Build America Bulletin: Spring 2021

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

• Low Interest Rates Lead to New Opportunities
• New Guidance for Transit-Oriented Development 
• TIFIA RPI Webinar Recording Available
• Introducing TIFIA Lite
• Marrying Grants and Loans
• Technical Assistance Update
• Project Pipeline Update
• Project Spotlight

Low Interest Rates Lead to New Opportunities

The Bureau is always working with transportation agencies to identify projects that would benefit from a TIFIA or RRIF loan. As the transportation sector rebounds from the COVID-19 pandemic, the Bureau has worked with many borrowers who have existing TIFIA and RRIF loans and looking to find ways to lower costs. As part of the COVID-19 relief efforts, the Bureau offered additional benefits to enable current borrowers to refinance their loans with a lower interest rate thus realizing substantial savings over the life of the loan and improved robustness of their financing arrangements. Furthermore, in most cases, borrowers and sponsors could re-direct those savings to other projects in their infrastructure capital investment program.

On May 21 the Bureau released new guidance that clarifies the eligibility of transit-oriented development (TOD) projects for the Bureau's programs. TOD creates dense, walkable, and mixed-use spaces near transit that support vibrant, sustainable, and equitable communities. TOD projects include a mix of commercial, residential, office, and entertainment land uses.

“When people can move safely and easily by public transit, foot, bike, wheelchair, or any other means, it can transform a community and improve the lives of those who call it home. [This] announcement will help communities use transit-oriented development to save residents time and money, reduce pollution and carbon emissions, and make jobs accessible to more people,” said U.S. Transportation Secretary Pete Buttigieg.

Resources for TOD projects can be found here.

Last fall, the Bureau closed its first two loans under the TIFIA Rural Project Initiative (RPI). Loans awarded through RPI receive the traditional benefits of a TIFIA loan PLUS loans sized at up to 49% of project costs (rather than 33%) and interest rates at 1/2 of the U.S. Treasury rate (rather than the full rate). Both loans were awarded to transit agencies serving rural areas, and will aid the construction of new bus maintenance and operations facilities.

The ROUTES Initiative, DOT's hub for rural transportation resources, held a webinar February 24 featuring both RPI awardees. The webinar was recorded and is available here.

New Streamlined Application with TIFIA Lite

TIFIA is a flexible tool that allows borrowers to customize their loan terms and amortization. However, this flexibility can prolong the application process due to the custom negotiations the Bureau and its advisors undertake with each borrower. With TIFIA Lite, experienced borrowers with strong credit and small, shovel-ready projects can access an expedited application process.

By agreeing to use a loan template with standard terms and forgoing the typical negotiation process, borrowers can access the traditional benefits of TIFIA (low interest rate, payment deferral up to five years, no pre-payment penalties, etc.) with a shorter review process. Projects eligible for TIFIA Lite can be approved up to six months faster than an average TIFIA application. Eligible projects can receive up to a $100 million loan to cover 33% of eligible projects costs (or 49% in rural areas).

The expedited TIFIA Lite process is available for public (or publicly-sponsored) entities with experience handling debt with shovel-worthy, shovel-ready projects backed by government appropriations or dedicated tax revenues. More information about TIFIA Lite can be found here.

Marrying Grants and Loans

The financing tools administered by the Build America Bureau can be great tools for transportation agencies looking to get projects done faster and cheaper. However, most projects will need other sources of funding beyond TIFIA, RRIF, or PABs. Among the funding options available to sponsors are other other federal grants. Projects that receive loans from the Bureau must have at least a 20% non-federal match but are otherwise free to pair other federal funds with their loans, including discretionary and formula grants. 

As part of this year's round of INFRA grant funding, a new provision was included in the program's NOFO called INFRA Extra. Under this provision, INFRA grant applicants that meet certain criteria but do not receive funding are eligible to receive a TIFIA loan for up to 49% of project costs (most projects are only able to receive loans for 33% of project costs).

