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Subtitle E--Finance CHAPTER 1--TRANSPORTATION INFRASTRUCTURE <<NOTE: Transportation Infrastructure Finance and Innovation Act of 1998. Grants. Inter- governmental relations. Loans.>> FINANCE AND INNOVATION 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), 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 ``(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 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: ``(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 ``(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.-- ``(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 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. ``(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; ``(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. ``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.''. CHAPTER 2--STATE INFRASTRUCTURE BANK PILOT PROGRAM SEC. 1511. STATE INFRASTRUCTURE BANK PILOT PROGRAM. <<NOTE: 23 USC 181 note.>> (a) Definitions.--In this section: (1) Other assistance.--The term ``other assistance'' includes any use of funds in an infrastructure bank-- (A) to provide credit enhancements; (B) to serve as a capital reserve for bond or debt instrument financing; (C) to subsidize interest rates; (D) to ensure the issuance of letters of credit and credit instruments; (E) to finance purchase and lease agreements with respect to transit projects; (F) to provide bond or debt financing instrument security; and (G) to provide other forms of debt financing and methods of leveraging funds that are approved by the Secretary and that relate to the project with respect to which the assistance is being provided. (2) State.--The term ``State'' has the meaning given the term under section 401 of title 23, United States Code. (b) Cooperative Agreements.-- (1) In general.-- (A) Purpose of agreements.--Subject to this section, the Secretary may enter into cooperative agreements with the States of California, Florida, Missouri, and Rhode Island for the establishment of State infrastructure banks and multistate infrastructure banks for making loans and providing other assistance to public and private entities carrying out or proposing to carry out projects eligible for assistance under this section. (B) Contents of agreements.--Each cooperative agreement shall specify procedures and guidelines for establishing, operating, and providing assistance from the infrastructure bank. (2) Interstate compacts.--If 2 or more States enter into a cooperative agreement under paragraph (1) with the Secretary for the establishment of a multistate infrastructure bank, Congress grants consent to those States to enter into an interstate compact establishing the bank in accordance with this section. (c) Funding.-- (1) Contribution.--Notwithstanding any other provision of law, the Secretary may allow, subject to subsection (h)(1), a State that enters into a cooperative agreement under this section to contribute to the infrastructure bank established by the State not to exceed-- (A)(i) the total amount of funds apportioned to the State under each of paragraphs (1), (3), and (4) of section 104(b) and section 144 of title 23, United States Code, excluding funds set aside under paragraphs (1) and (2) of section 133(d) of such title; and (ii) the total amount of funds allocated to the State under section 105 of such title; (B) the total amount of funds made available to the State or other Federal transit grant recipient for capital projects (as defined in section 5302 of title 49, United States Code) under sections 5307, 5309, and 5311 of such title; and (C) the total amount of funds made available to the State under subtitle V of title 49, United States Code. (2) Capitalization grant.--For the purposes of this section, Federal funds contributed to the infrastructure bank under this subsection shall constitute a capitalization grant for the infrastructure bank. (3) Special rule for urbanized areas of over 200,000.--Funds that are apportioned or allocated to a State under section 104(b)(3) of title 23, United States Code, and attributed to urbanized areas of a State with a population of over 200,000 individuals under section 133(d)(2) of such title may be used to provide assistance from an infrastructure bank under this section with respect to a project only if the metropolitan planning organization designated for the area concurs, in writing, with the provision of the assistance. (d) Forms of Assistance From Infrastructure Banks.-- (1) In general.--An infrastructure bank established under this section may make loans or provide other assistance to a public or private entity in an amount equal to all or part of the cost of carrying out a project eligible for assistance under this section. (2) Subordination of loans.--The amount of any loan or other assistance provided for the project may be subordinated to any other debt financing for the project. (3) Initial assistance.--Initial assistance provided with respect to a project from Federal funds contributed to an infrastructure bank under this section shall not be made in the form of a grant. (e) Qualifying Projects.-- (1) In general.--Subject to paragraph (2), funds in an infrastructure bank established under this section may be used only to provide assistance with respect to projects eligible for assistance under title 23, United States Code, for capital projects (as defined in section 5302 of title 49, United States Code), or for any other project related to surface transportation that the Secretary determines to be appropriate. (2) Interstate funds.