MAP-21 and Transportation Financing under the TIFIA Credit Program - PowerPoint PPT Presentation

MAP-21 and Transportation Financing under the TIFIA Credit Program Christopher P . Bertram Assistant Secretary for Budget and Programs and Chief Financial Officer September 2012 1

Moving Ahead for Progress in the 21 st What is TIFIA? Century Act (MAP-21)  The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) program was originally authorized under the Transportation Equity Act for the 21 st Century (TEA-21).  TIFIA provides credit assistance for qualified projects of regional and national significance.  The TIFIA credit program is designed to fill market gaps and leverage substantial co-investment by providing supplemental and subordinate capital. TIFIA can finance up to 49% of eligible project costs.  TIFIA can offer attractive borrowing rates with flexible terms. For example, the maximum maturity is 35 years after substantial completion. September 2012 2

Moving Ahead for Progress in the 21 st Moving Ahead for Progress in the 21 st Century Act (MAP-21) Century Act (MAP-21)  The recently enacted surface transportation bill, known as MAP-21, provided $1.7 billion in funding over two years for the TIFIA credit assistance program, • Funding has increased from $120 million in FY2012, making it the largest transportation infrastructure finance fund in the Department’s history. • The Department estimates that each dollar of federal funds can provide approximately $10 in TIFIA credit assistance, meaning $17 billion in loans through TIFIA, which in turn can leverage $20-$30 billion in transportation infrastructure investment. • Altogether, the expanded federal loan program could result in up to $50 billion in Federal, state, local and private sector investment for critical transportation projects across the country.  Notice of funding availability released on July 27, 2012 outlines TIFIA eligibility and application process in light of MAP-21. September 2012 3

What kinds of projects are eligible for TIFIA?  DOT is able to provide TIFIA credit assistance across a broad range of project types: Highway Transit Passenger Rail Certain Intermodal Projects including those Intelligent that facilitate direct Freight Rail Facilities intermodal transfer and transportation systems access into and out of port terminal Groups of related International Bridges eligible transportation and Tunnels projects secured by a common pledge  Projects need a revenue stream or dedicated source of funding to repay the loan. September 2012 4

What types of credit assistance are provided under TIFIA?  DOT may provide credit assistance in the form of direct loans, loan guarantees and lines of credit.  The TIFIA loan, which must have a senior or senior-parity lien in the event of bankruptcy, liquidation or insolvency, can be subordinate as to cash flows absent such an event.  If TIFIA is subordinate, the senior debt must have an investment grade rating.  MAP-21 includes a provision that DOT may: Waive the non- The revenue subordination TIFIA is pledge is not requirement if the financing 33% affected by The TIFIA loan borrower is a or less of the program is rated A or public agency with senior bonds under eligible project higher. performance or preexisting costs. is a system indentures so long pledge. as: September 2012 5

Changes to the TIFIA program under MAP-21  In addition to the change in the funding level, MAP-21 made a number of changes to the TIFIA program. Some of the changes include: • Rolling admissions process. Letters of interest can be submitted at any time. • Set-aside for rural projects. Up to 10% of the annual TIFIA budget authority can be used for rural projects with these projects also receiving an interest rate at half of the Treasury rate. Rural projects have a lower cost threshold ($25 million) than the typical $50 million TIFIA project cost threshold. • Increased coverage of eligible costs. MAP-21 increases the maximum amount of a loan for a project to 49 percent of a project’s eligible costs. For a TIFIA line of credit the maximum remains at 33 percent. Project must justify the need for greater than 33 percent. • Removal of discretionary selection criteria. MAP-21 eliminates the statutory selection criteria and replaces it with eligibility criteria such as creditworthiness, and readiness to proceed. September 2012 6

Changes to the TIFIA program under MAP-21 (continued) • Timelines. MAP-21 contains a timeline for assessing applications for credit assistance. o No later than 30 days after receipt of an application, DOT must inform applicant whether the application is complete or not. If not complete, DOT must identify the additional materials needed to complete the application. o No later than 60 days after issuing that notice, the applicant will be notified whether the application is approved or disapproved. September 2012 7

