The Bureau manages several programs that provide project finance assistance to State, local, and private project sponsors, reducing project costs and increasing flexibility. Project finance gives State and local project sponsors the ability to accelerate the delivery of needed infrastructure projects, often in partnership with private sector investors.
For many transportation agencies in the U.S. public-private partnerships (P3s) offer an opportunity to tap new financing sources and transfer certain project delivery risks. These partnerships differ from standard procurement practice wherein the public sponsor controls each phase — design, construction, finance, operation and maintenance – of the project’s lifecycle. In a P3, a single private entity (which may be a consortium of several companies) assumes responsibility for multiple phases, accepting long-term risks in return for prospective rewards.
The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides credit assistance for qualified projects of regional and national significance. Many large-scale, surface transportation projects - highway, transit, railroad, intermodal freight, and port access - are eligible for assistance. Eligible applicants include state and local governments, transit agencies, railroad companies, special authorities, special districts, and private entities. The TIFIA credit program is designed to fill market gaps and leverage substantial private co-investment by providing supplemental and subordinate capital. Each dollar of Federal funds can provide up to $10 in TIFIA credit assistance and support up to $30 in transportation infrastructure investment.
Under this program, the FRA Administrator is authorized to provide direct loans and loan guarantees up to $35.0 billion to finance development of railroad infrastructure. Up to $7.0 billion is reserved for projects benefiting freight railroads other than Class I carriers. Direct loans can fund up to 100% of a railroad project with repayment periods of up to 35 years and interest rates equal to the cost of borrowing to the government. Eligible borrowers include railroads, state and local governments, government-sponsored authorities and corporations, joint ventures that include at least one railroad, and limited option freight shippers who intend to construct a new rail connection.
Providing private developers and operators with access to tax-exempt interest rates lowers the cost of capital significantly, enhancing the investment prospects for transportation infrastructure. Increasing the involvement of private investors in highway and freight projects generates new sources of money, ideas, and efficiency. The law limits the total amount of such bonds to $15 billion and directs the Secretary of Transportation to allocate this amount among qualified facilities. The $15 billion in exempt facility bonds is not subject to the state volume caps.
Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies (FASTLANE)
The FASTLANE program provides dedicated, discretionary funding for projects that address critical freight issues facing our nation’s highways and bridges. It is also in line with the Department’s draft National Freight Strategic Plan released in October 2015, which looks at challenges and identifies strategies to address impediments to the efficient flow of goods throughout the nation.