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The Build America Bureau advances investment in transportation infrastructure by lending Federal funds to qualified borrowers; clearing roadblocks for credit worthy projects; and encouraging best practices in project planning, financing, delivery, and operations. The Bureau draws on expertise across DOT to serve as a point of coordination for states, municipalities, private partners, and other project sponsors seeking federal financing and technical assistance. Contact us at BuildAmerica@dot.gov.
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By Morteza Farajian, Ph.D., Executive Director
TOD projects can transform underperforming and underutilized assets, increase transit and passenger rail ridership and revenue, facilitate office-to-residential conversions, and support affordable, equitable, multimodal access to opportunities and services. In 2015, the Fixing America’s Surface Transportation (FAST) Act authorized the Bureau to offer financing for TOD projects. To qualify for those loans, TOD projects must include public infrastructure or economic development projects and be located within ½ mile walking distance to transit, passenger rail, or multimodal stations.
Building and implementing the TOD authorities Congress gave us has been incremental and steady. To make our financing more accessible and attractive, DOT modified policies to provide transit and TOD projects TIFIA financing for up to 49 percent of project costs, the TIFIA statutory limit since 2012. DOT typically limits TIFIA loans to 33 percent of project costs by policy. We published TOD guidance and a policy statement on our website. We held five webinars in the past year for more than 500 participants. We also participated in webinars with the White House and the U.S. Department of Housing and Urban Development (HUD) and gave presentations at the U.S. Housing and Community Development Conference, National Housing and Rehabilitation Association, and Urban Land Institute. We hosted in-person technical workshops in Austin, Kansas City, Los Angeles, Chicago, and Jacksonville.
Even with this progress, prospective borrowers have told us they are facing challenges in using TIFIA or RRIF for TOD projects, the most significant of which are:
- TIFIA’s legislation requires investment grade ratings. While this level of rating protects taxpayers from defaults, it can be unattainable for certain TOD projects (e.g., those pledging project revenues as the repayment source). The Bureau has consulted with rating agencies, several of which are developing rating approaches for TOD projects. Some rating agencies have told me they might have a hard time making the economics work to rate smaller projects. Consequently, for some projects the cost to obtain a rating offsets the benefits TIFIA offers, making TIFIA less attractive for those projects.
- A range of federal requirements apply to TIFIA and RRIF borrowers, including compliance with the National Environmental Policy Act (NEPA), Buy America, Davis-Bacon wage rates, and others. Some prospective borrowers have told the Bureau they are not familiar with federal requirements and have a learning curve in both understanding how to comply and structuring compliant projects that are financially viable. The Bureau has held one-on-one meetings to educate potential borrowers on federal requirements and to assist project sponsors in developing complete and quality applications. In coming weeks, we will hold three webinars on NEPA requirements with the Federal Transit Administration.
- Project sponsors are used to commercial bank timelines for short-term construction loans. TIFIA and RRIF loans typically have 40-year or longer maturities, meaning they have both short-term construction risk and long-term revenue risk. This combination complicates - and lengthens - the underwriting process. The Bureau has explored innovative approaches, such as teaming with short-term lenders and collaboration with HUD and other federal agencies to develop effective products and streamline the process. As our program matures and we close more TOD loans, we intend to standardize our processes and procedures and develop templates that could further streamline the process.
In early 2021, we had no TOD projects in the Bureau’s active pipeline, even though the authority had been in place since late 2015. Today, the TOD pipeline is robust. More than 20 TOD projects (40 percent of the number of pipeline projects) are requesting $9.2 billion in loans, almost 25 percent of the value of all pending requests. We anticipate our TOD pipeline and portfolio will continue growing. We welcome opportunities to improve our programs and provide quality customer experiences that deliver successful projects.
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Contractor to provide technical assistance for grantees and potential grantees under the Reconnecting Communities and Neighborhoods Program
The Reconnecting Communities Institute (RCI or Institute) will be DOT’s center for learning on restoring and reconnecting communities that have been harmed, isolated, and cut off from opportunity by past transportation choices and will assist communities in developing and delivering reconnection projects that better connect people to jobs, education, health care, and economic opportunities created by the Bipartisan Infrastructure Law, particularly the Reconnecting Communities and Neighborhoods (RCN) Program.
