The U.S. Department of Transportation’s Build America Bureau (Bureau) on July 7 reported a policy update to the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit program that will allow “all types of transportation infrastructure projects to finance up to 49% of eligible costs as authorized by TIFIA legislation.”
Previously, credit assistance was limited to 33% of reasonably anticipated eligible project costs, unless the project sponsor provided compelling justification for up to 49%, the project met certain rural, transit, or transit-oriented development eligibility, or was part of the Rural/INFRA/Mega grant Extra programs, according to the Bureau.
This policy, it said, presented “a roadblock for many project sponsors seeking to build critical infrastructure.”
The Bureau’s TIFIA credit program is said to provide flexible, long-term, low-interest loans that enable public- and private-project sponsors to accelerate the delivery of infrastructure at a lower financing cost and must be repaid using non-federal funding. “Allowable by statute since 2012, TIFIA loans could have financed up to 49% of reasonably anticipated eligible project costs; however, DOT continued its policy of limiting loans to up to 33% for most projects,” the Bureau reported.
To address customer feedback and increase the availability of higher percentage financings, the Bureau said it began in 2018 “to identify categorical eligibilities in addition to the project-by-project request approach.” Analysis of years of program data showed that taxpayer exposure from TIFIA loans is minimal, it noted. As a result, the Bureau said it established “several successful pilot programs to allow sponsors access to the higher financing maximum, including the TIFIA Rural Projects Initiative, and for certain transit and transit-oriented development projects.”
Further expansion of the option to finance up to 49% “provides more projects with opportunities to expedite delivery and save significantly on financing costs, reducing the need for federal grants or freeing up those grants to be used for other projects,” according to the Bureau. The Bureau noted that it can “increase efficiency because the streamlined policy simplifies due diligence and underwriting processes.” At the same time, non-federal investors will continue to share project costs and risks, it said.
“The TIFIA loan program has proven to be a highly effective tool, supporting the delivery of more than $150 billion in infrastructure investment through over $52 billion in flexible, low-cost loans,” said Morteza Farajian, Executive Director of the Bureau. “This policy update will ensure the program remains available at full capacity to support our private and local partners. We’re very pleased to announce more progress in modernizing this critical financing program that has already helped so many communities get the infrastructure they want for less money. By removing unnecessary barriers after careful analysis, we’re helping to open the door for every type of project to receive the same benefits and level of support from this administration.”
