Eligible transit and transit-oriented developments will be able to tap into a popular low-cost federal loan program to cover nearly half of their project costs, the U.S. Department of Transportation said Tuesday.
The DOT’s initiative, which it’s calling TIFIA 49, allows eligible transit and TOD projects to tap Transportation Infrastructure Finance and Innovation Act loans for up to 49% of the project costs. That’s up from the traditional 33% cap.
The higher borrowing ceiling is already allowed under federal law but the DOT has traditionally kept the one-third ceiling for most projects.
The announcement Tuesday puts transit and TOD projects on par with others that have previously been eligible for the maximum 49%, including rural projects and some highly-rated projects that were not awarded under certain DOT grant programs due to limited resources.
“There are countless promising transportation projects with the potential to better connect people to housing, jobs, schools and more – but that never get off the ground because of a lack of financing,” Transportation Secretary Pete Buttigieg said in a statement. “Now, with TIFIA 49, we’ll be able to support more of them than ever, and lower costs for taxpayers.”
The American Public Transportation Association tweeted that it was “thrilled” with the DOT’s announcement and that it will advance more projects.
Enacted in 1998, the TIFIA program provides long-term, low-interest loans and other types of credit assistance for the construction of surface transportation projects. It’s directed at projects with regional or national significance and marginal credit quality and is meant to close funding gaps by attracting private investment or other non-federal funds.
Projects newly eligible for the 49% financing are those that will build or improve public transportation systems, TOD projects that are joint transit and non-transit developments, or projects located within walking distance of a transit facility.
TIFIA’s lure in part is its low interest rates, which are pegged to the Treasury rate, and because the loans are subordinate to other obligations and payment can be delayed until after completion.
The DOT has floated $38.4 billion of TIFIA loans that support more than $132 billion in infrastructure across the country.
TIFIA 49 is aimed at projects that cost at least $10 million, which is lower than the traditional $50 million price tag.
The application process — which some have criticized as taking too long — is the same as with traditional TIFIA loans.
TIFIA loans can also be used as a non-federal match for a separate grant.