TOD Frequently Asked Questions

Transit-oriented development (TOD) projects are eligible under both the RRIF and TIFIA credit programs. The Frequently Asked Questions (FAQ) below clarify the definitions used and the analyses undertaken by the Build America Bureau (Bureau) to determine a TOD project's eligibility for RRIF and TIFIA credit assistance. Additionally, the FAQs clarify that TIFIA and RRIF loans used for conversion projects may be eligible for a categorical exclusion under the National Environmental Policy Act (NEPA) that would exempt applicable projects from more detailed environmental analysis and save time and money, as long as those projects do not expand the footprint of the building being converted or modify other facilities.

Please note: These FAQs do not have the force and effect of law and are not meant to bind the public in any way. They are only intended to provide clarity to the public regarding existing requirements under the law.

Please contact the Bureau with any questions about the FAQs, a specific TOD project's eligibility, or any other RRIF or TIFIA program requirements for TOD projects.

General

1) What is the minimum/maximum loan size available under the TIFIA and RRIF programs for TOD projects?

TIFIA: Eligible project costs of at least $10 million with a maximum financing at 49% of eligible project costs. There is no maximum loan amount. Total federal assistance (i.e., TIFIA plus all other federal funding and financing) may not exceed 80% of total project costs. Further explanation of federal and non-federal sources, including “private investment” is available in the project eligibility FAQs below.

RRIF: No minimum project size and no maximum loan amount. Maximum financing at 75% of total project costs.

Due to the cost of compliance with federal socioeconomic requirements (e.g., Davis-Bacon, NEPA) and cost for external advisors, projects under $10 million may not realize the full benefit of these credit programs.

2) What is the maximum maturity of a TIFIA or RRIF loan for a TOD project?

TIFIA and RRIF statutory maturities can extend up to 75 years depending on the useful life of the financed asset. Typical maturities for TOD loans will likely be shorter, e.g., 35 years post substantial completion, due to useful life of these assets, the statutory useful life calculation for maximum loan maturity, and other considerations such as the nature of the collateral and repayment source.

3) Can TIFIA/RRIF loans be pari passu or subordinated/second lien in a TOD project?

Yes, TIFIA and RRIF loans can be pari passu with other project lenders, subject to satisfactory intercreditor arrangements.

TIFIA and RRIF loans can also be subordinate or second lien in a TOD project, if certain conditions are met.

While TIFIA and RRIF loans can be subordinate in the flow of funds, they cannot be subordinate in the event of bankruptcy, insolvency, or liquidation of the obligor and thus DOT will include a “springing lien” in the financing documentation (i.e., the loan can initially have structural subordination but must “spring” to parity with senior lenders in the event of a bankruptcy, liquidation, or insolvency).

In certain circumstances, TIFIA and RRIF loans can be fully subordinated, namely where the borrower is a public authority, the loan is rated in the A category, the loan is payable from revenue unrelated to the project (e.g., in the case of TOD loans, not from lease revenues), and other statutory limitations for subordination under 23 U.S.C. § 603(b)(6) for TIFIA and 49 U.S.C. § 22402(l) for RRIF. Thus, most real estate TOD projects won’t meet the waiver criteria and will need to either structure the TIFIA/RRIF loan as senior or include a springing lien.

4) Do TIFIA/RRIF allow for loans subordinate to the TIFIA/RRIF loan?

Loans subordinate to TIFIA/RRIF loans are permitted subject to an intercreditor agreement satisfactory to the Bureau with adequate subordination of subordinate debtholders’ rights and remedies relative to those of U.S. DOT.

5) Do TOD projects require a credit rating? Which rating agencies are acceptable to the Bureau?

Per the TIFIA statute: For projects with total financing (TIFIA and senior debt) of less than $150 million, one investment grade rating (BBB-, Baa3, or higher) is required to be obtained from a Nationally Recognized Statistical Rating Organization for each of the TIFIA loan and the senior debt and, for projects with total financing of $150 million or more, two investment grade ratings are required for each of the TIFIA loan and the senior debt. In instances where the TIFIA loan is in a senior position, only the TIFIA loan must receive an investment grade rating(s), with the number of ratings also based on the $150 million financing threshold. One preliminary indicative rating is needed prior to advancing to the Bureau’s Creditworthiness Review stage; final rating(s) are required as part of the closing process; and annual reporting from a Nationally Recognized Statistical Rating Organization of the then-current rating is required until the loan is fully repaid.

The RRIF statute does not require ratings; however, the Bureau encourages borrowers to provide a credit rating as it could contribute to a material reduction in the credit risk premium (CRP) for borrowers. In addition, borrowers will be required to provide annual reporting from a Nationally Recognized Statistical Rating Organization of the current rating until the loan is fully repaid.

The list of Nationally Recognized Statistical Rating Organizations is located on the SEC website:

https://www.sec.gov/about/divisions-offices/office-credit-ratings/current-nrsros

6) Can the Bureau issue loan guarantees to commercial banks?

Yes, the Bureau can issue loan guarantees to commercial banks. Historically, project sponsors have opted for direct loans instead of loan guarantees due to the typically more advantageous terms of Bureau loans (e.g., favorable interest rates, maturity, capitalized interest periods, sculpted amortization, no prepayment penalties, etc.) compared with commercial bank debt terms.

7) Are TIFIA /RRIF loans available to finance construction?

Yes, the Bureau can finance construction, including hard and soft costs. TIFIA/RRIF can provide construction and long-term, permanent financing.

8) Can TIFIA/RRIF loans be used to finance the acquisition of real estate assets or operating legal entities?

Acquiring property in advance of National Environmental Policy Act (NEPA) process could jeopardize the project’s eligibility for a loan. Financing acquisition of a real estate asset may be possible, if the project includes a substantial upgrade, improvement, or addition to the existing asset (e.g., office to residential conversion, major energy-savings and emissions-savings retrofit, etc.). Bureau loans cannot be used for acquisition of operating legal entities. A borrower must ensure NEPA is complete prior to acquisition and other federal requirements, such as the Uniform Act, are followed. Some projects and acquisitions may be eligible for a Categorical Exclusions under NEPA (see below).

9) Can TIFIA/RRIF finance the rehabilitation of existing buildings?

Major building rehabilitation and modernization capital projects are eligible. By statute, operations and maintenance activities are not eligible for TIFIA/RRIF. Please consult with the Bureau to determine whether your project would be classified as maintenance versus an eligible capital project.

10) What pre-construction costs are allowable for commercial, residential, and mixed-use real estate projects?

Under TIFIA, eligible pre-construction costs include, but are not limited to, planning, feasibility analysis, revenue forecasting, environmental review, permitting, and preliminary engineering and design work. Lease buy-outs and other efforts to relocate commercial tenants may be eligible.

11) Can TOD projects be built on land that is leased instead of owned by the developer (i.e., ‘ground lease’)?

Yes, both directly owned land or a ground lease are acceptable. NEPA compliance is required prior to entering into any lease (just as it is required prior to purchasing real property).

12) Are the credit terms and conditions negotiable or fixed?

The Bureau negotiates the terms of TIFIA and RRIF loans with the borrower, unless the borrower agrees to use a standard loan template with minimal changes. These standardized loan templates are typically applicable to a specific subset of borrowers or projects, and can expedite the closing process. The Bureau currently anticipates using its standard templates for TOD loans with appropriate refinement for TOD projects and revenue sources. In the future, the Bureau intends to develop a standalone TOD loan agreement template.

13) Are there any pre-payment penalties or restrictions on refinancing on the commercial market?

