Transportation Infrastructure Finance and Innovation Act

2016 Report to Congress

U.S. Department of Transportation

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How TIFIA Benefits Transportation

Introduction – Why TIFIA Matters.

The Transportation Infrastructure Finance and Innovation Act (TIFIA) program is intended to fill market gaps and leverage substantial private co-investment by providing flexible credit assistance to projects that support critical improvements to the nation’s surface transportation system. Private investment can be in the form of debt or equity. Debt can be in the form of bonds, sold as taxable or tax-exempt investments in the United States (U.S.) capital markets, or private bank loans. Through TIFIA, the U.S. Department of Transportation (DOT or Department) can provide Federal credit assistance to surface transportation projects such as highway, transit, rail, and intermodal freight projects including seaports, as well as to State Infrastructure Banks (SIBs) and Transit Oriented Development (TOD) projects.

The TIFIA program offers three types of financial assistance featuring maturities up to 35 years after substantial completion of the project. Secured loans are direct Federal loans providing long-term financing of capital costs with flexible repayment terms. Loan guarantees provide full-faith-and-credit guarantees by the Federal Government of a portion of project loans made by institutional investors. Standby lines of credit represent secondary sources of funding in the form of contingent Federal loans that can supplement project revenues during the first 10 years of project operations.

Identifying a constructive role for Federal credit assistance begins with the acknowledgement that in comparison to most investors, the Federal Government has a naturally longer-term investment horizon, which enables it to more readily absorb the risks related to project financings.

Absent typical capital market investor concerns regarding return horizons and financial liquidity, the Federal Government can become the "patient investor," whose long-term view of asset returns enables the project's non-Federal financial partners to meet their investment goals. This allows borrowers to receive more favorable financing packages. The TIFIA program demonstrates that the Federal Government can perform a constructive role in supplementing, but not supplanting, existing markets for financing transportation infrastructure projects.

Purpose of this Report[1]

Congress directed the Secretary of Transportation (the Secretary) to submit a biennial report summarizing the financial performance of projects receiving assistance under TIFIA. The report must include a recommendation as to which governance structure best serves the objectives of TIFIA by: (i) continuing the program under the authority of the Secretary, (ii) establishing a government corporation or a GSE to administer TIFIA, or (iii) phasing out the program and relying on the capital markets to fund the types of infrastructure investments assisted by TIFIA without Federal participation.

Since the 2014 Report to Congress, the TIFIA Joint Program Office (JPO) has executed credit agreements for 13 loans to support 11 TIFIA projects. This represents $5.7 billion in credit assistance to support $18.8 billion in total project costs, and marks a 33% increase in credit assistance since the 2014 Report.

Legislative History

Congress created the TIFIA credit program as part of its 1998 enactment of the Transportation Equity Act for the 21st Century (TEA-21, P.L. 105-78), as amended by the TEA-21 Restoration Act (Title IX of P.L. 105-206) and Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU, P.L. 109-59), codified in Sections 601 through 609 of Title 23, United States Code (U.S.C.). In 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21, P.L. 112-141) reauthorized and amended the TIFIA credit program.

On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, (FAST Act, P.L. 114-94). The FAST Act made a number of changes to the TIFIA program structure including the terms and conditions under which the DOT can provide TIFIA credit assistance as well as the expansion of eligibility requirements. These changes will allow more projects to be funded with the addition of new categories of eligible projects, reduction in project cost thresholds, improvements to the application process, changes in the use of Master Credit Agreements, and expansions for the use of Federal funds for TIFIA. The Department is working diligently to implement these changes.

Funding

The TIFIA program is governed by the Federal Credit Reform Act of 1990, which requires the DOT to establish a capital reserve, or "subsidy amount," sufficient to cover the estimated long-term cost to the Federal Government of a Federal credit instrument, including any expected credit losses, before the DOT can provide TIFIA credit assistance. The FAST Act authorizes $1.435 billion in capital over five years for the TIFIA credit assistance program: $275 million in FY 2016, $275 million in FY 2017, $285 million in FY 2018, $300 million in FY 2019, and $300 million in FY 2020. This represents a significant reduction from FY 2015 funding levels of $1 billion. Although funding per year has declined, the FAST Act allows TIFIA to use carryover from excess MAP-21 and SAFETEA-LU funds to supplement new funding levels.  Additionally, the FAST Act permits the use of grant funds to cover TIFIA subsidy and administrative costs.

TIFIA successfully stretches the financing power of the Highway Trust Fund (HTF) by charging a subsidy cost, on average 7% of the TIFIA loan amount, against TIFIA’s budgetary authority. This allows TIFIA to leverage additional capital derived from the Federal Government or the HTF budget. Historically, and based on the most current estimates, $1 of TIFIA program funds will support a TIFIA loan of approximately $14 and result in infrastructure investment of up to $40, when taking into account other state, local, and private sector investments. The following chart shows how each TIFIA loan is leveraged as a percent of total project costs.

Leveraging Federal Dollars to Enhance the Nation’s Infrastructure

Description of Chart - This chart shows how each of the TIFIA-approved at the time of this Report leverage  Federal dolllars.  The maximum amount of Federal Assistance is 33 percent.  Eleven of the projects required less than 20 percent; thirteen leveraged between 20 and 29 percent and the remaining 33 projects leveraged more than 30 percent.