How to apply for TIFIA Step 1 Step 2 Step 3 Step 4 Project sponsors Letters of interest DOT will review Upon completion should submit a must demonstrate LOIs and request of the review and letter of interest satisfaction of further a determination MAP- 21’s (LOI) using the information as of eligibility, form available on eligibility necessary. DOT will invite TIFIA’s website. requirements. an application for LOIs may be credit assistance. submitted at any time.  With a rolling application process, DOT encourages projects to submit a LOI when the project is able to provide sufficient information to satisfy statutory eligibility requirements such as creditworthiness and readiness to proceed. September 2012 8

TIFIA Portfolio  Demand for TIFIA in recent years has exceeded the available funding. In 2012 the Department received 26 LOIs exceeding $13 billion. Requests in 2010 were more than $12 billion and more than $14 billion in 2011.  TIFIA program has used $9.2 billion in funding to leverage more than $36.4 billion in private and other capital to build 27 major transportation projects around the country. Examples of TIFIA projects include: • Presidio Parkway, California • Miami Intermodal Facility, Florida • U.S. 36 Managed Lanes, Colorado • Downtown and Midtown Tunnels, Virginia September 2012 9

Presidio Parkway, California  The California Department of Transportation (Caltrans) in cooperation with the San Francisco County Transportation Authority (SFCTA) is advancing the Presidio Parkway Project through a public-private partnership.  The Presidio Parkway will be a new 1.6-mile, six-lane roadway connecting the Golden Gate Bridge and the City of San Francisco. It will replace the existing Doyle Drive. The Project is divided into two phases. Caltrans is responsible for the design, financing and construction of Phase I, currently under construction. The current structure, built in 1936, does not meet current highway standards and is seismically deficient.  Caltrans selected Golden Link Concessionaire (GLC), to design, finance and construct Phase II, then to operate and maintain the entire facility for 30 years upon substantial completion.  The TIFIA Loan of $150 million is being structured in two tranches. Tranche A ($90 million) will be repaid fully following substantial completion in the form of a milestone payment. Tranche B ($60 million) will be repaid using the non-Federal portion of the availability payment over a 28 year period.  Total cost of project is $852 million.  Loan approved in 2012. September 2012 10

Miami Intermodal Facility, Florida  The Miami Intermodal Center (MIC) comprises a multi-year program of ground access improvements to and within Miami International Airport (MIA). Major project elements include: • Miami Central Station (MCS) - Intermodal center for transit (Metrorail), commuter rail (Tri-Rail), Amtrak, and intercity bus services • Rental Car Facility (RCF) - New rental car facility consolidating rental car operations at the airport and providing space for 10,000 cars • MIA Mover - Automated airport people mover to connect MIA to the MCS and RCF  Project received 2 loans, $269 million in 2000 and $170 million in 2005. First loan has been prepaid.  Funds to repay this loan will be derived from daily user charges assessed to rental car customers and contingent rent paid by rental car companies if user charges do not meet revenue projections.  Loan approved in 1999. September 2012 11

U.S. 36 Managed Lanes, Colorado  The U.S. 36 Managed Lanes U.S. 36 is four-lane divided highway that connects the City of Boulder to Denver at its intersection with I-25. The U.S. 36 Managed Lane Project: Segments 1 and 2 is an initial phase of approximately $1.3 billion of identified improvements along the 18 miles of roadway between the two cities. The $307 million first phase is expected to be open by 2015.  Project is being developed by High Performance Transportation Enterprise in partnership with Colorado Department of Transportation and the Regional Transportation District .  In addition to the TIFIA loan, project funding sources include $38 million in CDOT Federal and state grants, $46 million in CDOT bridge enterprise funds, $4 million in regional Federal funds, $120 million in RTD sales tax revenue and $4.8 million of the TIGER challenge grant (the remaining portion of the $10 million TIGER TIFIA challenge grant funded the TIFIA subsidy cost).  TIFIA loan of $54 million was approved in 2011. September 2012 12