The Institute will provide free training and technical assistance to build organizational or community capacity in transportation planning and identifying innovative strategies and solutions. The Bureau awarded the $27 million contract to The Cadmus Group, Inc. to establish and administer RCI with 13 partner organizations, including two national nonprofits and seven disadvantaged business enterprises and brings together urban planners, communications specialists, environmental justice experts, adult learning specialists, civil engineers, and subject matter experts. The Cadmus team includes seven disadvantaged business enterprises, comprising over 20 percent of the budget.
The Bureau will manage the contractor in conjunction with the Federal Highway Administration. Enrollment in RCI activities will be open to States, local and tribal governments, metropolitan planning organizations, and nonprofit organizations. DOT will prioritize enrollment for entities serving economically disadvantaged, rural, and tribal communities. Many training programs and educational opportunities will be open to the public.
Last year, DOT awarded $185 million to 45 communities through the Reconnecting Communities Pilot Program, including six capital construction grants and 39 planning grants.
For additional information, please visit the Reconnecting Communities Institute webpage or contact program manager Kelley C Britt at kelley.britt@dot.gov.
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The Thriving Communities Program helps disadvantaged communities identify, develop, and deliver transportation projects to achieve locally-driven economic development, health, environment, mobility, and access goals
Through the latest round of the Bureau's Thriving Communities Program (TCP), Capacity Builders will help 112 communities, including 12 Tribal nations, access federal funding and resources provided by the Bipartisan Infrastructure Law (BIL). DOT awarded grants totaling $23.6 million to three national and six regional Thriving Communities Capacity Builders, which provide two years of no-cost, intensive project-level technical assistance and planning support on issues such as preparing grant application materials, undertaking pre-development and project delivery activities, designing and deploying more inclusive community engagement strategies, and fostering small business and workforce development. With the inaugural cohort announced in April 2023, a total of 176 communities are supported by this program.
"President Biden’s infrastructure law has created a once-in-a-generation opportunity through which communities are reimagining and delivering safe, reliable transportation,” said Transportation Secretary Pete Buttigieg. “Our Department is proud to help another 112 under-resourced communities with hands-on assistance to secure federal infrastructure funding, and then deliver those projects well.”
The FY 2023 National TCP Capacity Builders are:
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Rural Community Assistance Partnership Incorporated, in partnership with Community Engineering Corps, Communities Unlimited, Great Lakes Community Action Partnership, Midwest Assistance Program, National Association of Development Organizations, RCAP Solutions, and Rural Community Assistance Corporation. - awarded $4.25 million to support 16 Main Street Communities
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Abt Associates Inc., in partnership with EPR, P.C., Equitable Cities, Morgan State University, Nelson\Nygaard, Safe Routes Partnership, and Smart Growth America - awarded $4.9 million to support 20 Complete Neighborhoods Communities
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Conference of Minority Transportation Officials, in partnership with AECOM, Intelligent Transportation Society of America, Accelerator for America, Two Degrees, ReConnect Rondo, and MWDBE Training Academy, Inc. - awarded $4.25 to support 16 Networked Communities
New for FY 2023, DOT added a Regional Pilot Program, which allows participants to provide TCP activities to communities within their jurisdictions at a state or regional scale. DOT funded six regional pilots at approximately $1-2 million each that collectively are supporting 60 communities.
For more information, see the news release and the Thriving Communities Program webpage.
The City of Detroit, Michigan welcomed a DOT team to better understand the freight infrastructure impacts in Southwest Detroit and the neighborhoods surrounding the Detroit Intermodal Freight Terminal (DIFT) and to identify solutions to mitigate the impacts of construction of the Gordie Howe International Bridge and other projects. The City Infrastructure Office provided a tour of the area for a first-hand look at the daily experiences of residents. Substantial freight/truck traffic creates local burdens, negative health and safety impacts, and environmental justice issues in the community.
