U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
Status of the Nation's Highways, Bridges, and Transit:
2002 Conditions and Performance Report
|Chapter 6: Finance|
Part I: Description of Current System
Part II: Investment Performance Analyses
Part III: Bridges
Part IV: Special Topics
Part V: Supplemental Analyses of System Components
TIFIA: The Transportation Infrastructure and Finance Innovation Act of 1998 (TIFIA) authorized the U.S. Department of Transportation to establish a new credit program offering eligible applicants the opportunity to compete for direct loans, loan guarantees, and lines of credit for up to one-third of the cost of large infrastructure construction projects of national or regional significance, provided that the borrower has a revenue stream, such as tolls or local sales taxes, which can be used to repay the debt issued by the project. To be eligible, a project must have eligible costs that total at least $100.0 million or alternatively equal 50.0 percent of a State’s Federal-Aid Highway apportionments for the most recent fiscal year, whichever is less. This dollar threshold reflects congressional intent to assist major projects that can attract substantial private capital with limited Federal investment. Intelligent Transportation System (ITS) projects are subject to a lower threshold, a minimum of $30.0 million. As of September 2002, 11 projects totaling $15.7 billion had been selected to receive TIFIA credit assistance, with commitments totaling more than $3.7 billion. These funding requests are for three transit projects, five highway and bridge projects, two intermodal projects, and one passenger rail project.
State Infrastructure Banks: Section 350 of the National Highway System Designation Act of 1995 (P.L. 104-59) authorized the U.S. Department of Transportation to establish the State Infrastructure Bank (SIB) Pilot Program. This program provides increased financial flexibility for infrastructure projects by offering direct loans and other credit enhancement products such as loan guarantees. SIBs are capitalized with Federal and State funds. Some States augment these operating reserves through a variety of methods including special appropriations and debt issues. Each SIB operates as a revolving fund and can finance a wide variety of surface transportation projects. As loans are repaid, additional funds become available to new loan applicants. TEA-21 legislation, limited the use of TEA-21 funds for SIB capitalization purposes to four States: Rhode Island, Missouri, California, and Florida. Texas was added later. The remaining states that participate in the SIB program operate under the provisions of the National Highway System Act rules and may not capitalize SIBs with TEA-21 funds. However, existing SIB programs continue to offer loan products. As of June 2002, 32 SIBs had entered into 294 loan agreements for a total of $4.0 billion. Six of these states (Arizona, Florida, Missouri, Ohio, South Carolina and Texas) account for over 92 percent of SIB loans nationwide.
GARVEE: Grant Anticipation Revenue Vehicles (GARVEE bonds) are a variation of a Grant Anticipation Note (GAN). A GAN is a form of debt that pledges anticipated grant money as a repayment source. GARVEE bonds permit debt issuance expenses to be reimbursed with anticipated Federal funds. In addition to traditional debt service, principal and interest, expenses such as underwriting fees, bond insurance, and financial counsel are eligible for reimbursement. Debt instruments issued by special purpose non-profit corporations (classified as 63-20 corporations by the Internal Revenue Service) may be repaid with Federal-aid funds if the bonds are issued on behalf of the State and the proceeds are used for projects eligible under Title 23. As of July 2002, six states (Alabama, Arkansas, Arizona, Colorado, New Mexico and Ohio) had sold 14 GARVEE bond issues totaling $2.5 billion.