On September 27, 1999, Secretary

of Transportation Rodney Slater

announced the first group of project

selections for credit assistance under

the Transportation Infrastructure

Finance and Innovation Act (TIFIA).

Following a competitive solicitation,

five projects were selected based on criteria set forth in the TIFIA statute.

The projects are valued at a combined

total of nearly $6.5 billion. TIFIA will

provide $1.6 billion in credit assistance

at a cost of just $61 million to the

Federal government. Every TIFIA dollar

will generate more than $100 million

in capital investment (see chart above).

TIFIA was enacted last year as part of

the Transportation Equity Act for the

21st Century (TEA-21) to help advance

projects that have their own revenue

streams but face market gaps in completing their plans of finance. TIFIA

involves credit assistance, rather than

grants, and can be provided in the

form of direct loans, loan guarantees,

or standby lines of credit.

Following the passage of TEA-21,

Secretary Slater established a

“ONEDOT” multi-agency steering

committee to administer the formal

rulemaking process and manage the

program. Seven applications were submitted by the August 2, 1999 due date,

from which the five finalist projects

were selected.

As of September 30, the end of the

Federal fiscal year, the Secretary had

executed term sheets with four of the

five selected projects, and entered into

a conditional commitment with the

fifth. The term sheets outline the terms

under which the U.S. Department of

Transportation (USDOT) agrees to

provide credit assistance to the projects.

The FY 1999 approved projects are:

❖ Miami Intermodal Center (Florida).

The MIC is a $1.3 billion project

designed to improve access to and

within Miami International Airport,

a global gateway for national and

international trade and commerce.

The project involves the establishment by 2005 of a multimodal

transportation center for car rental,

transit, commuter rail, Amtrak, and

intercity bus services. Subsequent

project phases call for substantial

commercial development. USDOT

will fund two loans: one for $269

million to fund right-of-way and

design and engineering elements,

backed by a regional gas tax allocation of state funds, and the other for

$164 million backed by daily car

rental fees, to fund a consolidated

rental car facility.

❖ Farley-Pennsylvania Station (New

York City). This $749 million project expands and refurbishes the historic Farley Post Office building

and the existing Penn Station complex in midtown Manhattan as a

key intermodal transportation and

commercial facility. The current station – already the nation’s busiest

transportation facility serving over

half a million people daily – is

expected to see dramatic growth in

usage. The project will increase station capacity by 30 percent, improve

Quarterly

FHWA's

VOLUME 5, NUMBER 2 SUMMER/FALL 1999

Also in this issue ...

GARVEE Roundup . . . . . . 3

SIB Update . . . . . . . . . . . . .4

SIBs on the Internet . . . . . .5

Grant Management

Techniques . . . . . . . . . . . .6

Technical Corner . . . . . . . .6

Conference Highlights

Innovative Finance 

Solutions . . . . . . . . . . . . . .7

Transitions and New 

Team Members . . . . . . . . .8

continued on page 2

FEDERAL CREDIT PROGRAM

Secretary Announces FY 1999 TIFIA Selections

Budget Authority Credit Assistance Total Investment

$6.5 Billion

$1.6 Billion

$61 Million

1999 TIFIA Projects:

Total Capital Investment to

Federal Budgetary Cost

TIFIA Leveraging Factor 106:1
Quarterly

FHWA's

2

passenger safety and circulation, and

provide a grand new gateway into

New York. Upon finalization of all

project funding sources, USDOT

will provide a $140 million direct

junior lien loan, and a $20 million

line of credit supporting an issue of

senior bonds, in both cases backed

by lease payments from retail and

other tenants at the new station.

❖ State Route 125 (San Diego,

California). SR 125 is a critical transportation link to provide improved

access to the Otay Border Mesa

Crossing – the principal commercial

border crossing in southern

California between the U.S. and

Mexico – and to relieve existing congestion and accommodate growth in

San Diego County. The $397 million

project involves building a nine-mile

toll facility, part of a new 11.2-mile

four-lane highway. Because the project has not yet received its final environmental clearance, the SR 125 term

sheet is being structured as a conditional commitment, pending issuance

of the final record of decision.

