U.S. DOT Announces Notice of Funding Availability for TIFIA Program
On Friday, July 27, 2012, U.S. Transportation Secretary Ray LaHood announced that up to $1.75 billion would be available under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. The TIFIA program provides low-interest, flexible financing options to major transportation projects via direct loans, loan guarantees, and standby lines of credit. The Notice of Funding Availability (NOFA) describes some of the policy changes to the TIFIA program made by the recently-enacted reauthorization bill, Moving Ahead for Progress in the 21st Century (MAP-21), and solicits Letters of Interest from prospective applicants. It also encourages interested parties to submit comments on the U.S. Department of Transportation's (U.S. DOT) interpretation of the TIFIA program under MAP-21.
MAP-21 authorizes $750 million for the TIFIA program in FY 2013 and $1 billion in FY 2014, subject to annual obligation limitations. After subtracting administrative expenses and assuming an annual obligation limitation, the NOFA estimates that $1.610 billion will be available to provide TIFIA assistance over the life of MAP-21. This level of credit subsidy corresponds to an estimated $16.1 billion in lending capacity. The TIFIA program was first established in 1998 by the Transportation Equity Act for the 21st Century (TEA-21) and had previously been funded at $122 million annually.
Major Changes to the TIFIA Program
In addition to substantially increasing federal resources for the TIFIA program, MAP-21 also implements several reforms to the project financing and the project selection process; the key changes to the TIFIA program were summarized in this Policy Update. Notably, MAP-21 increases the proportion of project costs that TIFIA is permitted to fund through loans from 33 percent to 49 percent and converts the program from a fixed-date to a rolling application process.
Further, MAP-21 eliminates the performance criteria formerly used to select projects. Under previous reauthorization bills, the TIFIA program evaluated projects based on a range of weighted criteria that measured a project's degree of private participation (20 percent), environmental impact (20 percent), national or regional significance (20 percent), project acceleration (12.5 percent), creditworthiness (12.5 percent), use of new technologies (5 percent), reduced federal grant assistance (5 percent), and consumption of budget authority (5 percent).
MAP-21 sets basic eligibility requirements and distributes funds on a first-come, first served basis. As before, eligible projects include a broad range of surface transportation projects; these projects must demonstrate creditworthiness and repay loans from dedicated revenue sources. The TIFIA assistance must be used to reduce the lifecycle costs of the project or to deliver projects faster than would otherwise be possible. TIFIA assistance must also reduce the project's need for federal grants. If appropriate, TIFIA projects should also promote public-private partnerships.
MAP-21 expands the eligibility requirements to include programs of related projects backed by a common financing pledge. Also, MAP-21 requires projects to begin the construction contracting process within 90 days of finalizing TIFIA assistance, and bars projects from receiving assistance until they have achieved environmental clearance under the National Environmental Policy Act. In general, projects receiving TIFIA assistance must cost at least $50 million, although intelligent transportation system (ITS) projects may cost as little as $15 million and rural project may cost $25 million. MAP-21 also allows for 10 percent of the program's budget authority to be reserved for rural projects at an interest rate of one-half the Treasury rate.
The guidelines for the former TIFIA program can be found in this December 2009 program guide from the U.S. DOT. The changes implemented by MAP-21 take effect October 1, 2012.
U.S. DOT is now accepting Letters of Interest from prospective applicants. These Letters of Interest must describe the project, outline its financial plan, provide the status of the project's environmental review, and demonstrate that the other eligibility requirements have been satisfied. Applicants should follow this template when submitting a Letter of Interest.
Letters of Interest on will be accepted a rolling basis. Upon receiving a letter, U.S. DOT will conduct an initial review to verify that a project is eligible for TIFIA assistance and will contact the project sponsor for more detailed information about the project. Project sponsors must provide a preliminary rating opinion letter and pay a $100,000 fee to defray the U.S. DOT's cost of outside financial and legal consultation before the Department can make a final determination of a project's eligibility. If U.S. DOT determines a project to be eligible for assistance, it will invite the project sponsor to submit an application. This determination is not a guarantee that the project will receive TIFIA assistance. Rather, final decisions are based on a project's creditworthiness, successful negotiation of the terms of assistance, the availability of funds, and the other applicant projects.
MAP-21 establishes specific timeframes for the completion of the application process. U.S. DOT must inform project sponsors if their applications are complete -- and identify any missing documentation -- within 30 days of receiving an application. Sixty days after that notice, U.S. DOT must inform project sponsors whether their applications have been approved or rejected.
The NOFA describes how the U.S. DOT plans to implement the changes to TIFIA made by MAP-21. The NOFA stresses that it does not provide comprehensive guidance on how the reforms will be implemented and notes that U.S. DOT intends to update its TIFIA Program Guide. As such, it invites interested parties to submit comments to U.S. DOT about the Department's implementation of the TIFIA program under MAP-21. Comments are due by September 1, 2012. The NOFA describes how to submit comments through the federal government's regulatory website, by fax, by mail, or by hand delivery.