FE D E R A L CR E D I T PR O G R A M

Next TIFIA Round Slated for Su m m e r

Potential applicants for direct loans, loan

guarantees, and lines of credit under the

U.S. De p a rtment of Tr a n s p o rt a t i o n’s

( U S D OT) new credit program should

expect an application due date in early

summer for fiscal year 2000 assistance.

Program Background and 

FY 1999 Selections

The Tr a n s p o rtation In f r a s t ru c t u re

Finance and In n ovation Act (T I F I A )

c redit program was enacted in June 1998

as part of the Tr a n s p o rtation Equity Ac t

for the 21st Century (TEA-21), the

l a n d m a rk surface transportation re a u t h orization bill. Under TIFIA, the USDOT

may provide up to $10.6 billion in Fe deral credit assistance to surface transp o rtation projects during the period

c overing fiscal years 1999 through 2003.

The USDOT launched this new pilot

p rogram with the publication of implementing regulations in June 1999, and

accepted the first round of applications

in August 1999. In September 1999,

U S D OT Se c re t a ry Slater announced the

first five recipients of TIFIA credit supp o rt totaling $1.6 billion as shown in the

table below. (Please refer to the Su mm e r / Fall 1999 edition of I F Q, Volume 5,

Number 2, for more detailed descriptions of these pro j e c t s . )

Basic Program Eligibility Criteria

The strategic goal of the TIFIA pro g r a m

is to leverage limited Federal re s o u rc e s

and stimulate private capital inve s t m e n t

in transportation infrastru c t u re by providing credit rather than grants to projects of national or regional significance.

Some of the major requirements of the

program include:

❖ An eligible project generally must

cost at least $100 million or 50 percent of the state’s annual Fe d e r a l - a i d

highway apportionments, whicheve r

is less; there is a lower cost thre s h o l d

of $30 million for intelligent transp o rtation systems (ITS) pro j e c t s ;

❖ The Federal TIFIA contribution is

limited to 33 percent of project costs;

❖ The pro j e c t’s senior debt obligations

must re c e i ve an investment grade rating (Baa3/BBB-) from at least one of

the major credit rating agencies;

❖ The project is subject to Fe d e r a l

re q u i rements (Civil Rights, Na t i o n a l

En v i ronmental Policy Act, Un i f o r m

Relocation, Titles 23/49); and

❖ The project must receive the necess a ry state/local approvals (transportation plans and policies).

TIFIA project sponsors may be public

or private entities, including state and

local governments, special purpose

authorities, transportation improvement districts, and private firms.

TIFIA project eligibility also is bro a d ,

encompassing the whole range of surface transportation projects:

❖ Highways and bridges;

❖ Intelligent transportation systems;

❖ Intermodal connectors;

❖ Transit vehicles and facilities;

❖ Intercity buses and facilities;

❖ Freight transfer facilities; and

❖ Passenger rail vehicles and facilities.

VOLUME 6, NUMBER 1 WINTER/SPRING 2000

FY 1999 TIFIA Project Selections

Also in this issue ...

G A RVEE Roundup . . . . . . . . . . 4

State DOTs Opt for Increased 

State Capitalization of SIBs . . . . 6

Arizona Expands SIB Bank 

with State Funds . . . . . . . . . . . . 6

Florida SIB Gains Momentum . . 7

Colorado Advances Major

Multimodal Project Through 

Innovative Financing . . . . . . . . 8

TE-045 Update . . . . . . . . . . . . 9

Second National Conference 

on Tr a n s p o rtation Finance . . . 1 0

Finance Primer Under 

D e v e l o p m e n t . . . . . . . . . . . . . 1 0

continued on page 2
2

For more information about the TIFIA

p rogram, including specifics on the

a vailable credit instruments, please 

refer to the TIFIA web site at h t t p : / /

tifia.fhwa.dot.gov.

Anticipated FY 2000 Schedule

Upon completion of the inaugural

round of TIFIA selections at the end of

FY 1999, the USDOT had contemplated the possibility of two solicitations for TIFIA proposals in FY 2000 –

an early round in the spring and a later

round in the summer or fall. However,

the USDOT now has determined that

there will be just one TIFIA solicitation

this year – probably in the summer –

for the following reasons:

1. Based on informal feedback from project sponsors, the financial commun i t y, and other observers, including

p a rticipants in recent USDOT workshops, the potential demand for

TIFIA assistance appears to be gre a test later in the year when large projects have had more time to deve l o p

and pro s p e c t i ve applicants have had

m o re time to pre p a re financial plans

and meet application re q u i re m e n t s .

2. The USDOT plans to weight the

eight statutory selection criteria for

FY 2000 and subsequent rounds of

TIFIA selections. The USDOT initially implemented the TIFIA program last year by treating each of the

selection criteria equally. Now,

based on program experience, cong ressional intent, and Ad m i n i s t r ation priorities, the USDOT will

p ropose different weights for the

selection criteria.

3. The USDOT also plans to clarify

certain other program provisions for

the benefit of future borrowers.

The USDOT plans to revise the TIFIA

rule through public notice and comment, then publish a solicitation for

proposals. Letters of interest and formal

applications will be due in early summer, and selections will be made before

the end of the fiscal year in September.

The table above reflects the USDOT’s

c u r rent schedule and is subject to

change depending on events over the

next few months.

