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Transportation Funding & Financing

TIFIA

Transportation Infrastructure Finance and Innovation Act

Overview

The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) is a Federal program under which USDOT provides credit assistance to major surface transportation projects of national or regional significance, including highway, transit, and rail. USDOT awards credit assistance to eligible applicants, which include state departments of transportation, transit operators, special authorities, local governments, and private entities. The program is designed to fill market gaps and leverage limited Federal resources and substantial co-investment by providing projects with supplemental or subordinate debt rather than grants.

The TIFIA credit program offers three distinct types of financial assistance designed to address the varying requirements of projects throughout their life cycles:

  • Secured (direct) loan - Maximum term of 35 years from substantial completion. Repayments must start 5 years after substantial completion.
  • Loan guarantee - Guarantees a project sponsor's repayments to non-Federal lender. Loan repayments to lender must commence no later than 5 years after substantial completion of project.
  • Standby line of credit - Contingent loan available for draws as needed up to 10 years after substantial completion of project.

Benefits of TIFIA assistance to public and private project sponsors include:

  • Improved access to capital markets
  • Flexible repayment terms
  • Potentially more favorable interest rates than can be found in private capital markets for similar instruments
  • Earlier completion of large, capital intensive projects that otherwise might be delayed or not built at all because of their size and complexity and the market's uncertainty over the timing of revenues

A recent amendment to the TIFIA program under SAFETEA-LU allows the use of TIFIA loan and loan guarantee proceeds to refinance long-term project obligations or Federal credit instruments if such refinancing provides additional funding capacity for the completion, enhancement, or expansion of new transportation infrastructure.

When originally enacted as part of TEA-21, up to $10.6 billion in TIFIA credit assistance was authorized over the FY 1999 to FY 2003 period, along with an appropriation of $530 million to pay the subsidy cost of supporting Federal credit under TIFIA. Available credit assistance was sustained at a rate of $2.4 billion per year until the passage of SAFETEA-LU in August 2005. SAFETEA-LU subsequently continued the TIFIA credit program by removing the annual credit assistance limitation and providing a total of $610 million ($122 million annually) through 2009 to cover the Federal subsidy costs. The TIFIA office estimates that these budget resources can fund up to $2.5 billion of credit assistance annually.

USDOT maintains a TIFIA Credit Assistance Website with information and materials.

Legislation

The TIFIA program is codified in United States legal code Title 23 Highways, Chapter 6 Infrastructure Finance, Sections 601 through 609.

Resources

Chapter 4 (Section 4.3) of FHWA's Chapter 4 of FHWA's Project Finance Primer discusses TIFIA.