TIFIA Loan Agreement Signed

On June 27, the U.S. DOT closed a $42

million loan with the Rhode Is l a n d

Economic De velopment Corporation for

the Wa rwick Intermodal Project. T h e

total cost of the project, which consists

of a commuter train station and platforms, bus pick-up and drop-off are a ,

commuter parking spaces, rental car

company facilities, and a skywalk fro m

the facilities to the T. F. Green Airport, is

$222.5 million. Project financing

includes $50.3 million in tax-exe m p t

senior lien bonds, which will be used to

fund construction and costs of issuance.

The project is scheduled for completion

in 2009.

Two TIFIA Loans Retired Early

The U.S. DOT has accepted re p a y m e n t

on two 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 )

loans, well ahead of the original payment

schedules. On May 3, a $55 million payment with interest was accepted on the

original $50.5 million TIFIA loan made

in 2002 to launch the Re n o

Tr a n s p o rtation Rail Access Corridor, or

Re T R AC project. The Re T R AC pro j e c t ,

which opened in Ja n u a ry 2006, repaid its

TIFIA loan 35 years ahead of schedule.

On July3, final payment of $17.1 million with interest was re c e i ved by 

On Ma rch 2, 2006, Rhode Island closed on its second tranche

in a three-phase issuance program of Grant Anticipation

Re venue Vehicle (GARVEE) bonds and motor fuel tax bonds.

The 2006 GARVEE bond issue in the amount of $184.6 million had a final maturity of 12 years and achieved a True In t e re s t

Cost (TIC) of 4.03 percent. The 2006 motor fuel tax re ve n u e

bonds in the amount of $42.8 million had a final maturity of

20 years and achieved a TIC of 4.38 percent. 

The Rhode Island borrowing program was conceived in 2003 as

the state faced the significant costs of bridge replacement, re c o ns t ruction of almost 50-year-old Interstate system segments, and

demand for new transportation projects critical to the state’s

e c o n o m y. The Rhode Island De p a rtment of Tr a n s p o rt a t i o n

( R I D OT) had programmed much of its future annual constru ction program in order to complete the construction projects in

the State Tr a n s p o rtation Im p rovement Program (T I P ) .

T h e re f o re, RIDOT and its financing team developed a multiyear strategy to use GARVEE bonds to fund the Federal-aid eligible portion of certain project costs and motor fuel tax re ve n u e

bonds to finance the state share. 

The Rhode Island Legislature agreed that the five pro j e c t s

financed by GARVEE and motor fuel tax bonds are critical

to the state’s economic vitality when it authorized the Rhode

Island Economic De velopment Corporation (RIEDC) to

issue bonds under both programs. Ac c o rding to RIDOT

Di rector James R. Capaldi, the GARVEE program “a l l ows the

state to complete the five essential transportation projects on an

accelerated basis, without disrupting the ongoing constru c t i o n

p rojects in the State T I P.” These projects are as follow s :

• Interstate 195 Relocation Pro j e c t . This $572 million project invo l ves the relocation of a 45-year-old 1.6-mile

s t retch of I-195 and an adjacent 0.8-mile portion of I-95

t h rough Providence which was one of Rhode Is l a n d’s first

sections of Interstate highway. The fre eway will be re l ocated 2,000 feet to the south of its current alignment and

outside the barrier which protects the 350-year-old city

f rom hurricane flooding. The project includes 14 new

bridges with a 1,200-foot mainline bridge over the

Providence Rive r, 25 lane-miles of new Interstate, a new

i n t e rchange with I-95, five miles of new city streets, and

4,100 feet of new pedestrian river walks. In addition,

re m oval of the existing Interstate will free up 20 acres of

prime dow n t own real estate. The project will complement

the recently completed river relocation, Waterplace Pa rk ,

and Memorial Bouleva rd Extension projects that have

re v i t a l i zed dow n t own Prov i d e n c e .

• Ro u t e 403 Pro j e c t . The $182 million Ro u t e 403 pro j e c t

involves construction of a new freeway that will connect the

existing Ro u t e 4 fre eway in East Greenwich with the

FEDERAL CREDIT PROGRAM

VOLUME 12, NUMBER 1 Fall 2006

Wa rwick Project, Prepayments Highlight T I F I A Ac t i v i t y

Rhode Island Meets Essential Project Needs with GARVEE Bonds

continued on page 2

GARVEE ROUNDUP

Also in this issue...

G A RVEE Issues on the Rise . . . . . . . . .3

North Carolina Design-Build . . . . . . .4

SIB Loan Activity . . . . . . . . . . . . . . . .7

Arizona’s HELP . . . . . . . . . . . . . . . . .7

Oregon SIB . . . . . . . . . . . . . . . . . . .8

People on the Move . . . . . . . . . . . . .8

Resources . . . . . . . . . . . . . . . . . . . . .9

continued on page 6
2

Quonset Davisville Po rt and Commerc e

Pa rk in No rth Kingstown (the Qu o n s e t

Industrial Pa rk), improving access to the

p a rk. This 4.5-mile, four-lane, cont rolled-access facility will contain thre e

i n t e rchanges, a total of 14.8 miles of

roadways (including the main fre ew a y

and the ramps), 14 new bridges, two

bridge rehabilitations, an extensive

storm drainage and water quality tre a tment system, and environmental mitigation improvements. With funding

p rovided by the bonding package, the

f re eway will be constructed in six contracts and opened to traffic at the end of

2007, five years ahead of the initial cons t ruction schedule.

