Are Major Changes in Store for the TIFIA Program?

The Senate and Environmental Public Works Committee unanimously voted to move its draft transportation authorization bill, known as Moving Ahead for Progress in the 21st Century (“MAP-21”), out of committee.   If enacted, MAP-21 would make significant changes to the current transportation reauthorization bill, SAFETEA-LU, including several important changes to the popular Transportation Infrastructure Finance Innovation Act (TIFIA) credit assistance program.  The TIFIA program aims to help advance expensive transportation projects by offering flexible credit assistance that encourages significant private investment to fill gaps in funding.

Here are five of the biggest changes MAP-21 proposes for the TIFIA program:

  • To meet the high demand for TIFIA credit assistance, the bill increases the budget authority for the TIFIA program from $122 million to $1 billion each year.  The $1 billion in annual budget authority has the potential to support approximately $20 billion in project.  At the same time, the bill also increases the maximum amount of TIFIA assistance from 33% to 49% of eligible project costs, meaning that states would be required to provide only 51% of the eligible project costs.
  • The bill eliminates all of the project selection criteria except for creditworthiness.  Currently, qualified projects are evaluated against eight statutory criteria including: creditworthiness, impact on the environment, significance to the national transportation system, and the extent to which the project generates economic benefits, leverages private capital, and promotes innovative technologies.  Elimination of virtually all of the TIFIA selection criteria represents a marked shift away from the Obama Administration’s push to use objective criteria in transportation decision-making.
  • The bill adopts a rolling application process, allowing qualified applicants to submit applications whenever they are ready.  The rolling application process would replace the current fixed-date application process, which offers the benefit of comparing multiple projects at once.  The combination of a rolling application process with the elimination of the TIFIA selection criteria framework could turn the TIFIA program into a first-come, first-serve free-for-all for TIFIA credit assistance.
  • The bill opens up the TIFIA program to rural communities.  Of the $1 billion in annual TIFIA budget authority, the bill sets aside $ 100 million for rural projects costing $25 million or more.   The bill also provides better interest rates for rural projects than for urban projects.
  • The bill defines the final maturity date of a secured loan to be the lesser of 35 years or the useful life of the capital asset.  Since many transit assets, such as buses and train cars, have useful lives less than 35 years, shortening the maturity date could lead to less favorable terms for such transit assets.

It remains to be seen what will come of the MAP-21 TIFIA proposal.  The bill still needs to pass the Senate Banking Committee and the Senate Finance Committee, not to mention a full Senate vote.  And there is no telling what direction the House will go.