The U.S. Department of Transportation has amended its well-known Transportation Infrastructure Finance and Innovation Act program to clarify interest rates on its longest-term loans and to broaden eligibility for projects.
The new
The TIFIA program, established in 1998, provides credit assistance like low-interest loans for large, complex transportation infrastructure projects of regional and national significance. It aims to “fill market gaps and leverage substantial private co-investment through supplemental, subordinate investment in critical improvements to the nation’s transportation system,”
It’s a well-known program in the public-private partnership and infrastructure finance sectors, though some
“TIFIA is a huge credit program that a lot of infrastructure projects use,” said Steve T. Park, a co-leader of Ballard Spahr LLP’s P3/Infrastructure Group and a partner in the Public Finance Group. The firm recently published a
Among other things, the DOT’s new rules make clear the interest rate set for longer-term TIFIA loans, Park said. “As a general rule, clarity is good,” he said.
The new rule applies to any TIFIA loans with a final maturity date later than 35 years after substantial completion of the project and a loan term of more than 40 years. The new interest rate will be equal to State and Local Government Series, or SLGS, 30- to 40-year securities plus one basis point, plus an annual interest rate adjustment for years 40 through 100.
SLGS are special purpose securities that Treasury issues to state and local governments that issue tax-exempt debt to help them comply with yield restriction and arbitrage rebate provisions.
The DOT noted on the Federal Register that the America Public Transportation Association supports the interest rate rule, “but encourages DOT to increase transparency about the specific criteria a project would need to meet to qualify for a loan with a term longer than those authorized before the passage of the IIJA.”
The amendments also reduce TIFIA-eligible requirements so projects no longer have to be “included in or consistent with” a state’s transportation plan, as Ballard Spahr said.
The rules take effect June 24.