• Freight Rail Im p rovement Pro j e c t .

The $196 million Freight Rail

Im p rovement Project (FRIP) is a

22-mile project located within Amtrak’s

No rtheast Corridor. A freight dedicated track will be constructed along

A m t r a k’s mainline tracks, linking

Qu o n s e t / Davisville to the Boston

Switch at Central Falls and out to we s tern markets. The FRIP is to be admini s t e red by Amtrak Fo rce Ac c o u n t –

w o rk performed by Amtrak re s o u rc e s –

as well as RIDOT construction contracts. RIDOT construction contracts

consist of nine individual site work and

s t ru c t u re projects containing elements

of work necessary for preparing the

alignment and track for the constru ction of the third track. Funding for the

p roject is a mix of state and Fe d e r a l

funds, including a combined $51 million in GARVEE and motor fuel bonds.

• New Washington Bridge. The existing

Washington Bridge carries multiple

eastbound lanes of I-195 and U.S.

Ro u t e s 6 and 44 over the Se e k o n k

R i ver between the cities of Prov i d e n c e

and East Providence. The bridge also

passes over several local streets as well as

the Providence and Wo rc h e s t e r

R a i l road. It was built in 1928, and is

immediately south of the Wa s h i n g t o n

Bridge No rth built in 1970. Based on

the recommendations of a value engineering study, the $85 million New

Washington Bridge will be re a l i g n e d

within a vacant area between the 1928

and 1970 stru c t u res, using a portion of

existing foundations to construct the

n ew facility. The new bridge will consist of five, 12-foot travel lanes and two,

four-foot shoulders.

• New Sakonnet Bri d g e . The $150

million New Sakonnet Bridge pro j e c t

will replace the existing bridge on a

n ew alignment immediately south of

the existing stru c t u re. The cro s s i n g

carries Rhode Island state Ro u t e 2 4

over the Sakonnet Rive r, a tidal passage separating the Town of

Po rtsmouth on Aquidneck Island to

the west, and the Town of Ti ve rt o n

on the mainland to the east. It is a

key link in the transportation systems

connecting Massachusetts to Rhode

Island and the Aquidneck Island communities, Po rtsmouth, Mi d d l e t ow n ,

and New p o rt .

The Rhode Island program authorizes the

issuance of up to $710 million, including

a p p roximately $585 million in GARV E E

bonds and $125 million in motor fuel tax

backed bonds, to fund the five pro j e c t s .

Rhode Island designed the program to

finance the projects in three installments

over a five - year period. The authorizing

legislation includes numerous constraints

such as project-specific caps on maximum debt service and amount issued in

the aggregate and by project. The Rhode

Island GARVEE bonds are “s t a n d - a l o n e”

in that no state re venues are pledged to

the payment of debt service. The motor

fuel tax bonds provide the state match

p o rtion for four of the projects and are

separately secured by dedication of two

cents of the state’s motor fuel tax.

The trust indentures we re stru c t u red to

m a x i m i ze the credit ratings within the

state law constraints. Both the GARV E E

bonds and the Motor Fuel bonds have

been assigned high ratings. T h e

G A RVEE bonds are rated Aa3/A+/AAby Mo o d y’s In vestors Se rvice, St a n d a rd &

Po o r’s, and Fitch Ratings, re s p e c t i ve l y.

The motor fuel bonds re c e i ved ratings of

A2/A+/A from the same rating agencies.

The inaugural November 2003 issuance

included $217 million in GARV E E

bonds and $53 million in motor fuel

bonds. Additional principal was scheduled for payment in the first two years to

m a x i m i ze coverage for the follow i n g t w o

series of bonds. Similar modifications

we re made to the 2006 principal payment stru c t u re to provide a hedge against

f u t u re interest rate increases. Rhode

Island originally contemplated issuing on

t h ree occasions over five years in

November 2003, 2006, and 2008. T h e

2006 issue was accelerated to take adva ntage of attractive interest rates, and additional construction draws we re included

in the borrowing to take advantage of the

m a rket. The final borrowing phase originally scheduled for 2008 is now pro j e c t e d

to take place in 2009. 

The total annual debt service re s u l t i n g

f rom the November 2003 and Ma rc h

2006 GARVEE bonds ranges from a high

of $44.2 million in 2008 to a low of

$34.8 million in 2018. These payments

p rovide projected coverage ranging fro m

340 percent to 428 percent under conserva t i ve assumptions. Rhode Island has a

300 percent additional bonds test for the

issuance of future GARVEE bonds. Both

the GARVEE and motor fuel tax bonds

we re insured, with Financial Su re t y

Assurance Inc. insuring the 2003

G A RVEE bonds, and Financial Gu a r a n t y

Insurance Co. insuring the 2006 series.

