Most federal highway transportation funds are distributed as grants to states as part of the federal aid highway program through a set of complex formulas that take into account a number of factors, including the estimated share of taxes highway users in each state contributes. The Highway Trust Fund is the principal source of funding for federal aid highway programs and is funded through motor fuel and other highway use taxes. Grants for transit projects are distributed as part of the federal transit program through a collection of formula-based and discretionary programs and are funded primarily by the Mass Transit Account of the Highway Trust Fund. Supplementing these federal programs is a collection of financing methods that allow project sponsors—such as state DOTs and transit agencies—to borrow money through bonds, loans, or other mechanisms. State DOTs and other project sponsors can raise money in the bond market through, for example, revenue bonds backed by anticipated project revenues like tolls; bonds backed by future federal transportation funds, such as Grant Anticipation Revenue Vehicles (GARVEE) or Grant Anticipation Notes (GAN); or general obligation bonds backed by the full faith and credit of a state or municipality. Project sponsors may also seek private investment through bank debt, private equity, or private activity bonds. Through TIFIA, DOT provides loans or other credit assistance to sponsors of surface transportation projects. Declining Highway Trust Fund revenues and states’ budget constraints, as well as the high cost and size of major transportation projects, have prompted project sponsors to seek alternative methods of funding transportation infrastructure. The TIFIA program’s primary goal is to leverage limited federal resources and stimulate private capital investment in transportation infrastructure by providing credit assistance to projects of national or regional significance. Underlying the TIFIA program is the notion that the federal government can perform a constructive role in financing large transportation infrastructure projects by supplementing, but not supplanting, existing capital finance markets. In this role, DOT identifies five key objectives for the TIFIA program: facilitate projects with significant public benefits; encourage new revenue streams and private participation; fill capital market gaps for secondary (subordinate) capital; be a flexible, “patient” investor willing to take on investor concerns about investment horizon, liquidity, predictability, and risk; and limit federal exposure by relying on market discipline. DOT provides TIFIA credit assistance in three forms: direct loans, loan guarantees, and standby lines of credit. The maximum maturity for all types of TIFIA credit assistance is 35 years after substantial completion of a project. Lines of credit can supplement project revenues during the first 10 years of project operations. In addition, DOT can defer the first TIFIA repayment until 5 years after substantial completion of a project, and most project sponsors avail themselves of this option. Other credit assistance terms include that (1) TIFIA assistance may provide no more than 33 percent of total project costs, (2) senior debt has an investment- grade credit rating (Baa3/BBB- or higher), and (3) TIFIA assistance can be subordinate to the project’s senior debt, meaning that senior creditors may receive project revenues ahead of DOT. According to DOT officials, the TIFIA program is one of the few federal credit programs in which federal assistance routinely takes a subordinate position to other, nonfederal lenders with respect to cash flows. However, to protect taxpayers, TIFIA loans may not be subordinated to the claims of other creditors with respect to the loan recipients’ bankruptcy, insolvency, or liquidation. Both public and private entities are eligible to receive TIFIA assistance for a range of surface transportation-related projects including highway, transit, railroad, intermodal freight, and port access. Borrowers can include entities like state DOTs, toll authorities, transit agencies, and private concessionaires. Other eligibility requirements include that a project must have total costs of at least $50 million (or $15 million for intelligent transportation systems projects); must be included in state and local transportation plans; and must have dedicated revenues, like tolls, user fees, or pledged taxes, for repayment. ITS encompasses a broad range of electronics and communication technologies to enhance the capacity and efficiency of surface transportation systems, including traveler information, public transportation, and commercial vehicle operations. reauthorized the TIFIA program, authorizing budget authority of $122 million for each of fiscal years 2005-2009 from the Highway Trust Fund for the program’s credit subsidy cost and administrative expenses. The credit subsidy is the estimated long-term cost to the government of providing assistance. Extensions of SAFETEA-LU have authorized budget authority of $122 million for the TIFIA program for each subsequent fiscal year. Any uncommitted budget authority remains available for obligation in subsequent years, unless Congress chooses to reprogram or rescind these amounts. According to DOT, $10 million in TIFIA budget authority can generally