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Published: June 9, 1998
SEC. 1501. SHORT TITLE. <note: 23 USC 101 note.>
This chapter may be cited as the ``Transportation Infrastructure
Finance and Innovation Act of 1998''.
SEC. 1502. FINDINGS. <note: 23 USC 181 note.>
Congress finds that--
(1) a well-developed system of transportation infrastructure
is critical to the economic well-being, health, and welfare of
the people of the United States;
(2) traditional public funding techniques such as grant
programs are unable to keep pace with the infrastructure
investment needs of the United States because of budgetary
constraints at the Federal, State, and local levels of
government;
(3) major transportation infrastructure facilities that
address critical national needs, such as intermodal facilities,
border crossings, and multistate trade corridors, are of a scale
that exceeds the capacity of Federal and State assistance
programs in effect on the date of enactment of this Act;
(4) new investment capital can be attracted to
infrastructure projects that are capable of generating their own
revenue streams through user charges or other dedicated funding
sources; and
(5) a Federal credit program for projects of national
significance can complement existing funding resources by
filling market gaps, thereby leveraging substantial private co-
investment.
SEC. 1503. ESTABLISHMENT OF PROGRAM.
(a) In General.--Chapter 1 of title 23, United States Code, is
amended by adding at the end the following:
``SUBCHAPTER II--INFRASTRUCTURE FINANCE
``Sec. 181. Definitions
``In this subchapter, the following definitions apply:
``(1) Eligible project costs.--The term `eligible project
costs' means amounts substantially all of which are paid by, or
for the account of, an obligor in connection with a project,
including the cost of--
``(A) development phase activities, including
planning, feasibility analysis, revenue forecasting,
environmental review, permitting, preliminary
engineering and design work, and other preconstruction
activities;
``(B) construction, reconstruction, rehabilitation,
replacement, and acquisition of real property (including
land related to the project and improvements to land),
[[Page 112 STAT. 242]]
environmental mitigation, construction contingencies,
and acquisition of equipment; and
``(C) capitalized interest necessary to meet market
requirements, reasonably required reserve funds, capital
issuance expenses, and other carrying costs during
construction.
``(2) Federal credit instrument.--The term `Federal credit
instrument' means a secured loan, loan guarantee, or line of
credit authorized to be made available under this subchapter
with respect to a project.
``(3) Investment-grade rating.--The term `investment-grade
rating' means a rating category of BBB minus, Baa3, or higher
assigned by a rating agency to project obligations offered into
the capital markets.
``(4) Lender.--The term `lender' means any non-Federal
qualified institutional buyer (as defined in section 230.144A(a)
of title 17, Code of Federal Regulations (or any successor
regulation), known as Rule 144A(a) of the Securities and
Exchange Commission and issued under the Securities Act of 1933
(15 U.S.C. 77a et seq.)), including--
``(A) a qualified retirement plan (as defined in
section 4974(c) of the Internal Revenue Code of 1986)
that is a qualified institutional buyer; and
``(B) a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986) that is a
qualified institutional buyer.
``(5) Line of credit.--The term `line of credit' means an
agreement entered into by the Secretary with an obligor under
section 184 to provide a direct loan at a future date upon the
occurrence of certain events.
``(6) Loan guarantee.--The term `loan guarantee' means any
guarantee or other pledge by the Secretary to pay all or part of
the principal of and interest on a loan or other debt obligation
issued by an obligor and funded by a lender.
``(7) Local servicer.--The term `local servicer' means--
``(A) a State infrastructure bank established under
this title; or
``(B) a State or local government or any agency of a
State or local government that is responsible for
servicing a Federal credit instrument on behalf of the
Secretary.
``(8) Obligor.--The term `obligor' means a party primarily
liable for payment of the principal of or interest on a Federal
credit instrument, which party may be a corporation,
partnership, joint venture, trust, or governmental entity,
agency, or instrumentality.