Both series of motor fuel tax bonds we re

i n s u red by Ambac.

Rhode Island GARVEE, continued from page 1

Richard Reed, 

RIEDC, 401/222-2601, 

rreed@riedc.com 

Maureen Gurghigian, 

First Southwest Company,

401/334-4267

mgurghigian@firstsw.com

Contacts:

John Megridichian, 

RIDOT, 401/222-2496, x 4650

jmegridichian@dot.state.ri.us 
Number Issue Projects

State of Issues (in Millions) Financed Insurance

Alabama 1 $200.0 County bridge program Yes

Alaska 1 $102.8 Eight road and bridge projects No

Arizona 5 $460.0 Maricopa freeway projects No

Arkansas 3 $575.0 Interstate highways No

California 1 $615.0 Eight road projects Yes, except 2005 series

Colorado * 5 $1,486.7 Any project financed wholly No.

or in part by Federal funds

Georgia 1 $360.0 Various transportation projects Yes

Idaho 1 $194.3 Various expansion projects Yes

Kentucky 1 $139.6 Three Interstate widening and Yes

rehabilitation projects

Maine 1 $48.4 Replacement of the Waldo-Hancock Bridge Yes

Montana 1 $122.8 44 miles of U.S. 93 improvements Yes

New Mexico 2 $118.7 New Mexico SR - 44 Yes

North Dakota 1 $51.4 Highway and bridge projects Yes

Ohio 6 $538.1 Various projects including: No

Spring-Sandusky and

Maumee river improvements

Oklahoma*** 2 $96.5 Projects in 12 corridors No

Puerto Rico 1 $139.9 Various transportation projects Yes

Rhode Island 2 $401.6 Freeway, bridge, and freight Yes

rail improvement projects

Virgin Islands 1 $20.8 Enighed Pond Port Project and Red Hook Yes 

Passenger Terminal Building

Total 36 $5,671.6

3

G A RVEEs continue to be an attractive mechanism for

s t retching Federal dollars and accelerating critical transport ation improvements across the country. Since 1998, the first

year GARVEEs we re issued under the provisions of the

National Highway System Designation Act of 1995, a total of

$5.7 billion in GARVEE bonds (excluding refunding issues)

has been sold for highway projects. Sixteen states, Pu e rt o

Rico, and the Virgin Islands have advanced projects with

GARVEE proceeds. This year to date (January 2006 through

August 2006) a total of $919 million in GARVEE bonds have

been issued in four states – Ohio, Rhode Island, Idaho, and

Georgia. Ohio’s January 2006 GARVEE issue represented its

sixth GARVEE bond sale. In contrast, the Idaho issue was the

s t a t e’s first GARVEE sale. The Georgia State Road and

Tollway Authority’s $360 million bond sale in July 2006 was

also a first for this issuer. Proceeds will be used to fund projects throughout the state with a significant share going to

projects in the metro-Atlanta area.

The growing trend in the use of the GARVEE financing

mechanism is reflected in the number of issues in the pipeline.

Ohio is accelerating its GARVEE program with plans to bring

a seventh issue to the market in fall 2006, followed by $600

million of additional debt beginning in 2007. West Virginia

is planning its first GARVEE sale later this year. Proceeds of

West Virginia's planned $200 million GARVEE bond issue

will fund the widening of a 15-mile stretch of highway along

U.S. Route 35. Maryland also will be a new issuer in the market this year with plans to issue its first tranche of GARVEE

bonds in early 2007 to finance a portion of the $2.6 billion

Intercounty Connector Project.

Contact: 

Jennifer Mayer, FHWA

National Resource Center,

415/744-2634,

jennifer.mayer@dot.gov

G A RVEE Issues on the Rise

GARVEE Transactions

As of July 2006

* Colorado DOT issued $400.2 million in June 2002 and $280.2 million in May 2004 to refund prior bonds.

** Excludes $26.3 million in proceeds used to refund outstanding June 2000 bonds.

*** With premiums on net proceeds worth $50 million.
North Carolina Advances Design-Build Project

The No rth Carolina DOT will partner with the FHWA to

a d vance a project needed to improve safety, increase traffic

c a p a c i t y, and reduce travel times along the U.S. 17 corridor in

Washington, NC. Flexible match provisions approved thro u g h

the TE-045 (Test and Evaluation) program are being used to

help fund this $220 million design-build project, which will

make needed improvements along this essential link in the eastern part of the state.

The project extends a distance of approximately 6.8-miles along

the U.S. 17 corridor and will consist of a four-lane 46-foot

median divided facility with full and partial control of access on

existing and new alignment. Two interchanges will be cons t ructed, as well as a 2.8-mile long bridge over the Tar River with

minimum clearances of 40-feet ve rtical and 60-feet horizo n t a l .

The project will be constructed as a design-build project. T h e

design-build team, a joint ve n t u re of Fl a t i ro n / United as contractor

and Eart h Tech of No rth Carolina as lead designer, will be

responsible for the turnkey job, including public invo l ve m e n t ,

all engineering related design, needed environmental documents

and permits, and all right-of-way related acquisitions.

