In 1998, New Mexico was the first state to issue bonds backed

solely by a pledge of future Federal-aid funds. These GARVEEs

were issued for the improvement of New Mexico State Route 44

(now called U.S. Highway 550), the primary trade and tourist

route for northwestern New Mexico. The scenic road runs from

I-25 just outside of Albuquerque to Bloomfield, New Mexico,

leading to the Four Corners area where Utah, Colorado,

Arizona, and New Mexico come together. In addition to a high

accident rate on the narrow, two-lane road, the lack of a fourlane highway impeded economic development in the area.

Financing Innovations 

Initially, the biggest challenge was the sheer size of the project.

The estimated construction cost of $215 million represented

nearly 84 percent of the average annual funding of $256 million

that New Mexico expected to receive under the Transportation

Equity Act for the 21st Century (TEA-21). Under traditional

financing and construction approaches, the New Mexico State

Highway and Transportation Department (NMSHTD)

estimated that the project would take 27 years to complete.

Taking advantage of the debt financing provisions under the

National Highway System Designation Act of 1995, as well as

the additional funding security provided by TEA-21,

NMSHTD financed approximately 40 percent of the project

cost through the issuance of GARVEE bonds to be repaid

through future Federal funds. The balance was financed with

the proceeds of state road bonds.

The $100 million GARVEE bond issue paved the way for

other states to issue debt repaid with Federal funds without a

backstop of state revenues.

The bond issue also incorporated an innovation in the form of a

“present-value” match that was approved under TE-045. Through

this innovation, the state was able to use a portion of the project

that had already been paid for with state funding as a match for the

future Federal funds that would be used for the project’s debt

service. The value of the match was determined by calculating the

present value of the initial investment over time, a method that

gave the state credit for the time value of the early funding.

Contracting Innovations

The project was begun in June 1999 and completed three years

later in November 2001, under an innovative development

agreement between NMSHTD and Mesa PDC, a limitedliability corporation owned by Koch Industries. Under the

agreement, Mesa was responsible for overall project and quality

management. Mesa contracted with CH2M HILL to work on

the design, and Flatiron Structures to manage construction.

Due to existing state law limitations on design-build contracts,

the project was divided into four bid packages, which

NMSHTD awarded to four separate contractors. The

contractors simultaneously worked on individual sections of

the 118-mile corridor.

NMSHTD also decided to obtain an innovative, long-term

warranty, to guarantee the overall performance of the highway.

VOLUME 7, NUMBER 3 FALL/WINTER 2001

Four Lanes to the Four Corners: Completion of New Mexico’s

First GARVEE Project

GARVEE ROUNDUP

Also in this issue ...

GARVEE Questions . . . . . . . .2

Rating TIFIA Debt . . . . . . . . . .3

TIFIA Trivia . . . . . . . . . . . . . . .5

SIB Activity Remains Steady . . .6

Texas SIB: A Progress Report . . 6

Delaware SIB Demonstrates

Leveraging Benefits . . . . . . . . .8

STP Program-Wide

Approval . . . . . . . . . . . . . . . .9

FHWA’s Test and Evaluation

Program . . . . . . . . . . . . . . . .9

On November 21, 2001 in the Federal Register (66 FR, 58549), the U.S. Department of

Transportation formally announced that up to $2.4 billion in credit assistance is

available for projects approved during Federal fiscal year 2002 under the Transportation

Infrastructure Finance and Innovation Act (TIFIA) program. This Notice of Funding

Availability (NOFA) also outlines the TIFIA application and selection process. Those

familiar with the TIFIA program know that along with the $2.4 billion authorized in FY

2002 another $2.6 billion in Federal credit assistance is authorized in FY 2003. To

support this assistance, TIFIA provides budget authority to fund subsidy costs of $120

million in FY 2002, and $130 million in FY 2003, subject to the annual obligation

limitation. The NOFA can be viewed at the web site of the National Archives and

Records Administration: http://www.nara.gov/fedreg/.

FEDERAL CREDIT PROGRAM

U.S. DOT Announces Availability of FY 2002

TIFIA Funds

continued on page 3

continued on page 2
The state paid $62 million up front for the warranty, but will

save $89 million in maintenance costs over the next 20 years.

There are two warranties, one covering the pavement, and the

other covering the structures, such as bridges. Like an

automobile warranty, each comes with usage and time factors

that are intended to adjust for variations in future conditions.

The warranties also place a cap on the total amount of

expenditures that Mesa will have to make for maintenance. The

pavement warranty will last for 20 years, or until a certain

amount of traffic (measured both by weight and number of

vehicles) has used the road, or until Mesa expends 1.8 times the

warranty fee. The structures warranty will last for 10 years, with

a similar traffic usage cap, and an expenditure cap of 2.0 times

the warranty fee. The condition of the pavement and structures

will be assessed on a periodic basis, and an annual maintenance

plan will be submitted to NMSHTD for review and comment.

Summary

The combination of innovative financing and design/construction management allowed Corridor 44 to be completed in

3.5 years. The project, which involved a unique collaborative

effort between the state, local governmental units, the Federal

government, and the private sector, has received eight national and

international awards, for everything from construction to public

outreach. Overall costs were within six to seven percent of original

estimates, compared to an industry standard of eight percent. The

project culminated in renaming and redesignating the road as U.S.