The USDOT is authorized to prov i d e

up to $1.8 billion in TIFIA credit supp o rt in FY 2000 and another $2.2 billion in FY 2001. Potential T I F I A

p roject sponsors are encouraged to

consult the TIFIA web site or contact

TIFIA, continued from page 1

Tentative TIFIA Schedule for FY 2000

continued on page 3

St a rting with this edition, I F Q will print the USDOT Credit Wo rk i n g

Gro u p’s responses to interesting questions about the TIFIA program posed

by our readers and other observers. We hope you find this “TIFIA Tr i v i a”

section useful and that you will submit questions, concerns, or comments to

either of the IFQ co-managing editors (Max Inman or Suzanne Sa l e ,

F H WA). In this way, we hope that I F Q facilitates communication betwe e n

the USDOT and its transportation partners and ultimately improves the

implementation of the TIFIA program as well as other finance initiative s .

Question

Do states that plan to participate in the TIFIA program have to be concerned about any effect on their regular Federal funding? In other word s ,

could Federal-aid apportionments be intercepted or offset by the USDOT

to ensure repayment of TIFIA cre d i t ?

Answer

No. A state’s Federal-aid apportionments will not be affected by part i c i p ation in the TIFIA program. The TIFIA program funding authorized by

TEA-21 ($530 million through FY 2003) is available to cover expected

losses of credit instruments. This funding essentially is a capital re s e rve for

u n re c ove red losses resulting from TIFIA defaults. To the extent such funding is not sufficient to cover actual losses, the USDOT has borrow i n g

authority from the U.S. Tre a s u ry to make up the difference. T h e re f o re, the

U S D OT will not intercept or otherwise affect a state’s regular Federal funding to ensure repayment of TIFIA credit. The TIFIA program is designed to

absorb credit risks associated with project construction and operation.

Howe ve r, it should be noted that the USDOT can apply an administrative

offset relating to a payment default in cases of criminal acts or wro n g d o i n g .

T I F I A Trivia 

The USDOT Responds to Your Questions
3

the USDOT directly (please refer to the

contact list on page 11 for up-to-date

information on the program). Also,

f u t u re issues of I F Q will provide updates

on the TIFIA program implementation.

Is Your Eligible Project Ready to

Apply for TIFIA Assistance?

If you are developing a transport a t i o n

p roject that meets the basic eligibility

criteria outlined above, you need to

consider carefully when your pro j e c t

should assemble its plan of finance and

apply for TIFIA assistance (assuming

your project re q u i res or could benefit

from Federal credit support). Prospective applicants should keep in mind that

eligible projects must meet cert a i n

re q u i rements throughout the T I F I A

process, from application to selection to

commitment to funding. For example,

prior to submitting an application to

the USDOT, the sponsor must satisfy

the following key requirements:

❖ The pro j e c t’s estimated eligible costs

must meet the appropriate thre s h o l d

amount and the credit request is not

m o re than 33 percent of those costs;

❖ The project is consistent with the

state’s long-range transportation plan

and, if located in a metropolitan area,

the project is included in the metropolitan transportation plan;

❖ The project sponsor has, at a minimum, circulated a Draft En v i ro n -

mental Impact Statement (DEIS)

or re c e i ved either a Finding of No

Significant Impact (FONSI) or a

Categorical Exc l u s i o n ;

❖ The project sponsor has developed a

c o m p re h e n s i ve financial plan that

includes detailed cash flows and

identifies specific re venue sourc e s

that will be used to secure the TIFIA

credit instrument(s); and

❖ The project sponsor has obtained at

least one preliminary rating opinion

letter from a major credit rating

agency that confirms the investment

grade potential of the project’s senior

debt obligations and assesses the

default risk of the proposed T I F I A

credit instrument(s).

Pro s p e c t i ve applicants are stro n g l y

encouraged to contact the USDOT

prior to submitting applications to

a s c e rtain the eligibility and readiness of

their proposed projects. It is import a n t

to remember that the above re q u i rements re p resent minimum pre re q u i s i t e s

for TIFIA application. Be f o re the

U S D OT can subsequently commit

TIFIA assistance or fund a cre d i t

i n s t rument, for example, the sponsor

must satisfy additional re q u i re m e n t s

such as:

❖ The project must be included in the

a p p roved Tr a n s p o rtation Im p rove m e n t

Program(s) of the re l e vant state(s);

❖ The project sponsor has re c e i ved a

Re c o rd of Decision (ROD), a FONSI,

or a Categorical Exclusion, as appropriate; and

❖ The project sponsor has obtained at

least one rating letter from a major

credit rating agency that conveys an

i n vestment grade rating (Ba a 3 / B B B - )

on the pro j e c t’s senior debt obligations

and assesses the default risk of the proposed TIFIA credit instru m e n t ( s ) .

The chart below illustrates the re l a t i ve

timing of some of the key requirements

that must be met throughout the TIFIA

process.

Major Documentation Required During the TIFIA Process

TIFIA, continued from page 2

Contact:

Bryan Grote,

Office of the Secretary,

USDOT, 

202/366-9656.
The State of the States 

on GARVEEs

Since the last issue of I F Q, a number

of states have continued to deve l o p

their Grant Anticipation Re ve n u e

Vehicle (GARVEE) programs. In early

Ma rch 2000, through a competitive

sale, Arkansas sold its first GARV E E

issue of $175 million out of a total of

$575 million bonds authorized by the

l e g i s l a t u re. This gro u n d b re a k i n g

G A RVEE issue was rated Aa2 by

Moody’s and AA by Standard & Poor’s. 

The Arkansas GARVEEs achieved a better than expected true interest cost

(TIC) of 5.2 percent. (TIC is a method

of computing interest cost that re c o gn i zes the time value of money.) 

