Burdensome financing red tape slashed to save time and taxpayer money
WASHINGTON, D.C. - The U.S. Department of Transportation’s (USDOT) Build America Bureau (Bureau) today announced a policy update to the Transportation Infrastructure Finance and Innovation Act (TIFIA) credit program that will allow all types of transportation infrastructure projects to finance up to 49 percent of eligible costs as authorized by TIFIA legislation. Due to a long-standing DOT policy, only limited kinds of projects could finance up to 49 percent, while most were capped at up to 33 percent, presenting a roadblock for many project sponsors seeking to build critical infrastructure.
“Unleashing the full value of the TIFIA program represents another step forward in getting America building again,” said U.S. Transportation Secretary Sean P. Duffy. “It’s common sense to allow all eligible projects the same access to our low-interest financing opportunities. We are building infrastructure easier, quicker, and cheaper. This update is the result of extensive analysis, successful pilot programs, and listening to feedback from our partners.”
The Bureau’s TIFIA credit program provides flexible, long-term, low-interest loans that enable public and private project sponsors to accelerate the delivery of infrastructure at a lower financing cost and must be repaid using non-Federal funding. Allowable by statute since 2012, TIFIA loans could have financed up to 49 percent of reasonably anticipated eligible project costs; however, DOT continued its policy of limiting loans to up to 33 percent for most projects.
“The TIFIA loan program has proven to be a highly effective tool, supporting the delivery of more than $150 billion in infrastructure investment through over $52 billion in flexible, low-cost loans. This policy update will ensure the program remains available at full capacity to support our private and local partners,” said Build America Bureau Executive Director Morteza Farajian, Ph.D. “We’re very pleased to announce more progress in modernizing this critical financing program that has already helped so many communities get the infrastructure they want for less money. By removing unnecessary barriers after careful analysis, we’re helping to open the door for every type of project to receive the same benefits and level of support from this administration.”
To address customer feedback and increase the availability of higher percentage financings, under the first Trump administration, the Bureau began in 2018 to identify categorical eligibilities in addition to the project-by-project request approach. Analysis of years of program data showed that taxpayer exposure from TIFIA loans is minimal. As a result, the Bureau established several successful pilot programs to allow sponsors access to the higher financing maximum, including the TIFIA Rural Projects Initiative, and for certain transit and Transit-Oriented Development projects.
Further expansion of the option to finance up to 49 percent provides more projects with opportunities to expedite delivery and save significantly on financing costs, reducing the need for Federal grants or freeing up those grants to be used for other projects. The Bureau can also increase efficiency because the streamlined policy simplifies due diligence and underwriting processes, delivering more value for a similar level of work. At the same time, non-Federal investors will continue to share project costs and risks.