Highway 550, which means a bolder mark on standard road maps,

and another draw for tourism and trade traffic. The project will

significantly improve roadway safety and expand economic

development opportunities in northern New Mexico.

While NMSHTD took time to celebrate the finish of this historic

project, the agency is not resting on its laurels. As reported in IFQ’s

Winter/Spring 2001 issue, New Mexico is continuing its role as a

GARVEE pioneer, having issued an additional $18.5 million of

GARVEEs for the U.S. 70 Corridor reconstruction, and it

anticipates using many of the innovative construction management

and warranty techniques pioneered on NM 44 in the future.

Contacts:

Reuben Thomas, FHWA, New Mexico Division,

505/820-2022 or

Charlie Trujillo, NMSHTD, 505/827-5258.

2

Four Lanes to the Four Corners, continued from page 1

Each issue of IFQ features questions and answers on the

GARVEE program. This issue focuses on GARVEEs and the

non-Federal matching share. Note that answers to these

questions are not regulatory or legislative, but represent

FHWA’s current administrative interpretations. If you have

questions or want to confirm any of this information, please

contact your local FHWA Division office, or the GARVEE

contacts listed in the Fall 2000 issue of IFQ. GARVEE

guidance is also available at http://www.fhwa.dot.gov/

innovativefinance/garguid1.htm. 

How is the Matching Ratio Set For GARVEEs? 

The maximum Federal share of the cost of a bond issue

project approved under Section 122 is the share as defined

under Section 120 of Title 23 (or other statutory reference).

This constitutes the legal pro rata share in effect at the time of

execution of the project agreement which may be adjusted in

accordance with sliding scale provisions. For any bond issue,

the Federal share eligible for reimbursement depends on the

amount of bond proceeds applied to approved Federal-aid

projects, including payment of soft costs such as capitalized

interest, issuance expenses, and credit enhancement fees. 

In situations where 100 percent of project costs are debt financed

through one bond issue, the bond-related costs may be measured

on a nominal, current-year basis (e.g. 80 percent of each payment

will be payable from Federal-aid and 20 percent from state match.)

This simplifies both State Transportation Improvement Program

(STIP) planning and the calculation of reimbursement amounts

and shares. However, this may not always be the case. The Federal

and non-Federal share may be financed separately. For example,

the Federal share may be debt financed, while the state share is

funded on a pay-as-you-go basis or satisfied with an in-kind match

such as donated property or toll credits. 

Could Tapering Be Used in Conjunction with GARVEEs? 

Tapered match (allowing the Federal share to vary over the life

of the project, as long as it is ultimately the appropriate ratio)

will not be permitted on debt-related reimbursements.

However, if approved, a Net Present Value match can serve as

a form of tapering, by allowing the non-Federal contribution

in advance of future Federal contributions. 

What is a Net Present Value Match? 

With special approval, a state may be permitted to apply the

net present value of existing contributions as non-Federal

match to future Federal participation, using an appropriate

discount rate to equate today’s dollars with the value of these

dollars in the future. The State of New Mexico received

approval for a non-Federal match under such a scenario. 

Can GARVEEs be Matched with Non-Cash Donations? 

Yes, non-cash matches can be used as the non-Federal share of

a GARVEE project. 

Can GARVEEs be Matched with Section 1044 Toll Credits? 

Yes, Section 1044 toll credits can be used as the non-Federal

share of a GARVEE project. 

Can GARVEEs be Matched with Interest Earned

on Bond Proceeds? 

Yes, interest earned on bond proceeds is considered eligible as

non-Federal match.

GARVEE “Questions of the Quarter”
3

New York TIFIA Loan Agreement Executed

U.S. DOT signed a loan agreement with the City of New York

on December 19, 2001 to provide a $159 million TIFIA loan

for the Staten Island Ferries and Terminals project. This project,

approved for TIFIA credit assistance in FY 2000, has become

part of the rebuilding of lower Manhattan in the wake of the

tragic events of September 11. The $463.1 million project,

supported by the $159 million TIFIA loan, includes the

rebuilding of the Whitehall Ferry Terminal in Manhattan and

the St. George Terminal in Staten Island, as well as replacement

of three ferry boats that have been in operation since the 1960s. 

The Staten Island Ferry system consists of the two terminals

and seven ferry vessels. It is a major commuter link that

transports more than 60,000 passengers daily and a worldrenowned tourist attraction. An estimated 20 million

passengers use the ferries each year for commuting or

tourism. Extensive renovation of bus and subway

connections at the Whitehall Terminal will accommodate

greater intermodal access, while the St. George Terminal is

planned to become the hub of a Staten Island redevelopment.

The three new ferry vessels will have an increased capacity of

about 25 percent and include the latest pollution-control

features. Completion of the project is expected in 2004.

Bay Bridge Selected for TIFIA Loan

The California Department of Transportation’s San FranciscoOakland Bay Bridge Seismic Retrofit Project has been

approved to receive TIFIA credit assistance. This is the first

project to be selected under TIFIA’s rolling solicitation process

in FY 2002. The $3.3 billion project, supported by a $450

million TIFIA loan, consists of the Seismic Retrofit of the West

Span, and the replacement of the East Span of the 8.5-mile San

Francisco-Oakland Bay Bridge. These project elements are part

of a comprehensive Toll Bridge Seismic Retrofit Program

established by legislation in 1997.