Other states have also made pro g re s s

t ow a rd issuing GARVEE bonds. Colorado is continuing to develop its

vo t e r - a p p roved Re venue Anticipation

Note (RAN) program (Colorado’s

G A RV E E mechanism), approved by

the voters in November 1999. In

Alaska, the governor announced plans

to issue up to $350 million worth of

G A RVEEs for several transport a t i o n

projects. The legislature is in the early

stages of considering the gove r n o r’s

plan. The Arizona DOT is mov i n g

f o rw a rd with a $400 million Gr a n t

Anticipation Notes (GANs) pro g r a m ,

and plans to sell the first issue of $50

million this summer.

Transit Grant Anticipation Notes 

Like highway agencies, transit agencies

can also borrow against future Federalaid funding. While transit bonding is

quite similar to highway bonding, the

transit bonds are referred to as GANs.

The idea is the same, howe ver: the

agency issues bonds secured with a

pledge of Federal-aid assistance, thus

amassing up-front capital, and pays

down the bonds over a period of time

as the Federal funds are received. 

TEA-21 contained certain prov i s i o n s

that enhanced transit agencies’ ability to

b o r row against future Federal aid. Fo r

example, the additional security of T E A -

2 1 ’s “f i rew a l l” provisions (separating

t r a n s p o rtation funding from appro p r i ations for other domestic purposes) was

one factor that helped make it possible

for transit agencies to pledge Federal aid

as the sole source of repayment, without

having to encumber other transit re venue sources. 

Just as the Federal-aid highway pro g r a m

and transit programs have different proc e d u res for receiving funds, the mechanics of transit GANs are different fro m

the GARVEE bonds issued for highway

purposes. To aid in an understanding

h ow transit GANs work, a brief re v i ew

f o l l ows of the basic funding mechanisms

for transit programs. 

Funding Mechanics – 

Transit Programs

In contrast to Federal highway funding,

most Federal transit funding is prov i d e d

d i rectly to transit agencies or units of local

g overnment, rather than state DOTs .

Tw o - t h i rds of Federal-transit funding is

a p p o rtioned by formula (re f e r red to as

“formula funds”), while one-third is allocated on a discre t i o n a ry basis (“d i s c ret i o n a ry funds”) by Congress and the

Federal Transit Administration (FTA ) .

The major FTA funding categories

include:

Section 5307

Section 5307 funds may be used for

purchase of buses, trains, ferries, vans,

and support equipment. As with

highway apportionments, these funds

are distributed by a formula based on

population and transit characteristics

and divided between urbanized and

non-urbanized areas.

Section 5309

❖ Fi xed Guideway Mo d e rnization –

These funds are for improvement of

rail and fixed guideway pro j e c t s .

While technically a part of FTA’s

d i s c re t i o n a ry program, these funds

a re distributed based on a formula

that applies only to rail, ferry, and

other transit operators.

❖ Buses – These funds may be used for

p u rchase of buses and improvements to bus facilities.

❖ Fixed Guideway New Starts – These

funds may be used for new rail systems and line extensions.

The bus and New St a rts programs are

d i s c re t i o n a ry and project-specific; no

state or local area is guaranteed a specified share of these funds (as is the case

with formula funds), and there is no

adjustment based on population or

other statistical factors. These funds

may be legislatively earmarked at the

time of the initial authorization (such

as in TEA-21), or the funds may be

annually appropriated by Congress to

specific projects. 

FTA recommends projects to Congress

for funding, but Congress ultimately

decides which projects will re c e i ve

funding in the appropriations process.

Transit GANs Backed by 

Formula Funds

Under the 1982 Su rface Tr a n s p o rt a t i o n

Uniform Relocation and Re h a b i l i t a t i o n

Act (STURRA) interest costs we re

4

G A RVEEs: 

A Semantic No t e

To avoid confusion, FHWA has

decided to clarify that the term

“ G A RVEE” (Grant Anticipation

Re venue Vehicle) refers only to

debt repaid directly with Fe d e r a l -

aid funds under the provisions of

the National Highway Sy s t e m

Designation Act of 1995, as codified in Section 122 of Title 23

of the U.S. Code, but not debt

that may be indirectly linked to

Federal re i m b u r s e m e n t s .

continued on page 5

G A RV E E RO U N D U P
5

made eligible for reimbursements for

both formula and discre t i o n a ry programs. In t e rest reimbursement was

limited to the “best available municipal

financing rate” for discre t i o n a ry programs, and to the “a verage curre n t

m a rket rate” for formula funds, as

determined by FTA. 

Although many transit agencies have

used Federal reimbursements as one of

the sources of funds for repayment of

re venue bonds, no agency had issued

bonds backed solely or primarily by

anticipated Federal formula re i m b u r s ements until New Je r s e y’s Certificates of

Pa rticipation (COPs) issuance in 1998

(see box on page 5). 

States have been increasingly intere s t e d

in borrowing against Federal-aid funds

since TEA-21 has enhanced both the

security and amount of transit funding,

as well as simplified FTA interest re i mbursement provisions. The intere s t

rate allowed in TEA-21, for all capital

p rograms, is the best rate re a s o n a b l y

a vailable at the time of financing. 

Transit GANs Backed by 

Full Funding Grant Agreements 

E s s e n t i a l l y, transit projects that are

noted in legislation without specific

dollar amounts have a “hunting

l i c e n s e” that makes them eligible for

d i s c re t i o n a ry funding, but does not

guarantee that they will receive it.

