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Qualified Projects

States may make Section 129 loans to a public or private entity to construct either a toll project that is eligible for Federal-aid funding or a non-toll highway project that has a revenue source specifically dedicated to support the project. The amount loaned by the state is considered an eligible Federal-aid project cost. Any Federal transportation program category can be used for a Section 129 loan as long as the project receiving the loan is eligible for funding from that category.

There are no Federal requirements that apply to how a state selects a public or private entity to be a recipient of a Section 129 loan. Rather, this selection process is governed by state law, and it is the state's responsibility to ensure that the recipient uses the loan for the specified purposes. Assuming that a project meets the test for eligibility, a loan can be made at any time. The Federal-aid loan may be for any amount, provided the maximum Federal share (typically 80 percent) of the total eligible project costs is not exceeded. Total eligible project costs are limited to the costs of engineering, right-of-way acquisition, and construction at the time FHWA authorizes the loan to be made. In other words, a loan can be made to an active, eligible project, but the amount cannot include the cost of work done prior to the loan authorization. A project loan can be authorized in conjunction with advance construction. Loans must be repaid to the state, beginning within five years after construction is completed and the project is open to traffic. Repayment must be completed within 30 years after the date Federal funds were authorized for the loan.

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