The existing bridge, heavily damaged during the Loma Prieta

earthquake in 1989, carries about 280,000 vehicles per day.

Replacement of the East Span and improvements to the West

Span are critical in order to address seismic safety deficiencies,

and to provide emergency relief access following a major

seismic event. Project debt will be repaid by revenues

generated by a seismic toll surcharge on a seven-bridge system

of the State of California. Completion of the project is

expected in 2006.

Contacts:

Mark Sullivan, TIFIA JPO, 202/366-5785 or

Duane Callender, TIFIA JPO, 202/366-9644.

U.S. DOT Announces TIFIA Funds, continued from page 1

With five TIFIA credit agreements worth more than $1.5 billion now completed and several others pending, the credit rating

agencies – which provide critical validation of the market acceptance of TIFIA debt – have developed experience in reviewing TIFIA

assistance. Based on FHWA’s discussions with Fitch, Moody’s Investors Service, and Standard & Poor’s, several characteristics can

be highlighted that distinguish TIFIA from traditional capital markets debt.

The Benefits of TIFIA Assistance

Congress created TIFIA so that transportation projects on the borderline of capital market access could obtain financing by utilizing

the Federal government’s inherent ability to realize investment benefits over the long term. As a patient investor willing to take a

generous view of time horizon, liquidity needs, and near-term uncertainty, the TIFIA program can provide subordinate lien capital

and back-loaded repayment schedules in financing up to 33 percent of project costs. Remaining project debt, thus enhanced by

TIFIA assistance, can then attract the more typical securities investor. A “stand-alone” or “non-recourse” project financing,

supported by user-based revenues, is the program’s main target.

However, TIFIA’s unique credit features can add value to a broad range of project financings, many reliant on tax revenues or other

government payments. Several of such projects have sought TIFIA assistance not for market access, but to lower their financing

costs and increase financial flexibility. For these projects, the rating agencies have applied fairly standard credit evaluation

procedures, adjusted to specific conditions. Still, even for these projects, a few aspects distinguish the TIFIA credit from other

capital market financings.

Cash Flow Analysis

Throughout much of 2001, the TIFIA borrowing rate, equivalent to the yield on taxable U.S. Treasury securities of comparable

maturity (see “TIFIA Trivia” box on page 5), has remained less than 25 basis points higher than the market’s tax-exempt interest

rate for AAA-rated credits. Lower-rated debt, of course, must pay a higher interest rate to attract investors, and TIFIA’s “taxable

rate” can be less than the comparable tax-exempt figure. For instance, the interest rate on New York City’s TIFIA loan for its

Staten Island Ferries and Ferry Terminals project, closed on December 19 (see story above), is 38 basis points less than what the

city’s other option, tobacco settlement revenue bonds, would have priced in the tax-exempt market. Combined with flexibility

A Perspective on Rating TIFIA Debt

continued on page 4
4

in structuring loan disbursements and repayments, the TIFIA assistance also permits an

accelerated construction schedule. For the

Staten Island Ferries loan and for tax-backed

loans such as the Miami Intermodal Center,

and the Cooper River Bridges, the rating

analysis has focused primarily on projected

cash flows and coverage.

Debt Repayment Provisions

TIFIA loans offer a borrower rare flexibility in

structuring repayment. For a non-recourse

project financing, repayment can be deferred

up to five years after substantial completion.

Depending on cash flow needs, tax-backed

borrowers may have to repay only interest

during the early years of amortization. And no

TIFIA borrower is penalized for prepayment.

Rating agencies thus view TIFIA assistance as

akin to equity in structuring a project’s cash

flow. However, a TIFIA loan may also include

an interest penalty for certain defaults which, if triggered, could

put additional pressure on project cash flows and potentially

threaten repayment to a senior bondholder. Therefore, credit

agencies would closely monitor conditions that might trigger

an incremental default interest rate. 

Cross Default Considerations

These issues arise when a revenue source with multiple liens is

pledged to repay the TIFIA loan. If, in addition, these revenues

are independent of the project itself, the TIFIA loan agreement

may contain default provisions applicable to the project

developer and operator that, if carried through to the source of

revenue, would put other creditors at risk. Any such default,

however, should have no implications for other bondholders.

The rating analyst will look to TIFIA to protect other

bondholders from such remedial action taken under the loan

agreement. In other words, a default by the project sponsor

under the loan agreement would not constitute a default by the

borrower under the bond indenture.

Nonsubordination

In creating TIFIA, Congress required that – in the event of

bankruptcy, insolvency, or liquidation – a TIFIA subordinate

lien must rise to parity with any senior debt holder. This

provision may create a credit risk for project bonds under an

indenture, and amending existing indentures could be

problematic. With several negotiations for TIFIA subordinate

loans underway, some analysts believe TIFIA loan agreements

should be more explicit regarding the procedure for invoking

nonsubordination. A possible model for such an approach is

the Federal Aviation Administration’s “Chicago language”

developed for financings using Passenger Facility Charges.