For transit New Starts projects that are

offered more than one year’s worth of

funding, FTA is required to enter into

m u l t i - year agreements known as Fu l l

Funding Grant Agreements (FFGAs).

FFGAs indicate FTA’s intention to

s u p p o rt a project, up to a specified

level of funding. 

An FFGA will typically specify the maximum level of Federal participation, and

the schedule of funding for the pro j e c t

(e.g., $400 million, at $50 million per

year for eight years). 

However, FFGAs are subject to appropriation, fulfillment of Federal requirements, and FTA priorities. Each fiscal

year, FTA makes recommendations on

which projects will re c e i ve funding,

and publishes a notice in the Fe d e r a l

Register indicating the level of funding

provided to each project. 

While transit agencies may use the disc re t i o n a ry funds provided thro u g h

FFGAs to repay debt, these funds are

not guaranteed to arrive on schedule

because they are subject to annual

a p p ropriations. Because discre t i o n a ry

funds provided under an FFGA are

project-specific, there is limited ability

to shift funds between projects in the

event of a shortfall. 

Thus, the credit risks for a transit

GAN backed by a discre t i o n a ry FFGA

may be higher than for a transit GAN

backed by formula funding at an

e q u i valent coverage level. A grantee

can increase coverage levels by borrowing less than the FFGA amount (essentially providing the coverage re q u i re d

for a good rating opinion) so that eve n

if Congress appropriates significantly

less than the budget request, there is

likely to be enough of an appro p r i a t i o n

to at least cover re q u i red debt serv i c e .

Two examples of past transactions that

h a ve explicitly relied on a pledge of

f u t u re FFGA funding include the

Hu d s o n - Bergen Light Rail project and

the San Francisco BART to the Airport

Ex t e n s i o n .

The Hudson Bergen Light Rail pro j e c t

in New Jersey was supported primarily

by a transit GAN, issued against anticipated discre t i o n a ry funding. As a seco n d a ry pledge, the financing was also

backed by a pledge from the state’s

t r a n s p o rtation trust fund, in the eve n t

that FFGA funds we re not forthcoming. 

The Bay Area Rapid Transit (BART)

district received a private line of credit

from several banks, backed solely by a

pledge of future discre t i o n a ry funds

for its BART to San Francisco airport

extension project. 

New Jersey Transit Corporation (NJT) issued $151.5 million of Cert i f i c a t e s

of Pa rticipation (COPs) in Ma rch 1999, solely backed by anticipated Se c t i o n

5307 formula funding. Proceeds we re used to purchase 500 buses, as part of

an overall bus purchase of 650 buses. COPs, a variation on GANs, are created as a part of a lease-purchase agreement, where by the lender, the holder

of the certificate, owns a right to participate in periodic lease payments

( i n t e rest and return of principal) as they are paid. In this case, the lease payments are made with Federal-aid funds. NJT chose this COPs stru c t u re

because it did not have statutory authority to issue bonds. 

The transit corporation was well-positioned to borrow against the formula

funds because, since 1989, it has re c e i ved most of New Je r s e y’s Federal transit funds. Under TEA-21, NJT is slated to re c e i ve over $150 million per ye a r

t h rough 2003. The increased level of TEA-21 funding provided substantial

c overage for the semi-annual lease payments for this COPs issue. Re p a yments are scheduled through the end of 2008, six years after TEA-21 expires. 

In Ja n u a ry 2000, NJT issued another round of COPs financing, raising $234

million. These funds will purchase a set of double-decker rail cars. This 15-

year issue will extend significantly beyond T E A - 2 1 ’s expiration in 2003,

spanning three authorization periods (assuming that future authorizations are

at least six years each).

A Transit GAN Close-up: New Jersey Tr a n s i t

Contacts:

Paul Marx, FTA,

202/366-1675

or

Jennifer Mayer, FHWA,

415/744-2634.

GARVEEs, continued from page 4
Although TEA-21 limited additional

Federal SIB capitalization to four

states, several states, recognizing the

benefits of the concept, have pursued state capitalization to meet

loan demands. 

Both Arizo n a’s and Oh i o’s SIBs

reflect increased activity as a re s u l t

of state funding. Arizona has

loaned a total of $158.0 million

t h rough Ma rch 2000, accounting

for nearly 30 percent of the SIB

loans nationwide as shown in the

accompanying table. Ohio ranks

second in loan volume with loans

totaling $106.5 million, but is first

in the number of loans made with

21 loans under agreement. Ohio has

c a p i t a l i zed its bank with $30 million in state funds. Arizo n a’s initiat i ve to enhance its program with

state funding is discussed in the foll owing article. 

Florida, one of the four new pilot

SIBs under TEA-21, has legislation

under consideration to establish a

state-funded SIB for transport a t i o n

i m p rove m e n t s .

This issue of IFQ spotlights Arizo n a’s and Fl o r i d a’s SIB pro g r a m s .

6

Contact:

Phyllis Jones,

FHWA, 

202/366-2854. 

State Infrastructure Bank Loan and Loan Agreements by State

March 2000

SIB UP D AT E

State DOTs Opt for In c reased State Capitalization of SIBs

A ri zona Expands SIB with State Fu n d s

Fo l l owing its selection as one of the 10

pilot states authorized to administer a

State In f r a s t ru c t u re Bank (SIB) program under the provisions of the

National Highway System De s i g n a t i o n

Act of 1995 (NHS), the Arizo n a

De p a rtment of Tr a n s p o rt a t i o n

( A D OT) pro a c t i vely moved forw a rd

with SIB implementation. In i t i a l l y,

the program was advanced under existing legislation. Howe ve r, in order to

re a l i ze the full benefits of this new concept, compre h e n s i ve state legislation

was enacted in 1998 (HB 2603). Arizo n a’s SIB is designated as the Hi g hway Expansion and Extension Loan

Program (HELP). The HELP program provides flexible financial

solutions for Arizo n a’s grow i n g

highway needs.