A borrower may prepay a loan in whole or in part at any time without penalty or premium.

14) Are there any pre-defined credit metrics and covenants that can be shared?

The Bureau is working with the U.S. Department of Housing and Urban Development (HUD) to refine the Bureau’s criteria and metrics, such as key ratios and covenants, minimum DSCRs, first mortgage lending, maximum LTC and LTV thresholds, distribution covenants, etc. The Bureau has preliminarily identified prospective minimum DSCRs, as described below.

15) What is the minimum Debt Service Cover Ratio? (DSCR)

Coverage ratio requirements vary depending on property type, loan product type (construction + permanent or permanent loan only), and capital structure (senior vs. subordinate loan).

Generally, for projects that have a certificate of occupancy, are placed in service, and operating, the Bureau will require debt service coverage in line with market best practices. For example and subject to change:

Predominantly Affordable Housing: min 1.1x DSCR
Market-rate Multifamily Housing: min 1.25x DSCR

16) Do TIFIA/RRIF loans offer any payment deferrals?

Interest on a loan can be capitalized during construction and for up to five years after completion of construction. Loans can be structured to defer portion of interest and principal to provide flexibility when revenues are insufficient to pay debt service. The entire principal has to be repaid in full during the remaining period, i.e., no residual loan outstanding at maturity/no refinancing risk.

17) If the project goes over budget, can the loan amount be increased after closing?

No, the loan agreement establishes the loan maximum. Loan sizing includes appropriate contingencies calculated on a case by case basis. Project sponsors can submit an LOI for the Bureau to review as a new loan.

18) Can a TIFIA or RRIF loan be used to as a permanent take-out facility for short-term construction loans or to refinance existing long-term obligations?

For interim construction financing, both TIFIA and RRIF can be used as takeout financing. However, for the interim construction financing to be eligible for TIFIA or RRIF refinancing, it cannot mature later than one year after the substantial completion of the project, and the refinancing cannot occur later than one year after the date of substantial completion of the project.

For RRIF, the interim construction financing must have been incurred only for the purpose of facilitating the payment of project costs during construction pending RRIF disbursement, and not as permanent financing. TIFIA and RRIF loans can be closed concurrently with short-term construction financing and accrue no interest (i.e., no negative carry). While there are draw conditions for TIFIA and RRIF loans, closing concurrently with construction financing provides a measure of comfort to construction lenders that they will be refinanced once the construction risk is removed.

Draws on the permanent loan will be subject to the property meeting Bureau loan agreement requirements (e.g., receiving certificate of occupancy). Please contact the Bureau when coordination is required with your preferred construction lender or rating agency.

For long-term project obligations, including prior debt incurred for a now-complete project, TIFIA loans can be used to refinance those obligations so long as the refinancing provides additional funding capacity for the completion, enhancement, or expansion of an asset that meets all the TIFIA eligibility requirements, including compliance with federal requirements.

RRIF loans cannot be used to refinance long-term obligations for TOD projects.

TIFIA loans may be used to refinance existing, long-term project debt if the refinancing provides additional funding capacity for the completion, enhancement, or expansion of an asset that meets all the TIFIA eligibility requirements, including compliance with federal requirements. In the case of refinancing interim construction financing, the TIFIA direct loan may not refinance the existing debt later than one year following substantial completion of the project, or if that interim debt’s maturity is later than 1 year after the substantial completion of the project. Refinancing purely for interest rate advantage is not allowed.

RRIF loans cannot be used to refinance existing debt for TOD projects.

19) What is the interest rate on TIFIA/RRIF TOD loans? Is it fixed or variable? How does the Credit Risk Premium (CRP) work?

Interest rates are set on the financial closing date based on U.S. Treasury rates for securities of a similar maturity on that date. Interest rates are fixed for the term of the loan.

For TIFIA rural projects with less than $100 million in eligible project costs, the loan rate is one-half of the U.S. Treasury rate.

Effective June 26, 2024, RRIF borrowers are no longer required to pay the credit risk premium (CRP) in a proportional amount at each draw. Instead, borrowers pay an interest rate spread throughout the life of the loan, payable every interest period, in lieu of CRP. Borrowers may choose to provide collateral (e.g., land, real property interests, or another physical asset) or credit enhancements (e.g., sureties, guarantees) that may reduce or eliminate such interest rate spread. For more details, see 49 CFR § 260.17(d) (https://www.ecfr.gov/current/title-49/subtitle-B/chapter-II/part-260/subpart-B/section-260.17).

Neither CRP nor the interest rate spread can be subsidized by the Bureau.

20) Do TIFIA/RRIF loans allow for distribution payments to the shareholders?

Yes, distributions are allowed if they do not materially impair the credit quality of the project. Distributions are not allowed during a debt service deferral period.

21) Can the project equity be provided in the form of subordinated debt or preferred shares?

Yes, if the terms of such instruments are acceptable to the Bureau.

22) Are foreign equity investors eligible to participate in TOD loans financed by the Bureau?

In general, foreign investors can be participants if they are not on any officially sanctioned or restricted entity/individuals list.

23) Are TIFIA/RRIF loans assumable upon sale?

Yes, subject to change of control conditions in the loan agreement. In general, the change of control requirements are designed to ensure the credit quality of the loan will not be materially impaired as a result of the sale.

24) Can TIFIA/RRIF be guaranteed or insured by HUD?

An FHA guarantee of the Bureau’s direct loan might be possible but may have Federal Credit Reform Act (FCRA) budgetary implications that will need to be evaluated.

25) Can the Bureau accept a revenue pledge that includes Section 8 voucher payments from HUD?

No, revenue pledges for TIFIA/RRIF loans must derive from non-Federal sources.

26) What are the reporting requirements for TOD?

Reporting requirements include construction-phase reporting and operational phase reporting. Construction-phase reporting will be required quarterly or semiannually during construction on construction cost, schedule, and budget. Construction phase reporting also includes certification of compliance with federal requirements, such as Buy America and Davis-Bacon. Operational phase reporting is customized to the project and revenue type and within market standards, including periodic financial and operating reports, required covenant compliance certificates, etc.

27) Are there any ongoing loan administration costs associated with TIFIA/RRIF loans?

Yes, the Bureau charges an annual amount for loan administration adjusted annually based on Consumer Price Index. The current amount is $16,500 per year.

28) What are the upfront fees payable to the Bureau for TOD loan applications?

The Bureau does not charge application or closing fees. Applicants pay for the cost of the Bureau’s external advisors (e.g., financial, legal, and others as appropriate) (see next question).

29) What are the estimated costs for the Bureau’s external advisors?

The current typical range is between $500,000 and $1,000,000, depending on project size, complexity, and the level of loan customization. Based on U.S. DOT’s past experience, we expect the fees for repeat customers and standard financing structures to be lower. The Bureau can cover those expenses for projects under $75 million seeking a TIFIA loan. The Bureau does not have sufficient budgetary appropriations for TIFIA and RRIF to cover these expenses for any project that does not meet this condition.

Project and Borrower Eligibility

The Frequently Asked Questions (FAQ) below clarify the definitions used and the analyses undertaken by the Build America Bureau (Bureau) to determine a TOD project's eligibility for RRIF and TIFIA credit assistance. Projects not eligible under these TOD authorities could be eligible under other existing RRIF and TIFIA authorities.

RRIF Eligibility

1) What types of projects are eligible for RRIF TOD loans?