The TIFIA assistance consists of a

$90 million loan guarantee on subordinated toll revenue bonds, and a

$37 million line of credit supporting

a series of senior toll revenue bonds.

The project, which is being developed

under a private consortium, is

scheduled to be completed in 2002.

❖ Tren Urbano (San Juan, Puerto

Rico). The Puerto Rico Highway and

Transportation Authority is developing a 17-kilometer rapid transit line

to serve metropolitan San Juan. The

$1.7 billion project is expected to

handle 100,000 trips per day in

2002, its first year of operation.

The Authority has arranged a

“turnkey” development with a private

sector consortium using state-of-theart technology, and will enter into

operating agreements with a private

sector entity to run the system.

USDOT will provide a $300 million

loan secured by a junior lien on the

Authority’s revenue stream, which

includes fuel tax receipts, motor vehicle

registration fees, and farebox revenues.

❖ Washington Metro Capital Program.

The Washington Metropolitan Area

Transportation Authority (WMATA)

has initiated a 20-year capital improvement program to rehabilitate and

replace vehicles, facility, and equipment on its Metrorail system, portions

of which date back to 1976. The entire

capital program costs $2.3 billion, and

is being funded with a combination

of Federal, state, and local sources.

WMATA has been approved for

$600 million of Federal credit assistance in the form of a loan guarantee. The guarantee will enable

WMATA to accelerate its procurement schedule, resulting in substantial cost savings on subway car

overhauls and other items. The loan

guarantee is secured by capital contributions by the District of

Columbia, the states of Maryland

and Virginia, and eight other participating local government jurisdictions, as well as a junior pledge on

WMATA’s general revenues.

Representatives of the five selected projects attended a press conference at the

World Trade Center in New York, where

Secretary Slater made the announcement of FY 1999 assistance. Formal loan

agreements will be executed, as project

sponsors obtain final bond ratings and

satisfy other conditions set forth in the

term sheets.

USDOT expects to announce the

schedule for FY 2000 assistance later

this fall, with an application deadline

likely in the first quarter of calendar

2000. A total of up to $9.0 billion of

additional credit amounts remains

available through FY 2003.

TIFIA, continued from page 1

Project

Project Cost

(in millions)

Credit Assistance

(in millions)

To be obligated in FY 2000 1

$ 1,349

749

1,654

2,324

$ 6,473

397

$ 433

160

300

600

$1,620

127

FL – Miami Intermodal Center

NY – Farley-Penn Station

PR – Tren Urbano Transit

DC – WMATA Capital Program

Total

1 CA – State Route 125

Approved TIFIA Projects

The Transportation Research Board’s (TRB) 78th Annual Meeting will be held

January 9 to 13, 2000 in Washington, D.C. FHWA and the TRB Committee on

Taxation and Finance are sponsoring a workshop on Federal financing initiatives on

Sunday, January 9, from 1:30 p.m. to 5:00 p.m. in the Lincoln East room,

Washington Hilton. The workshop will provide transportation stakeholders up-todate information on new funding approaches and share the progress and lessons

learned in implementing these new programs. The first part of the program will focus

on TIFIA which will feature an overview on the selection criteria and the scoring

model, a perspective on the rating process for credit assistance, and highlights of TIFIA

awards for FY 1999. The GARVEE financing mechanism will be the focus of the second half of the workshop program, providing in-depth coverage of the program parameters for this financing technique, lessons learned, and the outlook for the future.

Contact: Jon Williams or Pamela DeWitt, TRB, 202/334-3205.