The HELP Fund was initially capitali zed with Federal highway dollars up to

the maximum authorized under the

NHS Act and state matching funds.

HELP operates similar to a bank, providing financial assistance in the form of

loans or credit enhancement for eligible

t r a n s p o rtation projects across the state.

continued on page 7
While the maximum capitalization of

the HELP fund is limited to approx imately $50 million under the Fe d e r a l

p rogram, landmark legislation (SB 1201)

passed in 1999 greatly expanded the

amount of HELP loan funds ava i l a b l e

for transportation projects in Arizo n a .

Senate Bill 1201 enhanced funding to

the HELP program through a combination of direct appropriation, additional

state highway funds and the creation of

an innova t i ve financing mechanism

called Board Funding Ob l i g a t i o n s

( B F Os). This legislation allows the

State Tr a n s p o rtation Board to issue up

to $300 million of BFOs. The St a t e

Tre a s u rer purchases the BFOs and the

Tr a n s p o rtation Board pays back principal and interest due on the BFOs fro m

p rogram funds. The interest rate on the

B F Os is tied to U.S. Tre a s u ry rates.

This innova t i ve approach to capitalization allows the HELP program to

re c e i ve much needed additional capital

and the State Tre a s u rer to invest general

fund monies at a market interest rate.

The first issue of BFOs was authorize d

in October 1999 and will provide $100

million for loans to advance urban fre eway projects in Maricopa County.

Additional issues of BFOs are planned

in 2001 and 2004. 

In addition, SB 1201 appropriated $20

million from the State Highway Fund in

FY 2000 and a total of $60 million fro m

the State General Fund over a three ye a r

period beginning in FY 2001 ($20 million annually). Over the next eight

years, the new funding sources prov i d e d

to the HELP program by Senate Bi l l

1201 will provide approximately $600

million in loans for highway pro j e c t s

t h roughout Arizona as the $380 million

in new capitalization is leve r a g e d

t h rough short-term loans.

A r i zo n a’s HELP program accepts applications for loans from cities, tow n s ,

counties, tribal governments and state

agencies, including the De p a rtment of

Tr a n s p o rtation. While no loans have

been made yet to an Indian tribe, discussions are under way to explore the

possibility of a joint loan with the

De p a rt m e n t .

Loan activity of the HELP pro g r a m

has increased rapidly since its inception

in 1998. Since the first two pilot loans

we re approved in 1998 for $50 million,

four more HELP loans, totaling $108

million, have been approved. 

Loan amounts have ranged fro m

$300,000 to $100,000,000. Cu r re n t l y

t h e re is not a limit on the maximum

amount of any one loan, and eligible

p rojects include all types of ro a d

i m p rovements. In t e rest rates on the

loans are tied to municipal bond rates,

and may be subsidized if the applicant

for a loan is a local jurisdiction. 

A simplified application form, standardi zed loan documentation, and the

reduced costs of borrowing are attracting more borrowers to the HELP program each month. T h rough the use of

i n n ova t i ve capitalization techniques, the

A r i zona HELP program is prov i d i n g

the funds necessary to meet the incre a sing demand for project financing.

7

Contact:

Shawn Dralle, Arizona

Department of Transportation, 

602/712-4352.

Arizona, continued from page 6

In July 1999, Florida entered into a new

c o o p e r a t i ve agreement with FHWA as

one of the four pilot SIBs authorize d

under TEA-21. To date, $25,600,000

has been deposited in the TEA-21 SIB

account. The previous SIB, authorize d

by the National Highway System De s i gnation Act of 1995, was capitalize d

with a total of $48,519,297 in the

Highway Account and $10,812,500 in

the Transit Account. 

The SIB program in Florida has been

quite active since inception. The majority of early loans we re made to adva n c e

c o n s t ruction for existing Fl o r i d a

De p a rtment of Tr a n s p o rtation (FDOT)

p rojects. Even though the SIB was

made available to private and other governmental entities, the program initially

was not widely embraced. 

F D OT hosted a Florida Tr a n s p o rt a t i o n

Finance Wo rkshop in July 1999 and

Fl o rida SIB Gains Mo m e n t u m

continued on page 8
8

Colorado Ad vances Major Multimodal Project T h rough In n ova t i ve Fi n a n c i n g

TE C H N I C A L CO R N E R

T h rough a collaborative effort of the

Colorado De p a rtment of Tr a n s p o rt a t i o n

( C D OT), the Regional Tr a n s p o rt a t i o n

District (RTD), FHWA, and FTA ,

Colorado is embarking on the largest

s u rface transportation project eve r

u n d e rtaken in the state, the So u t h e a s t

C o r r i d o r, a multi-modal project costing

a p p roximately $1.66 billion. T h e

Southeast Corridor links the two largest

e m p l oyment centers in the region – the

Southeast Business District and the

De n ver Central Business Di s t r i c t .

The Southeast Corridor is truly an innova t i ve transportation project from both

an engineering and a financial standpoint. It is a joint project between a

state DOT and a regional transit agency

which utilizes a single design/build contract for both transit and highway

i m p rovements. This project will be

financed with a combination of Fe d e r a l

transit discre t i o n a ry funds, a dire c t

G A RVEE bonding program, a local

bonding program, state funds, and local

funds. In November 1999, voters ove rwhelmingly approved two bond initiat i ves to accelerate the So u t h e a s t

Corridor pro j e c t .