The Michigan Department of Transportation, Southeastern Michigan Council of Governments, Chief of Infrastructure in the (Detroit) Mayor’s Office, Kresge Foundation, and community partners joined the USDOT team.
The City of Detroit will receive a $2 million Reconnecting Communities and Neighborhoods grant for the I-75 Overbuild planning project on Advancing Detroit’s Future by Reestablishing Neighborhood Connections.
Left: Fugitive dust and air quality issues at NS entrance; right: truck near Detroit Livernois yard and stormwater issues.
On March 11, the Bureau issued the Notice of Funding Opportunity for the Innovative Finance and Asset Concession Grant Program for three fiscal years totaling $57.72 million. The Bureau received more than 50 applications, which are undergoing technical review.
Two types of grants are available: Technical Assistance Grants will be awarded to build organizational capacity to develop, review, or enter into asset concessions to advance TIFIA-eligible projects. Expert Services Grants will be awarded for project development of identified assets, including hiring professional services to explore opportunities for leverage. Applicants can seek either type of grant but had to choose one for this round of funding.
Please sign up for email updates and email InnovativeFinanceTA@dot.gov with any questions.
Last fall, the Bureau held the first-ever Regional Infrastructure Accelerator (RIA) Summit in College Park, Maryland. More than 70 people convened, including representatives from 19 of 21 RIA grant recipients and staff of DOT operating administrations and University of Maryland Build America Center. The Fixing America's Surface Transportation (FAST) Act established the RIA Demonstration Program to assist entities in developing improved infrastructure priorities and financing strategies for the accelerated development of a project that is eligible for TIFIA financing.
To learn more, please visit 2023 Regional Infrastructure Accelerators Summit or watch the video below.
The Bipartisan Infrastructure Law (BIL) created the Rural and Tribal Assistance Pilot Program to provide states, local governments, and tribal governments no match requirement grants to support legal, technical, and financial advisors to help advance infrastructure projects. The first NOFO included two fiscal years and made $3.4 million available to eligible applicants on a first-come, first-served basis. The program will have $27 million available for grants for fiscal year 2024.
Eligible project sponsors can receive funds to select advisors to assist with pre-development phase activities, including:
- feasibility studies project planning,
- revenue forecasting and funding and financing options analyses,
- preliminary engineering and design work,
- environmental review,
- economic assessments and cost-benefit analyses public benefits studies,
- statutory and regulatory framework analyses value-for-money (VFM) studies,
- evaluations of costs to sustain the project, and
- evaluation opportunities for private financing and project bundling
For more information, please email RuralandTribalTA@dot.gov.
The Bureau has conducted four direct technical assistance in-person workshops this year to educate project sponsors about how to best combine DOT credit instruments, funding programs, and innovative project delivery approaches to accelerate transportation infrastructure projects for their communities. Agendas typically include discussions on solutions for complex delivery challenges, specific funding and financing opportunities, and developing a recommended roadmap of short- and long-term next steps to help move projects forward. The team coordinates with DOT operating administration partners and subject matter experts to tailor the content and agendas to the community’s needs.
The Bureau team visited Los Angeles to discuss regional transportation management and system modernization with City of Los Angeles staff and their partners.
The Bureau team in Los Angeles to discuss regional transportation management and system modernization.
In April, three workshops across the country were conducted. First, in Chicago, with the Chicago Metropolitan Agency for Planning and partners to discuss the I-290 and Blue Line Corridor projects.
At the Chicago Metropolitan Agency for Planning.
Second, in Washington, D.C., with representatives from the Office of Oregon Governor Kotek, Port of Coos Bay, and partners to discuss the I-90 and Blue Line Corridor projects.
In Washington, D.C., with representatives from the Office of Oregon Governor Kotek, Port of Coos Bay, and partners to discuss the Port of Coos Bay project.
Third, in Jacksonville, Florida, to discuss returning passenger rail to their historic downtown Union Terminal and TOD possibilities with the City of Jacksonville and partners.