--Funds contributed to an infrastructure bank from funds apportioned to a State under section 104(b)(4) of title 23, United States Code, may be used only to provide assistance with respect to projects eligible for assistance under such paragraph. (3) Rail program funds.--Funds contributed to an infrastructure bank from funds made available to a State under subtitle V of title 49, United States Code, shall be used in a manner consistent with any project description specified under the law making the funds available to the State. (f) Infrastructure Bank Requirements.-- (1) In general.--Subject to paragraph (2), in order to establish an infrastructure bank under this section, each State establishing such a bank shall-- (A) contribute, at a minimum, to the bank from non- Federal sources an amount equal to 25 percent of the amount of each capitalization grant made to the State and contributed to the bank under subsection (c), except that if the State has a higher Federal share payable under section 120(b) of title 23, United States Code, the State shall be required to contribute only an amount commensurate with the higher Federal share; (B) ensure that the bank maintains on a continuing basis an investment grade rating on its debt issuances and its ability to pay claims under credit enhancement programs of the bank; (C) ensure that investment income generated by funds contributed to the bank will be-- (i) credited to the bank; (ii) available for use in providing loans and other assistance to projects eligible for assistance from the bank; and (iii) invested in United States Treasury securities, bank deposits, or such other financing instruments as the Secretary may approve to earn interest to enhance the leveraging of projects assisted by the bank; (D) ensure that any loan from the bank will bear interest at or below market rates, as determined by the State, to make the project that is the subject of the loan feasible; (E) ensure that repayment of the loan from the bank will commence not later than 5 years after the project has been completed or, in the case of a highway project, the facility has opened to traffic, whichever is later; (F) ensure that the term for repaying any loan will not exceed the lesser of-- (i) 35 years after the date of the first payment on the loan under subparagraph (E); or (ii) the useful life of the investment; and (G) require the bank to make a biennial report to the Secretary and to make such other reports as the Secretary may require in guidelines. (2) Waivers by the secretary.--The Secretary may waive a requirement of any of subparagraphs (C) through (G) of paragraph (1) with respect to an infrastructure bank if the Secretary determines that the waiver is consistent with the objectives of this section. (g) Limitation on Repayments.--Notwithstanding any other provision of law, the repayment of a loan or other assistance provided from an infrastructure bank under this section may not be credited toward the non-Federal share of the cost of any project. (h) Secretarial Requirements.--In administering this section, the Secretary shall-- (1) ensure that Federal disbursements shall be at an annual rate of not more than 20 percent of the amount designated by the State for State infrastructure bank capitalization under subsection (c)(1), except that the Secretary may disburse funds to a State in an amount needed to finance a specific project; and (2) revise cooperative agreements entered into with States under section 350 of the National Highway System Designation Act of 1995 (Public Law 104-59) to comply with this section. (i) Applicability of Federal Law.-- (1) In general.--The requirements of titles 23 and 49, United States Code, that would otherwise apply to funds made available under such title and projects assisted with those funds shall apply to-- (A) funds made available under such title and contributed to an infrastructure bank established under this section, including the non-Federal contribution required under subsection (f); and (B) projects assisted by the bank through the use of the funds; except to the extent that the Secretary determines that any requirement of such title (other than sections 113 and 114 of title 23 and section 5333 of title 49), is not consistent with the objectives of this section. (2) Repayments.--The requirements of titles 23 and 49, United States Code, shall apply to repayments from non-Federal sources to an infrastructure bank from projects assisted by the bank. Such a repayment shall be considered to be Federal funds. (j) United States Not Obligated.-- (1) In general.--The contribution of Federal funds to an infrastructure bank established under this section shall not be construed as a commitment, guarantee, or obligation on the part of the United States to any third party. No third party shall have any right against the United States for payment solely by virtue of the contribution. (2) Statement.--Any security or debt financing instrument issued by the infrastructure bank shall expressly state that the security or instrument does not constitute a commitment, guarantee, or obligation of the United States. (k) Management of Federal Funds.--Sections 3335 and 6503 of title 31, United States Code, shall not apply to funds contributed under this section. (l) Program Administration.-- (1) In general.--A State may expend not to exceed 2 percent of the Federal funds contributed to an infrastructure bank established by the State under this section to pay the reasonable costs of administering the bank. (2) Non-federal funds.--The limitation described in paragraph (1) shall not apply to non-Federal funds.