TRB Workshop on Project Finance

Contacts:

Max Inman, FHWA, 

at 202/366-0673, or

Mark Sullivan, FHWA,

at 202/366-5785.
The Grant Anticipation Revenue

Vehicle (GARVEE) financing mechanism continues to gain momentum as

more states and transportation authorities move forward with programs to

advance projects with up-front capital

on the basis of future Federal transportation dollars. Through September

1999, as shown in the table below,

four states have issued a total of $1.3

billion in GARVEE bonds, sometimes referred to as GANs or Grant

Anticipation Notes. The largest state

issuer to date is Massachusetts which

has sold $921.7 million in two separate bond issues to finance a portion

of the Central Artery Project. One of

the benefits of this new financing

mechanism is its flexibility as indicated by the variations in program

structure among the issuers. Three

states – New Mexico, Ohio, and

Massachusetts – have brought to market project-specific financings, while

Mississippi sold GARVEE bonds to

finance a program of road projects to

expand capacity on the state’s highway

system. Two of the issues to date have

been direct GARVEEs, while two were

structured as indirect GARVEEs. 

As reported in the Spring 1999 issue

of IFQ, the New Jersey Transit

Corporation was the first transit

agency to issue debt backed solely by a

pledge of future Federal Transit

Administration funds and plans to sell

a second issue in the near future. At

least six other transit agencies across

the country are exploring the issuance

of GARVEE bonds for transit expansion and capital improvements. 

Please refer to the Spring 1999 and

Summer 1998 issues of IFQ for additional information on the GARVEE

financing mechanism.

Golden State GARVEEs Pass

With Overwhelming Margins

In early September, the California State

Assembly unanimously passed enabling

legislation to permit issuance of

GARVEEs. The GARVEE bill (Senate

Bill 928) also passed the Senate by an

overwhelming margin, and was recently

signed into law by Governor Gray Davis.

Prior to the bill’s passage, the California

Legislative Analyst’s office released a

report on GARVEEs (available on-line

at http://www.lao.ca.gov/cal_update/

aug_99_update.pdf) which provides

an excellent summary of the major

issues involved in GARVEE issuance. 

California’s legislation permits issuance

of stand-alone, non-recourse GARVEEs

(bonds that are backed solely by Federalaid funds, with no other sources of revenue pledged). The legislation limits the

annual debt service on the GARVEEs

to 30 percent of Federal funds received

by the Department in any 12 months

of the last 24 months before issuance.

Local governments in California may

be able to access the GARVEE tool,

issuing bonds backed by the county

allocation of future Federal-aid. 

Other GARVEE News 

Ohio, one of the first states to issue

GARVEEs, recently sold an additional

$20 million in GARVEEs as part of a

refunding of the Spring-Sandusky

interchange project. Another GARVEE

bond sale on the horizon is Arkansas’

issue which was approved by the voters on June 19, 1999. The Arkansas

Transportation Commission is in the

process of selecting a financing team for

its planned $575 million issue for

Interstate improvements. Meanwhile,

Colorado voters are preparing to decide

whether to approve a referendum on

November 2, 1999 allowing their state

to issue GARVEE bonds for several

related projects improving I-25.

Virginia’s governor has launched a

major transportation funding plan to

accelerate highway and bridge projects.

The plan includes a proposal to issue up

to $590 million in indirect GARVEEs.

The issue will help accelerate 90 projects delayed in Virginia DOT’s most

recent six-year program. VDOT will

be developing enabling legislation.

Quarterly

FHWA's

GARVEE ROUNDUP

More States Roll Out GARVEE Programs

3

Massachusetts June

1998

$600 million

Nov

1998

$321.7 million

$1,311.9 million

Indirect Central

Artery

Project

State Gas Tax Lien in the

event of shortfall in

coverage (subject to

appropriations); 

Partially insured

Mississippi June

1999

$200 million Indirect Four-Lane

Highway

Program

State Gas Tax pledge

New Mexico Sep

1998

$100.2 million Direct New

Mexico

State

Route 44

No backstop; Bond

Insurance obtained

Ohio

Summary

May

1998

$70 million

Aug

1998

$20 million

Direct SpringSandusky

Project

Moral Obligation pledge

to use State Gas Tax

funds and seek general

fund appropriations in the

event of Federal shortfall

State

Date of

Issue

Projects

Financed Backstop

Direct/

Indirect

Face Amount

of Issue

Key Aspects of GARVEE Transactions to Date

Contact:

Jennifer Mayer, FHWA,

Western Resource Center,

415/744-2634.
Quarterly

FHWA's

SIB UPDATE

Progress Report on State Infrastructure Banks

Recognizing the benefits of the State

Infrastructure Bank (SIB) mechanism

to leverage limited transportation

resources, state DOTs are continuing

to make strides in accelerating projects

through SIB assistance. Federal SIB

obligations as of September 30, 1999

totaled $565.9 million, of which $24.1

million represents transit dollars.

Through September 30, 1999, 28

states have loaned a total of $377 million to assist in the financing of 96

projects. These loans are supporting $2.9

billion in construction, a leveraging ratio

of 7.6:1. Of the loaned amount, states

have dispersed $234.7 million.

Although states are limited in expanding Federal capitalization of their SIBs

(with the exception of the four TEA-21

pilot states), some states are enhancing

capitalization with non-Federal revenue sources. Arizona enacted comprehensive legislation (SB 1201) in the

spring of this year to enhance funding

through a combination of additional

state highway funds, general fund

appropriations, and capital borrowings

from the State Treasurer. Florida is

moving forward with a legislative proposal to increase SIB capitalization

with state funds, and Michigan is considering additional state capitalization

as an option, as discussed below. Ohio

has also utilized state appropriations to

complement Federal SIB dollars to

meet loan demands.

This issue of IFQ places the spotlight

on two SIB programs – Michigan and

Puerto Rico. These two SIB programs

demonstrate the implementation flexibility states have as each program has

been tailored to meet the specific

needs in their respective states.

Michigan SIB

Michigan began its SIB program in

1998 with an $11 million Federal capitalization grant. The strategic objectives of Michigan’s SIB are to:

❖ Attract additional investment to

transportation projects;

❖ Reduce transportation project costs

by reducing the cost of borrowing;

❖ Accelerate the delivery of transportation projects by providing

financial assistance that is otherwise

unavailable in the short-term; and

❖ Establish a revolving loan fund that

is self-sufficient, adequately capitalized, and addresses customer needs

in a timely and flexible fashion.

Since its inception, the SIB has

approved $15 million in loans to 20

transportation projects. The total cost

of these projects is $34 million. The

SIB has focused its marketing efforts

on local units of government, county

road commissions, and transit agencies

that have dedicated transportation revenue sources that can be accessed by the

Michigan Department of Transportation

(MDOT) in case of payment default.

MDOT has approved loans to six

cities, six villages, four county road

commissions, and four transit agencies. 

Projects financed by the SIB address a

variety of local transportation needs.

They include constructing new roads,

reconstructing and resurfacing major

county, city, or village roads and

streets, improving street access to local

businesses, upgrading existing roads to

all-season standards, enhancing

Michigan’s secondary commercial network, mitigating the impacts of transportation improvements, building new

transit facilities, and financing a new

passenger ferry. 

The average loan made by the Michigan

SIB is $795,000 with loans ranging

from $35,000 to $2.5 million. The

interest rate for all loans is four percent

per year with an average repayment term

of eight years. Because of limited

resources available, the SIB has established as a guideline a maximum loan

amount of $2 million with repayment

within 12 years. As a result, the SIB is

being utilized by local agencies to meet

project financing gaps, to reduce the costs

of borrowing, and to accelerate project

4

Total Federal Obligations

$566 million

Total Loans Under Agreement

$377 million

Transit

$24 million

Balance to be Disbursed

$142 million

Disbursements

$235 million

Highway

$542 million

State Infrastructure Bank Pilot Program

Financial Activity (as of September 30, 1999)

continued on page 5
Quarterly

FHWA's

delivery. On average, SIB financing

has enabled local transportation agencies to reduce total project costs by

seven percent and to reduce the time

required to construct a project by 18

months to two years.

The greatest challenge facing Michigan’s

SIB is the need for new capital.

