Build America Bulletin: Winter 2020

The Build America Bureau is U.S. DOT's “one-stop shop” for transportation infrastructure finance. We also provide technical assistance and encourage innovative best practices in project planning, financing, delivery, and operation. If you are interested in using our financing tools or have any questions, contact us at BuildAmerica@dot.gov.

Table of Contents

• The Bureau is Open for Business!
• New NOFO: RRIF Express 2.0
• New NOFO: Regional Infrastructure Accelerators
• TIFIA Airport Terminal Development
• COVID-19 Refinancing
• Project Pipeline Update
• Project Spotlight

The Bureau is Open for Business!

The Bureau has stayed busy during the COVID-19 pandemic despite the unprecedented economic challenges facing transportation agencies, and has closed five loans worth $1.5 Billion. This includes both TIFIA and RRIF loans, the two loan programs administered by the Bureau. These five projects will enable transportation providers to improve safety, enhance service, and unlock economic development. Financing with the Bureau will save these borrowers significant amounts money over the coming years with the current historically-low interest rates. This includes the first two TIFIA Rural Project Initiative (RPI) loans, which offer extended benefits on top of the typical benefits of TIFIA loans, including the ability to finance up to 49% of eligible project costs.

The Bureau also administers the Private Activity Bonds (PAB) program, which enables governments to partner with private entities and issue tax-exempt bonds for public-private partnership (P3) transportation infrastructure projects. The Bureau has facilitated three PAB allocations worth $1.1 Billion since the onset of the COVID-19 pandemic.

The Bureau has been very active over the last few months and expects to close multiple loans in the coming weeks totaling $2 Billion. Stay tuned!

The Bureau has released a new Notice of Funding Opportunity (NOFO) for the RRIF Express program. RRIF Express is aimed at reducing the time and costs associated with securing loans to modernize aging freight and commuter rail infrastructure. In addition to expedited handling of loan requests, the new program provides RRIF loans of up to $150 Million for qualified borrowers. This NOFO expands on the program first introduced earlier this year, including:

•    Increasing loan amounts from $50 Million to $150 Million;
•    Expanding the types of eligible projects; 
•    Increasing the ability to refinance loan amounts from 40% to 75%; and 
•    Increasing the different categories of environmental review that can be considered. 

The NOFO also raises the amount available with the Credit Risk Premium from 5% up to 10% of the loan value, capped at $5 Million per application. More information on RRIF Express, including how to apply, can be found here.

Regional Infrastructure Accelerators

The Bureau launched a new demonstration program to establish Regional Infrastructure Accelerators (RIA). The RIAs will serve as resources to state, local, tribal, and regional governments as they develop the capacity to use federal financing. The FAST Act authorized the establishment of an RIA Demonstration Program to assist entities as they develop improved infrastructure priorities and financing strategies for the accelerated development of a project that is eligible for funding under the TIFIA and RRIF programs. An RIA can provide project-specific technical assistance for projects that are eligible for the Bureau’s TIFIA and RRIF programs, including assistance for:

• Project planning;
• Financial and environmental analyses;
• Preliminary engineering; and
• Statutory and regulatory framework analysis. 

Public entities, either alone or in partnership with other public or private entities, are eligible for this program. The Bureau will designate 3-5 RIAs from the pool of applicants, including at least one state agency, one in an urban area, and one in a rural area. More information on this program is available here.

Airport Terminal Development Loans Ready for Takeoff

The TIFIA program has previously funded a number of intermodal surface transportation projects at airports such as transit stations and consolidated rent-a-car (CONRAC) facilities which reduce traffic congestion and air pollution near airports. After many inquiries from potential project sponsors related to TIFIA financing for airport passenger terminal projects, the Department has determined that airport terminal projects, at public-use airports in the Federal Aviation Administration’s National Plan of Integrated Airport Systems (NPIAS) that meet the TIFIA statute’s eligibility criteria as public infrastructure within walking distance of transit, could be eligible for TIFIA loans. More information is available here.

Refinancing TIFIA Loans Impacted by COVID-19

During the period of historically low interest rates in the summer and fall, the Bureau took the initiative to help borrowers affected by the economic downturn caused by the COVID-19 pandemic to reset the interest rates on existing TIFIA and RRIF loans. The Bureau has limited statutory authority to refinance preexisting debt for eligible transportation projects and those loans had to meet a specific subset of criteria. Reducing the interest rates on TIFIA and RRIF loans generated substantial savings for those borrowers, helping them withstand this crisis and redeploy those savings to other infrastructure projects.

Project Pipeline Update

Build America Bureau staff are working with transportation providers across the country to help them secure federal financing through the Bureau's programs. Before a project's loan is approved by the DOT Secretary it goes through the Bureau's Project Pipeline. Projects in the Pipeline go through an intensive vetting process by Bureau staff to ensure that the projects are eligible and the final loan application will be approved. There are currently 42 active projects in the pipeline. 

Maintaining a strong project pipeline is a top priority for the Bureau, and a key element of this is increasing pipeline diversity by bringing in new borrowers and reaching new and underserved areas. Of the 42 projects currently in the pipeline 8 are from states that have not received a TIFIA or RRIF loan in the past and 12 qualify for financing via the TIFIA Rural Project Initiative. 

Project Spotlight

Sound Transit Operations & Maintenance Satellite Facility: East

A rendering of the future operations and maintenance facility in Bellevue, Washington

In 2017 Sound Transit, which provides light rail and bus services in the Seattle, Washington, region, received a $87 million TIFIA loan for an operations and maintenance facility. The $265 Million facility, once complete, will maintain, store, and deploy light rail vehicles. The TIFIA loan will cover 33% of the cost of the project along with $112 Million in tax revenue, $57 Million from bond proceeds, and $8 Million from federal and local grants. This was the second project to reach financial close under a Master Credit Agreement (MCA) executed by U.S. DOT and Sound Transit in December 2016, which provided a $1.991 Billion contingent commitment to the borrower. The MCA provided Sound Transit certainty, predictability, and efficiency for the projects financed under the MCA.

The project is crucial for the expansion of the region’s light rail system. By 2023, the system will grow from 16 to 50 miles and the existing light rail fleet will triple in size from 62 to 180 vehicles. Sound Transit forecasts that the current operations and maintenance facility in Seattle is near full capacity, making the project a much needed addition to Sound Transit’s maintenance capacity. The new site is located between a former BNSF Railway railroad right-of-way on the west and 120th Avenue Northeast on the east, south of SR520 and north of Northeast 12th Street in the City of Bellevue. The project is nearing substantial completion and the agency is continuing to expand.

The Build America Bureau is open for business! If you are interested in exploring federal financing with the Build America Bureau, please contact us at BuildAmerica@dot.gov.