Program Overview and Eligibility

The types of projects that are eligible for TIFIA credit assistance under the TIFIA program include: highways and bridges, intelligent transportation systems, intermodal connectors, transit vehicles and facilities, intercity buses and bus facilities, TODs, certain freight facilities (e.g., freight transfer facilities), passenger rail vehicles and facilities, certain port projects, certain rural infrastructure projects, and surface transportation facilities at airports. Both public and private entities seeking to finance, design, construct, own, or operate an eligible surface transportation project may apply for TIFIA credit assistance. Examples of eligible entities include state and local governments, SIBs, state departments of transportation, transit agencies, railroad companies, special authorities, special districts, and private firms or consortia that may include companies specializing in engineering, construction, materials, and/or the operation of transportation facilities. The graphic below depicts some of the eligible TIFIA applicants and project types.

Eligible TIFIA Applicants and Projects

Description of Chart - List of Eligible TIFIA Applicants and Projects

Applicants

• State Governments
• State Infrastructure Banks
• Private Firms
• Special Authorities
• Local Governments
• Transportation Improvement Districts

Projects

• Highways and Bridges
• Intelligent Transportation Systems
• Intermodal Connectors
• Transit Vehicles and Facilities
• Intercity Buses and Facilities
• Freight Transfer Facilities
• Pedestrian Bicycle Infrastructure Networks
• Transit-Oriented Development
• Rural Infrastructure Projects
• Passenger Rail Vehicles and Facilities
• Surface Transportation Elements of Port Projects

To be eligible for TIFIA credit assistance, a project must have at least $50 million in total costs, unless it qualifies under intelligent transportation system (ITS), rural, local, or TOD project guidelines.

• ITS projects must have total project costs of at least $15 million to qualify.
• Rural infrastructure projects must have total project costs of at least $10 million and no more than $100 million to qualify.
• Local infrastructure projects with significant local government participation must involve at least $10 million in project costs.
• TOD projects must involve at least $10 million in project costs to qualify.

In addition, the senior debt must be rated investment grade by two rating agencies, unless the total amount of the debt is less than $75 million, in which case only one is required. The project must also have a dedicated revenue stream for repayment and meet all applicable Federal requirements, including but not limited to Civil Rights, Environmental, Uniform Relocation, Titles 23 and 49, and others, as applicable.

Program Administration

Implementation of the TIFIA program is the responsibility of the Secretary of Transportation. As currently structured, the DOT has administered TIFIA via a Joint Program Office. The TIFIA JPO is organized by three key program areas: loan origination, credit analysis and budgeting, and portfolio management. The Office of the Chief Financial Officer and Assistant Secretary for Budget and Programs has overseen the TIFIA program and the TIFIA JPO on behalf of the Secretary. This includes evaluating individual projects and providing overall policy direction and program decisions for the TIFIA program. In addition, the program is supported by counsel in the Offices of the Chief Counsel from certain modal offices.

The DOT’s ongoing work to implement the National Surface Transportation and Innovative Finance Bureau (Bureau), authorized under the FAST Act, builds upon the Administration’s efforts over the past two years to stand up the Build America Transportation Investment Center (BATIC). The Bureau is responsible for administering the TIFIA application process, providing assistance, and communicating best practices for financing and funding opportunities to sponsors of eligible projects. As such, the Bureau will continue to expand access to and demand for this already successful credit assistance program. Under the Bureau, the DOT anticipates a reduction in uncertainty and delays related to environmental reviews and permitting, project delivery, and procurement.

The Bureau is a single point of contact and coordination for states, municipalities, and project sponsors looking to leverage Federal transportation expertise, applying for Federal transportation credit programs, and exploring ways to access private capital in public-private partnerships (P3s). Notably, in their explanatory statement of the FAST Act, Congressional conferees explicitly recognized the accomplishments of the Administration’s Build America Investment Initiative in increasing infrastructure investment and economic growth.

The Bureau is managed by an Executive Director reporting to the Under Secretary of Transportation for Policy. The FAST Act also establishes a Council on Credit and Finance (Council), chaired by the Deputy Secretary, which is charged with reviewing and approving innovative finance applications, making recommendations to the Secretary, and monitoring approved projects on a regular basis. This new Council will build on the Credit Council that the DOT previously established through administrative measures.

TIFIA’s Crucial Role in Transportation Financing and Project Benefits

Program Goals and Accomplishments

The TIFIA program has played a significant role in delivering infrastructure projects. Since its launch, the TIFIA program has financed 56 projects across the U.S., including five intermodal projects, 37 highway projects, and 14 transit projects. Currently, the TIFIA program’s portfolio represents approximately $82.6 billion in infrastructure investment spread across the country. The TIFIA program has dramatically increased its investment and expanded its portfolio into new states and municipalities. The TIFIA program’s portfolio spans all regions of the country, covering a total of 20 states, including the District of Columbia and Puerto Rico.

The TIFIA program’s fundamental goals are to fill market gaps by encouraging substantial private and non-Federal co-investment and providing flexible credit assistance to facilitate surface transportation projects that support critical improvements to the nation’s surface transportation system. The TIFIA program leverages Federal dollars in a time of scarce budgetary resources, facilitating private participation in transportation projects, and encouraging innovative financing mechanisms that help accelerate project delivery. By offering flexible repayment terms and attracting private capital, the TIFIA program stimulates infrastructure investment that would be significantly or permanently delayed without TIFIA financing, while successfully limiting Federal credit risk. The subsections below provide additional detail on the unique advantages provided by the TIFIA program for our national transportation system.

TIFIA supplements existing financial markets/fills market gaps: Due to the complexity and scale of transportation projects, obtaining credit assistance from capital markets may cause delays due to uncertainties in project cash flows or schedules. TIFIA’s more flexible repayment terms and lower interest rates can allow projects with longer construction timelines and revenue ramp-up periods to adequately make debt service payments and proceed without delay.