The project was initially identified in the seve n - year No rt h

C a rolina State Tr a n s p o rtation Im p rovement Program to be

funded with Federal funds and in subsequent years changed

from a design-bid-build project to a design-build project. Due

to financial challenges experienced by many states – flat state

revenues, unpredictable Federal-aid revenues, and increases in

construction costs – North Carolina DOT began to consider

and evaluate the use of a state flexible matching progress payment schedule. In addition to tapered match, North Carolina

DOT wanted to take advantage of advance construction proced u res with partial conversion payback instead of committing

all of the obligation authority for the project (as re q u i red by

tapered match procedures).

Combining Finance Tools 

North Carolina DOT worked with the NC FHWA Division

Office on ways to marry the advance construction and partial

conversion of Federal-aid projects with tapered match to meet the

TOOLS IN PRACTICE

4

continued on page 5

The Finer Points of GARVEEs

Each issue of I F Q f e a t u res questions and answers on the GARVEE program. This issue focuses on whether formal agre e m e n t s

between a state and the FHWA are required to issue GARVEEs.

Note that answers to these questions are not re g u l a t o ry or legislative, but re p resent the FHWA’s current administrative

i n t e r p retations. If you have questions or want to confirm any of this information, please contact your local FHWA

Division office. GARVEE guidance is also available at: http://www.fhwa.dot.gov/innovativefinance/garguid1.htm.

How can the State Infrastructure Bank (SIB) program be used in conjunction with GARVEEs?

SIBs and GARVEEs can work together in several ways to secure financing for eligible Federal-aid projects.

SIB as GARVEE Lender

Since SIB loans may be repaid with Federal-aid funds, the SIB can be the source of financing for a loan repaid with Fe d e r a l - a i d

funds. In this case, the SIB could be reimbursed under Section 122 of Title 23 for a loan made to an eligible project. In

essence, the SIB would play the same role as a commercial bank or the capital markets, providing the capital that will eve n t u a l l y

be repaid with Federal-aid funds. Oregon’s SIB uses this model extensively.

SIB as Credit Assistance to GARVEEs

If a state DOT or local government instead seeks to finance a project with a GARVEE bond obtained from the capital mark e t s ,

a SIB can provide a line of credit, interest rate buy-down, or other form of credit assistance to the GARVEE debt. This SIB

credit assistance would effectively lower the interest rate on a GARVEE instrument. This technique could be particularly

useful for local governments or tribal governments that are issuing GARVEEs, since they generally have lower cove r a g e

ratios than bonds issued by state DOTs. For example, suppose a local government received $1 million in Federal-aid funds

annually, and wanted to start a project that cost $6.5 million. If the government issued a GARVEE bond at 6 percent, the

annual debt service would be approximately $883,000, with a debt service coverage ratio of 1.13. With SIB credit assistance,

the local government could probably obtain a higher rating, and either borrow more funds or achieve a lower interest rate.

SIB as Subordinate Lender

Finally, a SIB loan that finances the same project as a GARVEE can be structured as a subordinate loan that will also assist

the credit rating of the GARVEE. The GARVEE bondholders may be willing to accept lower interest rates on such a

t r a n s a c t i o n , because they would be repaid before the SIB in the event of a shortfall. For example, if the local government

mentioned above were able to finance a percentage of the project with a SIB loan, it would be able to increase its coverage

ratio, and lower its interest rate. If the source of repayment on the SIB loan is non-Federal, it could even serve as all or

part of the non-Federal share required to match the GARVEE debt service payment.
needs of the project. An application under the TE-045 pro g r a m

was submitted in the early fall of 2005 to the Division Office

where it received a favorable endorsement and was forwarded

to FHWA He a d q u a rters for further consideration. T h e

F H WA approved No rth Carolina to use t a p e red match with

a d vance construction pro c e d u res. The NC FHWA Division

Office in addition requested a project payout schedule to help

anticipate project invoice and reimbursement amounts.

The project was awarded in Ja n u a ry 2006 at an estimated cost

of approximately $220 million and is expected to be completed

in 58 months. As agreed with FHWA, the non-Federal share

will be provided after the obligated Federal funds have been

fully expended. As of early June 2006, the project had incurre d

$9.2 million in cost and No rth Carolina DOT has billed in the

same amount.

Prior to this project, No rth Carolina DOT had not used tapere d

match. Now, the tapered match provisions when combined

with advance construction and partial conversion have give n

No rth Carolina DOT the flexibility needed to advance improvements along an important link in thestate’s transportation network .

Contact: 

H. A. “Burt” Tasaico, 

PE, NCDOT, 

919/715-4657,

htasaico@dot.state.nc.us

North Carolina Design-Build, continued from page 4

The Finer Points of TIFIA

The “Finer Points of TIFIA” box provides responses to questions posed by our readers and other observers. We hope

you find this section useful and that you will submit questions to Ma rk Su l l i van, Chief, TIFIA JPO, 202/366-5785 or

m a rk . s u l l i va n @ d o t . g ov.

Question

What flexibility does TIFIA provide in structuring repayment of project loans?