Michigan has committed over $3 million in state highway funds to meet the

loan demand in FY 1999. The SIB,

however, expects to receive $20 million

in loan requests in FY 2000. Options

currently being explored include a state

capitalization grant and bonding.

Michigan is also supporting changes in

Federal law to allow states to use TEA21 funds to capitalize their SIBs.

Puerto Rico SIB

Most states with SIB programs are providing SIB assistance in the form of

direct loans. Puerto Rico’s SIB program

is unique in that the SIB monies have

been leveraged to support the issuance

of highway bonds. The Puerto Rico

Highway and Transportation Authority

(PRHTA) used $15 million in combined Federal and SIB “seed” money to

establish a SIB Trust Fund at the

Government Development Bank (GDB)

for Puerto Rico. This Trust Fund was

used as partial support for a $75 million PRHTA bond issue sold to finance

critically-needed highway and bridge

projects throughout Puerto Rico, creating a leveraging ratio of 5:1.

The SIB-supported bonds were issued

in July 1998 as 30-year Subordinated

Transportation Revenue Bonds at a net

interest rate of 5.17 percent. Moody’s

and Standard & Poor’s rated these

bonds as Baa1 and A-, respectively. 

Under the SIB Trust Fund concept, the

balance is slowly freed up to act as

security for other debt as the original

bond issue is repaid. Accordingly, it

effectively becomes a “revolving fund,”

available to support similar bond issues

or other borrowing in the future. 

As a result of this $75 million bond issue,

Puerto Rico effectively doubled its FY

1998 Federal-aid program and advanced

several vital highway and bridge projects

by two to four years. The following

were among the projects accelerated: 

❖ $30 million in highway and bridge

improvements to PR-148, a linchpin of PRHTA’s “Access to the

Mountains” program, which significantly enhances mobility and economic growth opportunities in the

mountain town of Naranjito;

❖ An $18 million bridge project over

the San Antonio Channel, providing enhanced access to the intermodal port facility in historic Old

San Juan and improved mobility

along the entire Seaport-to-Airport

Corridor; and

❖ An $8 million bridge on PR-165

just west of San Juan, which dramatically improves access to San

Juan from its western suburbs,

including a key industrial area.

PRHTA has enthusiastically supported

the SIB program and views the program as a resounding success. Based

on its favorable experience to date,

Puerto Rico is considering expansion of

its SIB to support additional bond

issues or other borrowings for vital

surface transportation projects in the

Commonwealth.

SIB, continued from page 4

5

Leveraging Factor

7.6:1

SIB Loans

(as of Sept 30, 1999)

Total

Project Costs

$377 million

$2.9 billion

Billions of

Dollars

0

1

2

3

Leveraging SIB Dollars

Contacts:

Michigan SIB – Kris

Wisniewski, MDOT,

517/335-2614; Puerto Rico SIB –

Frederick J. Werner, FHWA, Southern

Resource Center, 404/562-3680.

Currently, five states are maintaining web pages for their SIB programs. Some of these sites contain sample

applications and guidance material that may be of interest to IFQ readers. We encourage you to take a look.

Arizona

http:://www.dot.state.az.us/about/fms/help.htm

Ohio

http:://www.dot.state.oh.us/sib1/

Oregon

http::/www.odot.state.or.us/fsbpublic/otib.htm

Texas

http::/www.dot.state.tx.us/revexp/sib/sibtoc.htm

SIBs on the

Internet

Vermont

http::/www.aot.state.vt.us/planning/sibinfo.htm
Quarterly

FHWA's

6

Many of the questions FHWA receives

related to project financing involve the

matching requirement. For most

Federal-aid projects, Federal law

requires that 20 percent of the costs be

derived from a non-Federal source (10

percent for most Interstate highway

projects). These percentages are

reduced in states with large portions of

Federally-owned land, adjusted by

what is referred to as “sliding scale.”