In Jacksonville, FL, to discuss returning passenger rail to their historic downtown Union Terminal.
Many thanks to our partners and supporting staff, project sponsors, and communities for participating and helping to make these workshops valuable events that drive transportation infrastructure forward.
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Community project in Mount Vernon, Washington saves $3 million with Build America Bureau Financing
The Bureau closed its first transit-oriented development (TOD) TIFIA loan for up to $26.8 million for the Mt. Vernon Library Commons Project in Washington state. The project includes a multi-use building with a public library, community center, meeting rooms, commercial kitchen, parking garage, public restrooms, STEM center, computing space, and electric vehicle (EV) chargers. The project, now under construction with completion expected this summer, encompasses half a city block in downtown Mount Vernon, just a short walk from Skagit County’s multimodal transportation center.
“Having a library, public restrooms, a community center, and a kitchen all under one roof—and only steps away from Skagit station—will be a major benefit for the people of Mount Vernon,” said U.S. Transportation Secretary Pete Buttigieg. “This is the first of what we hope will be many TOD loans that will make vital resources more accessible to more people, especially historically overlooked communities.”
The project is financed through the Transportation Infrastructure Finance and Innovation Act (TIFIA) Rural Project Initiative for up to 49 percent of project costs with an interest rate equal to one-half the U.S. Treasury rate. As a small rural project, DOT was able to provide additional support by waiving advisor costs.
“The TIFIA loan product is the absolute best financing that a small rural city like ours can utilize. The length of the loan and incredible interest rate made our project doable with our city budget. The interest rate saved $3 million over traditional financing. Our project would not have been possible without this tool,” said Jill Boudreau, Mayor Emerita, Project Administrator, Mount Vernon Library Commons.
For more information about TOD financing, please contact Robert Hanifin at robert.hanifin@dot.gov.
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The “Complete 540 Phase 2” Project will complete the Triangle Expressway Loop
Travelers will benefit from improved infrastructure because the Bureau closed a $417.2 million loan for the North Carolina Turnpike Authority (NCTA) Complete 540 Phase 2 Project around Raleigh, North Carolina. The project extends the Triangle Expressway 10.8 miles from I-40 to the existing I-540 at I-87/ U.S. 64/U.S. 264 in Knightdale, and includes 6 interchanges, 24 bridges, and 14 culverts, with construction expected to be completed in 2028. The $1.3 billion project will connect to Phase 1’s 17.1-mile project currently under construction.
“Phase 2 of Complete 540 will provide vital mobility options for North Carolina,” said NCTA Chief Financial Officer David Roy. “Completion of the project would not be possible without the support of the Bureau and [its] commitment to reliable transportation solutions across the country. The $417 million TIFIA loan provides tens of millions in savings over the life of the loan and allows construction to begin years ahead of original estimates.”
New and Improved Rail Infrastructure Will Enhance Safety and Supply Chain for the Region
A $31.4 million Railroad Rehabilitation and Improvement Financing (RRIF) loan to the Sierra Northern Railway (SNR) and Mendocino Railway (MRY) will expand and rehabilitate rail infrastructure in the Central Valley and Mendocino County, California. The loan finances nearly 100 percent of the planned improvements, including SNR expansion of 6.7 miles of Oakdale Branch track for engine and carriage storage; MRY rehabilitation of Noyo Canyon Tunnel No. 1, 27 bridges and 40 miles of track. Project benefits to the community include increased safety, operating capacity, and efficiency; reduction of derailments and grade-crossing incidents; and reduced congestion on local roads and highways.
“We appreciate the Bureau and all [its] hard work helping us with the RRIF loan,” said Sierra Northern Railway President Kennan H. Beard III. “This project will provide the region with new construction jobs and greatly benefit the Central Valley.”