Answer

Per the TIFIA statute, borrowers can defer the start of their loan repayment up to five years following a project’s substantial

completion. As interest accrues from the date the borrower draws loan proceeds, this feature is equivalent to the “c a p i t a l i ze d

i n t e re s t” typically found in a project revenue bond issue, which uses borrowed funds to pay not only construction costs but

also interest costs during construction before the project can generate its own revenues. The TIFIA program goes further in

that it allows loan repayments, once begun, to cover less than the periodic interest accrued and thus continue to capitalize

interest for an extended period. The use of this approach in the SR-125 South Toll Road financing demonstrated the U.S.

D OT’s willingness to provide needed flexibility to enhance a project's financial viability.

Further, as the patient lender willing to defer repayment while waiting for project revenues to strengthen sufficiently, the

U.S. DOT has the flexibility to structure alternative TIFIA repayment schedules to minimize the likelihood of payment

default. In instances where the TIFIA lien is subordinate, this alternative repayment stru c t u re reduces senior lender concerns

that the U.S. DOT would be motivated to force a distressed project into bankruptcy in order to invoke TIFIA’s “springing

l i e n” and achieve parity with other lenders. The basic approach establishes two debt service profiles: a scheduled debt serv i c e

due if revenues materialize as expected, and a lower mandatory debt service (with the unpaid balance re-amortized on the

back end of the loan) if revenues fail to materialize. The mandatory debt service feature enhances further the credit quality

of a project's senior debt and still requires ultimate recovery of the Federal loan. Developed for low-income housing and

tobacco securitizations, this concept has been applied in TIFIA loans for the Staten Island Ferries, the SR-125 South Toll

Road, and the 183A Toll Road projects.

5
6

Private Activity Bond Update

Section 11143 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act  A Legacy for Users (SAFETEA-LU)

authorizes up to $15 billion in tax-exempt private activity bonds (PABs) to be issued by state or local governments for

qualified highway and surface-freight transfer facilities. Qualified highway or surface freight transfer facilities are defined as:

• Any surface transportation project which receives Federal assistance under Title 23, United States Code;

• Any project for an international bridge or tunnel for which an international entity authorized under Federal or state law is

responsible and which receives Federal assistance under Title 23, United States Code; or

• Any facility for the transfer of freight from truck-to-rail or rail-to-truck (including any temporary storage facilities directly

related to such transfers) which receives Federal assistance under Title 23 or Title 49, United States Code.

The legislation gives the Secretary of Transportation authority to allocate the $15 billion national limitation among qualified

highway or surface freight transfer facilities in such manner as the Secretary determines appropriate. 

A January 5, 2006, Federal Register Notice solicited applications for allocations of the $15 billion and described what should

be included in an application. A May 15, 2006, Internal Re venue Se rvice Notice indicated that the Internal Re ve n u e

Service will rely on allocations of authority by the Secretary of Transportation to determine that a project or facility meets

the definition of qualified highway or surface freight transfer and receives the required Federal assistance under Title 23 or

Title 49 of the United States Code.

The Office of the Assistant Secretary for Transportation Policy has had discussions with many prospective applicants, with

interest coming from both highway projects and intermodal transfer facilities. In many cases, applicants are interested in

using private activity bonds in conjunction with TIFIA assistance.

The first application was received from the Texas DOT in August, requesting $1.866 billion in PABs for the SH 121 project

in Texas. The project is seeking a conditional commitment or reservation of private activity bond authority, which will be

offered to a short list of four firms bidding for the concession to develop SH 121. Texas is seeking a similar conditional

commitment for SIB assistance, which is being sought under the authority of the SEP-15 program. The Texas DOT’s application for TIFIA assistance was also received in August.

Additional applications for highway projects and intermodal transfer facilities are expected later this year. It is likely, however, that allocation will still be available in 2007 and beyond.

The private activity bond provisions are being implemented by the Office of the Assistant Se c re t a ry for Tr a n s p o rt a t i o n

Policy. If you would like to discuss an application or have any questions, call Jack Bennett at 202/366-6222.

Link to January 5, 2006, DOT Federal Register Notice: http://www.access.gpo.gov/su_docs/fedreg/a060105c.html

Link to May 15, 2006, Federal Register Notice: http://www.irs.gov/pub/irs-irbs/irb06-20.pdf

the U.S. DOT for the Miami Intermodal Center (MIC) pro j e c t ,

24 years ahead of the originally scheduled final maturity. T h e

TIFIA loan for the $1.35 billion MIC project was approved in

June 2000 for up to $269 million, but the Florida DOT had

drawn down only $15 million as of the repayment date.

To date, five TIFIA loans have been repaid in advance of their

scheduled maturity dates. Each early repayment reduces risk to

the Federal government while accomplishing T I F I A’s goal of

p roviding capital to projects of national or regional significance.

Rulemaking Process Underway

The TIFIA Joint Program Office (JPO) has begun a rulemaking process to revise the current TIFIA regulation based on

several significant changes to the TIFIA statute resulting from

the passage of SAFETEA-LU, which reauthorized the surface

transportation program in FY 2005. In connection with that

process the JPO hosted two public meetings in San Francisco

and New Yo rk in April 2006 to solicit comments about the

TIFIA rule from interested stakeholders. The results of those

meetings are posted on the TIFIA website.