``(9) Project.--The term `project' means--
``(A) any surface transportation project eligible
for Federal assistance under this title or chapter 53 of
title 49;
``(B) a project for an international bridge or
tunnel for which an international entity authorized
under Federal or State law is responsible.
``(C) a project for intercity passenger bus or rail
facilities and vehicles, including facilities and
vehicles owned by the National Railroad Passenger
Corporation and components of magnetic levitation
transportation systems; and
[[Page 112 STAT. 243]]
``(D) a project for publicly owned intermodal
surface freight transfer facilities, other than seaports
and airports, if the facilities are located on or
adjacent to National Highway System routes or
connections to the National Highway System.
``(10) Project obligation.--The term `project obligation'
means any note, bond, debenture, or other debt obligation issued
by an obligor in connection with the financing of a project,
other than a Federal credit instrument.
``(11) Rating agency.--The term `rating agency' means a bond
rating agency identified by the Securities and Exchange
Commission as a Nationally Recognized Statistical Rating
Organization.
``(12) Secured loan.--The term `secured loan' means a direct
loan or other debt obligation issued by an obligor and funded by
the Secretary in connection with the financing of a project
under section 183.
``(13) State.--The term `State' has the meaning given the
term in section 101.
``(14) Subsidy amount.--The term `subsidy amount' means the
amount of budget authority sufficient to cover the estimated
long-term cost to the Federal Government of a Federal credit
instrument, calculated on a net present value basis, excluding
administrative costs and any incidental effects on governmental
receipts or outlays in accordance with the provisions of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
``(15) Substantial completion.--The term `substantial
completion' means the opening of a project to vehicular or
passenger traffic.
``Sec. 182. Determination of eligibility and project selection
``(a) Eligibility.--To be eligible to receive financial assistance
under this subchapter, a project shall meet the following criteria:
``(1) Inclusion in transportation plans and programs.--The
project--
``(A) shall be included in the State transportation
plan required under section 135; and
``(B) at such time as an agreement to make available
a Federal credit instrument is entered into under this
subchapter, shall be included in the approved State
transportation improvement program required under
section 134.
``(2) Application.--A State, a local servicer identified
under section 185(a), or the entity undertaking the project
shall submit a project application to the Secretary.
``(3) Eligible project costs.--
``(A) In general.--Except as provided in
subparagraph (B), to be eligible for assistance under
this subchapter, a project shall have eligible project
costs that are reasonably anticipated to equal or exceed
the lesser of--
``(i) $100,000,000; or
``(ii) 50 percent of the amount of Federal
highway assistance funds apportioned for the most
recently completed fiscal year to the State in
which the project is located.
``(B) Intelligent transportation system projects.--
In the case of a project principally involving the
installation
[[Page 112 STAT. 244]]
of an intelligent transportation system, eligible
project costs shall be reasonably anticipated to equal
or exceed $30,000,000.
``(4) Dedicated revenue sources.--Project financing shall be
repayable, in whole or in part, from tolls, user fees, or other
dedicated revenue sources.
``(5) Public sponsorship of private entities.--In the case
of a project that is undertaken by an entity that is not a State
or local government or an agency or instrumentality of a State
or local government, the project that the entity is undertaking
shall be publicly sponsored as provided in paragraphs (1) and
(2).
``(b) Selection Among Eligible Projects.--
``(1) Establishment.--The Secretary shall establish criteria
for selecting among projects that meet the eligibility criteria
specified in subsection (a).
``(2) Selection criteria.--
``(A) In general.--The selection criteria shall
include the following:
``(i) 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.
``(ii) The creditworthiness of the project,
including a determination by the Secretary that
any financing for the project has appropriate
security features, such as a rate covenant, to
ensure repayment.
``(iii) The extent to which assistance under
this subchapter would foster innovative public-
private partnerships and attract private debt or
equity investment.
``(iv) The likelihood that assistance under
this subchapter would enable the project to
proceed at an earlier date than the project would
otherwise be able to proceed.