High-speed rail project will create thousands of jobs and provide efficient travel between Southern California and Las Vegas
DOT allocated $2.5 billion in private activity bonds (PABs) authority for the Brightline West High-Speed Intercity Passenger Rail project connecting Las Vegas, Nevada, and Southern California. The 218-mile, high-speed rail line will primarily run along the I-15 median with trains capable of reaching 186 mph or more, cutting the trip to one-half the time to travel by car.
“Building a high-speed rail corridor from Las Vegas to Southern California will drive economic investment and opportunity across the region,” said U.S. Deputy Secretary of Transportation Polly Trottenberg. “Residents and visitors alike will benefit from access to a fast and sustainable travel option that better connects key cities.”
In 2020, DOT approved a private activity bond allocation of $1 billion for Brightline West, raising the total allocation for this project to $3.5 billion. In December 2023, DOT awarded a $3 billion Federal State Partnership for Intercity Passenger Rail grant to the Nevada Department of Transportation for this project.
“As the first true high-speed rail system in America, Brightline West will serve as the blueprint for connecting cities with fast, eco-friendly passenger rail throughout the country,” said Brightline Founder and Chairman Wes Edens. “Connecting Las Vegas and Southern California will provide widespread public benefits to both states, creating thousands of jobs and jumpstarting a new level of economic competitiveness for the region. We appreciate the confidence placed in us by [USDOT] and are ready to get to work.”
Roger Bohnert, former Director of Outreach and Project Development at the Bureau, retired this April after an incredible public service career spanning more than 40 years. Roger was at the forefront of the Bureau’s work since its creation in 2016 and made critical contributions to diversify our borrower and asset portfolios. He was instrumental in establishing the Rural Projects Initiative, which in just a few years has closed 12 loans at one-half the U.S. Treasury rate, with three more in the pipeline. Roger also helped create a program to help smaller and regional railroads and established the Bureau’s direct technical assistance and grant programs. Most importantly, he built a superior team of project development leads, outreach specialists, and technical assistance experts who engage everyday with Bureau customers to advance investment in America’s infrastructure.
Previously, Roger was the Deputy Associate Administrator of the Maritime Administration’s Office of Intermodal System Development, leading programs like StrongPorts, and he served in the Coast Guard for 20 years.
Warmest congratulations to Roger on his retirement. Please join us in wishing him “fair winds and following seas” for his next adventure.
Photo info: Acting Under Secretary of Transportation for Policy Christopher Coes (left) and Bureau Executive Director Morteza Farajian (right) congratulate Roger Bohnert (middle) on his retirement and present him a recognition plaque.
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The Rural and Tribal Assistance Pilot and Regional Infrastructure Accelerator (RIA) Notices of Funding Opportunity are under development for release later this year - stay tuned for updates.
Transit-oriented development (TOD) projects are a relatively new category for DOT financing programs―both the Federal Transit Administration (FTA) and the Build America Bureau (Bureau) are committed to supporting project sponsors as they explore these opportunities and the federal requirements tied to financial assistance.
FTA and the Bureau are hosting informational webinars regarding National Environmental Policy Act (NEPA) requirements for TOD projects financed through the TIFIA and RRIF programs.
Who should attend:
Private developers with limited NEPA experience who are interested in financing TOD projects.
What:
Webinar on NEPA requirements and expectations for TOD financing applications.
When:
Each webinar will cover the same content and will be offered on the following dates:
- June 26, 2024 | 3:00 pm – 4:30 pm ET
- July 9, 2024 | 1:00 pm – 2:30 pm ET
- July 15, 2024 | 3:00 pm – 4:30 pm ET
The webinars will be recorded and posted to the Build America Bureau TOD webpage.
How:
The webinars will be hosted on Zoom. Click the button below to register.
Participants are encouraged to register at least five business days before the webinar date. Registration is free but required.
Accessibility:
FTA and the Bureau are committed to providing equal access to each webinar for all participants. Closed captioning will be available during the webinars. If you need alternate formats, options, or language services, please emailyujin.kim@dot.gov at least five business days prior to the webinar.
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If you are interested in exploring federal financing with the Build America Bureau, please contact us at BuildAmerica@dot.gov.
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