Under current law, state and local governments have more flexibility in

meeting the non-Federal match requirement. In addition to non-Federal cash,

the value of donated land, materials,

and services may also be contributed

toward the match. States may earn

credits for toll revenues used for highway construction and for state funds

used on off-system bridges. These credits may be substituted for the nonFederal share on Federal-aid projects.

Another technique, called “tapered

match,” was made possible by TEA-21.

The Act removed a long-standing provision that limited payments to the

state for the Federal share of project

costs incurred by the state during each

billing cycle. Tapering allows the

Federal share to vary at different stages

of the project, as long as the nonFederal share requirement is satisfied

by the time the project is completed.

For example, the Federal share could

start at 100 percent and taper off to

zero at the end of the project. 

Tapered match may be useful when

the government sponsor lacks the

funds needed to match a Federal-aid

project at the start, but will accumulate the match over the life of the project. For example, this technique may

facilitate a project when a local government has recently enacted a local

transportation tax. Using tapered

match, the project can move forward

immediately using 100 percent Federal

funds, allowing time for the transportation tax revenues to accumulate. The

local revenues would be used to fund

the final 20 percent of project costs

(see chart below).

FHWA issued a guidance memorandum on tapered match on July 7,

1999. In the interest of effective management of Federal funds, the policy

guidance limits the use of tapered

match to situations that result in expediting project completion, reducing

project costs, or leveraging additional

non-Federal funds. The guidance

memorandum is available on FHWA’s

home page at www.fhwa.dot.gov/tea21/

tea21new.htm. Just scroll down to

Section 1302.

Project Cost (millions) Project Reimbursements

Cumulative

Dollars

(millions)

1234

$40 $120 $160 $160

$0 $0 $10 $40

$40 $120 $170 $200

0

50

100

150

200

Federal

Share

80%

Federal

100%

Federal

100% Federal

80% Federal

0% State Share

20%

State

Total

Federal

Year

- Federal

- State

Tapering the Federal Share

GRANT MANAGEMENT TECHNIQUES

Tapered Match May Provide a Better Project Fit

The New Mexico State Highway

and Transportation Department

(NMSHTD) is breaking new ground

in both the financing and construction

of its highways. The Corridor 44 project, a primary trade and tourist route

into northwest New Mexico, exemplifies how innovative financing, design/

construction management, and roadway warranty can be combined to

develop a project on an unusually fast

schedule with notable cost savings and

improved performance. The financing

of the 121-mile section of Corridor 44

through GARVEE bonds was featured

in the Summer 1998 issue of IFQ. To

build the project, NMSHTD ventured

into a contract with a subdivision of

Koch Industries to design, manage, and

construct the expansion of Highway 44

from two to four lanes of traffic. This

expansion is to be accomplished no

later than November 2001. A roadway

performance warranty is one of the

innovative features of this contract.

TECHNICAL CORNER

New Mexico Corridor 44 Project Warranty

continued on page 7

Contact:

Max Inman, FHWA,

202/366-0673.
Quarterly

FHWA's

Conference Highlights Innovative Finance Solutions

More than 200 financial experts from

the public and private sectors attended

the 1999 State/Federal Transportation

Finance Conference in Dallas, TX from

July 19 to July 22. Organized and sponsored by the Texas DOT and FHWA,

the conference shared best financial

practices and explored new innovative

finance solutions to long-standing

transportation issues. Financial strategies highlighted included innovative

financing at the Federal, state, and

local levels; leveraging of scarce transportation funds; financial management

practices; electronic efficiencies; private sector financing of transportation

projects; strategies for reducing motor

fuel tax evasion; and lessons learned

from Latin American privatization. 

Following opening remarks by state

and Federal officials, Anthony R. Kane,

Executive Director of FHWA, delivered

the keynote address for the conference.

Mr. Kane highlighted the bold steps

and leadership that are positioning

states to meet the financial challenges

of the 21st century.