Technical Assistance Update

The Federal Highway Administration (FHWA) is currently soliciting applications for award of one cooperative agreement for the operation of the Center for Excellence in Project Finance (CEPF). The agreement will provide up to $5,000,000 in Federal funding on a cost-sharing basis.

The FHWA’s vision for CEPF is an organization that supports the public sector by sharing best practices, keeping stakeholders current with industry trends, and performing objective research on critical topics. The vision reflects both the continuing essentiality of innovative finance practice and evolving opportunity within the financing programs of the Build America Bureau. Eligibility for this funding opportunity is open to all sources.

Applications must be submitted via grants.gov by 11:00 pm EDT on July 16, 2021. Search for funding opportunity number 693JJ321NF00002. Submit questions by email to Angela.Jones@dot.gov.

The Bureau has also partnered with FHWA to deliver a two-day course on public-private partnerships (P3) through the National Highway Institute (NHI). Through this course participants discuss why they may want to do a P3, the benefits, project development life cycle, financial structure, Money-for-Value, contract terms, and risks. During these sessions we provide examples, lessons learned and best practices.

Upon completion of the course, participants will have a better understanding of P3s. including how to evaluate potential P3 proposals, and explain the process for developing, procuring, and implementing P3s. These sessions can be tailored to address a specific topic (such as financial model) for a public entity or adapted for a specific project or model. More information on the course, including how to host a course for your agency, can be found here.

Report to Congress on Federal Assistance for Airport-Related Projects

Section 570 of the FAA Reauthorization Act of 2018 (Pub. L. 115-254) required the Department to conduct a review to determine whether a federal credit assistance program would be beneficial and feasible for airport-related projects as defined in section 40117(a) of title 491, which are projects eligible for Passenger Facility Charge (PFC) revenue. The Department was asked to consider expanding eligibility under an existing federal credit assistance program to include such projects or establishing a new credit assistance program for such projects.

This report was submitted to Congress in January 2021. The Department concluded that a federal airport credit program would likely be beneficial for airport-related projects as defined in section 40117(a) of title 49, because it could provide airports a lower-cost and more flexible option for financing portions of such projects. The Department also concluded that such a program is feasible. It was not within the scope of this study, however, to make a legislative recommendation.

Project Pipeline Update

Build America Bureau staff are working with project sponsors across the country to help them secure federal financing through the Bureau's programs. Before a project's loan is approved by the Secretary of Transportation 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 loans can be repaid. There are currently 52 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 52 projects currently in the pipeline 10 are from states that have not received a TIFIA or RRIF loan in the past and 11 are eligible for the TIFIA Rural Project Initiative.

The Bureau proactively looks for ways to streamline the application process and get loans out the door quickly for shovel-worthy projects. Loans closed this fiscal year have set records for least amount of time spent in the underwriting process. Refinanced loans are often able to bypass entire steps, skipping straight from project development into credit-worthiness and helping borrowers reach financial close months sooner. This increased efficiency has led to more projects in the pipeline and, soon, more loans closing: we expect to close nearly a dozen loans by the end of the summer, including both the refinancing of existing loans and several new loans for highway, transit, and port projects.  

Project Spotlight

Moynihan Train Hall

New York Governor Andrew Cuomo Cuts the Ribbon at Moynihan Train Hall 

In 2017 the New York State Urban Development Corporation D/B/A Empire State Development (ESD) received a $537.1 million TIFIA loan for the redevelopment of the Moynihan Train Hall in New York City. Once complete, the project will deliver critical improvements and expansions that will ease congestion and delays and facilitate future passenger demand.

The project is expected to relieve congestion at New York City’s Penn Station, which is the busiest passenger transportation facility in the U.S. with 650,000 passengers per weekday. Located in the James A. Farley Post Office Building, the project will be the new home of Amtrak and will serve as the arrival and departures hall for all Amtrak passengers in New York City. It will also provide ticketing and other facilities for Metropolitan Transportation Authority’s (MTA) Long Island Rail Road service (LIRR). The Train Hall will benefit the entire North East Corridor ("NEC") service area, as two-thirds of all NEC rail trips pass through Penn Station today.

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.