The Southeast Corridor is a multimodal project comprised of highway

widening, safety improvements, and

light rail transit components. T h e

highway improvements consist of

re c o n s t ructing and widening 14 miles

of I-25 and four miles of I-225. On I25 there will be one additional highway

lane in each direction between Bro a dway and I-225 and two additional

highway lanes in each direction fro m

I–225 and C-470. On I-225 there will

be one additional lane in each dire ction. The light rail portion of the project is 19 miles in length. It will be

grade separated, double tracked, and

h a ve 13 light rail stations and park -

a n d - r i d e s .

C D OT and RTD have entered into an

i n t e r g overnmental agreement that provides the framew o rk for their joint effort

to finance and construct the corridor

i m p rovements. A single design/build

contract will be used for the design and

c o n s t ruction of both the highway elements and light rail. The design/build

request for proposals is expected to be

issued in the summer of 2000, with

selection of the contractor by spring of

2001. Construction is scheduled to

begin in the summer of 2001 with a

summer 2008 completion date.

The funding for the Southeast Corridor

p roject will be accomplished through a

multi-agency initiative, involving the

continued on page 9

invited county, city, and other gove r nmental entities to participate. T h e

w o rkshop was designed to discuss innova t i ve leveraging tools and concepts

being used in Florida. Pa rticipants we re

asked to discuss current transport a t i o n

needs, re venue sources, and leve r a g i n g

p rograms, and to identify options to

l e verage funds as appropriate. Ke y

financial managers and consultants

f rom other states outlined successful

l e veraging programs that we re taking

place throughout the nation. 

The workshop was extremely successful

and acted as a catalyst for generating

g reater interest among gove r n m e n t a l

entities in the potential of innova t i ve

SIB funding. Since the work s h o p,

i n t e rest in the SIB has escalated rapidly

and applications are being submitted for

a variety of projects. 

The current plan for SIB funding will

l e verage $2.2 billion in total pro j e c t

costs with $283.1 million in SIB loans.

T h ree examples of projects re c e n t l y

a w a rded SIB funds are the Miami In t e rmodal Center, the Wo n d e rw o o d

Ex p re s s w a y, and the Palm Tran bus

replacement program. The Mi a m i

Intermodal Center is a $1.35 billion

p roject which will alleviate congestion,

i m p rove road designs and pedestrian

access, consolidate rental car activity,

and increase air quality by re d u c i n g

congestion. The $25 million SIB loan

makes it possible to accelerate the project by 24 months resulting in $178

million in cost savings. 

The Wo n d e rwood Ex p ressway is a $110

million fre eway and bridge pro j e c t

which will provide an east-west corridor

and an important emergency eva c u ation route in Jacksonville. The $21 million SIB loan will be repaid within two

years, and will result in cost savings by

accelerating the design and build schedule by five years. 

The Palm Beach County Transit Au -

thority has 85 buses that are at or near

re t i rement age. An $8.8 million SIB

loan will enable the Authority to

replace 50 of these vehicles four ye a r s

ahead of schedule. Total cost of the

p u rchase is $13 million and the SIB

loan will be repaid in four equal payments beginning in 2005. 

Florida intends to build upon its SIB

success by adding another powe rf u l

i n n ova t i ve financing vehicle. T h e re is

c u r rently legislation before the 2000

Florida Legislature that will provide for

the creation of a “f l e x i b l e” state SIB.

Projects funded by this state SIB would

not need to follow Federal re q u i rements. This measure would re s t o re the

focus of the original SIB and allow a

m o re flexible SIB program by prov i d i n g

assistance through loans to a wide range

of transportation projects based on the

benefits being provided by the project. 

Contact:

Lowell Clary, Florida

Department of Transportation,

850/414-4455.

Florida, continued from page 7
9

commitment of funds from the four

p roject partners – CDOT, RTD, FHWA,

and FTA. 

C D OT’s share of the funding will be

p rovided through the issuance of $671

million of GARVEE bonds. T h e s e

bonds we re authorized by the Colorado

l e g i s l a t u re in 1999 as part of compreh e n s i ve funding package to finance

nearly $5 billion in Strategic Corridor

p rojects which include the So u t h e a s t

Corridor and 27 other projects of

s t a t ewide significance. In addition, the

funding legislation transfers $200 million in sales and use tax re venues to

C D OT annually to finance the St r a t e g i c

Corridor projects. Because Colorado law

re q u i res voter approval for all tax

i n c reases and debt financing transactions, CDOT was re q u i red to seek vo t e r

a p p roval in November 1999 for the

issuance of its bonds. By a majority of

62 percent, Colorado voters approve d

C D OT’s initiative to sell bonds to accelerate construction of these Strategic Corridor projects. The first bonds will be

issued in May of 2000. They will be 15-

year direct GARVEE bonds repaid with

f u t u re Federal and state matching funds. 

RTD will also secure up-front financing

for the Southeast Corridor pro j e c t

t h rough the issuance of sales tax re ve n u e

bonds, since a pay-as-you-go appro a c h

will not provide sufficient cash balances

for a project of this magnitude. RT D

also sought voter approval in Nove m b e r

1999 for the issuance of debt to part i a l l y

finance the transit portion of the So u t heast Corridor project. Like the CDOT

i n i t i a t i ve, voters ove rw h e l m i n g l y

a p p roved RT D ’s ballot measure. 

