State Infrastructure Banks can provide loans, lines of credit, and loan guarantees to projects eligible for Federal aid under Title 23 of the United States Code.
States determine loan application process, interest rates, length of loans, and other policies.
As of September 2016, 33 states and Puerto Rico had entered into 834 SIB loan agreements with a total value of $5.9 billion.
State and local governments continue to explore the concept of revolving funds to finance transportation infrastructure projects. Recent interest has been shown by Alabama, Louisiana, New York, and the City of Chicago.
State Infrastructure Banks (SIBs) are revolving infrastructure investment funds for surface transportation that are established and administered by States.
SIBs function as revolving funds that, much like banks, can offer loans and other credit products to public and private sponsors of Title 23 highway construction projects or Title 49 transit and rail capital projects. Federally capitalized SIBs were first authorized under the provisions of the National Highway System Designation Act. The pilot program was originally available to only 10 States and was later expanded to include 38 States and Puerto Rico. The Transportation Equity Act for the 21st Century (TEA - 21) established a new pilot program for the States of California, Florida, Missouri, and Rhode Island. The next highway authorization, the Safe, Accountable, Flexible, Efficient, Transportation Equity Act - A Legacy for Users (SAFETEA - LU) expanded authority to all States to establish SIBs and also allowed the creation of multi-State SIBs.
The initial infusion of Federal and State matching funds is critical to the start-up of a SIB, but States have the opportunity to contribute additional State or local funds to enhance capitalization. Under SAFETEA - LU, States can capitalize their SIB account(s) with additional Federal funds as follows:
SIBs complement traditional funding techniques and serve as a useful tool to meet project-financing demands, stretching both Federal and State dollars. The primary benefits of SIBs to transportation investment include:
Although the authorizing Federal legislation establishes basic requirements and the overall operating framework for a SIB, States have customized the structure and focus of their SIB programs to meet State-specific requirements. A variety of types of financing assistance can be offered by a SIB; loans are the most popular form of SIB assistance. As of September 2016, 33 States and Puerto Rico had entered into 834 SIB loan agreements with a total value of $5.9 billion.
SIB assistance may include loans (at or below market rates), loan guarantees, standby lines of credit, letters of credit, certificates of participation, debt-service reserve funds, bond insurance, and other forms of non-grant assistance.
Maximum loan terms are set at 30 years, and repayment must begin no later than 5 years after substantial project completion.
As loans are repaid, the SIB's capital is replenished and can be used to support a new cycle of projects. For SIBs operating under the rules of the initial pilot program, when SIB loans are repaid, the funding used for capitalizing the SIB loses its Federal designation and becomes State funds, which can then be used to finance any Title 23-eligible transportation project pursuant to State requirements. Projects financed with SIB repayments from TEA-21 and later authorizations must follow Federal-aid requirements in perpetuity.
FHWA retains oversight, monitoring, and reporting responsibilities. SIB eligibility is generally determined by FHWA Division Offices, in consultation with FHWA Headquarters, where necessary.
SIBs can also be structured to leverage additional resources. A "leveraged" SIB would issue bonds against its capitalization, increasing the amount of funds available for loans.
Center for Innovative Finance Support provides a one-stop source for expertise, guidance, research, decision tools, and publications on program delivery innovations. Our web page, workshops, and other resources help build the capacity of transportation professionals to deliver innovation.
Center for Innovative Finance Support's Project Finance program focuses on alternative financing, including State Infrastructure Banks (SIBs), Grant Anticipation Revenue Vehicles (GARVEEs), and Build America Bonds (BABs).
Center for Innovative Finance Support's P3 program covers alternative procurement and payment models (e.g., toll and availability payments), which can reduce cost, improve project quality, and provide additional financing options.
Center for Innovative Finance Support's revenue program focuses on how governments can use innovation to generate revenue from transportation projects (e.g., concessions, value capture, developer mitigation fees, air rights, and road pricing).