``(v) The extent to which the project uses new
technologies, including intelligent transportation
systems, that enhance the efficiency of the
project.
``(vi) The amount of budget authority required
to fund the Federal credit instrument made
available under this subchapter.
``(vii) The extent to which the project helps
maintain or protect the environment.
``(viii) The extent to which assistance under
this chapter would reduce the contribution of
Federal grant assistance to the project.
``(B) Preliminary rating opinion letter.--For
purposes of subparagraph (A)(ii), the Secretary shall
require each project applicant to provide a preliminary
rating opinion letter from at least 1 rating agency
indicating that the project's senior obligations have
the potential to achieve an investment-grade rating.
``(c) Federal Requirements.--In addition to the requirements of this
title for highway projects, chapter 53 of title 49 for transit projects,
and section 5333(a) of title 49 for rail projects, the following
provisions of law shall apply to funds made available under this
subchapter and projects assisted with the funds:
[[Page 112 STAT. 245]]
``(1) Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et seq.).
``(2) The National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.).
``(3) The Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (42 U.S.C. 4601 et seq.).
``Sec. 183. Secured loans
``(a) In General.--
``(1) Agreements.--Subject to paragraphs (2) through (4),
the Secretary may enter into agreements with 1 or more obligors
to make secured loans, the proceeds of which shall be used--
``(A) to finance eligible project costs; or
``(B) to refinance interim construction financing of
eligible project costs;
of any project selected under section 182.
``(2) Limitation on refinancing of interim construction
financing.--A loan under paragraph (1) shall not refinance
interim construction financing under paragraph (1)(B) later than
1 year after the date of substantial completion of the project.
``(3) Risk assessment.--Before entering into an agreement
under this subsection, the Secretary, in consultation with the
Director of the Office of Management and Budget and each rating
agency providing a preliminary rating opinion letter under
section 182(b)(2)(B), shall determine an appropriate capital
reserve subsidy amount for each secured loan, taking into
account such letter.
``(4) Investment-grade rating requirement.--The funding of a
secured loan under this section shall be contingent on the
project's senior obligations receiving an investment-grade
rating, except that--
``(A) the Secretary may fund an amount of the
secured loan not to exceed the capital reserve subsidy
amount determined under paragraph (3) prior to the
obligations receiving an investment-grade rating; and
``(B) the Secretary may fund the remaining portion
of the secured loan only after the obligations have
received an investment-grade rating by at least 1 rating
agency.
``(b) Terms and Limitations.--
``(1) In general.--A secured loan under this section with
respect to a project shall be on such terms and conditions and
contain such covenants, representations, warranties, and
requirements (including requirements for audits) as the
Secretary determines appropriate.
``(2) Maximum amount.--The amount of the secured loan shall
not exceed 33 percent of the reasonably anticipated eligible
project costs.
``(3) Payment.--The secured loan--
``(A) shall--
``(i) be payable, in whole or in part, from
tolls, user fees, or other dedicated revenue
sources; and
``(ii) include a rate covenant, coverage
requirement, or similar security feature
supporting the project obligations; and
[[Page 112 STAT. 246]]
``(B) may have a lien on revenues described in
subparagraph (A) subject to any lien securing project
obligations.
``(4) Interest rate.--The interest rate on the secured loan
shall be not less than the yield on marketable United States
Treasury securities of a similar maturity to the maturity of the
secured loan on the date of execution of the loan agreement.
``(5) Maturity date.--The final maturity date of the secured
loan shall be not later than 35 years after the date of
substantial completion of the project.
``(6) Nonsubordination.--The secured loan shall not be
subordinated to the claims of any holder of project obligations
in the event of bankruptcy, insolvency, or liquidation of the
obligor.
``(7) Fees.--The Secretary may establish fees at a level
sufficient to cover all or a portion of the costs to the Federal
Government of making a secured loan under this section.
``(8) Non-federal share.--The proceeds of a secured loan
under this subchapter may be used for any non-Federal share of
project costs required under this title or chapter 53 of title
49, if the loan is repayable from non-Federal funds.