Letter of Interest Received

The TIFIA program received one Letter of Interest in FY 2006

from Container Intermodal Distribution (CID) for the Inland

Systems Logistics Ne t w o rk De velopment (ISLND) pro j e c t .

The project sponsor is seeking a $34 million direct loan for

this $104 million project. The completed project is intended

to address the challenges connected to the movement of international ocean freight by constructing freight transfer facilities

that will increase freight mobility at some of the nation’s most

congested port s .

Contact: 

Duane Callender, 

TIFIA JPO, 202/366-9644,

duane.callender@dot.gov

TIFIA Re c a p , continued from page 1
7

A r i zo n a’s Highway Expansion and Extension Loan Pro g r a m

(HELP) has been one of the nation’s most active SIBs both in

terms of number and dollar amount of approved loans. A seve n -

member HELP Ad v i s o ry Committee accepts loan applications,

re v i ews and evaluates requests for financial assistance, and makes

recommendations to the state Tr a n s p o rtation Board on loan and

financial assistance requests. As of June 2006, the state

Tr a n s p o rtation Board has approved 55 loans totaling $598 million.

The program has been used throughout Arizona with loans in 14

of Arizo n a’s 15 counties, benefiting both rural and urban are a s .

Each of the three major regional areas of the state – Ma r i c o p a

C o u n t y, Pima County, and statewide (the other 13 counties) –

h a ve re c e i ved substantial assistance from HELP. The Arizo n a

De p a rtment of Tr a n s p o rtation (ADOT) estimates that total additional HELP loan capacity from 2006 through 2010 is approx imately $350 million. To ensure that each area has access to this

additional capacity, the state Tr a n s p o rtation Board has adopted target percentages that allocate 50 percent of future capacity for

s t a t ewide projects, 37 percent for Maricopa County, and 13 percent for Pima County.

A significant portion of the additional HELP loan capacity in

Maricopa County will likely be used to accelerate projects in the

Maricopa County Regional Tr a n s p o rtation Plan (RTP). The RT P

is a 20-year plan of transportation improvements funded with a

one-half cent excise tax and other funding sources. This plan

included funding in 2011 and 2014 to construct new general purpose and high occupancy vehicle lanes on Interstate 10 to the we s t

of Phoenix. In April, the state Tr a n s p o rtation Board approved a

$7.4 million HELP loan to the City of Go o d year to accelerate the

design projects. This will allow the construction projects to be

a d vanced by two to six years, and the construction projects are now

expected to begin in 2008 and 2009. While HELP loans are being

used to accelerate the design, ADOT expects the accelerated cons t ruction projects to be funded through the issuance of approx imately $122 million of Grant Anticipation Notes (GANs are

A r i zo n a’s version of GARVEE bonds).

Total HELP capitalization is nearly $209 million. In addition to

the initial Federal and state capitalization, HELP has been capitali zed with other state sources. These include a $20 million state

Highway Fund loan and $140 million in Board Fu n d i n g

Obligations (BFOs). The BFOs are an innova t i ve funding mechanism that allows HELP to use state operating funds from the state

Tre a s u re r. The ability to use BFOs has been particularly useful to

A D OT in accelerating purchases of right-of-way for the Ma r i c o p a

County Regional Fre eway System. During the 2005 session, the

A r i zona Legislature re c o g n i zed the importance of the BFO program by extending the ability of HELP to borrow these funds fro m

2008 to 2024.

Ge n e r a l l y, loan maturities are less than five years and this has

enabled HELP to quickly re c ycle funds and increase pro g r a m

l e verage. HELP has re c e i ved over $360 million of principal re p a yments and 29 loans have been completely repaid. These re p a yments have generated considerable funding that has been made

a vailable for additional loans. In t e rest and investment income also

has generated over $47 million.

The HELP program continues to be a vital tool, accelerating

needed projects for communities throughout Arizona. Ad d i t i o n a l

information on the HELP program is available on A D OT’s we b

site at www. a zd o t . g ov / In s i d e _ A D OT / He l p / i n d e x . a s p.

Projects Benefit from Arizona’s HELP 

SIB HIGHLIGHTS

During the second half of 2005, another 34 loan agre e m e n t s

were executed from State Infrastructure Banks (SIBs) across the

nation, totaling near one-quarter million dollars to fund

needed transportation improvements. Wyoming led the way

with six new agreements valued at $34 million. In total, nearly

$5.3 billion in loan agreements have been made by 33 states, as

shown in the table to the right.

This issue of I F Q p rovides an update on Arizo n a’s SIB, known as

the Highway Expansion and Extension Loan Program or HELP,

which has been one of the most active of the infrastru c t u re

banks. Also featured is a unique program funded in part by

Ore g o n’s SIB, which will help reduce diesel gas consumption and

i m p rove air quality throughout the state.