In addition, RTD and CDOT are currently pursuing a full funding grant

a g reement (FFGA) with FTA in the

amount of $525 million, which when

combined with the issuance of $320

million in sales tax re venue bonds and

$30 million in local funds, will allow the

District to fund the light rail portion of

the Southeast Corridor project. 

The Southeast Corridor project exe m p l ifies the innovation that is taking place

today as transportation agencies meet

the challenge of limited re s o u rces and

g rowing infrastru c t u re needs. T h ro u g h

p a rtnerships, innova t i ve delive ry, and

l e veraging Federal re s o u rces with

G A RVEE mechanism, CDOT and the

RTD are building the Southeast Corridor project years earlier, and at a lowe r

cost, than would have been possible

under traditional appro a c h e s .

Southeast Corridor Project Funding

$1.66 Billion Estimated Total Cost

Contact:

Heather Dugan, Colorado

Department of Transportation,

303/757-9168.

Colorado, continued from page 8

TE-045 UP D AT E

The Test and Evaluation Project 045,

k n own as the TE-045 program, continues as a key initiative of FHWA to

expand transportation infrastru c t u re

i n vestment. T h rough this pro g r a m ,

states, communities, and the priva t e

sector have the opportunity to submit

p roposals for unique and innova t i ve

financing ideas which can be tested for

implementation.

The TE-045 program serves as a

benchmark for non-traditional financing approaches and the results to date

h a ve been significant. As of Se p t e mber 1999, TE-045 had supported 98

p rojects in 24 states with a total cons t ruction value of over $7 billion.

Since publication of an eva l u a t i o n

report of TE-045 in November 1996,

nine new proposals from states have

been approved. T h ree of these

a p p roved proposals are briefly

described below.

New Mexico Citizens Highway

Assessment Task Force (CHAT)

Major Investment Program

As part of its GARVEE financing, New

Mexico proposed and re c e i ved approva l

to provide the state match for a program of projects instead of pro j e c t - by -

p roject match. FHWA is also allow i n g

New Mexico to use tapered net pre s e n t

value (NPV) to calculate state match.

New Mexico will bill FHWA based on

the principal and interest costs for the

bonding portion of the program. 

Capital Avenue Corridor, 

South Bend, Indiana 

Indiana requested and re c e i ve d

a p p roval to consider prior local and

toll revenue contributions as matching

funds for the remaining phases of cons t ruction. All re venue for the pre v iously completed portion of the

Corridor was contributed by va r i o u s

local funds. As a condition of

approval, Indiana DOT will prepare a

continued on page 10
re p o rt for FHWA on the va r i o u s

impacts of advancing this project segment without concurrent matching

funds from non-Federal sources.

Spokane Tr a n s p o rtation Op e r a t i o n s

C e n t e r, Spokane, Wa s h i n g t o n

Washington State DOT proposed using

the present value of future Fe d e r a l - a i d

payments to fund a long-term capital

lease for the operations center. Re c e i ving the present value of the Fe d e r a l

s h a re of the lease cost up-front in lieu of

nominal amounts on an annual basis

a l l owed the project sponsor to secure a

long-term lease at a reduced cost. 

Many of the techniques tested under

TE-045 are now available to states as

part of the regular Federal-aid program

as a result of the enactment of T E A -

21. These include tapered (or va r iable) match, program level match for

Surface Transportation Program (STP)

projects, and flexible match. 

Recognizing the value of this program

in moving projects into constru c t i o n

m o re quickly or increasing the nonFederal investment in projects, FHWA

invites states or other sponsors to submit proposals for innovative financing

a p p roaches through their re s p e c t i ve

F H WA Division. The submission

should include a brief description of

the project, a detailed description of

the type of innovative finance mechanism your agency proposes to use, and

a summary of the benefits (i.e., economic, safety, time savings, etc.) the

use of the innova t i ve finance tool

would provide to the project. 

10

Contact:

Max Inman, FHWA,

202/366-0673.

TE-045, continued from page 9

UP C O M I N G EV E N T S

Second National Conference on Tr a n s p o rtation Fi n a n c e

Scottsdale, Arizona—August 20-23, 2000

This conference will bring together re pre s e n t a t i ves of the public and priva t e

sectors in a national forum to addre s s

i n n ova t i ve approaches to financing

t r a n s p o rtation projects. 

The conference is intended to 1) assess

recent financing experiences and innovations, 2) identify and analyze the factors

that make successful projects possible, 3)

e x p l o re needed new organizational

changes and potential public policy

shifts, 4) evaluate the impact of new and

emerging technologies on transport a t i o n

finance, and 5) propose new financing

i n i t i a t i ves to address future needs for

t r a n s p o rtation system deve l o p m e n t .

This conference builds on the success of

the first Tr a n s p o rtation Re s e a rch Board

(TRB) National Conference on Tr a n sp o rtation Finance held in Dallas, Te x a s

in April 1997. The 2000 Conference is

being co-sponsored by the Tr a n s p o rt ation Re s e a rch Board and USDOT

modal agencies (FHWA, FTA, and Fe deral Railroad Administration). 

This three-day conference will be held

at the Hyatt Regency at Gainey Ranch,

Scottsdale, Arizona. The confere n c e

begins on Sunday afternoon, Au g u s t

20, 2000 with the following thre e

w o rkshops: 1) In n ova t i ve Finance Concepts; 2) Tr a n s p o rtation and the Capital

Ma rkets; and 3) a CEO Wo rkshop for

State DOTs. The formal opening of

the conference will be at 8:00 am on

Mo n d a y, August 21, 2000 and the conf e rence will close on We d n e s d a y,

August 23, at noon.