An eligible purpose for RRIF loans is to “finance economic development, including commercial and residential development, and related infrastructure and activities, that (i) incorporates private investment of greater than 20 percent of total project costs; (ii) is physically connected to, or is within ½ mile of, a fixed guideway transit station, an intercity bus station, a passenger rail station, or multimodal station, provided that the location includes service by a railroad; (iii) demonstrates the ability of the applicant to commence the contracting process for construction not later than 90 days after the date on which the direct loan or loan guarantee is obligated for the project under this chapter; and (iv) demonstrates the ability to generate new revenue for the relevant passenger rail station or service by increasing ridership, increasing tenant lease payments, or carrying out other activities that generate revenue exceeding costs.”¹

To be eligible, RRIF TOD projects must be economic development and meet all four of the statutory eligibility criteria.

The Bureau’s interpretation of, and methods for evaluating, the above underlined statutory language are the subject of the guidance provided in this section of the FAQ.

¹49 U.S.C. § 22402(b)(1)(F)

1.1) How does the Bureau define “economic development, including commercial and residential development, and related infrastructure and activities”?

The RRIF TOD statute uses the phrase “economic development, including commercial and residential development” to describe an eligible purpose for RRIF loans.¹ This phrase refers to any real estate development projects that enhance the economic vitality and competitiveness of the surrounding neighborhood and region, and provide new spaces and opportunities for commercial activity and housing. Eligible projects are not limited to real estate developments with commercial and residential uses; any land uses permitted under applicable local law and projects that are economically feasible based on applicants’ own analysis and due diligence are eligible, including but not limited to office, institutional (e.g., civic, academic, health, etc.), industrial, entertainment, recreational, etc. Eligible projects are not limited to construction of new buildings and facilities; projects that convert or rehabilitate existing buildings and facilities may be eligible as well.

The statute also uses the phrase “related infrastructure and activities,” which means infrastructure and activities related to eligible RRIF TOD projects.

Applicants may wish to include in their proposed RRIF TOD projects information on how their projects could drive transformative, long-lasting improvements in the surrounding area that may result in one or more of the following:

Increased location- and energy-efficient housing options, including affordable and/or mixed-income housing, particularly for the local workforce, low- and moderate-income households, families with children, minorities, seniors, veterans, persons with disabilities, or disadvantaged communities, such as homeless or low-income populations;
Increased housing options or other significant benefits for persons and households already located in the area (i.e., current residents);
Increased transportation options and enhanced priority and safety for pedestrians, bicyclists, and other non-motorized micro-mobility options;
Improved access to employment centers, educational opportunities, and essential services; and
Improved environmental quality and/or public health outcomes.

¹49 U.S.C. § 22402(b)(1)(F)

1.2) What are some illustrative examples of projects that are eligible for RRIF TOD loans?

An illustrative example of an eligible RRIF TOD project is a private real estate developer that partners with a local government-sponsored passenger rail agency in a joint venture to advance a project or series of projects that: (i) create or enhance economic development, and (ii) improve the financial position of an eligible passenger rail agency or service.

Constructing a new commercial office building or new housing complex or converting an existing office building to residential use are all examples of eligible RRIF TOD projects. A RRIF TOD loan may also be used to finance infrastructure and activities related to the eligible TOD project.

Building a new, or improving an existing, passenger rail station or service is eligible for traditional RRIF loans.

This example scenario and list of potentially eligible infrastructure activities are illustrative and not meant to be comprehensive. Interested applicants are encouraged to contact the Bureau to explore their projects and the RRIF TOD eligibilities further.

1.3) Do TOD projects with residential uses need to include affordable housing to be eligible for a RRIF loan?

No. Inclusion of affordable housing is not a federal requirement. However, some local governments may require a minimum percentage of new housing to be affordable as a condition of their local entitlement process.

1.4) Is industrial development eligible for a RRIF TOD loan?

Yes, provided a project can satisfy all the eligibility criteria that apply specifically to RRIF TOD. In general, RRIF TOD aims to support projects that generate new, positive financial benefits for passenger rail services or stations, either through capital improvements or operational benefits, such as passenger trip generation. To the extent an industrial development near passenger rail is a land use permitted under applicable local law, is economically feasible based on the applicants’ own analysis and due diligence and is financially beneficial for a related passenger rail service or station, it may be eligible for a RRIF TOD loan.

Projects in industrial areas that construct operations, maintenance, or storage facilities for freight or passenger rail are railroad improvements that may be eligible for traditional RRIF loans, but not a RRIF TOD loan.

Similarly, projects in industrial areas that develop, improve, or rehabilitate intermodal facilities for transporting or facilitating direct intermodal transfer of freight may be eligible for traditional TIFIA loans, but not a RRIF TOD loan.

2) Are there other RRIF TOD eligibility criteria?

Yes. An eligible purpose for RRIF loans is to “finance economic development, including commercial and residential development, and related infrastructure and activities, that (i) incorporates private investment of greater than 20 percent of total project costs; (ii) is physically connected to, or is within ½ mile of, a fixed guideway transit station, an intercity bus station, a passenger rail station, or multimodal station, provided that the location includes service by a railroad; (iii) demonstrates the ability of the applicant to commence the contracting process for construction not later than 90 days after the date on which the direct loan or loan guarantee is obligated for the project under this chapter; and (iv) demonstrates the ability to generate new revenue for the relevant passenger rail station or service by increasing ridership, increasing tenant lease payments, or carrying out other activities that generate revenue exceeding costs.”¹

To be eligible, RRIF TOD projects must be economic development and meet all four of the statutory eligibility criteria.

The Bureau’s interpretation of, and methods for, evaluating the above underlined statutory eligibility criteria are the subject of the guidance provided in this section of the FAQ.

¹49 U.S.C. § 22402(b)(1)(F)

2.1) How does the Bureau evaluate satisfaction of RRIF TOD Eligibility Criterion #1?

RRIF TOD Eligibility Criterion #1: “Incorporates private investment of greater than 20 percent of total project costs”

Private investment can take many forms, including but not limited to direct monetary contributions of private funding (i.e., private equity), in-kind contributions of private property or services, project debt repaid by private sources of funding (not including Federal credit assistance, such as a RRIF or TIFIA loan or other Federally-guaranteed debt), or investment of revenues generated from value capture mechanisms into the construction or improvement of the related passenger rail station or service.

Private investment must exceed 20 percent of total project costs, but the form, tenor, and total amount of private investment incorporated into a project is negotiated at arm’s length between the applicant or borrower and the parties involved in delivering the project. Private investment may be incorporated initially or over the life of a project or joint venture.¹

¹The RRIF statute requires that no less than 25% of the total eligible project cost of TOD projects must be funded with non-Federal sources, such as: state, regional, or local public funding; or private funding or non-Federal debt sources. Furthermore, as part of its creditworthiness review, the Bureau reserves the right to require applicants to make additional equity contributions as part of a project’s plan of finance to reduce the Bureau’s risk exposure and protect the Federal interest.

2.2) How does the Bureau evaluate satisfaction of RRIF TOD Eligibility Criterion #2?

RRIF TOD Eligibility Criterion #2: “is physically connected to, or is within ½ mile of, a fixed guideway transit station, an intercity bus station, a passenger rail station, or multimodal station, provided that the location includes service by a railroad”

Projects are physically connected to a station if they are adjoined, co-located, or share the same physical footprint. Examples of a physical connection include a project built above, within, or adjacent to a station; or a project and station connected by a dedicated avenue of access (i.e., an enclosed walkway).