David Seltzer, FHWA Senior Advisor on

Project Finance, presented the Federal

perspective on innovative finance. He

outlined a number of Federal investment incentive programs – generally

categorized as regulatory incentives

(flexible matching concepts and

design-build contracting procedures),

tax incentives (enterprise zones, tax

credit bonds, and tax-exempt financing) and credit incentives (direct loans,

loan guarantees, and standby lines of

credit) – and demonstrated the varying

potential for leverage realized through

each type of incentive program.

According to Mr. Seltzer, it is innovative finance in combination with

innovations in technologies, procurement, or operations that collectively

improve a project’s economics.

State and local finance initiatives highlighted at the conference covered a

broad spectrum of program development stages, from the selection of projects and analysis of potential funding

alternatives in Oregon, to the SIB program in Arizona, and the GARVEE

bond programs in Arizona, Arkansas,

and New Jersey. The state and local

perspective provided attendees with

insight into the practical application

of innovative finance techniques,

including measures taken to overcome

political, institutional, and legal barriers to implementation.

The private sector perspective focused

on strategies for encouraging private

participation in the development and

financing of toll facilities. Presentations

ranged from taxable market transactions

for new toll facilities to the financing of

intelligent transportation system projects and shared resource opportunities.

Frederick Werner, FHWA Innovative

Finance Specialist, chaired a session

focusing on Latin American privatization.

The lessons learned from these efforts

could provide an important resource

for U.S. financial managers as this country charts its own course in privatization.

Through this sharing of information

and best practices, state DOTs and

transportation authorities are better

positioned to successfully implement

new financial solutions to meet critical

transportation needs.

7

Contact:

Max Inman, FHWA,

202/366-0673.

New Mexico, continued from page 6

For a one-time cost of $62 million,

Koch is guaranteeing the overall performance of the highway pavement for 20

years from the date of completion, and

will also warrant the bridges, drainage,

and erosion control features of the

highway for 10 years. The warranty is

secured by a $114 million surety bond.

The state will perform normal nonpavement maintenance along the roadway, such as mowing, snow removal

and signage. NMSHTD estimates that

the state will save $89 million in maintenance costs over the 20-year period.

The warranty requires the equivalent

of a Pavement Serviceability Index rating of 3.0 or better for the entire term

of the warranty. 

Both preventive and corrective maintenance will be scheduled as needed.

Measurements will be taken every

spring and at the end of the 20-year

warranty period. Preventive maintenance will be performed either by contractors obtained through New Mexico’s

procurement procedures or will be performed by NMSHTD’s maintenance

crews and reimbursed for the expense by

Koch. Corrective maintenance will be

performed by contractors obtained

through the state’s procurement process.

The warranty also is a means for the

state to capture the true, long-term

cost of highway infrastructure and to

ensure the long-term maintenance of

the highway. This avoids the deferral of

maintenance which causes roads to

deteriorate prematurely and wastes significant taxpayer dollars.

The Secretary of Transportation recently

announced a 20-year research agreement

between USDOT’s Research and

Special Programs Administration

(RSPA) and NMSHTD to validate cost

savings to the government by determining the advantages of this innovative approach of providing warrantied

highway improvements. The agreement

is called New Mexico’s Road-Lifecycle

Innovative Financial Evaluation (LIFE).

While warranties have been used in

Europe and have proven to be cost effective, in the U.S. New Mexico is “paving

the way” to innovation in road maintenance with the Corridor 44 project.

Contact:

John Fenner, NMSHTD,

505/827-5446.
8

A REMINDER TO READERS

FHWA DOES NOT MAINTAIN A MAILING

LIST AND DOES NOT DISTRIBUTE IFQ

DIRECTLY. IFQ IS AVAILABLE AS AN

INSERT TO THE AASHTO JOURNAL,

AND IS AVAILABLE ELECTRONICALLY

THROUGH FHWA’s WWW HOME

PAGE:

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

innovative finance/

IFQ IS ALSO PROVIDED TO THE FOLLOWING ORGANIZATIONS FOR REDISTRIBUTION

AND/OR AS INFORMATION FOR THEIR

MEMBERSHIP:

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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)

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Council’s (NARC’s) Association 

of MPOs (AMPO)

SUZANNE H. SALE, FHWA

CO-MANAGING EDITOR

602/379-4014

FAX: 602/379-3608

SUZANNE.SALE@FHWA.DOT.GOV

MAX INMAN, FHWA

CO-MANAGING EDITOR

202/366-0673

FAX: 202/366-7493

LAURIE L. HUSSEY, CS MANAGING EDITOR

CAMBRIDGE SYSTEMATICS, INC.