``(c) Repayment.--
``(1) Schedule.--The Secretary shall establish a repayment
schedule for each secured loan under this section based on the
projected cash flow from project revenues and other repayment
sources.
``(2) Commencement.--Scheduled loan repayments of principal
or interest on a secured loan under this section shall commence
not later than 5 years after the date of substantial completion
of the project.
``(3) Sources of repayment funds.--The sources of funds for
scheduled loan repayments under this section shall include
tolls, user fees, or other dedicated revenue sources.
``(4) Deferred payments.--
``(A) Authorization.--If, at any time during the 10
years after the date of substantial completion of the
project, the project is unable to generate sufficient
revenues to pay the scheduled loan repayments of
principal and interest on the secured loan, the
Secretary may, subject to subparagraph (C), allow the
obligor to add unpaid principal and interest to the
outstanding balance of the secured loan.
``(B) Interest.--Any payment deferred under
subparagraph (A) shall--
``(i) continue to accrue interest in
accordance with subsection (b)(4) until fully
repaid; and
``(ii) be scheduled to be amortized over the
remaining term of the loan beginning not later
than 10 years after the date of substantial
completion of the project in accordance with
paragraph (1).
``(C) Criteria.--
``(i) In general.--Any payment deferral under
subparagraph (A) shall be contingent on the
project meeting criteria established by the
Secretary.
``(ii) Repayment standards.--The criteria
established under clause (i) shall include
standards for reasonable assurance of repayment.
``(5) Prepayment.--
[[Page 112 STAT. 247]]
``(A) Use of excess revenues.--Any excess revenues
that remain after satisfying scheduled debt service
requirements on the project obligations and secured loan
and all deposit requirements under the terms of any
trust agreement, bond resolution, or similar agreement
securing project obligations may be applied annually to
prepay the secured loan without penalty.
``(B) Use of proceeds of refinancing.--The secured
loan may be prepaid at any time without penalty from the
proceeds of refinancing from non-Federal funding
sources.
``(d) Sale of Secured Loans.--
``(1) In general.--Subject to paragraph (2), as soon as
practicable after substantial completion of a project and after
notifying the obligor, the Secretary may sell to another entity
or reoffer into the capital markets a secured loan for the
project if the Secretary determines that the sale or reoffering
can be made on favorable terms.
``(2) Consent of obligor.--In making a sale or reoffering
under paragraph (1), the Secretary may not change the original
terms and conditions of the secured loan without the written
consent of the obligor.
``(e) Loan Guarantees.--
``(1) In general.--The Secretary may provide a loan
guarantee to a lender in lieu of making a secured loan if the
Secretary determines that the budgetary cost of the loan
guarantee is substantially the same as that of a secured loan.
``(2) Terms.--The terms of a guaranteed loan shall be
consistent with the terms set forth in this section for a
secured loan, except that the rate on the guaranteed loan and
any prepayment features shall be negotiated between the obligor
and the lender, with the consent of the Secretary.
``Sec. 184. Lines of credit
``(a) In General.--
``(1) Agreements.--Subject to paragraphs (2) through (4),
the Secretary may enter into agreements to make available lines
of credit to 1 or more obligors in the form of direct loans to
be made by the Secretary at future dates on the occurrence of
certain events for any project selected under section 182.
``(2) Use of proceeds.--The proceeds of a line of credit
made available under this section shall be available to pay debt
service on project obligations issued to finance eligible
project costs, extraordinary repair and replacement costs,
operation and maintenance expenses, and costs associated with
unexpected Federal or State environmental restrictions.
``(3) Risk assessment.--Before entering into an agreement
under this subsection, the Secretary, in consultation with the
Director of the Office of Management and Budget and each rating
agency providing a preliminary rating opinion letter under
section 182(b)(2)(B), shall determine an appropriate capital
reserve subsidy amount for each line of credit, taking into
account such letter.