Projects within ½ mile of a qualified station includes projects located outside the same physical footprint or structural envelope of a station and even separated, for example, by intervening streets, thoroughfares, or unrelated properties. Projects within ½ mile of a qualified station are de facto eligible under this criterion. Whether projects are within ½ mile of a qualified station is determined based on the most direct, accessible pedestrian path between the two closest entrances to the project and station, respectively. In some cases, it may not be immediately clear exactly where the project’s or station’s closest entrances are and what the most direct, accessible pedestrian path between them is. The Bureau will make these determinations on a case-by-case basis after close examination of the unique circumstances of each project and related qualifying station and will measure the distance using geographic information system tools.

Projects must be physically connected to, or within ½-mile of, a station with service provided by a railroad. “Railroad,” is defined in 49 U.S.C. § 22401(12). In general, the services that railroads provide that qualify a station for a TOD project include “commuter rail” or “intercity rail.”

Examples of “commuter rail” include Maryland Area Regional Commuter and Virginia Railway Express services in the Washington, D.C. area. An example of “intercity passenger rail” includes Amtrak service.

If you have questions about whether a specific passenger rail service is or is not “commuter rail” or “intercity passenger rail,” please contact the Bureau.

2.3) How does the Bureau evaluate satisfaction of RRIF TOD Eligibility Criterion #3?

RRIF TOD Eligibility Criterion #3: “Demonstrates the ability of the applicant to commence the contracting process for construction not later than 90 days after the date on which the direct loan or loan guarantee is obligated for the project under this chapter”

The “commencement” of a procurement process for a construction contractor can take many forms. Competitive procurement processes typically begin either with a request for qualifications (RFQ) or request for proposals (RFP).

2.4) How does the Bureau evaluate satisfaction of RRIF TOD Eligibility Criterion #4?

RRIF TOD Eligibility Criterion #4: “Demonstrates the ability to generate new revenue for the relevant passenger rail station or service by increasing ridership, increasing tenant lease payments, or carrying out other activities that generate revenue exceeding costs.”

The Bureau does not prescribe the amount of revenue the relevant station or service should receive. The form, tenor, and total amount of revenue the relevant station or service receives is negotiated at arm’s length between the applicant or borrower and the parties involved in delivering the project. A relevant station or service may receive the revenues initially or over the life of a project or joint venture.

Applicants should be able to demonstrate to the Bureau the source and expected amount of revenue the relevant station or service will receive. For example, the applicant could demonstrate to the Bureau that the TOD project will increase ridership for the relevant station or service, which will increase farebox and potentially other revenue exceeding the marginal cost of providing service to accommodate the additional riders as transit operating costs are generally fixed.

2.5) Can RRIF finance 100% of the total eligible costs for a TOD project as it can for all other eligible rail projects?

No. A RRIF loan for a TOD project may only finance up to 75% of the total eligible project cost. This means that no less than 25% of the total eligible project cost must be funded with non-Federal sources, such as: state, regional, or local public funding; or private funding or non-Federal debt sources.¹

¹49 U.S.C. § 22402(h)(4)

2.6) Is there a minimum or maximum loan amount or total eligible cost threshold for RRIF TOD projects?

No. RRIF TOD projects are neither subject to minimum or maximum total eligible cost thresholds, nor minimum or maximum loan amounts. However, the DOT is authorized to have, at any one time, up to $35 billion in unpaid principal amounts of obligations under direct loans and loan guarantees through the RRIF program and $7 billion is reserved for projects benefiting freight railroads other than Class I carriers.

2.7) Are private entities eligible borrowers for RRIF financing?

A private entity participating in a joint venture with at least one RRIF-eligible entity may be an eligible borrower.

RRIF-eligible entities include:
- state and local governments;
- entities implementing interstate compacts consented to by Congress under section 410(a) of the Amtrak Reform and Accountability Act of 1997 (49 U.S.C. 24101 note);
- government sponsored authorities and corporations;
- railroads; or
- limited option freight shippers that own or operate a plant or other facility, solely for the purpose of constructing a rail connection between a plant or facility and a railroad.

2.8) What constitutes an eligible joint venture?

A joint venture can take many forms and can simply be an arrangement between a private entity and at least one RRIF-eligible entity, with the shared goal of accomplishing the project receiving RRIF credit assistance. The joint venture should demonstrate (i) that all parties are making meaningful contributions to (or for) the project and (ii) the benefits of the project to the parties involved. The joint venture can be memorialized in a contract, memorandum of understanding (MOU), or any legally binding agreement that describes how the parties to the joint venture will work together to deliver the project.

2.9) For a RRIF joint venture, does the joint venture’s RRIF-eligible entity need to be a signatory on the letter of interest (LOI), application, or loan Agreement?

No. The RRIF-eligible entity to the joint venture does not need to sign the LOI, application, or loan agreement. If they are not a signatory, the RRIF-eligible entity will need to acknowledge their participation in the joint venture and that their relationship is being invoked to achieve RRIF eligibility. Examples of this acknowledgement include providing appropriate language directly in the joint venture agreement or attesting to the RRIF joint venture in a letter to the Bureau.

TIFIA Eligibility

3) What types of projects are eligible for TIFIA TOD loans?

Projects eligible for TIFIA loans include “a project to improve or construct public infrastructure that is (I) located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility, including a transportation, public utility, or capital project described in section 5302(4)(G)(vi) of title 49, and related infrastructure…” or (II) “a project for economic development, including commercial and residential development, and related infrastructure and activities—(i) that incorporates private investment; (ii) that is physically or functionally related to a passenger rail station or multimodal station that includes rail service; (iii) for which the project sponsor has a high probability of commencing the contracting process for construction by not later than 90 days after the date on which credit assistance under the TIFIA program is provided for the project; and (iv) that has a high probability of reducing the need for financial assistance under any other Federal program for the relevant passenger rail station or service by increasing ridership, tenant lease payments, or other activities that generate revenue exceeding costs.”¹

To be eligible, TIFIA TOD projects must either (I) improve or construct public infrastructure or (II) be economic development and improve or construct public infrastructure and meet the other relevant statutory eligibility criteria.

The Bureau’s interpretation, of and methods for, evaluating the above underlined statutory language are the subject of the guidance provided in this section of the FAQ.

¹23 U.S.C. § 601(a)(12)(E) – Note: this provision sunsets as of September 30, 2026 based on the receipt of letters of interest and the Bureau’s preliminary eligibility determination.

3.1) How does the Bureau define the terms “public infrastructure” and “economic development”?

The TIFIA TOD statute uses the term “public infrastructure” to describe an eligible project for TIFIA loans. This term refers to infrastructure systems, structures, and facilities, including but not limited to transportation, public utility systems, and capital projects.1 Based on statutory and regulatory references within the Department, the term “public” is understood in this context to mean:

owned, occupied, developed, or operated/maintained by the public sector; or
open to the public, support a public service, or serve a public purpose

“Open to the public” is understood in this context to mean accessible and available to all without discrimination, restriction, or impediment. Examples may include streets, sidewalks, parks, plazas, or open spaces without regard to public vs. private ownership.

“Support a public service” is understood in this context to mean the project provides space for a public agency to function, operate, or provide service to the public. Examples may include public housing, civic centers, or buildings that includes space for government agencies.

“Serve a public purpose” is understood in this context to mean a project or activity that confers a public benefit. For example, if a project receives public financial assistance – such as grants or tax credits – it can reasonably be assumed to benefit and promote the welfare of the government that authorized the use of funds or tax credits and its citizens and not solely the specific recipient and/or project.