Analysts believe a definitive procedure, including remedies and

timeframe, would provide safeguards to mitigate the risk of

U.S. DOT declaring nonsubordination without extensive

interaction with senior bondholders, thus improving the

acceptability of a TIFIA subordinate lien.

Summary

While exceptions are always the rule in analyzing complex

financings, there are general considerations credit analysts use

to review TIFIA credit assistance:

❖ The project’s overall creditworthiness including cash flow,

economics, and legal structure;

❖ If TIFIA is a subordinate lien, the extent to which this

enhances the senior debt;

❖ Whether or not TIFIA is issued under an existing Indenture

of Trust;

❖ The degree to which TIFIA loan provisions are material to

bondholders; and

❖ The probability of nonsubordination.

Once a project is completed the rating analysis shifts to

surveillance. The following types of events would raise rating

agency concerns about the ongoing credit quality of a TIFIA loan: 

❖ The project’s fundamental economics are materially

adversely affected;

❖ Any missed payment, whether senior or subordinate;

❖ A draw under a TIFIA line of credit or loan guarantee taken

to avert a payment default;

❖ An incremental default interest rate is triggered; and

❖ An event of nonsubordination.

Contact:

Cheryl E. Jones, 

TIFIA JPO,

202/366-0317.

Assistance Limited

to 33 Percent

Security

Features

Rating

Requirement

Project-Based

Revenue Pledge

Flexible

Repayments

Junior-Lien

Position

A Perspective on Rating TIFIA Debt, continued from page 3

The TIFIA Program: A balance between the goal of facilitating

access to capital markets and managing financial risk.
5

Question

How does the TIFIA program establish interest rates for borrowers of secured loans?

Answer

The TIFIA statute requires that the interest rate on a TIFIA secured loan “shall be not less than the yield on marketable

United States Treasury securities of a similar maturity to the maturity of the secured loan on the date of execution of the

loan agreement” (23 U.S.C. 183(b)(4)). Consistent with this language and U.S. DOT’s policy objectives, the TIFIA

program chose to set its borrowing rates as low as possible, i.e., equal to the corresponding Treasury rate without

differential premiums for perceived credit risk.

Having made this policy decision, the U.S. DOT then faced the seemingly straightforward task of locating a source for

these corresponding Treasury yields. The information also would need to be transparent to TIFIA borrowers, applicable

to the range of maturities (10 to 40 years) expected for TIFIA loans, and responsive to any date of closing.

TIFIA found this information in a somewhat surprising location: the Treasury Bureau of Public Debt’s Daily Rate Table

for State and Local Government Securities (the SLGS table), located at http://www.publicdebt.treas.gov. With one

adjustment, the SLGS table can reveal the Treasury’s own estimates of the yields on its marketable securities. As specified

in 31 CFR 344.2 (Regulations Governing United States Treasury Certificates of Indebtedness), the daily SLGS rates “are

five basis points below the then current estimated Treasury borrowing rate for a Treasury security of comparable

maturity.” TIFIA, therefore, simply adds five basis points to the published rates in order to identify the applicable

Treasury security yield.

The SLGS table, which indicates maturities from one month to 40 years, is available to anyone with access to the Internet.

Because it is updated daily by the Bureau of Public Debt, the TIFIA program uses the rate published on the day a loan

agreement is executed.

Again, the TIFIA borrowing rate is based only on the maturity of the comparable Treasury security, not on the

perceived credit risk. Once the TIFIA program negotiates appropriate safeguards in the loan agreement itself, each

borrower – regardless of credit rating of its debt – is subject to the identical mechanism for establishing its comparable

Treasury rate.

TIFIA Trivia 

The U.S. DOT Responds to Your Questions

The “TIFIA Trivia” box provides responses to questions posed by our readers and other observers. We hope you find this

“TIFIA Trivia” section useful and that you will submit questions to either of the IFQ co-managing editors (Max Inman

or Suzanne Sale, FHWA).

Project Finance Workshop Reminder

FHWA and the Transportation Research Board (TRB) Committee on Taxation and Finance

(A1A01) are sponsoring a comprehensive workshop on new financing approaches for surface

transportation projects. The workshop will feature the latest developments in innovative

finance techniques, covering a range of “tools in the toolbox” from GARVEEs to credit

assistance options. The emphasis of the workshop will be on applying the tools and identifying

best practices. Project sponsors will share their first-hand experiences in implementing the

tools and will highlight “lessons learned.” Up-to-date information will be provided on TIFIA,

addressing issues and outlook for the future. The workshop, intended to advance the

knowledge base of innovative project finance, will be structured in an interactive format with

time set aside for Q&As and dialogue with transportation finance experts.

The workshop will be held as part of the TRB Annual Meeting in Washington, D.C., on Sunday,

January 13, 2002 from 1:30 to 5:00 p.m. at the Hilton Washington Hotel, International East.

For more information, visit TRB’s web page: http://www4.trb.org/trb/annual.nsf.
6

In the three years of administering its SIB program,

the Texas Department of Transportation (TxDOT)

has helped fund and expedite more than $1.1 billion

in needed transportation projects. City and county

officials across the state are taking advantage of this

innovative financing option that has truly been a

success. Recognizing that transportation is vital to

continued economic growth in Texas, the SIB has

allowed many projects to begin development sooner

rather than later by making needed funds available

to local entities at or slightly below market-rates.