For the most current information on

the conference program and re g i s t r ation, visit the conference home page

on the Internet at h t t p : / / w w w 4 .

n a t i o n a l a c a d e m i e s . o r g / t r b / c a l e n d a r. n s f

or contact Jon Williams, TRB, at

202/334-3205.

Finance Primer Under De ve l o p m e n t

F H WA is preparing a compre h e n s i ve

re s o u rce handbook, or primer, describing innova t i ve financing techniques.

The Project Finance Pr i m e r will: 1) provide Federal, state, local, and priva t e

agencies with detailed information on

n ew project finance mechanisms for

s u rface transportation projects; 2) provide practical, case-oriented information relating to emerging financial

strategies; and 3) provide ove rv i ews of

best practices among state and local

t r a n s p o rtation agencies advancing programs and projects with the use of

i n n ova t i ve finance mechanisms.

Achieving these goals will lead to a

m o re successful utilization of these

m e c h a n i s m s .

The primer will summarize a bro a d

range of financial strategies, including

cost-cutting tools, re venue sourc e s ,

finance mechanisms, and innova t i ve

contracting pro c e d u res. The stru c t u re

of each strategy will be defined including eligibility re q u i rements, case studies, benefits, and legal, political, and

institutional issues. A future issue of

I F Q will provides additional details on

the primer, which is scheduled to be

completed in late summer of 2000.
11

A REMINDER TO READERS

F H WA D O E S N OT M A I N TA I N A M A I L I N G

L I S T A N D D O E S N OT D I S T R I BU T E I F Q

D I R E C T LY. I F Q I S AVA I LA B L E A S A N I N S E RT

TO T H E A A S H TO J O U R N A L, A N D I S

AVA I LA B L E E L E C T RO N I C A L LY T H RO U G H

F H WA’s WWW HO M E PAG E:

http://www.fhwa.dot.gov/

innovative finance/

I F Q I S A L S O P ROV I D E D TO T H E F O L LOWI N G O RG A N I ZAT I O N SF O R R E D I S T R I BU T I O N

A N D/O R A S I N F O R M AT I O N F O RT H E I R

M E M B E R S H I P:

• American Public Works 

Association (APWA)

• Surface Transportation Policy 

Project (STPP)

• National Governor’s Association 

(NGA)

• National Association of State 

Treasurers (NAST)

• National Association of State 

Auditors, Controllers, and 

Treasurers (NASACT)

• National Association of Regional 

Council’s (NARC’s) Association 

of MPOs (AMPO)

SU Z A N N E H. SA L E, FHWA

CO- MA N A G I N G ED I TO R

6 0 2 / 3 7 9 - 4 0 1 4

FAX: 602/379-3608

SU Z A N N E. SA L E@F H WA.D O T.G O V

MA X IN M A N, FHWA

CO- MA N A G I N G ED I TO R

2 0 2 / 3 6 6 - 0 6 7 3

FAX: 202/366-7493

LA U R I E L. HU S S E Y, CSMA N A G I N G ED I TO R

CA M B R I D G E SY S T E M AT I C S, IN C.

6 1 7 / 3 5 4 - 0 1 6 7

FAX: 617/354-1542

L L H@C A M S Y S.C O M

R e p roduction (in whole or in part) and

b road distribution of IFQ is stro n g l y

encouraged. Permission from FHWA, 

the editor, or any other party 

is not necessary.

Contributors to Vol. 6, No. 1 

of IFQ include:

Roger Berg, Cambridge Systematics, Inc.

Lowell Clary, Florida Department of Transportation

Shawn Dralle, Arizona Department of Transportation

Heather Dugan, Colorado Department of Transportation

Bryan Grote, Office of the Secretary, USDOT

Max Inman, FHWA

Phyllis Jones, FHWA

Jennifer Mayer, FHWA, Western Resource Center

Suzanne H. Sale, FHWA

Federal Highway 

Administration

Max Inman

Tel: 202-366-2853

Email: max.inman@fhwa.dot.gov

Robert C. Brown

Tel: 202-366-6813

Email: robert.brown@fhwa.dot.gov

Phyllis Jones

Tel: 202-366-2854

Email: phyllis.jones@fhwa.dot.gov

Suzanne Sale

Tel: 602-379-4014

Email: suzanne.sale@fhwa.dot.gov

Mark Sullivan

Tel: 202-366-5785

Email: mark.sullivan@fhwa.dot.gov

FHWA Western Resource Center

Ian Carroll

Tel: 415-744-2650

Email: ian.carroll@fhwa.dot.gov

Jennifer Mayer

Tel: 415-744-2634

Email: jennifer.mayer@fhwa.dot.gov

USDOT Innovative Finance Team 

Contact List

FHWA Southern Resource Center

Frederick Werner

Tel: 404-562-3680

Email: frederick.werner@fhwa.dot.gov

Federal Railroad 

Administration

JoAnne McGowan (RDV-12)

Tel: 202-493-6390

Email: joanne.mcgowan@fra.dot.gov

Federal Transit 

Administration

Paul Marx (TPB-10)

Tel: 202-366-1675

Email: paul.marx@fta.dot.gov

Office of the Secretary

Bryan Grote

Tel: 202-366-9656

Email: bryan.grote@ost.dot.gov

Stephanie Kauffman

Tel: 202-366-9649

Email: stephanie.kauffman@ost.dot.gov