Based on other statutory and regulatory references within the Department, the term “infrastructure” is understood in this context to include those elements and activities that prepare a site for development (e.g., demolition of existing structures, construction of building foundations or utility connections, roads, sidewalks, parks, transit access improvements, etc.) as well as the ground-up development of public buildings and facilities, as the term “public” is defined above.

The statute describes two types of projects that are eligible under 23 U.S.C. § 601(a)(12)(E):

a project to improve or construct public infrastructure that is located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility, including a transportation, public utility, or capital project described in section 5302(4)(G)(vi) of title 49, and related infrastructure; or
a project to improve or construct public infrastructure that is a project for economic development, including commercial and residential development, and related infrastructure and activities (aa) that incorporates private investment; (bb) that is physically or functionally related to a passenger rail station or multimodal station that includes rail service; (cc) for which the project sponsor has a high probability of commencing the contracting process for construction by not later than 90 days after the date on which credit assistance under the TIFIA program is provided for the project; and (dd) that has a high probability of reducing the need for financial assistance under any other Federal program for the relevant passenger rail station or service by increasing ridership, tenant lease payments, or other activities that generate revenue exceeding costs.

In other words, an economic development project that meets the four eligibility criteria is only eligible for TIFIA if it also includes a project to improve or construct public infrastructure. However, a public infrastructure project does not need to include economic development, it only needs to be within walking distance of a qualified station or service to be eligible.

The term "economic development” refers to any real estate development projects that enhance the economic vitality and competitiveness of the surrounding neighborhood and region, and provide new spaces and opportunities for commercial activity and housing. Eligible projects are not limited to real estate developments with commercial and residential uses; any land uses permitted under applicable local law and projects that are economically feasible based on applicants’ own analysis and due diligence are eligible, including but not limited to office, institutional (e.g., civic, academic, health, etc.), industrial, entertainment, recreational, etc. Eligible projects are not limited to the construction of new buildings and facilities; projects that convert or rehabilitate existing buildings and facilities may be eligible as well.

The four eligibility criteria for economic development under TIFIA are understood to have the same meaning as the eligibility criteria under the RRIF program (as described in FAQs #2.1-2.4) with one exception – under TIFIA, the term “rail service,” is understood to include rail transit service in addition to service provided by a “railroad” as that term is defined under RRIF.

As provided in the TIFIA statute, “public infrastructure” may also include “related infrastructure” and the kinds of infrastructure and activities listed below:

property acquisition;
demolition of existing structures;
site preparation;
utilities;
building foundations;
walkways;
pedestrian and bicycle access to a public transportation facility;
construction, renovation, and improvement of intercity bus and intercity rail stations and terminals;
renovation and improvement of historic transportation facilities;
open space;
safety and security equipment and facilities (including lighting, surveillance, and related intelligent transportation system applications);
facilities that incorporate community services such as daycare or health care;
a capital project for, and improving, equipment or a facility for an intermodal transfer facility or transportation mall; and
construction of space for commercial uses.

3.2) What are some illustrative examples of projects that are eligible for TIFIA TOD loans?

An illustrative example of an eligible TIFIA TOD project is a private real estate developer who purchases several acres of land near a new rail transit station that they intend to develop into a mixed-use, transit-oriented community consisting of several buildings, new or improved transit facilities, a redesigned street and sidewalk network, publicly accessible open space, and other amenities, etc. Another illustrative example is an commercial-to-residential conversion project where a developer rehabilitates a vacant office building and converts it into housing. Another illustrative example is a public entity financing the construction of a new government building or community center.

If a project includes economic development (e.g., residential or commercial) it must also improve or construct public infrastructure to be eligible for TIFIA. If a project only improves of constructs public infrastructure and does not include economic development, then it only needs to be within walking distance of a qualified station or service to be eligible.

3.3) What is “joint development” and can TIFIA loans finance it?

Under a separate authority from the TOD authority, TIFIA can finance any eligible FTA project¹ and FTA’s statutory definition of “capital project” includes “joint development”² as eligible for funding under any of FTA’s capital grant programs. Joint development projects requesting new FTA grant funding or approval to use real property with a Federal interest and meet the statutory eligibility criteria may receive FTA approval, and thus be eligible for TIFIA financing, per 23 U.S.C. § 601(a)(12)(A). Joint developments not requesting new FTA grant funding or approval to use real property with a Federal interest, or that do not meet the statutory eligibility criteria at 49 U.S.C. § 5302(4)(G), may not receive, or be eligible for, FTA approval, however, they may still be eligible for TIFIA financing, per 23 U.S.C. § 601(a)(12)(E).³

The Bureau supports the use of joint development as a means of constructing or improving public infrastructure and encourages sponsors of joint development projects to contact the Bureau to explore their projects and all the TIFIA financing options.

A detailed discussion of the eligibility criteria for FTA-assisted joint development projects are available in the FTA’s Joint Development Guidance (Circular 7050.1B).

More information about joint development is available in the Transportation Research Board’s Guide to Joint Development for Public Transportation Agencies.

¹Per 23 U.S.C. § 601(a)(12)(A), TIFIA loans can finance any surface transportation project eligible for grant funding through a program authorized under Chapter 53 of Title 49, U.S.C.

²49 U.S.C. § 5302(4)(G)

³Per 23 U.S.C. § 601(a)(12)(E), TIFIA loans can finance “a project to improve or construct public infrastructure that is (I) located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility, including a transportation, public utility, or capital project described in section 5302(4)(G)(vi) of title 49, and related infrastructure…” or (II) “a project for economic development, including commercial and residential development, and related infrastructure and activities—(i) that incorporates private investment; (ii) that is physically or functionally related to a passenger rail station or multimodal station that includes rail service; (iii) for which the project sponsor has a high probability of commencing the contracting process for construction by not later than 90 days after the date on which credit assistance under the TIFIA program is provided for the project; and (iv) that has a high probability of reducing the need for financial assistance under any other Federal program for the relevant passenger rail station or service by increasing ridership, tenant lease payments, or other activities that generate revenue exceeding costs.”

4) Are there other TIFIA TOD eligibility criteria?

Yes. The first type of project eligible for TIFIA loans is “a project to improve or construct public infrastructure that is located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility, including a transportation, public utility, or capital project described in section 5302(4)(G)(vi) of title 49, and related infrastructure.”¹

The second type of project eligible for TIFIA loans is “a project to improve or construct public infrastructure that is a project for economic development, including commercial and residential development, and related infrastructure and activities (aa) that incorporates private investment; (bb) that is physically or functionally related to a passenger rail station or multimodal station that includes rail service; (cc) for which the project sponsor has a high probability of commencing the contracting process for construction by not later than 90 days after the date on which credit assistance under the TIFIA program is provided for the project; and (dd) that has a high probability of reducing the need for financial assistance under any other Federal program for the relevant passenger rail station or service by increasing ridership, tenant lease payments, or other activities that generate revenue exceeding costs.”²

To be eligible, a TIFIA TOD project must either (I) improve or construct public infrastructure or (II) be economic development and improve or construct public infrastructure and meet the other relevant statutory eligibility criteria.

The Bureau’s interpretation, of and methods for, evaluating the above underlined statutory language are the subject of the guidance provided in this section of the FAQ.

¹23 U.S.C. § 601(a)(12)(E)(i)(I)

²23 U.S.C. § 601(a)(12)(E)(i)(II)

4.1) How does the Bureau evaluate satisfaction of the TIFIA TOD eligibility criteria “located within walking distance of, and accessible to…”?