SIB Loan Activity Grows

Alaska 1 $2,737 $2,737

Arizona 53 582,021 509,654

Arkansas 1 31 31

California 2 1,120 1,120

Colorado 4 4,400 1,900

Delaware 1 6,000 6,000

Florida 52 864,508 403,776

Indiana 2 5,715 5,715

Iowa 2 2,879 2,879

Maine 23 1,635 1,635

Michigan 36 25,948 25,948

Minnesota 17 106,676 105,941

Missouri 20 93,554 92,138

Nebraska 2 6,792 6,792

New Mexico 4 25,216 17,815

New York 10 27,700 27,700

North Carolina 2 1,713 1,713

North Dakota 2 3,891 3,891

Ohio 74 235,179 172,795

Oregon 19 34,394 25,052

Pennsylvania 61 38,794 28,406

Puerto Rico 1 15,000 15,000

Rhode Island 1 1,311 1,311

South Carolina 9 2,735,000 2,272,000

South Dakota 3 28,776 28,776

Tennessee 1 1,875 1,875

Texas 58 290,556 273,763

Utah 1 2,888 2,888

Vermont 4 1,805 1,427

Virginia 1 18,000 17,989

Washington 3 2,376 487

Wisconsin 7 3,051 3,051

Wyoming 14 112,332 112,332

TOTAL 491 $5,283,883 $4,174,537

Contact:

Phyllis Jones, FHWA,

202/366-2854,

phyllis.jones@dot.gov

State

Number of

Agreements

Loan

Agreement

Amount ($000)

Disbursements

to Date ($000)

State Infrastructure Bank Loan Agreements by State

As of December 31st, 2005

Contact:

John Fink, ADOT,

602/712-7441,

JFink@azdot.gov
8

Oregon SIB Helps Fund SmartWay Upgrade Kits

At a June 22, 2006 EPA SmartWay press event held in Portland

Oregon, Governor Ted Kulongoski announced funding and

s u p p o rt for a new initiative that will reduce diesel emissions

along the I-5 corridor on the West Coast. In partnership with

the U.S. DOT, the U.S. EPA, the West Coast Di e s e l

C o l l a b o r a t i ve, the trucking industry, and Cascade Si e r r a

Solutions, Oregon’s Departments of Transportation and Energy

have committed a total of $5 million ($3 million from the SIB

and $2 million from the state De p a rtment of Energy). T h e

state De p a rtment of Energy is also offering a 35 percent tax

credit for the SmartWay Upgrade Kits.

Cascade Sierra So l u t i o n s – a recently established nonpro f i t

o r g a n i z a t i o n – will be responsible for deploying the Up g r a d e

Kits, which include:

• Engine idle reduction technology, such as an auxiliary power

unit, direct fired heater, or truck stop electrification;

• Low rolling resistance tires;

• Improved aerodynamics for tractors and trailers; and

• Exhaust after-treatment devices, such as oxidation catalysts

and particulate filters.

SmartWay Upgrade Kits can reduce fuel consumption, carbon

dioxide emissions, and nitrogen oxide emissions by as much as

20 percent. When the kit includes an exhaust after-treatment

device, particulate matter emissions are reduced by 25 percent

to 90 percent, depending upon the type of technology.

Because of the fuel savings, upfront capital costs of SmartWay

kits are generally paid back within one to three years. In addition to the short payback period, if a loan is needed to purchase

an upgrade kit, the monthly fuel savings exceed the monthly

loan payments, thus increasing profits from the first day companies use the kits.

The application of SIB funds to this innovative air quality program is truly unique, as SIB funds are typically expended on

traditional surface transportation projects such as highway and

bridge construction. This marks the first deployment of

Sm a rt Way Upgrade Kits and innova t i ve financing along a

major transportation corridor. The U.S. DOT, EPA, and

DOE intend to work together with state and local gove r nments, nonprofits, and state trucking associations in an effort

to replicate this deployment strategy around the country.

Mo re information can be found at: w w w. e p a . g ov / s m a rtway;

www.westcoastcollaborative.org; 

and www.cascadesierrasolutions.org.

Max Inman Re t i re s

On June 2, Max In m a n re t i red from the FHWA after 33

years of service. Max wore multiple hats over his past three

decades at the FHWA, serving both as Acting Chief of the

Budget Office and Chief of the Federal-Aid Ma n a g e m e n t

Division, where he was responsible for establishing re i mbursement policies for the Federal-aid highway program and

c reating financial management improvement initiative s .

Max had a key role in advancing the FHWA's innova t i ve

finance program and several public-private partnerships were

forged under his leadership.

Max also understood that unless state DOTs and others

h a ve information about available Fe d e r a l l y - s p o n s o re d

financing tools and understand how to use them, those

tools cannot leverage needed transportation projects acro s s

the nation. Max was instrumental in communicating U.S.

D OT innova t i ve finance tools to the states and others,

t h rough the In n ova t i ve Finance Qu a rt e rl y n ewsletter and the

In n ova t i ve Finance Pr i m e r, both of which are aimed in educating practitioners about available tools and best practices

in transportation finance.

His contributions have been many, significant, and longlasting. We will miss Max, thank him for his years of service, and wish him all the best in the future.

