Over 30 years of reporting on Congress, federal agencies and the White House for corporate America as well as national trade and professional associations.

Questions hang over revamped DOT funding program

Public Works magazine...November 2012

Considerable uncertainty surrounds the ground rules for Transportation Infrastructure Finance and Innovation Act (TIFIA) funding for highway, rail, and intermodal projects over the next two years. Launched in 1998, the program leverages federal infrastructure investment with private investment via loans, loan guarantees, and credit. In addition to state and local DOTs, eligible applicants include transit operators, special authorities, and private entities.

Moving Ahead for Progress in the 21st Century (MAP–21), the federal surface-transportation funding program that was reauthorized in July 2012, increases TIFIA funding to unprecedented levels both in terms of total and per-project dollars. It also allows the U.S. DOT to finance up to 49% of reasonably anticipated eligible project costs — much, much more than the previous 33% maximum.

But state and local highway officials are questioning the agency’s interpretation of some MAP-21 changes, starting with such preliminary matters of what they ought to include in their letters of interest. Texas DOT Executive Director Phil Wilson says the notice of funding availability the U.S. DOT issued in July “subverts the central function of an application in the credit assistance process by improperly moving these functions into the letter of interest, expanding the letter of interest well beyond the content required under the new law.”
All projects must be funded

In the past, the U.S. DOT ranked projects based on selection criteria, weighted the relative merits of eligible projects, and funded those with the highest merit. Not all proposals made the cut.

Now, however, all projects that meet certain criteria must be funded if funds are available.
“Public benefit” up for grabs

The federal money can be used for all sorts of projects: highways, passenger rail, transit and intermodal, private rail facilities, modifications that facilitate intermodal transfer and access to port terminals, intelligent transportation systems, international bridges and tunnels, and intercity passenger bus or rail facilities and vehicles. Wilson believes MAP-21 eliminates the requirement to show a public benefit.

Some groups want more types of projects to be allowed, such as bicycle and pedestrian facilities. The National Housing Conference wants to expand eligibility to parking, roads, walkways, sewers, and parks that support transit development for affordable and mixed-used housing.

“What isn’t clear is what the threshold will be for ‘public benefit,’” says Transportation for America’s David Goldberg. “There’s no firm standard on how many spaces would need to be dedicated for transit users — nor is there a formal maximum parking deck size — nor is there a clear rule that the transit set-aside would have to be for the full 24 hours or if it could float depending on peak period demand. Our sense is that U.S. DOT is not going to provide hard guidance. In all likelihood it will be a case-by-case basis.”
Rate break for rural areas

While most proposals must have at least $50 million in total eligible project costs, MAP-21 lowers the requirement to $15 million for intelligent transportation systems and $25 million for rural infrastructure projects.

The typical TIFIA interest rate is equal to the U.S. Treasury Rate on the date of execution of the TIFIA credit instrument. MAP-21, however, allows 10% of funding to go to rural projects — those located in any area other than a city with a population of more than 250,000 inhabitants within the city limits — at half the Treasury rate.

Proposals must have a dedicated revenue source for repaying a loan. Projects have been supported by tolls, user fees, public-private partnerships or availability payments, real estate tax increments, interjurisdictional funding agreements, and room and sales taxes.

— Stephen Barlas is a Washington, D.C.-based freelance writer who covers regulatory issues, with a special emphasis on EPA.