TIFIA acts as a flexible, “patient investor”: When compared to most investors, the Federal Government has a naturally longer-term investment horizon, which enables it to more readily absorb the risks inherent in project financings. Absent typical capital market investor concerns regarding timing of payments and financial liquidity, the Federal Government can become the “patient investor” whose long-term view of asset returns enables the project’s non-Federal financial partners to meet their investment goals, allowing the borrower to receive a more favorable financing package.

TIFIA limits Federal credit risk by relying on market discipline: Although TIFIA provides substantial benefits and flexibilities when compared to similarly sized credit instruments in the capital markets, TIFIA applies strict market discipline to limit Federal exposure and avoid credit defaults. For instance, by limiting TIFIA assistance to no more than 49% of eligible project costs, project sponsors and co-investors are more inclined to protect their investments and enhance the creditworthiness of the project. Additionally, TIFIA ensures creditworthiness by requiring most projects to obtain an investment-grade rating for senior debt by two rating agencies. Lastly, projects must provide dedicated revenues pledged to repayment. This further enhances a project’s credit quality by requiring certain revenues to cascade through to TIFIA debt service before being applied to other uses.

TIFIA encourages private co-investment/new revenue streams: TIFIA plays a strong role in incentivizing traditional private investment as well as P3s. By providing low-cost subordinate debt, flexible terms, and a long investment horizon, TIFIA can enhance the project’s financial structure and make private investment viable. Further, TIFIA has typically limited its funding to 33% of the total project cost, often requiring project sponsors to structure their plan of finance to include private co-investment. The following chart shows the amount of private debt and equity that projects have obtained as a percentage of total project costs.

Description of Chart - This chart shows the amount of private debt and equity as a percentage of total project costs.  Of the projects that included private debt or equity, 13 projects included more than 50 percent; 13 included between 30 and 50 percent; 15 provided less than 30 percent.

Because the TIFIA program offers credit assistance, rather than grant funding, infrastructure projects  typically pledge revenue streams generated through user charges or other dedicated funding sources. Under TIFIA, new revenue streams have been a source of project financing and have included the use of revenue generated through real estate and transit-oriented development.

How TIFIA Helps to Address Infrastructure Needs

With diminishing Highway Trust Fund revenue and increasingly tight state budgets, public sources of funds for transportation are often difficult to secure. At the same time, our nation is seeing more large-scale transportation projects in urgent need of attention, as our aging infrastructure reaches the end of its useful life. TIFIA was created, in part, because state and local governments that sought to finance large-scale transportation projects with tolls and other forms of user-backed revenue often had difficulty obtaining financing at reasonable rates due to the uncertainties associated with these revenue streams.

Additionally, TIFIA can solidify community support for the project by helping induce other public or private investors to participate. In some cases, Federal financial support for the project can ease the way in securing commitments from other funding partners. A Federal credit commitment can also help assure other potential investors that the project will benefit from appropriate oversight.

In the preparation of this report, the project sponsors for active projects provided varying levels of detail related to the specific benefits delivered under TIFIA for their unique projects. In calculating the average benefits derived through TIFIA, the statistics below reflect only the information made available by the project sponsors or through Internet research. As such, the graphic below and the information in this section depict some of the benefits that could be delivered by a TIFIA project on average.

Benefits Derived from TIFIA Projects

Credit-Related Benefits:

• Leverage $1 of TIFIA funds to support a $14 loan, resulting in infrastructure investment of up to $40
• Encourage new revenue streams for private sector co-investment and debt enhancement averaging  $277M
• Utilize TIFIA’s attractive interest rates and repayment terms to save approximately $353M in financing costs 
• Accelerate delivery of significant transportation projects by an average of 13 years

Macro-Economic Benefits:

• Stimulate $6B in economic benefits across U.S. communities 
• Create an average of 24,300 jobs
• Reduce congestion, saving  26 minutes per trip and $1B  annually
• Decrease greenhouse gas emissions by an average of 120,300 metric tons annually
• Reduce congestion and improve mobility to increase safety on our nation’s roads

TIFIA’s Credit-Related Benefits

TIFIA delivers a number of credit-related benefits based on the flexibility the legislation creates for Federal investment in large-scale infrastructure projects. Benefits range from leverage, debt enhancement and co-investment, cost savings that arise from financial structuring provisions that allow for payment flexibility, as well as acceleration of projects.

TIFIA can significantly benefit project financings through its flexible payment features. TIFIA credit provisions aim to facilitate financings by allowing debt service to be structured according to project cash flows. Often this entails deferral of interest not only during construction but also during the project's ramp-up of operations, which private investors may be hesitant to otherwise accept. In addition, the TIFIA program allows borrowers to prepay at any time without penalty. To obtain this same flexibility through the municipal bond market could add significantly to borrowing costs, depending on market conditions.

For example, tolls and other project-based revenues are difficult to predict, particularly for new facilities. Although tolls can become a predictable revenue source over the long-term, it is difficult to estimate how many road users will pay tolls, particularly during the initial "ramp-up" years after construction of a new facility. Similarly, innovative revenue sources, such as proceeds from tax increment financing, are difficult to predict. A critical benefit of the TIFIA program is that the credit assistance is often available on more advantageous terms than in the financial market, making it possible to obtain financing for needed projects when it might not otherwise be possible.