Following selection as one of the first 10 states

approved by the U.S. DOT to pilot the program,

TxDOT was then authorized at the state level to administer the SIB

program under legislation enacted in 1997. SIB financial assistance

can be provided to any public or private entity authorized to

construct, maintain, or finance an eligible transportation project.

The program provides financial assistance through more than just

loans. Lines and letters of credit, bond insurance, and capital

reserves are also available through the SIB program. TxDOT has

tailored its SIB to enhance the ability of borrowers to access capital

funds at or lower-than-market interest rates. 

TxDOT has developed its own computer software to track every

SIB loan application. The tracking system is built on a spreadsheet

system capable of modifying and calculating loan amounts, rates,

payments, and interest, and it offers a cash flow analysis for

approved loans. In conjunction with the tracking system, TxDOT

has created a revolving loan register that maintains a chronological

database of loans processed through the program. The register

provides basic information for all loans submitted to the bank.

SIB-Funded Projects in Texas

Since 1997, the Texas Transportation Commission, TxDOT’s

governing body, has approved 32 SIB loans totaling $88.9 million,

helping to fund $1.1 billion in highway and bridge construction

projects. This represents a Federal leveraging factor of over 14:1.

The SIB-assisted projects in Texas are highlighted below:

❖ State Highway 121 – The State Highway 121 corridor

consists of a heavily traveled two-lane roadway connecting

several of Dallas’ northern suburbs and the Dallas-Fort

Worth International Airport. The project plan is to expand

approximately 25 miles of highway to a six-lane freeway in

order to improve the flow of north-south traffic through

Denton County in one of the state’s fastest growing corridors.

The SIB loan helped jump start this critical project that would

otherwise have been unfunded for 10 to 15 years. Denton

County partnered with five area cities to contribute an

additional $48 million to the cost of expanding State

State Infrastructure Bank Loan Agreements by State

As of September 30, 2001

Loan 

Number of Agreement Disbursements

State Agreements Amount to Date

($000) ($000)

Alaska 1 $2,737 $2,737

Arizona 23 373,192 156,850

Arkansas 1 31 31

Colorado 2 400 400

Delaware 1 6,000 6,000

Florida 32 465,000 94,000

Indiana 1 3,000 0

Iowa 1 739 739

Maine 23 1,780 759

Michigan 23 17,034 13,033

Minnesota 7 66,124 29,581

Missouri 10 69,251 66,754

Nebraska 1 1,500 0

New Mexico 1 541 541

New York 2 12,000 12,000

North Carolina 1 1,575 1,575

North Dakota 2 3,565 1,565

Ohio 35 146,624 102,550

Oregon 9 11,483 11,181

Pennsylvania 15 14,600 14,600

Puerto Rico 1 15,000 15,000

Rhode Island 1 1,311 1,311

South Carolina 5 1,502,289 510,428

South Dakota 1 11,740 11,740

Tennessee 1 1,875 1,875

Texas 32 88,900 70,016

Utah 1 2,888 2,888

Vermont 3 1,030 0

Virginia 1 18,000 18,000

Washington 1 700 0

Wisconsin 2 1,188 1,188

Wyoming 5 49,090 32,614

245 $2,891,187 $1,179,956

Note: Includes both Federal and state SIB programs.

SIB UPDATE

SIB Activity Remains Steady

State Infrastructure Banks (SIBs) continue to leverage

the ability of states to address project needs

throughout the country. As shown in the table to the

right, as of September 30, 2001, 32 states had entered

into 245 SIB loan agreements with a dollar value of

nearly $2.9 billion. The table on the following page

summarizes obligations and outlays of Federal funds

for the SIB Program as of September 30, 2001.

One of the more active SIBs is the Texas SIB,

highlighted below. With 32 loan agreements to

date, the Texas SIB has helped advance more than

$1.1 billion in needed transportation projects

throughout the state. Also highlighted is the

Delaware SIB, which with one loan agreement in

place, is charting a course to support future projects.

Contact:

Phyllis Jones, FHWA, 

202/366-2854.

SIB HIGHLIGHTS

Texas SIB: A Progress Report

continued on page 7
7

Highway 121, which includes a $10 million SIB loan that will

help leverage the $145.8 million project. The funding

package blended a local bond issue with the SIB loan to

leverage both state and Federal highway funds. 

❖ State Highway 45 – Transportation toll projects can also

utilize the Texas SIB loan program. A SIB loan is facilitating

financing of the new State Highway 45, one of the four

project elements of the planned 122-mile Central Texas

Turnpike Project that is being developed by the Texas

Turnpike Authority, a division of TxDOT.

The City of Round Rock and its Transportation System

Development Corporation (4B Corporation) received a $16

million SIB loan as part of its contribution to the $553.7

million project. The 15-mile long highway will provide a

direct east-west connection through the rapidly growing

commercial and residential area located in north Austin and

neighboring suburb, Cedar Park. Ultimately, the facility

design will be a six-lane roadway with frontage roads and

overpasses at major thoroughfares, and direct connection

ramps to Interstate 35.

❖ World Trade Bridge – Nearly 45 percent of approved SIB loans

in Texas are for transportation improvements in the TexasMexico border region. More than $39.3 million in approved

loans have gone to border area projects as a way to address the

needs related to increased trade due to the North American Free

Trade Agreement (NAFTA). Texas ports of entry are used by 79

percent of all United States-Mexico border truck traffic.