``(4) Investment-grade rating requirement.--The funding of a
line of credit under this section shall be contingent
[[Page 112 STAT. 248]]
on the project's senior obligations receiving an investment-
grade rating from at least 1 rating agency.
``(b) Terms and Limitations.--
``(1) In general.--A line of credit under this section with
respect to a project shall be on such terms and conditions and
contain such covenants, representations, warranties, and
requirements (including requirements for audits) as the
Secretary determines appropriate.
``(2) Maximum amounts.--
``(A) Total amount.--The total amount of the line of
credit shall not exceed 33 percent of the reasonably
anticipated eligible project costs.
``(B) 1-year draws.--The amount drawn in any 1 year
shall not exceed 20 percent of the total amount of the
line of credit.
``(3) Draws.--Any draw on the line of credit shall represent
a direct loan and shall be made only if net revenues from the
project (including capitalized interest, any debt service
reserve fund, and any other available reserve) are insufficient
to pay the costs specified in subsection (a)(2).
``(4) Interest rate.--The interest rate on a direct loan
resulting from a draw on the line of credit shall be not less
than the yield on 30-year marketable United States Treasury
securities as of the date on which the line of credit is
obligated.
``(5) Security.--The line of credit--
``(A) shall--
``(i) be payable, in whole or in part, from
tolls, user fees, or other dedicated revenue
sources; and
``(ii) include a rate covenant, coverage
requirement, or similar security feature
supporting the project obligations; and
``(B) may have a lien on revenues described in
subparagraph (A) subject to any lien securing project
obligations.
``(6) Period of availability.--The line of credit shall be
available during the period beginning on the date of substantial
completion of the project and ending not later than 10 years
after that date.
``(7) Rights of third-party creditors.--
``(A) Against federal government.--A third-party
creditor of the obligor shall not have any right against
the Federal Government with respect to any draw on the
line of credit.
``(B) Assignment.--An obligor may assign the line of
credit to 1 or more lenders or to a trustee on the
lenders' behalf.
``(8) Nonsubordination.--A direct loan under this section
shall not be subordinated to the claims of any holder of project
obligations in the event of bankruptcy, insolvency, or
liquidation of the obligor.
``(9) Fees.--The Secretary may establish fees at a level
sufficient to cover all or a portion of the costs to the Federal
Government of providing a line of credit under this section.
``(10) Relationship to other credit instruments.--A project
that receives a line of credit under this section also shall not
receive a secured loan or loan guarantee under section 183 of an
amount that, combined with the amount of the line of credit,
exceeds 33 percent of eligible project costs.
[[Page 112 STAT. 249]]
``(c) Repayment.--
``(1) Terms and conditions.--The Secretary shall establish
repayment terms and conditions for each direct loan under this
section based on the projected cash flow from project revenues
and other repayment sources.
``(2) Timing.--All scheduled repayments of principal or
interest on a direct loan under this section shall commence not
later than 5 years after the end of the period of availability
specified in subsection (b)(6) and be fully repaid, with
interest, by the date that is 25 years after the end of the
period of availability specified in subsection (b)(6).
``(3) Sources of repayment funds.--The sources of funds for
scheduled loan repayments under this section shall include
tolls, user fees, or other dedicated revenue sources.
``Sec. 185. Project servicing
``(a) Requirement.--The State in which a project that receives
financial assistance under this subchapter is located may identify a
local servicer to assist the Secretary in servicing the Federal credit
instrument made available under this subchapter.
``(b) Agency; Fees.--If a State identifies a local servicer under
subsection (a), the local servicer--
``(1) shall act as the agent for the Secretary; and
``(2) may receive a servicing fee, subject to approval by
the Secretary.
``(c) Liability.--A local servicer identified under subsection (a)
shall not be liable for the obligations of the obligor to the Secretary
or any lender.
``(d) Assistance From Expert Firms.--The Secretary may retain the
services of expert firms in the field of municipal and project finance
to assist in the underwriting and servicing of Federal credit
instruments.