Additionally, the TIFIA program has been the “make or break” source of financing for virtually every P3 transportation project successfully brought to market since the program’s authorization.[2] Given these dynamics, the TIFIA program has become a crucial tool in advancing vital transportation projects that might otherwise be delayed due to their size and complexity.[3]

The following sections highlight examples of the credit-related benefits that TIFIA delivers:

Leverage

Revenue Leverage: TIFIA can help the project leverage a new or untested revenue stream that otherwise might not be marketable. This factor often benefits user-backed financings that involve start-up facilities with uncertain revenues expected to grow over time. Each $1 of Federal funds can provide up to $14 in TIFIA credit assistance and support up to $40 in transportation infrastructure investment.

Senior Debt Enhancement: TIFIA can be structured as junior-lien financing in order to enhance the creditworthiness of senior-lien capital markets financing through greater debt service coverage. This factor is highly correlated with revenue leverage, as projects often utilize subordinate debt to maximize the leveraging of project revenues that secure the debt financing.

Coverage Benefit: TIFIA can increase leveraging potential and improve financing efficiency by accepting lower ratios of projected revenues to total debt service. This factor, relating to the required coverage levels on combined senior and junior debt service, may allow for senior debt enhancement. If the TIFIA coverage requirement is lower than that for conventional funding sources, it enables the project to raise more proceeds.

Co-investment and Debt Enhancement

Public Co-investment: TIFIA can attract or accompany public co-investment in the form of governmental grants or loans. TIFIA assistance can be a cost-effective way for the Federal Government to help a project complete its plan of finance (e.g., in lieu of more grants).

Private Co-investment: TIFIA can attract or accompany private co-investment in the form of debt or equity financing. The participation of at-risk private investors is a key objective of the TIFIA program. Eleven TIFIA financings include private co-investment exceeding 15 percent of their capital costs. Three of the financings receive the majority of their funding from private sources.

By encouraging new revenue streams and stimulating infrastructure investment, the TIFIA program has attracted an average of approximately $277 million in private debt and/or equity for projects that would otherwise be delayed or deferred due to lack of funding. Some examples follow.

Project Example	Project Description	Co-Investment Benefits
I-4 Ultimate Project, FL	This P3 involves the reconstruction and widening of 21 miles of I-4 from Orange County through downtown Orlando to Seminole County. It is being procured as a 40-year design-build-finance-operate-maintain (DBFOM) availability payment concession – the private partner receives milestone and completion payments during and immediately following construction completion.	The private partner, I-4 Mobility Partners, is contributing $103 million in equity and $484 million in debt financing.
I-77 Hot Lanes, NC	The project will add 26 miles of variably priced managed lanes along I-77 and I-277 in Charlotte to the north through Mecklenburg and Iredell Counties. In exchange for undertaking the design, build, operate and maintain (DBOM) project, the private sector partner receives toll revenue generated from the lanes.	The private sector partner, Cintra Infraestructuras, S.A., will invest the $248 million in equity.
Port of Miami Tunnel, FL	Developed as a P3, the project has improved access to and from the Port, as a dedicated roadway connector linking the Port (located on an island in Biscayne Bay) with the MacArthur Causeway (which connects Miami to Miami Beach) and I-395 on the mainland.	The private partner, Miami Access Tunnel, LLC, is contributing $80.3 million in equity and $341.5 million in debt financing.

Financing Cost Savings

Interest Cost Savings: TIFIA's interest rate can result in cost savings compared to the likely rates on alternative financing instruments. For projects that must access the taxable debt markets, borrowing rates are based on a credit spread above the benchmark U.S. Treasury yield curve. The fact that the DOT lends its funds at the U.S. Treasury's borrowing rate makes TIFIA an attractive and cost-effective option, even for those projects able to access the tax-exempt municipal market.

Transaction Cost Savings: In cases where TIFIA is the only source of debt, its use can help the project avoid significant transaction costs that otherwise would be incurred. These include underwriter fees, bond counsel expenses, and other "soft costs" associated with issuing project debt, as well as the "negative carry" (excess of borrowing cost over investment return) of bond proceeds during construction. While typically not prohibitive, these costs can be significant for large transactions involving debt financing. Many projects find TIFIA to be a relatively efficient, cost-effective financing vehicle since the DOT has not charged significant fees for its credit instruments.

By utilizing TIFIA’s attractive interest rates and repayment terms, TIFIA project sponsors have estimated an average savings of approximately $353 million in financing costs. Some examples follow.

Project Example	Project Description	Financing Cost Savings
Dulles Corridor Metrorail, VA	TIFIA financed three direct loans for the Dulles Corridor Metrorail project to leverage the financial commitments made by Fairfax County, Virginia, Loudoun County, Virginia, and the Metropolitan Washington Airport Authority (MWAA). The project eliminates negative arbitrage on bond proceeds during the construction period, reducing potential interest expense, and minimizing transaction costs.	Estimated to save $2.3 billion in financing costs.
The Grand Parkway (SH 99) Segments D-G, TX	When completed, the project will be a four-lane, 53-mile toll road in Harris County and Montgomery County, Texas. Deferred interest and principal payment provisions provided in the TIFIA loan agreement result in fewer bonds having to be sold (the debt with the highest interest rate); further, the TIFIA loan can be repaid at any time with no prepayment penalty, creating significant value to the project should a future debt restructuring or refinancing be advantageous.	Estimated to save approximately $1 billion in interest costs over the life of the loan.
Triangle Expressway, NC	The 18.8-mile project serves the Research Triangle Park (RTP) region (including I-40) between Raleigh and Durham and improves commuter mobility, accessibility, and connectivity to the RTP employment center. Estimated savings are calculated by applying the All-in Tenancy in Common (TIC) of the project’s Revenue Bonds to the TIFIA loan, maintaining the TIFIA structure.	Realized acceleration benefits and reduced interest costs are estimated to save $388 million.