Public infrastructure projects within ½ mile of a qualified facility or station (see definitions of qualified facilities and stations in the FAQs below) are de facto eligible under this criterion. Projects not within ½ mile, may be eligible under this criterion, but eligibility is not de facto. Additionally, sponsors should be able to demonstrate, based on reasonable analysis, that people can and will safely and conveniently walk on a regular basis to the qualified facility/station, which is evidence of the facility/station being accessible to the project. Whether projects are within ½ mile of a qualified facility/station is determined based on the most direct, accessible pedestrian path between the two closest entrances to the project and facility/station, respectively. In some cases, it may not be immediately clear exactly where the project’s or facility/station’s closest entrances are and what the most direct, accessible pedestrian path between them is. The Bureau will make these determinations on a case-by-case basis after close examination of the unique circumstances of each project and related qualified facility/station and will measure the distance using geographic information system tools.¹

¹This method of analyzing “walking distance” is based on the same method used in FTA’s Circular on Joint Development (FTA C 7050.1B), published in 2020, to evaluate a project’s “functional relationship” to transit, which incorporates the same method established in FTA’s statement of policy, published in 2011, on the eligibility of pedestrian and bicycle improvements under Chapter 53 grant programs. (76 FR 52046, Aug. 19, 2011). In the 2011 statement of policy, FTA states, “research indicates that: (1) Pedestrians walk at a pace of approximately two miles per hour, and (2) pedestrians generally are willing to walk approximately fifteen minutes to reach a public transportation stop or station. Accordingly, pedestrians generally are able to walk a distance of approximately one-half mile during a fifteen minute walk at a two mile per hour pace. Based on this information, FTA hereby establishes a one-half mile de facto pedestrian catchment area. This de facto catchment area will simplify the process of determining whether a pedestrian improvement is eligible for FTA funding.”

4.2) Is there a difference between a “facility” and a “station”? Are these different from a “stop”?

Yes and yes. The terms “facility” and “station” are understood to have the same meanings as they are defined in FTA’s National Transit Database Reporting Policy Manual, and there are differences between the definitions of a “facility” and a “station,” and both are distinct from the definition of a “stop.”

A “station” means a passenger boarding/alighting facility with a platform, which may include:

Stairs, elevators, escalators, passenger controls (e.g., faregates or turnstiles), canopies, wind shelters, lighting, signs,
Buildings with a waiting room, ticket office or machines, restrooms, or concessions.

Typical examples of “stations” include:

Fixed guideway passenger facilities (except for on-street cable car and light rail stops), including busway passenger facilities; underground, at-grade, and elevated rail stations; and ferryboat terminals.
Transportation / transit / transfer centers, park-and-ride facilities, and transit malls with the above components, including those only utilized by motor buses.

The definition of a “facility” encompasses the definition of a “station” and more. In other words, a “station” is a type of “facility” and there are examples of “facilities” that are not “stations.” For example, the NTD Reporting Policy Manual defines a “passenger facility” to include a “simple at-grade platform” and “exclusive platform,” which include low-level or raised platforms on-street or in street or highway medians that typically include shelters, canopies, lighting, signage, and/or ticket vending machines, and are often served by light rail, streetcar, and cable car transit. For bus modes, to be defined as a “simple at-grade platform” or an “exclusive platform,” a significant structure must be present; these definitions do not include a “simple bus shelter.” The NTD Reporting Policy Manual goes on to note that, in addition to passenger facilities, a “facility” is defined as, for example, administrative offices owned by a transit agency or a building where the routine maintenance and repairs of transit vehicles are conducted.

Neither the definitions of a “station” nor a “facility” encompass the definition of a “stop,” which is typically an on-street location at the curb or in a median, sometimes with a shelter, signs, or lighting for bus, light rail, cable car, etc., but no platforms and no significant structure.

A key distinction between the definitions of a “station” and a “facility,” and the definition of a “stop” is the presence of a platform at the former and not the latter.

4.3) What is the definition of “fixed guideway transit”?

The term “fixed guideway transit” is understood to have the same meaning as it is defined in FTA’s National Transit Database Reporting Policy Manual. “Fixed guideway transit,” means a public transportation service that uses and occupies a separate right-of-way or rail for the exclusive use of public transportation; or a fixed catenary system over roadway useable by other forms of transportation.

“Public transportation” [or “transit”] means “regular, continuing shared-ride surface transportation services that are open to the general public or open to a segment of the general public defined by age, disability, or low income; and does not include intercity passenger rail transportation provided by [Amtrak] (or a successor to [Amtrak]); intercity bus service; charter bus service; school bus service; sightseeing service; courtesy shuttle service for patrons of one or more specific establishments; or intra-terminal or intra-facility shuttle services.”¹

Examples of “fixed guideway transit” include:

all rail modes, such as heavy rail, light rail, or commuter rail;
inclined plane, cable car, monorail, or automated guideway;
bus rapid transit² and trolleybus;³ and
aerial tramway⁴ and ferryboat⁵.

¹49 U.S.C. § 5302(15)

²Per FTA’s NTD Reporting Policy Manual, “bus rapid transit” means “fixed-route bus systems that operate at least 50 percent of the service on fixed guideway. These systems also have defined passenger stations, traffic signal priority or preemption, short headway bidirectional services for a substantial part of weekdays and weekend days; low-floor vehicles or level-platform boarding, and separate branding of the service. Agencies typically use off-board fare collection as well.”

³Per FTA’s NTD Reporting Policy Manual, “trolleybus” means “a transit mode comprising electric rubber-tired passenger vehicles, manually steered and operating singly on city streets. Vehicles are propelled by a motor drawing current through overhead wires via trolleys, from a central power source not onboard the vehicle.”

⁴Per FTA’s NTD Reporting Policy Manual, “aerial tramway” means “a transit mode that is an electric system of aerial cables with suspended powerless passenger vehicles. The vehicles are propelled by separate cables attached to the vehicle suspension system and powered by engines or motors at a central location not on-board the vehicle.”

⁵Per FTA’s NTD Reporting Policy Manual, “ferryboat” means “a mode comprising vessels carrying passengers and / or vehicles over a body of water that are generally diesel powered. Ferryboat may also include hovercraft, hydrofoil, and other high-speed vessels. Intercity ferryboat (FB) service is excluded, except for that portion of such service that is operated by or under contract with a public transit agency for predominantly commuter services. Predominantly commuter service means that for any given trip segment (i.e., distance between any two piers), more than 50 percent of the average daily ridership makes a return trip on the ferryboat on the same day.”

4.4) What is the definition of “passenger rail”?

Passenger rail is understood to mean passenger service provided by a “railroad,” as that term is defined in 49 U.S.C. §22401(12). In general, this includes “commuter rail” or “intercity passenger rail” services. Examples of “commuter rail” include Maryland Area Regional Commuter and Virginia Railway Express services in the Washington, D.C. area. An example of “intercity passenger rail” includes Amtrak service.¹

¹If you have questions about whether a specific passenger rail service is or is not “commuter rail” or “intercity passenger rail,” please contact the Bureau.

4.5) What is the definition of “intercity bus”?

The term “intercity bus” is understood to have the same meaning as it is defined in FTA’s National Transit Database Reporting Policy Manual. “Intercity bus” is public or private bus services that provide regularly scheduled service that is open to the public using over-the-road buses that operate with limited stops between two urbanized areas or that connect rural areas to an urbanized area, and where 50 percent or more of the passengers do not make a same-day return trip.

4.6) What is the definition of “intermodal”?