``Sec. 186. State and local permits
``The provision of financial assistance under this subchapter with
respect to a project shall not--
``(1) relieve any recipient of the assistance of any
obligation to obtain any required State or local permit or
approval with respect to the project;
``(2) limit the right of any unit of State or local
government to approve or regulate any rate of return on private
equity invested in the project; or
``(3) otherwise supersede any State or local law (including
any regulation) applicable to the construction or operation of
the project.
``Sec. 187. Regulations
``The Secretary may issue such regulations as the Secretary
determines appropriate to carry out this subchapter.
``Sec. 188. Funding
``(a) Funding.--
``(1) In general.--There are authorized to be appropriated
from the Highway Trust Fund (other than the Mass Transit
Account) to carry out this subchapter--
``(A) $80,000,000 for fiscal year 1999;
``(B) $90,000,000 for fiscal year 2000;
[[Page 112 STAT. 250]]
``(C) $110,000,000 for fiscal year 2001;
``(D) $120,000,000 for fiscal year 2002; and
``(E) $130,000,000 for fiscal year 2003.
``(2) Administrative costs.--From funds made available under
paragraph (1), the Secretary may use, for the administration of
this subchapter, not more than $2,000,000 for each of fiscal
years 1998 through 2003.
``(3) Availability.--Amounts made available under paragraph
(1) shall remain available until expended.
``(b) Contract Authority.--
``(1) In general.--Notwithstanding any other provision of
law, approval by the Secretary of a Federal credit instrument
that uses funds made available under this subchapter shall be
deemed to be acceptance by the United States of a contractual
obligation to fund the Federal credit instrument.
``(2) Availability.--Amounts authorized under this section
for a fiscal year shall be available for obligation on October 1
of the fiscal year.
``(c) Limitations on Credit Amounts.--For each of fiscal years 1998
through 2003, principal amounts of Federal credit instruments made
available under this subchapter shall be limited to the amounts
specified in the following table:
Maximum amount
``Fiscal year: of credit:
1998...................................................$1,200,000,000
1999...................................................$1,200,000,000
2000...................................................$1,800,000,000
2001...................................................$1,800,000,000
2002...................................................$2,300,000,000
2003...................................................$2,300,000,000.
``Sec. 189. Report to Congress
``Not later than 4 years after the date of enactment of this
subchapter, the Secretary shall submit to Congress a report summarizing
the financial performance of the projects that are receiving, or have
received, assistance under this subchapter, including a recommendation
as to whether the objectives of this subchapter are best served--
``(1) by continuing the program under the authority of the
Secretary;
``(2) by establishing a Government corporation or
Government-sponsored enterprise to administer the program; or
``(3) by phasing out the program and relying on the capital
markets to fund the types of infrastructure investments assisted
by this subchapter without Federal participation.''.
(b) Conforming Amendments.--Chapter 1 of title 23, United States
Code, is amended--
(1) in the analysis--
(A) by inserting before ``Sec.'' the following:
``SUBCHAPTER I--GENERAL PROVISIONS'';
and
(B) by adding at the end the following:
``SUBCHAPTER II--INFRASTRUCTURE FINANCE
``181. Definitions.
``182. Determination of eligibility and project selection.
``183. Secured loans.
``184. Lines of credit.
``185. Project servicing.
[[Page 112 STAT. 251]]
``186. State and local permits.
``187. Regulations.
``188. Funding.
``189. Report to Congress.'';
and
(2) by inserting before section 101 the following:
``SUBCHAPTER I--GENERAL PROVISIONS''.
SEC. 1504. DUTIES OF THE SECRETARY.
Section 301 of title 49, United States Code, is amended--
(1) in paragraph (7) by striking ``and'' at the end;
(2) in paragraph (8) by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(9) develop and coordinate Federal policy on financing
transportation infrastructure, including the provision of direct
Federal credit assistance and other techniques used to leverage
Federal transportation funds.''.
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