be leveraged to provide $100 million in credit assistance. In fiscal year 2008, total requests for TIFIA assistance exceeded DOT’s available budgetary resources for the first time. Prior to this, when there was lower demand for the program, DOT allowed project sponsors to seek TIFIA assistance on a “first come, first served” basis defined by the sponsor’s schedule. Figure 1 shows the number and amount of credit assistance requested each fiscal year. In its 2010 report to Congress on TIFIA, DOT attributed the increased demand for TIFIA assistance to several factors, including the growing demand for infrastructure investment relative to other sources of funding (like declining fuel tax receipts), the economic downturn and difficulty accessing capital markets, and the increasing use of innovative approaches, like public-private partnerships, to finance and deliver projects. After demand exceeded available budget resources, DOT terminated the open application process and instituted an annual, fixed- date solicitation process for sponsors to submit LOIs for credit assistance. In fiscal year 2010, DOT began evaluating and competitively selecting projects based on how well they align with the TIFIA selection criteria and the availability of budget resources. As shown in figure 2, there are four primary stages for securing TIFIA credit assistance. For each project, the amount of time needed to complete each stage varies. For instance, in its 2002 report to Congress, DOT stated that the length of credit agreement negotiations is affected by the complexities and uncertainties of large infrastructure projects as well as the learning curve of both project sponsors and DOT as they encounter unique legal and financial issues with projects. After determining that a project meets the eligibility requirements, DOT uses eight statutory criteria weighted by regulation to select projects to receive credit assistance. Beginning in fiscal year 2010, DOT defined the statutory criteria in the notice of funding availability (funding notice), which included clarification of the national or regional significance and environment criteria. (See table 1.) In addition, projects that received funding through DOT’s Transportation Investment Generating Economic Recovery (TIGER) grant program were eligible for TIFIA credit assistance. Specifically, project sponsors could use TIGER grant funds for TIFIA credit assistance, known as a TIGER TIFIA payment. In each of the four rounds through which DOT TIGER grants have been available, a portion of the funds could be used to support the credit subsidy and administrative costs of projects eligible for federal credit assistance. When a project sponsor is offered a TIFIA award through the TIGER program, the project goes through the regular TIFIA process, including the TIFIA credit evaluation, credit agreement negotiation, and oversight and monitoring. DOT implements and manages the program using internal staff and a pool of external financial and legal advisors. There are nine internal TIFIA office staff who are responsible for assisting with reviewing LOIs, selecting projects to apply for credit assistance, negotiating credit agreements, monitoring loan disbursements and the financial performance of executed credit agreements, and tracking credit subsidy calculations. Currently, DOT supplements its internal staff with a pool of five financial and legal advisors, contracted for 5-year periods, who assist in the review of applications and negotiation of credit agreements. Since the TIFIA program was created in 1998, DOT has executed 27 credit agreements for 26 projects. To date, assistance has been provided through 26 loans and one loan guarantee. Of the 26 projects, 17 are located in 5 states—California, Colorado, Florida, Texas, and Virginia (see fig. 3). Overall, sponsors from 33 states, the District of Columbia, and Puerto Rico have submitted LOIs for projects that vary by mode and purpose, but most have high total costs. Highway projects account for a majority of all LOIs submitted to TIFIA program. According to DOT data, highway projects—such as building new roads and replacing bridges—accounted for about 60 percent of the 182 LOIs submitted to the TIFIA program from 1999 to 2012. Transit and intermodal projects—such as building new transit systems and constructing parking garages and facilities linking various transport modes near airports—account for 18 percent and 10 percent of all LOIs, respectively. In addition, rail, ferry, and ITS projects account for 4 percent, 2 percent, and 1 percent of LOIs during this time, respectively. However, no projects in these three modes have received TIFIA assistance to date. Over the history of the program, the average total cost of projects seeking TIFIA assistance has been $1.2 billion. Through fiscal year 2012, no sponsor in the other 17 states has submitted an LOI to the TIFIA program. (See fig. 4.) According to DOT data, TIFIA credit agreements have been used mostly for large, high-cost highway projects. Overall, DOT has provided TIFIA assistance to 17 highway projects. Some of these projects—like the President George Bush Turnpike-Western Extension (SH 161) in Texas— were to construct new roads, and others—like the I-595 Corridor Roadway Improvements project in Florida—to reconstruct and expand existing roads.