617/354-0167

FAX: 617/354-1542

LLH@CAMSYS.COM

Reproduction (in whole or in part) and

broad distribution of IFQ is strongly

encouraged. Permission from FHWA, 

the editor, or any other party 

is not necessary.

Quarterly

FHWA's

Contributors to Vol. 5, No. 2 of IFQ include:

Patrick Balducci, Cambridge Systematics, Inc.

Roger Berg, Cambridge Systematics, Inc.

John Fenner, New Mexico State Highway and Transportation Department

Max Inman, FHWA

Phyllis Jones, FHWA

Jennifer Mayer, FHWA, Western Resource Center

Suzanne H. Sale, FHWA

David Seltzer, FHWA

Esther Strawder, FHWA

Frederick Werner, FHWA, Southern Resource Center

Kris Wisniewski, Michigan Department of Transportation

David Seltzer, a member of the innovative finance team since 1996, will be

leaving FHWA at the end of October

1999. Mr. Seltzer is to be commended

for his significant contributions to

Federal project finance initiatives. In

particular, he has been instrumental in

the development and implementation of

the TIFIA program and the advancement

of the GARVEE bond financing mechanism. With TIFIA now up and running,

Mr. Seltzer has decided to pursue opportunities outside the agency. He will be

missed by all members of the team. 

In this transition, Robert Clarke Brown

will undertake the challenge of continuing

Mr. Seltzer’s notable work, and will serve

as Capital Markets Advisor for FHWA.

Mr. Brown comes to the team from Key

Capital Markets in Cleveland, OH,

where he was the head of the public

finance department. Recently, President

Clinton renominated Mr. Brown to serve

on the Board of Directors of the

Metropolitan Washington Airports

Authority. Previously, he was a senior

investment banker at Lehman Brothers and

a former top official of the Ohio DOT.

He chaired the Maglev Study Advisory

Committee, which advised the Secretary

on Maglev applications in the U.S. He is

a member of the Transportation Research

Board’s Committee on Taxation and

Finance, and has served in leadership

positions in both the American Public

Transit and the American Road and

Transportation Builders Associations.

Early in his career, Mr. Brown served as

a staff member in USDOT’s Office of

the Secretary. He earned a J.D. from

Harvard Law School and a B.S.E. in

aeronautical engineering from Princeton

University, where he was elected to Phi

Beta Kappa. He received an LL.M. from

Georgetown University. 

Also joining the innovative finance

team is Mark Sullivan after five years in

USDOT’s Office of Intermodalism. He

will serve as Project Finance Coordinator.

Mr. Sullivan has wide experience in passenger and freight transportation issues,

from regulatory and economic analysis to

facility planning and development. At

the Office of Intermodalism, he worked

closely with FHWA and the Federal

Railroad Administration to support the

Alameda Corridor, the seaport access

project in southern California which

received a USDOT loan of $400 million.

This led to his involvement with the

USDOT working group to implement

the TIFIA provisions of TEA-21.

Previously, Mr. Sullivan was with the

Port of Seattle, responsible for business

planning, marketing, and facility development for cruise ships and passenger ferries. Mr. Sullivan also worked for the

New York City Department of Ports

where he managed a variety of planning

studies, development projects, and lease

negotiations for marine and aviation

facilities in New York City. Mr. Sullivan

holds bachelor degrees in Journalism

and History from the University of

Washington where he was elected to

Phi Beta Kappa and a Master in Public

Policy from Harvard University’s

Kennedy School of Government.

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