The largest of these border area SIB loans is a $29.3 million

loan to the City of Laredo for construction of the Laredo

Northwest International Bridge IV (World Trade Bridge). The

bridge is the fourth international bridge connecting Laredo,

located in Webb County, Texas and Nuevo Laredo, in

Tamaulipas, Mexico. The eight-lane bridge structure carries

commercial vehicle and pedestrian traffic only, and will help

alleviate congestion on other area toll bridges and roadways as

well as support increased trade and traffic.

❖ El Paso International Bridges – Rehabilitation of the El Paso

International Bridges system is another United States-Mexico

border NAFTA project given financial assistance through the

SIB program. The City of El Paso is using an $8.9 million

SIB loan to fund total costs of improvements to city-owned

international toll bridges, which include purchase of an automated toll collection system, construction of a toll collections

support building, and structural rehabilitation of two

Texas SIB, continued from page 6

continued on page 8

SIB Pilot Program Obligations and Outlays (as of September 30, 2001)

Highway Obligations Highway Outlays Transit

Alaska $ - 2,490,000 - 2,490,000 - 2,490,000 - 2,490,000 $ - $ -

Arizona 39,485,974 6,700,000 - 46,185,974 39,485,974 6,700,000 - 46,185,974 - -

Arkansas - 1,500,000 - 1,500,000 - 1,380,000 - 1,380,000 - -

California - 3,000,000 - 3,000,000 - - - 0 - -

Colorado 3,200,000 1,500,000 - 4,700,000 - 400,000 - 400,000 - -

Delaware 3,300,000 1,500,000 - 4,800,000 3,300,000 1,500,000 - 4,800,000 - -

Florida 38,815,438 8,650,000 28,320,000 75,785,438 38,815,437 8,650,000 28,320,000 75,785,437 - -

Georgia - - - 0 - - - 0 - -

Illinois - - - 0 - - - 0 - -

Indiana - 3,390,000 - 3,390,000 - 3,118,800 - 3,118,800 - -

Iowa - 1,500,000 - 1,500,000 - 591,600 - 591,600 - -

Louisiana - - - 0 - - - 0 - -

Maine - 2,540,000 - 2,540,000 - 2,336,800 - 2,336,800 - -

Massachusetts - - - 0 - - - 0 - -

Michigan - 8,666,389 - 8,666,389 - 7,782,389 - 7,782,389 2,383,610 2,383,610

Minnesota 31,109,200 - - 31,109,200 31,109,200 - - 31,109,200 3,960,000 3,524,400

Missouri 25,000,000 - 16,000,000 41,000,000 25,000,000 - 16,000,000 41,000,000 7,410,000 7,410,000

Nebraska - 2,830,000 - 2,830,000 - 2,603,600 - 2,603,600 - -

New Jersey - - - 0 - - - 0 - -

New Mexico 4,827,348 8,140,000 - 12,967,348 4,827,348 7,244,600 - 12,071,948 - -

New York - 12,000,000 - 12,000,000 - 8,920,000 - 8,920,000 - -

North Carolina - 120,000 - 120,000 - - - 0 1,380,000 1,260,000

North Dakota - 2,540,000 - 2,540,000 - 2,133,600 - 2,133,600 - -

Ohio 75,000,000 5,100,000 - 80,100,000 75,000,000 4,140,000 - 79,140,000 6,900,000 6,900,000

Oklahoma - - - 0 - - - 0 - -

Oregon 8,973,000 2,589,700 - 11,562,700 8,973,000 1,708,100 - 10,681,100 2,920,300 2,920,300

Pennsylvania 14,000,000 2,090,000 - 16,090,000 14,000,000 1,922,800 - 15,922,800 1,300,000 1,196,000

Rhode Island - 1,500,000 - 1,500,000 - 1,020,000 - 1,020,000 - -

South Carolina 1,848,045 3,000,000 - 4,848,045 - 2,670,000 - 2,670,000 - -

South Dakota 8,322,719 2,830,000 - 11,152,719 8,322,719 2,603,600 - 10,926,319 - -

Tennessee - 1,500,000 - 1,500,000 - 1,380,000 - 1,380,000 - -

Texas 159,288,804 12,000,000 - 171,288,804 159,288,804 11,040,000 - 170,328,804 - -

Utah - 2,310,000 - 2,310,000 - 2,310,000 - 2,310,000 - -

Vermont 560,000 1,500,000 - 2,060,000 560,000 1,020,000 - 1,580,000 - -

Virginia 18,000,000 3,000,000 - 21,000,000 18,000,000 - - 18,000,000 - -

Washington - 1,500,000 - 1,500,000 - 1,500,000 - 1,500,000 - -

Wisconsin - 1,500,000 - 1,500,000 - 1,380,000 - 1,380,000 - -

Wyoming 21,031,942 2,510,000 - 23,541,942 21,031,942 2,510,000 - 23,541,942 - -

Puerto Rico 10,748,588 1,500,000 - 12,248,588 10,748,588 1,260,000 - 12,008,588 - -

TOTAL 463,511,058 111,496,089 44,320,000 619,327,147 458,463,012 92,315,889 44,320,000 595,098,901 26,253,910 25,594,310

State Federal-Aid Special TEA-21 Total Federal-Aid Special TEA-21 Total Obligation: Outlays:

Highway Appropri- Funds Highway Appropri- Funds Special Special

Funds ations Funds ations Appropri- Appropriations ations
8

downtown international bridges.