Acceleration

Ultimately, the most beneficial impact of TIFIA may be its ability to accelerate delivery of transportation infrastructure. TIFIA can expedite the financing and accelerate the delivery of a project, which may otherwise not be built until years into the future. In some cases, TIFIA assistance is essential to the viability of a project's financial plan. For example, without the interest cost savings or flexible repayment terms of a TIFIA loan, a given revenue stream may be insufficient to support a given project. In other cases, a public project sponsor may have access to adequate revenue and private capital markets to finance the project, but TIFIA assistance helps advance the project more quickly and at a lower cost, freeing up resources to tackle other infrastructure projects.

According to the project sponsors that provided data, TIFIA accelerates projects by an average of approximately 13 years to improve the nation’s infrastructure and enhance safety. Some examples follow.

Project Example	Project Description	Acceleration Benefits
I-4 Ultimate project, FL	Through the use of TIFIA financing and the P3 delivery method, the Florida Department of Transportation estimates that it will be able to save hundreds of millions of dollars and deliver the project 50% quicker than they would have under other delivery methods.	Estimated completion approximately 25 years sooner than conventional financing.
US 36 Managed Lanes, CO	US 36 is a four-lane divided highway that connects the City of Boulder to Denver at its intersection with I-25. The highway currently experiences significant congestion.	Estimated completion is about 20 years sooner due to low interest rates/flexible repayment schedules.

TIFIA’s Macro-Economic Benefits

TIFIA also confers benefits upon the local communities in which they are delivered at a macro-economic level, including economic development, job creation, mobility improvements, added safety measures, as well as environmental and sustainability improvements.

Transportation projects receiving TIFIA credit assistance have varying objectives, including safety, mobility, environmental protection, and livability, among others. The TIFIA program helps make it possible for these projects to be constructed and successfully accomplish these goals.

Economic Development

By facilitating these projects, the TIFIA program is helping to modernize our transportation system, thereby creating access to opportunities that will advance communities and help American businesses compete and grow in the global economy.

By stimulating investment in the country’s transportation infrastructure, the TIFIA program stimulates an average of $6 billion in economic benefits per project. Some examples follow.

Project Example	Project Description	Economic Benefits
Grand Parkway (SH 99) Segments D-G, TX	The project is anticipated to alleviate the strain on current transportation infrastructure from population and economic growth to reduce barriers between businesses, consumers, and transportation infrastructure.	Expected to generate approximately $7.89 billion in total economic impact.
Intercounty Connector, MD	An 18-mile toll highway in Maryland, the road will link existing and proposed development areas within central and eastern Montgomery County and northwestern Prince George's County.	Expected to generate approximately $7 billion in total economic impact within its first 20 years of operation.
Westside Purple Line Extension, CA	Extends the Purple Line from its current terminus at Wilshire/Western, nine miles to Los Angeles' "second downtown," through the neighborhoods of Beverly Hills, Century City, and Westwood.	Along with 11 other Caltrans projects, the Purple Line Extension will produce a combined total economic impact of $3.5 billion in direct, indirect, and induced business revenues.

Job Creation

Ensuring a well-functioning and safe transportation system is critical to America’s economic future. The U.S. economy relies on the nation’s transportation system to move people and goods safely, facilitate commerce, attract and retain businesses, and support jobs.

On average, a TIFIA project creates approximately 24,300 jobs. Some examples follow.

Project Example	Project Description	Job Creation Benefits
The East Link Extension project, WA	This 14.5-mile Light Rail Transit line will provide east-west connections from the largest population and employment centers to downtown Seattle, doubling the capacity of the I-90 Floating Bridge.	The project connects over 200,000 existing jobs in Seattle, Bellevue, and Redmond, and is expected to create 49,000 new jobs.
Crenshaw/Los Angeles International Airport (LAX) Transit Corridor, CA	Located in Southwest Los Angeles, the project consists of construction of an 8.5-mile light rail transit (LRT) line, including a minimum of six transit stations and the construction of a full service maintenance facility. Once completed, the project will provide critical linkages for the region’s residents and employees, and will create a more efficient connection to LAX.	The project has generated approximately 20,400 direct, indirect, and induced jobs and approximately $2.8 billion in direct, indirect, and induced business revenues.
Wekiva Parkway, FL	The TIFIA loan will finance the Wekiva Parkway, or State Road 429, to relieve congestion and provide an alternate route to Interstate 4. The megaproject is broken up into thirteen segments.  Central Florida Expressway Authority’s portion of the project, which consists of approximately 10 miles of the overall project, will be constructed in 5 segments.	Construction is estimated to generate more than 35,000 jobs in central Florida over 8 years.

Mobility – Travel Time Reduction (minutes)

Increasing economic mobility improves the link between economically isolated communities to job opportunities like those discussed in the previous section.

Based on an analysis of project information, the reduction in congestion on our nation’s roads will deliver an average of approximately 26 minutes of travel time saved per trip. Some examples follow.

