credit agreement. The borrower is responsible for payment of this fee regardless of whether the credit agreement is executed.
An annual servicing fee, indexed to inflation and currently $11,500, for each credit instrument approved, due by November 15 each year.
Project monitoring fees are charged to borrowers in cases where the USDOT incurs costs in connection with monitoring the performance of a project, the enforcement of credit agreement provisions, amendments to the credit agreement and related documents, and other performance-related activities. The USDOT includes a provision requiring the borrower to reimburse the USDOT for such costs in each TIFIA credit agreement.
The USDOT announces periodic changes to the types and amounts of fees for the TIFIA credit program in the Federal Register. Check to ensure that you are paying the correct fee in the event that this FAQ is not up to date.
Because the demand for credit assistance now exceeds budgetary resources, it is no longer feasible for USDOT to maintain, as it has since 2002, an open process whereby the TIFIA JPO accepts applications on a "first come, first serve" basis as defined by the optimal schedule of the applicant. Instead, the USDOT is returning to periodic fixed-date solicitations that will establish a competitive group of projects to be evaluated against the TIFIA program statute, regulations, and objectives.
Applicants seeking TIFIA credit assistance must compete at the Letter of Interest stage to secure an invitation to submit a formal application. Each applicant seeking TIFIA assistance must submit a Letter of Interest that demonstrates their ability to meet the requirements related to satisfying the project fundamentals and addressing the TIFIA evaluation criteria by the date specified in the most recent Federal Register notice and highlighted in the revised forms posted on the TIFIA website. Interested applicants that have previously submitted Letters of Interest must restate them using the most current version of the form. For the purpose of completing its evaluation, the TIFIA JPO staff may contact an applicant regarding specific information in the Letter of Interest.
Depending on the modal characteristics of the project, the USDOT may establish an evaluation team representing several offices and agencies (e.g., FHWA, FRA, FTA, MARAD, and OST) to conduct the review. The evaluation team screens the application for completeness of information, satisfaction of the threshold requirements.
A public agency that seeks access to TIFIA on behalf of multiple competitors for a project concession must submit the project's Letter of Interest. Although the public agency would not become the TIFIA borrower, nor even have yet identified the TIFIA applicant, it must provide information sufficient for the USDOT to evaluate the project against the TIFIA program objectives. The USDOT will not consider Letters of Interest from entities that have not obtained rights to develop the project.
After concluding its review of the Letters of Interest, the USDOT will invite complete applications (including the preliminary rating opinion letter and detailed plan of finance) for the selected projects. The application due date will be established after consultation between the TIFIA JPO and the applicant.
The USDOT typically employs the services of an expert financial advisor to assist with financial and credit risk assessments of the project.
The DOT may give priority to projects that enhance the TIFIA portfolio's geographic diversity and have a significant impact on desirable long-term outcomes for the Nation, a metropolitan area, or a region. In addition, DOT may consider the project's readiness and timeline to proceed to financial close on the TIFIA instrument. With respect to selection criteria that have multiple components, a project need not be well aligned with each of the components in order to be successful in that criterion overall. However, projects that are strongly aligned with multiple components will be the most successful in those criteria. Furthermore, a project that has a negative effect on safety or environmental sustainability will need to demonstrate significant merits in other components in order to be selected for funding. The TIFIA credit program assesses the strengths of applications in meeting the following eight selection criteria, per the relative weightings shown below:
Significance (20 percent). The extent to which the project is nationally or regionally significant, in terms of generating economic benefits, supporting international commerce, or otherwise enhancing the national transportation system. This includes consideration of livability: providing transportation options that are linked with housing and commercial development to improve the economic opportunities and quality of life for people in communities across the U.S.; economic competitiveness: contributing to the economic competitiveness of the U.S. by improving the long term efficiency and reliability in the movement of people and goods; and safety: improving the safety of U.S. transportation facilities and systems and the communities and populations they impact.