The project will help provide a new

automated toll collection system for

the Zaragoza, Stanton, and Santa

Fe International bridges to include

commercial, private vehicle, and

pedestrian lanes. 

❖ Joe Fulton International Trade

Corridor – The Joe Fulton International Trade Corridor is a $40

million project that has been designated by Congress as a National

High Priority Corridor. The corridor runs through the inner

harbor of the Port of Corpus Christi, the fifth largest port in

the nation. The port authority is developing a nine-mile

highway along the port that will link Interstate 37 to U.S.

Highway 181 and provide a principal arterial roadway, and

link existing area rail lines that will serve current and future

waterborne transportation facilities.

The need for the project was established by the area’s increase

in NAFTA-related traffic. Trucks carrying shipments to and

from Mexico can cut 200 miles from their trip if their cargoes

are moved through Corpus Christi’s port. The project will

eliminate dependency on area bridges and improve port

access. The $16.3 million SIB loan request submitted by the

Port of Corpus Christi has won preliminary approval and is

still awaiting environmental clearance before final approval.

❖ John F. Kennedy Causeway – The John F. Kennedy Causeway

project, also in Corpus Christi, is another project that has

received assistance from the SIB program. Elevation of the

JFK Causeway, also known as State Park Road 22, was seen as

an essential safety measure for this area, located in Texas’

Coastal Bend area. Its susceptibility to being washed over, if

not flooded, by hurricane-driven Laguna Madre waters,

thereby potentially isolating hundreds of residents and anyone

else on North Padre Island, has been demonstrated repeatedly.

The project involves raising the roadway to provide a safer,

more efficient evacuation route from area islands during

high tides, tropical storms, and hurricanes. The SIB

program provided a $4 million loan to the City of Corpus

Christi to fund its portion of the $45 million cost to elevate

and expand the roadway, which is currently built just above

the sea-level of the Gulf of Mexico.

These SIB-assisted projects are important examples of the state’s

efforts to help alleviate congestion and enhance mobility in

response to increased traffic and trade resulting from the

implementation of NAFTA. “Traditional methods for financing

the development of infrastructure are no longer enough to serve

the need of communities,” said TxDOT’s Dorn Smith, manager

of the TxDOT SIB. “The SIB program is a perfect example of

‘outside of the box’ thinking necessary to help provide the

assistance communities need in order to accomplish these tasks.”

Additional SIB information is posted on TxDOT’s web site at

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

Contacts:

Dorn Smith, Texas Department of Transportation,

512/463-8721 or

Mark Cross, Texas Department of Transportation,

512/475-0942.

Texas SIB, continued from page 7

Project Total SIB $ Interest Length of

Project $ Rate Loan (years)

State Highway 121 $145,800,000 $10,000,000 4.5% 7

State Highway 45 $553,680,000 $16,000,000 4.6% 15

World Trade Bridge $92,497,000 $29,300,000 4.1% 28

El Paso International

Bridges $8,922,000 $8,922,000 4.3% 15

Joe Fulton

Trade Corridor* $40,000,000 $16,300,000 TBD TBD

JFK Causeway $45,000,000 $4,000,000 4.5% 8

*Final SIB approval anticipated upon completion of environmental clearance.

Highlighted Texas SIB Projects: Key Statistics

The Delaware Department of Transportation’s (DelDOT) SIB

was authorized in November 1997 with the signing of a

Cooperative Agreement between FHWA and the Delaware

Transportation Authority.

Delaware’s SIB account is maintained at Wilmington Trust

Company (WTC), a banking corporation organized and existing

under the laws of the State of Delaware. WTC serves as the

trustee for the Delaware Transportation Authority. Delaware’s

SIB is managed through DelDOT’s Trust Fund Administration.

In 1998, the SIB was capitalized with $4.8 million of Federal

funds and $1.2 million of state funds. The SIB advanced a $6

million loan in November 1999 to DelDOT for the Biddle’s

Road Toll Plaza. The loan will be repaid at an interest rate of

5.02 percent over six years in semi-annual payments. The

project included construction of a 9,491 square-foot toll plaza

with 10 manual lanes and four high-speed express lanes. All

lanes are equipped with electronic toll collection equipment.

The total cost of the project was $54 million. This translates

into a leveraging factor of 9:1, demonstrating the value of the

SIB concept in facilitating project financing.

As monies are repaid from the first loan, Delaware will rebuild

the bank balance. As of September 30, 2001, the SIB balance

was $2.6 million. Delaware anticipates launching a second

round of loans in FY 2003.

Contact:

John Nauman,

Delaware Department of Transportation,

302/760-2692.

Delaware SIB Demonstrates Leveraging Benefits
9

TECHNICAL CORNER

STP Program-Wide Approval: Simplifying Procedures and Saving Dollars

Today’s increasing administrative costs, shrinking state administrative budgets, and the need

to improve state cash flow are all factors creating

increased pressure on many state DOTs. Taking

advantage of 23 U.S.C. 133 Surface Transportation Program (STP) program approval

procedures is one way to reduce transaction

costs, while providing a state with increased

flexibility in the management of its STP funds.