Project Example	Project Description	Mobility (Time) Benefits
Miami Intermodal Center (MIC), FL	Ground access improvements to and within the Miami International Airport (MIA) include: Miami Central Station (MCS); Rental Car Center (RCC) - new rental car facility; MIA Mover - automated airport people mover to connect MIA to the MCS and RCC; and various roadway improvements to improve airport access.	Reduced congestion by 30% due to the elimination of shuttle buses that served the airport prior to the opening of the MIA Mover System.
Northwest Corridor project, GA	The project extends along 29.7 miles of I-75 and I-575 to provide more reliable travel times through the use of dynamic, congestion-based tolling.	Reduced congestion will save an average of 59.2 minutes per trip.
Port of Miami Tunnel, FL	The Tunnel has improved access to the Port by rerouting many cargo trucks, buses, cruise suppliers, cruise passengers, and taxis away from downtown Miami. This creates value for trucking companies by potentially allowing drivers to make additional revenue-bearing trips during the day.	Using a travel time savings between 10 to 40 minutes per vehicle for an average of 8,228 vehicles per day, the project estimates total travel saving of 3,400 hours/day.

Mobility – Annual Travel Time Savings ($)

Based on an analysis of project information, the reduction in congestion on our nation’s roads is valued at an annual average of approximately $1 billion. Some examples follow.

Project Example	Project Description	Mobility ($) Benefits
ORB Downtown Crossing/East End Crossing, IN and KY	Both projects are components of the larger Ohio River Bridge (ORB) project and seek to improve cross-river mobility and enhance livability, economic competitiveness, and safety in the region.	Expected to generate a combined travel time savings valued at approximately $3.2 billion annually.
Presidio Parkway, CA	Replaces Doyle Drive, a 1.6-mile segment of Route 101 in San Francisco that is the southern access to the Golden Gate Bridge, connecting Marin and San Francisco counties and providing a major regional traffic link between the peninsula and North Bay Area counties.	Estimated to save commuting California motorists 30 minutes in travel time, valued at nearly $1.1 billion annually.

Safety

Across the Department’s programs, safety is the highest priority in every mode. The Department is focused on improving safety for all system users, aiming to make capital improvements to advance safety. A focus on surface transportation is aimed at keeping the system safe and in a state of good repair. Technology is fundamentally changing our transportation system, and these technologies must be incorporated safely.

While safety benefits are harder to quantify, several of the projects identified safety-related benefits worthy of mention in this report. Some examples follow.

Project Example	Project Description – Safety Benefits
Chicago Transit Authority (CTA) Your Blue Line project, IL	This improvement program is a series of modernization projects along the CTA’s Blue Line O'Hare Branch, running between the Grand station just outside the Loop and O'Hare station at O'Hare International Airport. It includes track improvements, power substation upgrades, and an updated signal system. The project will also help reduce the risk of safety incidents with brighter lighting, cleaner and drier stations, improved entrances, and additional Americans with Disabilities Act (ADA) access.
Interlink project, RI	The project is an intermodal project connecting air, rail, bus, automobiles, and rental cars at T.F. Green Airport in Warwick, RI that serves the Providence area and Southern Massachusetts. It emphasizes rider safety through the creation of a connected security system, tying security cameras to the airport security system.
Riverwalk Extension, IL	The project encompasses several elements of the Wacker Drive Reconstruction Project, a major initiative to improve transportation along Wacker Drive, strengthen intermodal links, and establish a continuous pedestrian walkway along the south bank of the Chicago River. It will enhance safety for pedestrians with bicycle paths and pedestrian trails along the continuous promenade; additional design elements include ADA-compliant access.
SR 520 Floating Bridge project, WA	The project connects major population and employment centers between Seattle and the region's eastern suburbs, including Bellevue and Redmond. The project’s wider lanes and shoulders will prevent congestion and improve roadway safety.

Environmental/Sustainability – Greenhouse Gas Emission Reduction

The TIFIA program has promoted the Department’s goals to improve the condition and performance of highway and roadway systems in ways that protect the environment, increasing mobility while reducing environmental impacts.

Environmental benefits delivered by TIFIA projects include the reduction in greenhouse gas emissions by an average of approximately 120,300 metric tons annually. Some examples follow.

Project Example	Project Description	Environmental Benefits
Dallas Area Rapid Transit Orange Line, TX	This light rail transit line connects downtown Dallas with the City of Irving and Dallas/Fort Worth (DFW) International Airport northwest of Dallas.	Reduce greenhouse gas emissions by 535,242 metric tons each year until 2032.
Chicago O’Hare International Airport Consolidated Joint Use Facility, IL	As part of the overall project, the existing Airport Transit System, a 24-hour rail system that serves terminals and parking structures, will be extended and connected to the Consolidated Rental Car Facility; a new bus plaza accommodating bus services, off-airport hotel, and other commercial shuttles also will be connected.	Over a 20-year period, the local area will see a reduction of greenhouse gas carbon emissions by 50,000 to 100,000 tons, equivalent to planting a 20,000-acre pine forest.
SR 91 Corridor Improvement, CA	A heavily traveled east-west corridor through Riverside and Orange Counties, the project will extend the tolled express lanes approximately eight miles, replacing the existing HOV lanes. SR-91 is currently used by more than 280,000 vehicles per day, and this volume is expected to increase by approximately 50% by 2035.	Reduce fuel consumption by approximately 285 million gallons and eliminate roughly 2 million tons of carbon dioxide emissions over 50 years.

TIFIA Portfolio Overview

The TIFIA program strives to provide credit assistance to various project types and borrowers while adhering to conservative lending practices. Currently, the TIFIA loan portfolio comprises projects spanning 20 states, including the District of Columbia and Puerto Rico, and totals $22.8 billion in Federal credit assistance that supports $82.6 billion in total project costs. As of December 31, 2015, the TIFIA portfolio is composed of 61 total loans with 51 of these loans remaining active and 10 that have been fully repaid. As the TIFIA portfolio expands, it continues to support new types of projects that touch urban, suburban, and rural communities.