The term “intermodal” is understood to mean the ability to connect more than one means or mode of transportation. In the context of the TIFIA TOD statute, the term “intermodal facility” is understood to mean a facility that connects at least one of the other three modes listed before it in the statute, i.e., “fixed-guideway transit,” “passenger rail,” or “intercity bus.”

4.7) What is the definition of “rail service”?

In this context, the term, “rail service” is understood to have the same meaning as the term “rail modes” as it is defined in FTA’s National Transit Database Reporting Policy Manual. “Rail modes” includes transit modes whose vehicles travel along fixed rails – bars of rolled steel - forming a track. The vehicles are usually electrically propelled typically through motors onboard the vehicles, but motors may also be at a central location not onboard the vehicles to pull the vehicles by cables. For commuter rail, vehicles may be self-propelled or may be drawn by a locomotive. NTD recognizes nine rail modes: Alaska Railroad; cable car; commuter rail; heavy rail; hybrid rail; inclined plane; light rail; monorail/automated guideway transit; and streetcar. Additionally, intercity passenger rail is understood in this context to be a “rail service.” An example of “intercity passenger rail” includes Amtrak service.

5) Is there a minimum or maximum total eligible cost threshold for TIFIA TOD projects?

Yes and no. TIFIA TOD projects are subject to a minimum total eligible cost threshold of $10 million.¹ However, the TIFIA program does not specify a maximum total eligible cost threshold.

¹23 U.S.C. § 602(a)(5)(B)(ii)

Federal Requirements

1) Do I need to comply with federal requirements to receive TIFIA or RRIF credit assistance?

Yes, all projects and sponsors must comply with applicable laws, regulations, Executive Orders, and guidance as a condition of receiving federal financial assistance. Potential borrowers are strongly encouraged to familiarize themselves with the TOD federal requirements prior to initiating any project activity (including solicitation/ contractor selection, land acquisition, sitework, etc.).

2) If I am only seeking take-out or permanent financing of short-term construction debt does my project need to comply with federal requirements during and before construction?

Yes, the Bureau may only finance projects that fully comply with federal requirements regardless of when the financial assistance is secured. Projects must adhere to these requirements during all phases of the project lifespan—pre-construction, construction, and post-construction—until repayment of loan.

3) Do TOD projects need to comply with Federal Surface Transportation Planning and Programming Requirements (23 U.S.C § 602(a)(3); 23 U.S.C. §§ 134 - 135; 49 U.S.C. §§ 5303 - 5304; 23 CFR Part 450)

Transportation planning and programming requirements apply to certain categories of TIFIA and RRIF projects that receive or are eligible to receive federal assistance under Title 23 or Chapter 53 of Title 49 of the United States Code. The TIFIA “public infrastructure” and RRIF “economic development” statutes authorize a broad range of TOD projects, some of which may not be subject to the federal surface transportation planning and programming requirements, though other Federal requirements would still apply.

Applicants/borrowers should consult the Bureau to determine whether the Federal planning and programming requirements apply to a project.

4) Is a Value-for-Money (VfM) analysis required for public-private partnership (P3) TOD projects?

A VfM or similar comparative analysis is required for a project of any size seeking TIFIA or RRIF credit assistance if the project is developed using a P3 delivery method. It is also required if a project meets all five of the following requirements: 1) cost of more than $750 million, 2) carried out by a public entity, 3) located in a state with authorizing P3 laws, 4) applying for a TIFIA or RRIF loan, and 5) generates user fees. For the purposes of a VfM analysis, a public-private partnership is defined as a long-term arrangement between a public sponsor and a private entity for delivery of a project that includes at least the following elements: design, construction, financing, and either operations or maintenance or both of the project over a term specified in a concession agreement.

5) Does the National Environmental Policy Act apply to TIFIA and RRIF credit assistance?

Yes, NEPA applies to projects receiving Federal financial assistance, including Bureau loans. Completion of the NEPA review process is a prerequisite to financial close. For many projects to be eligible for a Bureau loan, NEPA must be complete before milestones such as property acquisition, construction activities, and potentially prior to entering into construction contracts. The NEPA process may be completed prior to or concurrently with the Bureau application process. The Bureau requires completion of the NEPA process before extending an invitation to apply, a milestone near the end of the Creditworthiness Review phase of the application process.

6) What is a NEPA “Class of Action” and how is it determined?

A class of action under NEPA refers to level of analysis and documentation needed to satisfy NEPA requirements. Depending on the significance of the impact, there are three classes of action that may be applied to projects to demonstrate compliance with NEPA. They include, in order by the potential for impacts: categorical exclusion (CE), environmental assessment (EA), and environmental impact statement (EIS). The class of action is determined based on the significance of a project’s potential impacts, not the project’s size or cost. The NEPA class of action is ultimately the lead Federal agency’s determination to make and “significance” under NEPA is determined by the context, intensity, and duration of potential impacts.

7) Does a “Categorial Exclusion” (CE) Class of Action Determination (COA) mean that my project is exempt from the National Environmental Policy Act (NEPA)?

A categorical exclusion (CE) under NEPA indicates that a specific federal action has been determined by a federal agency to not normally have significant environmental impacts. Application of a CE to a particular federal action, however, does not exempt the action from all environmental analysis. Use of a CE can streamline the process by allowing agencies to forgo the preparation of an environmental assessment (EA) or environmental impact statement (EIS), unless there are extraordinary circumstances that could lead to significant impacts. Even if your project qualifies for a CE, some documentation will likely be required to ensure there is no potential for significant impact and that other applicable laws and regulations (e.g., Section 106 of the National Historic Preservation Act, the Endangered Species Act, etc.) have been satisfied. Agencies often use an environmental worksheet to verify that the proposed action falls within the CE criteria. Each federal agency has procedures for the use of CEs. In summary, a CE can be a quicker way to demonstrate compliance with NEPA for certain projects, but some analysis and documentation are generally still required, especially for capital projects, to ensure no significant impact may occur and to document compliance with other applicable laws.

8) Could a prior state environmental approval for my project fulfill National Environmental Policy Act (NEPA) requirements?

While complying with state environmental approvals is important, they do not satisfy the requirements of NEPA. NEPA mandates that federal agencies consider the environmental impact of proposed actions before funding, authorizing, or implementing them. Various states, including the District of Columbia, have their own state environmental laws that are similar to NEPA, but these are separate from the federal NEPA requirements. Therefore, if your project has a previous state environmental approval, it’s essential to assess whether it aligns with NEPA’s specific criteria and procedures. Please consult with the Bureau to see how a state environmental process might satisfy some aspects of a NEPA compliance process.

9) What types of TOD projects could potentially qualify for a Categorical Exclusion (CE)?

TOD project types may qualify for the following FTA CEs:

Rehabilitation or conversion of an existing office building to residential or mixed use within substantially the same footprint that meets the requirements in 23 CFR 771.118(c)(8).
Reconstruction or construction of a new commercial building primarily using land disturbed for transportation use that meets the requirements in 23 CFR 771.118(c)(9).

Other project types may qualify as a CE under the d-list CE authority (23 CFR 771.118(d)) when documentation demonstrates that there are no significant impacts related to the project in accordance with 23 CFR 771.118(a) and (b).

10) If I have completed a state environmental process, will I need to repeat all studies and analyses to meet National Environmental Policy Act (NEPA) requirements?

The answer depends on the specific circumstances and the alignment between state and federal environmental review requirements. If your state environmental process aligns closely with NEPA, you may be able to leverage existing studies and analyses to supplement the NEPA documents. Note that state environmental process documentation should be validated so that it is representative of the current existing conditions for a project (i.e., verify the data is not old).

