TIFIA - The Impact of the Infra Act | Page 2

Eligible project costs The term eligible project costs means amounts substantially all of which are paid by , or for the account of , an obligor in connection with a project , including the cost of –

• Development-phase activities , including planning , feasibility analysis , revenue forecasting , environmental review , permitting , preliminary engineering and design work , and other preconstruction activities ;

• Construction , reconstruction , rehabilitation , replacement , and acquisition of real property ( including land relating to the project and improvements to land ), environmental mitigation , construction contingencies , and acquisition of equipment ;

• Capitalised interest necessary to meet market requirements , reasonably required reserve funds , capital issuance expenses , and other carrying costs during construction ; and

• Capitalising a rural projects fund .

The US $ 1trn IIJA is designed to facilitate the refurbishment , expansion and modernisation of US transportation , water , broadband and energy infrastructure . One of the express policy goals of the IIJA is to enable the leveraging of federal funds to promote private investment . The IIJA does this in part by expanding the kinds of projects eligible for TIFIA funding ( although admittedly not as broadly as many in the industry had expected ) and introducing other changes to make the Program more agile .

New eligible projects First , the IIJA expanded TIFIA eligible projects to include three new categories of projects 5 :

• Transit-oriented transportation projects – These refer to a project to improve or construct public infrastructure that either : is located within walking distance from and accessible to a transit , passenger rail , intercity bus , or intermodal facility , including a transportation , public utility or joint development capital project where future occupants of the financed facilities agree to pay a fair share of the costs of such facility through rental payments and other means 6 ; or is an economic development project , including commercial and residential development and related infrastructure , that ( a ) incorporates private investment and ( b ) is physically or functionally related to a passenger rail station or a multimodal station that includes rail service , ( c ) has a high probability to commence work within 90 days , and ( d ) has a high probability of reducing Federal funds assistance for the rail station or service by increasing ridership , rental payments or other activities that generate revenue in excess of project costs .

To be eligible a project must have delivered a letter of interest to the Secretary of Transportation ( the “ Secretary ”) and received a determination of eligibility from the Secretary by September 30 2025 . For each fiscal year , qualifying projects will be eligible for up to 15 % of TIFIA ’ s total budget aut horisation for that fiscal year .

• Airport-related projects – Eligible to be financed by passenger facilities charges by federal law , including airport development and planning , gate construction and the conversion of vehicles and ground support equipment to low emission technology . As with transit-oriented projects , ( i ) to be eligible the airport project must have delivered a letter of interest to the Secretary and received the Secretary ’ s determination of eligibility by September 30 2025 and ( ii ) this category of projects will have the same yearly 15 % share of total TIFIA budget authorisation , and

• Habitats – Projects to acquire plant and wildlife habitats pursuant to a transportation project environmental mitigation plan that has been

FIGURE 1 - P3 PROJECT SENIOR FUNDING INFRASTRUCTURE WITH TIFIA

Rating Agency

Bond Investors

Collateral / Intercreditor agent

Debit service , reserve funding , all other collateral and cash waterfall

52 Project Finance International March 23 2022