The program has also filled a necessary gap in the credit market by providing flexible credit assistance to both public and private sector entities that are unable to obtain sufficient financing to initiate projects without excessive delays. TIFIA also promotes P3s, a structure that allows public entities to leverage private sector knowledge in the development and management of public infrastructure. Such an approach has allowed for improved risk sharing with the private sector and faster delivery of key infrastructure projects. The current portfolio includes 19 TIFIA loans to P3 projects (approximately one-third of the portfolio), a number projected to grow considerably as the program attracts more participants. The subsections below provide additional details of the portfolio as of December 31, 2015.

Geographic Distribution of Projects

As of December 31, 2015, TIFIA has provided credit assistance to projects in 20 states, including the District of Columbia and Puerto Rico, and continues to diversify the geographic makeup of its portfolio. In FY 2015, for instance, credit assistance was provided to TIFIA’s first projects in Indiana and Ohio. In FY 2016, TIFIA’s first project in Delaware was approved. With the FAST Act’s improved credit access for rural projects as well as a streamlined review process for new projects, the TIFIA portfolio is expected to provide credit assistance in even more states and to more key infrastructure projects.

Transportation 

By reaching additional markets in more states, TIFIA has been able to finance a variety of needed transportation infrastructure beyond traditional highway projects. As of December 31, 2015, TIFIA’s portfolio of active and retired loans is composed of 62% highway, 11% intermodal, and 26% transit loans.

Description of Chart - This chart shows that 62 percent of the loans and 66 percent of credit assistance is provided to Highway projects; 11 and 5 percent respectively for Intermodal projects; and 26 and 30 percent to Transit projects.

Diversification of TIFIA Loan Repayment Sources

Although the TIFIA program continues to finance new projects in new regions and by various mode of transportation, the program has retained a very conservative approach to risk management. The chart below represents the TIFIA portfolio as of December 31, 2015, and shows how TIFIA continues to  diversify itself of certain revenue pledge risk.

Description of Chart - This chart breaks out the loans by revenue pledge (number in the active portfolio): 12 - taxes; 11 tolls; 6 availability payments; 6 system pledge; 9 managed lanes; 7 other project revenues.

TIFIA Loan Performance: Actual vs. Projected at Time of Closing

The TIFIA program takes a conservative approach to credit risk. By limiting the TIFIA loan size to 33% of project costs, requiring senior debt to obtain an investment grade rating, ensuring that TIFIA debt is treated equally with senior debt in the event of default, and requiring a dedicated revenue stream for TIFIA loan repayment, the TIFIA program has limited taxpayer exposure and ensured adequate portfolio performance. Out of 51 active loans, 44 (86%) are performing normally, 4 (8%) demonstrate above expected performance, and 3 (6%) are performing below expectations. Performance is based on the project’s ability to meet construction timelines and generate cash flows necessary to service TIFIA debt and pay other obligations as needed.

Description of Chart - This chart depicts loan performance: 10 projects have been retired; 44 loans meet expectations; 4 loans have exceeded performance expectations; 3 loans have not met expectations.

TIFIA Financial Performance

As detailed in the previous pages, the portfolio of active TIFIA projects is diversified by geography, mode, and repayment source. Additionally, within the TIFIA portfolio, 10 borrowers have retired their TIFIA credit agreements.

The following table displays key financial performance information for TIFIA projects within the portfolio as of December 31, 2015.

Disbursement Status of Active TIFIA Credit Agreements as of December 31, 2015

Description of Chart - the chart details the disbursement status of active TIFIA Credit Agreements as of December 31, 2015.

Future Outlook

TIFIA Pipeline as of December 31, 2015

As of December 31, 2015, there are 20 projects requesting a total of $7.8 billion in TIFIA credit assistance at various stages of the LOI review process. The DOT has also witnessed a growing interest from states that have not previously utilized TIFIA credit assistance. Of the 19 LOIs received since our FY 2014 Report to Congress as of June 1, 2015, five are from states that have yet to be part of the TIFIA loan portfolio – Alaska, Massachusetts (2 LOIs), New Hampshire, and West Virginia.

The table below summarizes the eligible letters of interest currently under review that were submitted between June 1, 2014 and December 31, 2015. There has been tremendous diversity in project type, credit assistance request amount, procurement method, and project location among the submissions.

Active Letters of Interest Received Between June 1, 2014 and December 31, 2015

Description of Chart - the chart details the active letters of interest received between June 1, 2014 and December 31, 2015.

Program Recommendation

Each TIFIA Report to Congress must recommend the governance structure that best serves the objectives of TIFIA by either (i) continuing the program under the authority of the Secretary, (ii) establishing a government corporation or a GSE to administer the program, or (iii) phasing out the program and relying on the capital markets to fund the types of infrastructure investments assisted by TIFIA without Federal participation.

(i) Continuing the program under the authority of the Secretary

TIFIA's current governance structure within the DOT provides policymakers flexibility to adapt Federal credit assistance to the demands of new and traditional transportation infrastructure owners and investors, while subjecting the program to congressional and executive oversight.

The TIFIA program is administered under the policy guidance of the DOT Credit Council (Council on Credit and Finance under the FAST Act), chaired by the Deputy Secretary, with the Chief Financial Officer/Assistant Secretary for Budget and Programs as vice-chair, and consisting of the Administrators of the several DOT Operating Administrations, and other senior officials from the Office of the Secretary.

The Office of the Chief Financial Officer/Assistant Secretary for Budget and Programs oversees the TIFIA program on behalf of the Secretary, including the evaluation of individual projects, and provides overall policy direction and program decisions for the TIFIA program. The program's operations are administered via the TIFIA JPO within the FHWA Office of Innovative Program Delivery. Final approval of TIFIA credit assistance is reserved for the Secretary.