Keith Bishop Joins Finance Technical Se rvice Te a m

FHWA is pleased to announce that Keith Bishop has joined

the Baltimore Resource Center in February as an Innovative

Finance Specialist. Keith brings valuable experiences and

expertise to the team because of his strong state DOT backg round and his successful use of many of the innova t i ve

finance tools promoted by U.S. DOT.

Keith began his public service career as an accountant with

the South Carolina State Budget Control Board. He later

accepted the position of Accounting Manager with then

Governor Be a s l e y’s Office. Keith then joined the So u t h

C a rolina De p a rtment of Tr a n s p o rtation (SCDOT) as cash

flow analyst, rising to the position of Director of Financial

Planning and Cash Management and Chief Fi n a n c i a l

Officer. In this position, he directed SCDOT’s $5.3 billion

bonding program, which has been nationally recognized for

its innovation and financial management. 

Keith earned a B.S. in Business Administration from the

University of South Carolina and is a graduate of the Duke

Un i ve r s i t y / Ha rva rd Un i versity Strategic Leadership

Program, the National Tr a n s p o rtation Institute at In d i a n a

Un i ve r s i t y, the South Carolina Exe c u t i ve Institute, and the

S C D OT Strategic Training for Tr a n s p o rtation Agency

Representatives (STTAR) program. 

People on the Move...

Contacts:

Tom Meek,

Oregon DOT

503/986-3921

Thomas.R.Meek@dot.state.or.us

Diane Turchetta,

FHWA,

202/493-0158,

Diane.Turchetta@dot.gov

or
A REMINDER TO READERS

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

LIST AND DOES NOT DISTRIBUTE IFQ

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

INSERT TO THE AASHTO JOURNAL,

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/

innovativefinance/

I F Q I S A L S O P ROV I D E D TO T H E F O LLOWING ORGANIZATIONS FOR REDISTRIBUTION AND/OR AS INFORMATION FOR

THEIR MEMBERSHIP:

• American Public Works Association

(APWA)

• Surface Transportation Policy

Project (STPP)

• NationalGove r n o r’sAssociation(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)

JOE DAILEY, FHWA

CO-MANAGING EDITOR

202/366-1616

FAX: 202/366-7493

JOSEPH.DAILEY@DOT.GOV

SUZANNE H. SALE, FHWA

CO-MANAGING EDITOR

602/379-4014

FAX: 602/379-3608

SUZANNE.SALE@DOT.GOV

LAURIE L. HUSSEY, CS MANAGING EDITOR

CAMBRIDGE SYSTEMATICS, INC.

617/354-0167

FAX: 617/354-1542

LHUSSEY@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.

RESOURCES

Freight Financing Guidebook Under Development

The ability of the nation’s transportation system to provide for and maintain

superior performance for freight will be a key determinant for continuing economic health. While freight investment needs have grown dramatically over

the last several decades with increased growth forecast for the future, financing

of improvements has primarily been the domain of the private sector. Ports,

railroads, and intermodal terminals are primarily operated by private concerns

with a profit motive. However, governments at all levels have an interest in the

health of the freight transportation network due to its role as an import a n t

contributor to regional and national economic growth and pro d u c t i v i t y. In

addition, there has been increasing discussion over the last several years about

the role of government in financing freight-oriented improvements, including

investments in private infrastructure where there is a public benefit.

To help state, regional, and local staff responsible for advancing fre i g h t - o r iented projects better understand available funding and financing tools for

f reight investments, the FHWA is developing a freight financing guidebook.

The guidebook, which will be available in the fall of 2006, is divided into

two sections:

Funding and Financing Tools for Freight In ve s t m e n t s – This section

describes existing Federal funding programs and financing tools that could be

used to fund freight investments. In addition, it provides an overview of several state programs that have been created to support the increasing need for

the public sector to invest in fre i g h t - related infrastru c t u re as a way of pro m o t i n g

economic development and addressing multimodal transportation issue.

Case Studies of Freight Financing – Each freight project is unique. This section provides brief summaries of how various types of freight-related projects

were financed. Some 50 case studies demonstrate how the tools described in

the first section have been applied in practice, rating from the massive trailblazing

Alameda Corridor project to modest investments aimed at solving more

l o c a l i zed problems.

Contact:

Carol Keenan,

FHWA,

202/366-6993,

carol.keenan@dot.gov

Iris Ortiz,

Cambridge Systematics, Inc.,

617/354-0167,

iortiz@camsys.com

or

Contributors to Vol. 12, No. 1 of IFQ include:

Jack Bennett, U.S. DOT

Roger Berg, Cambridge Systematics, Inc.

Duane Callender, TIFIA Credit Program

John Fink, ADOT

Dale Gray, FHWA

Maureen Gurghigian, First Southwest Company

Phyllis Jones, FHWA

Carol Keenan, FHWA

Jennifer Mayer, FHWA National Resource Center

John Meek, ODOT

John Megridichian, RIDOT

Richard Reed, RIEDC

Suzanne Sale, TIFIA Credit Program

Burt Tasaico, NCDOT

9