TIFIA rejigs credit-application process

Due to high demand, the US Department of Transportation’s infrastructure-lending program is now no longer accepting rolling applications for loans, and will instead require applications to be submitted by fixed deadlines.

The US Department of Transportation has ended the rolling first-come, first-serve application process for its TIFIA program, which provides direct loans, lines of credit and loan guarantees to public and private surface transportation projects of national significance. Instead it will review and prioritise projects according to the department’s policy objectives.

The changes, foreshadowed earlier this year in public remarks by TIFIA officials, were formally announced last week in the Federal Register, a rulemaking newsletter for public agencies of the US government.

Under the new process applicants will have until 31 December, 2009, to submit letters of interest for funding in the government’s 2010 fiscal year. Once the letters have been received, officials will review all projects and rank them against the department’s policy objectives, such as livability, economic competitiveness, safety, sustainability and state of good repair, and select the most promising projects for funding.

The TIFIA program was created by Congress’ namesake 1998 Transportation Infrastructure Finance and Innovation Act and wasn’t highly utilised by the private sector until the outbreak of the credit crisis in 2007. In 2008, for the first time since the program’s creation, credit requests for the program exceeded available resources, prompting officials to rethink how they awarded TIFIA credit.

TIFIA: Scarce resources for 2010
Source: TIFIA Joint Program Office, US Department of Transportation

“Before, we had more than enough money, so we did not have to compete the projects against each other,” said an official familiar with the new procedures.

The official could not say for certain how much money the TIFIA credit program office will have available for 2010 because of uncertainty over Congressional appropriations. The program gets its money from Congress’ transportation spending programme, which in 2005 dedicated $122 million annually for the next four years to TIFIA. That money is used to subsidise government loans, the money for which comes from the US treasury: the larger the loans made by applicants, the more of the subsidy allocation gets used.

Congress has not yet re-authorised the programme for future years, so TIFIA doesn’t know how much money it will have available for these subsidy costs. But “the expectation is that Congress will re–authorise an equivalent amount of budget authority for the TIFIA program” in its 2010 fiscal year, according to the Federal Register.

To stretch its dollars, TIFIA will explore a pilot programme whereby applicants for its credit assistance would pay a fee that would be used to offset the entire subsidy cost of TIFIA assistance. This would leave the program with more available funds for subsidising loans that would otherwise not be made once TIFIA’s funding availability dries up.

TIFIA’s 2010 funding availability could also be impacted by projects that were financed this year. TIFIA used up some of the funds it was anticipating on getting in 2010 to finance this year’s projects. As a result, 2010 could be a leaner year, though it is not certain at this point how much next less money the program will have until all the 2009 projects close.

So far this year, TIFIA has lent $603 million to the I-595 corridor improvement project in Florida, $387 million to the Triangle Expressway project in North Carolina and $341 million to the Port of Miami Tunnel in Florida.

The program anticipates closing on another project, the North Tarrant Expressway development in Texas, next week, and two more projects in January: the Transbay Terminal rail station in San Francisco and Texas’ Interstate Highway 635 development, also known as the “New LBJ” project.

The New LBJ features an $800 million TIFIA loan which, if closed, would be the second-largest loan in the programme’s 11-year history.

Changes in TIFIA's credit application process were hinted at earlier this year by Mark Sullivan, the credit programme's former director. In March, he stated at a conference in Washington DC that TIFIA would soon end the rolling application process in response to demand for its credit assistance.

Sullivan has since moved on to become a senior advisor to Regina McElroy, director of the Office of Innovative Programme Delivery, which provides advice and financing for transportation infrastructure projects. The TIFIA programme sits within McElroy's division.

Duane Callender, a veteran of the TIFIA programme office, was named acting director in Sullivan's place in May. Last month he was officially named director of the TIFIA programme.