The DOT is also working on a broader effort to educate and engage project sponsors on the innovative financing tools available to them, including TIFIA, but also Private Activity Bonds, and the Railroad Rehabilitation and Improvement (RRIF) program. The DOT understands that pursuing a TIFIA loan requires significant support for many potential project sponsors who are not familiar with innovative project financing or public-private partnerships. In an effort to attract additional public and private investment in infrastructure through all available means, the DOT is undertaking a new, multimodal initiative, the BATIC, to build capacity, expertise, and familiarity with innovative financing approaches to delivering infrastructure.

The strong utilization of TIFIA credit assistance for the wide array of projects described in this report demonstrates the significant importance of the program to advance infrastructure investments across the U.S., while ensuring private sector engagement in infrastructure financing. In addition, DOT's success in carrying out improvements to the TIFIA program further highlights that the program's governance provides the responsiveness needed to serve the evolving demands of transportation finance. The DOT therefore recommends continuing the TIFIA credit program under the authority of the Secretary.

The FAST Act established the National Surface Transportation and Innovative Finance Bureau (Bureau) within DOT. The Department is in the process of establishing the Bureau to help consolidate outreach and coordination of DOT credit programs, process applications more efficiently, provide technical assistance, and communicate best practices regarding DOT financing and funding opportunities.

(ii) Establishing a Federal corporation or federally-sponsored enterprise to administer the program

A government corporation is a special entity chartered by Congress to perform business activities typically involving fees for service. An example includes the Government National Mortgage Association (residential mortgages). The U.S. Treasury holds most or all of the corporation's stock or equity. Analogous to a State or local public authority, each corporation is established under specific authorizing legislation with provisions that may vary considerably from case to case. A government corporation usually is capitalized via a Federal appropriation. A single administrator heads some government corporations, while others have federally-appointed boards of directors.

Government corporations must submit annual budgets to Congress, but some have their own borrowing, receipts, and spending authority, making them largely independent of the Federal appropriations process. All such Federal credit programs, however, must follow the budgeting provisions of the Federal Credit Reform Act.

A government sponsored enterprise (GSE) is generally a for-profit, shareholder-owned financial institution established under Federal charter, with nationwide lending authority. Although independent, a GSE enjoys special Federal status. A GSE has federally-appointed representation on its boards of directors, is exempt from State and local income taxes and from securities laws administered by the Securities and Exchange Commission, and often has access to a line of credit from the U.S. Treasury. Examples of GSEs are Fannie Mae and Freddie Mac (housing loans), the Farm Credit System (agricultural loans), and Sallie Mae (student loans).

Although a government sponsored enterprise may have the ability to provide many forms of credit assistance, the credit terms that it could likely offer its borrowers would not be able to match the lower interest and issuance costs of the U.S. Treasury.

(iii) Phasing out the program and relying on the capital markets to fund the types of infrastructure investments assisted by the TIFIA program without Federal participation

The flexibility and favorable terms of TIFIA credit assistance are not typically available to project sponsors through capital markets. Sole reliance on capital markets to finance infrastructure investments may result in deferred projects and/ or higher overall project delivery costs due to the inherent inability of project sponsors to access capital markets at costs as favorable as the U.S. Treasury rate.

For project sponsors that have utilized innovative procurement strategies such as public-private partnerships to deliver new facilities, TIFIA has proved an instrumental delivery tool. To date, almost all large-scale P3 highway and transit projects delivered in the U.S. have utilized TIFIA financing. TIFIA, when combined with another source of tax-exempt debt such Private-Activity Bonds (PABs), provides borrowers with access to low-cost capital. For these projects, the low-cost capital not only reduces the long-term costs of project delivery, it provides project sponsors the flexibility of utilizing innovative delivery methods that would otherwise be prohibitively expensive utilizing taxable long-term debt.

Federal participation through the TIFIA credit program is therefore critical to ensure that project sponsors have the flexibility to choose the project delivery method that best achieves their transportation goals in a cost-effective manner.

Conclusions

Since its inception, the TIFIA program has proven itself to be a critical component in the effort to ensure a fast, safe, efficient, accessible, and reliable transportation system for the traveling public. For almost two decades, TIFIA has functioned as an indispensable government lending program that both stimulates infrastructure investment and reduces Federal credit risk.

As numerous project sponsors have attested, their ability to access TIFIA financing has enabled them to successfully complete innovative transportation projects that have led to increased safety-related benefits, jobs, and economic development, while decreasing travel time, pollution, and project costs. These benefits, along with TIFIA’s ability to accelerate project completion timeframes, are some of the main reasons why demand for the program has continued to grow. And with increasingly scarce sources of public funding available for such essential transportation projects, the need for the TIFIA program is projected to increase even more over time.

Appendix A: TIFIA Project Profiles

Please see the Projects Financed web pages to find the most current project profiles for each of the 56 projects (active and retired) in the TIFIA portfolio.

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[1] This TIFIA Report to Congress constitutes the seventh biennial submission from the DOT. In addition to meeting congressional requirements, this report addresses changes to the program since enactment of the Fixing America’s Surface Transportation Act, achievement of program goals, and issues that have arisen since the 2014 report, which provided data up to May 31, 2014.

[2] From http://www.pwfinance.net/document/research_reprints/3%20why%20tifia%20matters.pdf

[3] Through a review of TIFIA applications and project updates, as well as discussions with project sponsors, DOT has identified a number of specific benefits associated with TIFIA.