This technique was first tested by the

Washington DOT as a TE-045 financing

innovation and then was implemented as a

standard feature of the Federal-aid program

under TEA-21 authorization.

STP program approval allows the state to

establish one annual Federal-aid STP project

for each STP program (appropriation) code.

This program efficiency is designed to provide

the state and FHWA Division Offices with the

option of processing only one annual Federalaid authorization request per STP program.

In 1994, FHWA spearheaded a program initiative, known as

TE-045, to introduce new flexibility into the financial

characteristics of the Federal-Aid Highway Program. Under

the TE-045 program, FHWA sought proposals from states for

alternatives to traditional financing approaches. To date, 102

projects have been approved in 42 states, generating

substantial benefits in terms of building more projects with

existing resources and accelerating project construction.

TE-045 is still available for states to test innovative financing

ideas. States that may wish to consider alternatives to

traditional grant funding are encouraged to submit proposals

through their FHWA Division Office. Highlighted are

proposals submitted by Oregon and South Carolina that were

recently accepted as TE-045 projects.

❖ The Oregon Department of Transportation (ODOT) submitted a TE-045 proposal for a flexible match to be applied

as the non-Federal match against current and future Federalaid projects along Highway 99W, a major safety corridor in

Oregon. In their proposal, ODOT requested approval to 1)

use part of a state-funded project as the match for the

Federal-aid project, and 2) use the remaining non-Federal

funds as match for the adjacent future Federal-aid projects

that were identified, and included in the State

Transportation Plan. This innovative matching technique

will leverage state dollars, enabling ODOT to accelerate the

Highway 99W safety corridor project.

❖ The South Carolina Department of Transportation (SCDOT)

submitted a proposal for a flexible match to be applied to

Federal-aid highway projects. In their proposal, SCDOT

requested approval to apply soft match credit for eligible

administrative costs. This technique will allow SCDOT to

take credit for the eligible administrative costs in the form of

soft match against future Federal-aid projects, and release

much needed additional funds for highway maintenance. The

acceptance of this proposal provides flexibility to test

alternative cost payment methods which are allowed in the

Office of Management and Budget’s Circular A-87, Cost

Principles for State, Local, and Indian Tribal Governments.

Contact:

Dale Gray, FHWA, 202/366-0978.

FHWA’s Test and Evaluation Program: What’s New

Tool Number of States

STP Program Match 4

Tapered Match 9

Donations 19

Partial Conversion of

Advance Construction 31

Toll Credits 20

Scorecard on Innovative Matching

Tools in Practice

Current Procedure

(325 authorizations + 775 modifications + 325 final vouchers = 1,325 documents) 

Higher Transaction Costs

Separate authorizations/

agreements for each project

Project

Agreements

Multiple modifications

for each project

Modifications

Final voucher for

each project

Final

Vouchers

Statewide Procedure

(8 authorizations + 16 modifications + 8 final vouchers = 32 documents) 

Lower Transaction Costs

Separate authorizations/

agreements for each STP program code

Project

Agreements

Reduced number of

modifications

Modifications

One voucher for

each agreement

Final

Vouchers

STP Lifecycle: Hypothetical Case Study

continued on page 10
10

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:

• 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)

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.

Contributors to Vol. 7, No. 3 

of IFQ include:

Roger Berg, Cambridge Systematics, Inc.

Duane Callender, TIFIA JPO

Mark Cross, Texas Department of Transportation

Dale Gray, FHWA

Cheryl E. Jones, TIFIA JPO

Phyllis Jones, FHWA

Stephanie Kaufman, FHWA, TIFIA JPO

Jennifer Mayer, FHWA Western Resource Center

John Nauman, Delaware Department of Transportation

Suzanne H. Sale, FHWA, TIFIA JPO

Joe Stertz, FHWA, Wisconsin Division

Mark Sullivan, TIFIA JPO

Also using this technique, Federal funds can be matched across the full program,

not on a project-by-project basis. The biggest administrative savings is realized in

the elimination of hundreds of individual project modifications, while the

primary challenge to implementing this technique involves the transfer of project

data to FHWA. 

The figure on page 9 illustrates hypothetically how a state with 325 STP new

project authorizations and three modifications per project per year can vastly reduce

the number of required transactions through STP program approval.

The STP statewide program not only cuts transaction costs for both the state and

FHWA, but it also gives the state the flexibility to modify individual state project costs

without waiting for FHWA approval. This means the state, as long as it stays within

the amount authorized for the Federal master project, can process individual state

project cost under runs and over runs. The self-approved state adjustment procedure

improves the state cash flow by allowing a state to immediately bill FHWA for its full

STP program costs, rather than waiting for the FHWA Division office to process the

detailed project modifications.

By bundling together individual STP-funded projects and treating them as a single

project for purposes of approval and administration, the state can realize both cash

flow benefits and reduced processing costs.

Contacts:

Joe Stertz, FHWA, Wisconsin Division, 608/829-7525 or

Max Inman, FHWA, 202/366-2853.

STP Program Approval, continued from page 9