11) Can a National Environmental Policy Act (NEPA) approval from one federal agency fulfill NEPA requirements for another federal agency?

NEPA’s regulations allow for the adoption of another agency’s NEPA documents if certain criteria are met. In general, an agency may adopt a draft or final EIS, EA, or portion thereof, or a CE determination if the action covered by that determination and the adopting agency’s proposed action are substantially the same. The adopting agency must ensure that the original analysis is still relevant and that any necessary updates are made to address agency-specific actions and in accordance with the adopting agency’s NEPA procedures. Please consult with the Bureau for guidance on how NEPA adoption might be used.

12) What is the intake process to initiate NEPA?

The intake process involves obtaining comprehensive information about a project to enable a Federal Agency to ascertain the NEPA lead, NEPA class of action, and a reasonable project schedule. This information encompasses, but is not restricted to, the project description, purpose and need, alternative analysis, impact analyses and project schedule. The initiation of the NEPA process is triggered by an official class of action determination provided by the lead federal agency. For an EIS, a notice of intent initiates the NEPA process, which is a formal announcement made by a federal agency that is submitted to the Federal Register. Potential borrowers are encouraged to engage with the Bureau early during the Initial Engagement phase to ensure compliance with NEPA requirements and avoid taking actions that could prejudice the NEPA process and disqualify the project from federal financial assistance.

Market Study

The Build America Bureau (Bureau) is authorized to finance a broad range of transit-oriented development (TOD) projects under the TIFIA and RRIF credit programs, including real estate projects with project-generated revenue pledges (e.g., leasing of retail/office space, rental unit payments by individual tenants, etc.). These “project financing” transactions present market demand risk that must be evaluated to determine the feasibility of the project and repayment.

The purpose of the market study is to substantiate the financial feasibility and economic impact of a project finance TOD loan. It evaluates the project’s feasibility within the context of the broader regional economy, local market conditions, and the market demand for the relevant asset class – demonstrating the project’s financial proposal is supported by reasonable assumptions, analyses, and conclusions.

The following guidance includes requirements for the market study and qualifications for the market analyst selected by the applicant to complete the study.

1) In what circumstances does the Bureau require a market study?

Applicants must provide a market study for any credit assistance request for which the loan is partially or fully repaid with revenues generated by the project itself (e.g., lease payments) without relying on external credit support for debt repayments. The market study is necessary to demonstrate the project’s financial projections are reasonable and that the anticipated revenue stream can support the RRIF/TIFIA loan repayment.

For example, a commercial real estate developer seeking a loan pledges tenant lease payments as the loan repayment source. As this revenue is derived from the project’s completion and market conditions, a market study is necessary to demonstrate demand for the property type in the market geography.

2) At what phase of the application process does a market study need to be submitted to the Bureau?

The market study must be submitted to the Bureau during the Project Development phase of the process. Submission of the market study, with the complete and final Letter of Interest (LOI) package, are required to advance the project to the Creditworthiness Review phase.

3) At what phase of the application process should the market study be initiated?

Prior to initiating the market study, the potential borrower should submit a draft Letter of Interest to the Bureau and work with the assigned project development lead to ensure a reasonable path to borrower and project eligibility and compliance with program and federal requirements. Applicants are encouraged to initiate the market study after the Bureau makes preliminary determinations of borrower and project eligibility and issues a preliminary determination letter to the applicant.

4) What are the qualifications of a market analyst conducting a commercial real estate market study?

Minimum qualifications of the market analyst conducting the market study include:

Market analyst must be independent of, and may not be affiliated with, the Bureau, other lenders in the capital structure, broker, developer, applicant, borrower, lender(s), or any individual or institution involved in any other financial role in the application;
Have at least 3 years of experience performing market studies for income-producing properties;
Be currently active and regularly engaged in performing market studies for comparable properties (office, affordable housing, etc.);
Be knowledgeable concerning real estate market conditions and financing trends in the geographic market area where the project is located; and
Be experienced in performing market studies with the complexity and characteristics similar to those of the subject project. If the subject contains commercial space, LIHTC, or other subsidies, the market analyst must have acceptable prior experience with comparable properties.

5) Does the Bureau have criteria for the market analyst?

The applicant/borrower should demonstrate the market analyst meets the qualifications. The Bureau recommends that applicants discuss with Bureau staff the prospective analyst’s qualifications, experience, and credentials for the specific property type and locality.

If a market study is completed prior to the Bureau being engaged, the Bureau will evaluate and qualify the study as described below.

6) What information does the market study need to include?

A market study should include the following:

The market study must discuss conditions and trends in the larger metropolitan statistical area, region, or county.
The study must describe the competitive submarkets, competing existing, under construction, and planned buildings, available supply and absorption, forecast rental rates and lease-up incentives three to five years post stabilization, income and expense projections and associated drivers, as well as the below additional considerations for the relevant project property type:
- Multifamily: the number of renter households, retail businesses, commercial businesses, with sufficient incomes to afford the type of rents/leases proposed at present
- Hotel, event, and leisure: Occupancy, REVPAR, ADR, flag chain assumptions, hotel and event management assumptions, and event bookings by type
- Office: Pre-leasing activity, tenant improvement and leasing commission assumptions, PILOT, and ground lease assumptions as applicable
The study must also identify and discuss any risks associated with longer-term changes in rental demand (during the term of the loan).
In addition, the market study must estimate the number of leasable spaces that the market could reasonably absorb over a specified forecast period, which is typically 3 years, taking into consideration competitive units in the existing inventory, units currently under construction, and units in the planning pipeline, as well as the gross and contract rents of those units.

All studies should designate the Build America Bureau as an intended user, along with the other lender(s) and the borrower or developer.

7) Is there a template for a market study?

Each market study should be tailored to reflect the nuances of the market and specific project under consideration.

The following outline serves as an illustrative example that is neither comprehensive, nor specific to any property type. Please consult the Bureau if you have any questions related to the methodology or content of the study.

Introduction
Approach
Background
Analysis, Observations, Key Findings
- Competitive submarkets
- Competitive existing, under construction and planned buildings
- Comparable Building chart
- Comparable Building descriptions
- Primary Comparable Properties
- Secondary Comparable Properties
Available Supply and Absorption
Vacancy Rates
Leasing Velocity and Absorption
Observations and Conclusions
Supply and Demand Model
Conclusion
Revenue Items in the Model
Market Rent/Potential Base Rent
Rental Increases
General Vacancies and Collection Loss
Free Rent
Operating Expenses Benchmarking
Operating Expenses
Real Estate Taxes
Ground Rent
Appendix
- PILOT Calculation
Sources of Data
Limiting Assumptions
Market Analyst Qualifications

8) How does the Bureau evaluate the market study?

During the Creditworthiness Review phase, the Bureau and its technical advisors review the market study to understand the key assumptions behind the project’s financial plan. During this review, the Bureau may determine whether the study adequately substantiates the inputs, assumptions, and conclusions of the project’s financial performance and overall feasibility. The Bureau may request additional information or updates to the market study during the Creditworthiness Review phase.

Last updated: Wednesday, December 11, 2024

Build America Bureau Credit Programs Office

TOD Frequently Asked Questions

Table of Contents:

General

Project and Borrower Eligibility

RRIF Eligibility

TIFIA Eligibility

Federal Requirements

Market Study

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TOD Frequently Asked Questions

Table of Contents:

General

Project and Borrower Eligibility

RRIF Eligibility

TIFIA Eligibility

Federal Requirements

Market Study