TIFIA approved by the Secretary of Interior in accordance with the Wildlife Protection Act . This facilitates funding , for example , for the purchase or lease of land for conservation areas required to mitigate the environmental impact of transportation projects .
Streamlined application process In addition , the IIJA requires the Secretary to design , within 120 days after enactment of the IIJA , a streamlined application procedure for certain projects but such easier procedure comes with limitations , including , among others , that the project must have ( a ) a reasonable expectation that the contracting process for the project can commence within 90 days after a Federal credit instrument is obligated for the project under the TIFIA program ; ( b ) the TIFIA senior secured loan has a rating of at least A , ( c ) the senior secured TIFIA loan does not exceed 33 % of total eligible costs , and ( d ) the project has received a Finding of No Significant Impact under NEPA .
Flexible terms The IIJA has also softened some of the requirements under the programme by , among other things : a ) Extending the period for contingent commitments under a TIFIA master credit agreement from three years to five , b ) Facilitating projects with only one ratings opinion ( where previously any project over US $ 75m required two separate investment grade ratings , now the bar for requiring two ratings has been raised to US $ 150m ), and c ) Extending the potential maturity of a TIFIA loan for a capital asset with an estimated useful life of more than 50 years to the lesser of ( i ) 75 years after the date of substantial completion and ( ii ) 75 % of the estimated usable life of the asset .
Payment and performance security Any project making use of the TIFIA programme must demonstrate that its design and construction are supported by appropriate payment and performance security , regardless of whether the obligor is a private entity or a state , local authority or any department or instrumentality thereof . If local law requires such security , then the Secretary may accept that security if “ the Federal interest with respect to Federal funds and other project risk related to design and construction is adequately protected ”.
The IIJA opens the door for the potential use of TIFIA funds to support in part the development of neighbourhoods around train stations , including mixed-use real estate projects . TIFIA financing will be available not only to fund the reconstruction or refurbishment of an existing station plus access roads and other related infrastructure , but also commercial and potentially some residential buildings that are physically or functionally related to a station providing passenger rail service . 7
Of course , any sponsor wishing to avail itself of TIFIA ’ s favourable financing will need to carefully design a revenue structure for the project so that its senior debt can achieve the required rating . This could include availability payments from the city or state ( probably for the station and some related infrastructure ), public grants , and / or longterm rental commitments by the tenants of the public buildings .
In addition , we do expect the expansion of the Program to result in TIFIA financing becoming a valuable tool for airport projects , given that many US airport installations are considering expanding or refurbishing passenger terminals ( including regional and local airports ) and cargo terminals .
Conclusion The expansion of the TIFIA financing programme in late 2021 is a positive step towards realising significant progress in the refurbishment of America ’ s ailing infrastructure , in expanding the types of projects eligible for low-cost , longterm federal financing for projects – although limiting the expanded projects ’ share to 15 % of total TIFIA loan availability in any year for each of the transit-oriented and airport-related project categories – and providing more flexible loan terms , including longer loan commitment periods and potential maturity dates , as well as lowering rating requirements from two to a single credit rating per project .
These improvements , when combined with opportunities to combine TIFIA funding with federal and state infrastructure grants , as well as the partial expansion of project types that are eligible to utilise tax-exempt private activity bonds in their capital stack , should help private investors leverage federal money to fund vitally needed improvements to US infrastructure on a cost-efficient basis – at a time when the deterioration of our infrastructure has reached a tipping point . Now , it is up to state and local authorities to tender projects that are well structured so as to be technically viable , to have the potential to utilise these improvements , and are appetising enough to draw private investors to the procurement table . •
Footnotes
1 - In the last 20 years , TIFIA loans have supported the construction of more than 75 large transportation projects . 2 - The Build America Bureau also manages the Railroad Rehabilitation and Improvement Financing ( RRIF ) credit programme . 3 - Pursuant to the Surface Transportation Reauthorization Act of 2021 , the Program total for each year starting 2022 through to 2026 is US $ 250bn for a total of US $ 1.25trn . 4 - The form of TIFIA loan and TIFIA Intercreditor Agreement grant to the TIFIA lender ( ultimately , the United States ), a “ springing lien ” whereby such loan becomes pari passu with senior debt upon the occurrence of a bankruptcy event . 5 - 23 USc § 601 ( a )( 12 )( E ) 6 - 49 USc § 5302 ( 3 )( G )( v )). 7 - Such “ public sector activities ” include daycare , healthcare , education , and job training . www . transportation . gov / buildamerica / TOD / faqs
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