Private Participation (20 percent). The extent to which assistance would foster innovative public-private partnerships and attract private debt or equity investment.
Environment (20 percent). The extent to which the project helps to maintain or protect the environment. This includes sustainability: improving energy efficiency, reducing dependence on oil, reducing greenhouse gas emissions, and reducing other transportation-related impacts on ecosystems; and state of good repair: improving the condition of existing transportation facilities and systems, with particular emphasis on projects that minimize lifecycle costs and use environmentally sustainable practices and materials.
Project Acceleration (12.5 percent). The likelihood that assistance would enable the project to proceed at an earlier date than the project would otherwise be possible. This includes demonstrating that traditional sources of financing are not available at feasible rates, or that the costs of traditional financing would constrain their ability to deliver the project, or that delivery of this project through traditional financing approaches would constrain their ability to deliver additional components of their capital programs.
Creditworthiness (12.5 percent). The creditworthiness of the project. This includes a demonstrated capacity to repay the federal credit assistance as well as a determination that the project has appropriate security features, such as proper coverage ratios, rate covenants and reserves as applicable.
Use of Technology (5 percent). The extent to which the project uses new technologies, including intelligent transportation systems that enhance the efficiency of the project.
Consumption of Budget Authority (5 percent). The amount of budget authority consumed in funding the requested Federal credit instrument.
Reduced Federal Grant Assistance (5 percent). The extent to which assistance would reduce the contribution of Federal grant assistance to the project.
The term sheet (PDF) is a contractual agreement between the USDOT and the borrower that sets forth certain business terms and conditions of TIFIA credit assistance for the project. The USDOT's issuance of this document triggers the USDOT's obligation (i.e., legal commitment) of budget authority, but no disbursements are made.
Term sheets serve primarily as obligating instruments for TIFIA credit assistance. Therefore, they include only basic terms and conditions related to the USDOT's provision of credit assistance. Typically, the following information is included in every TIFIA term sheet:
Parties to the agreement (e.g., lender, borrower, and guaranteed lender, as applicable)
Type(s) of credit instrument (i.e., secured loan, loan guarantee, or line of credit)
Description of the project
Estimated total project costs and total TIFIA-eligible project costs
Maximum amount of TIFIA credit assistance
Method for establishing the interest rate
Estimated final maturity date
Source of payment and security, including lien structure and TIFIA credit instrument priority
Requirement to reimburse the USDOT for credit processing fees
Conditions, if applicable, for execution of a credit agreement
The TIFIA credit agreement (DOC) is the definitive agreement between the USDOT and the borrower (and the guaranteed lender, if applicable). It specifies all terms and conditions of the credit assistance and authorizes the disbursement of TIFIA credit assistance to the project.
The contents of TIFIA credit agreements include both standard provisions and transaction-specific provisions. The borrower and the USDOT will execute the credit agreement for a secured loan or line of credit; the guaranteed lender, the USDOT, and the borrower will execute the credit agreement for a loan guarantee. Additionally, the guaranteed lender will execute a separate loan agreement with the borrower, and the borrower will execute a borrower's certificate, compliance, and loan agreement with the USDOT. Depending on the nature of the transaction, additional documents, such as an intercreditor agreement, may also be necessary.
The USDOT may also require the borrower to provide copies of the bond documents and other agreements material to the flow of funds or to USDOT's security for its review. The USDOT also reviews any disclosure with respect to the TIFIA transaction, which the borrower includes in the offering documents.
Generally, borrowers can expect credit agreements to include the items required for the TIFIA term sheet (PDF), as well as the following:
Security features and additional terms
Detailed description of pledged security (e.g., rate covenants)
Flow of funds
Repayment terms, including amortization schedule and final maturity
Representations and warranties
Borrower covenants
Annual disbursement schedule and conditions for draws
Financial plan requirements
Monitoring and reporting requirements
The credit agreement also includes a form of requisition for disbursements and a note form.
Additional information on the TIFIA credit program is available from the following sources:
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