1. Overview of the Department of Transportation’s Innovative Financing Solutions
Good morning and thank you for welcoming me to the Northeast Texas Transportation Summit, I am part of the Outreach and Development team with the U.S. Department of Transportation’s Build America Bureau
For those of you that are not familiar with who we are, we were established by the Secretary of Transportation on July 20, 2016, in accordance with the Fixing America’s Surface Transportation (FAST) Act.
The Bureau combines the TIFIA and RRIF credit programs, Private Activity Bonds (PABs), and eventually the INFRA and BUILD grant programs all under one roof within the Office of the Undersecretary for Transportation for Policy.
2018 Northeast Texas Transportation Summit 1

2. Session Objectives
Railroad Rehabilitation & Improvement Financing (RRIF)
Transportation Infrastructure Finance and Innovation Act (TIFIA)
TIFIA Rural Projects Initiative (RPI)
Private Activity Bonds (PABs)
BUILD Grants
INFRA Grants
In this session, we may not need the full hour allocated, but I would like to briefly discuss our grant and credit programs
BUILD formerly known as TIGER grants
INFRA formerly known as FASTlane grants
RRIF
TIFIA
and a new initiative that we’ve just launched under TIFIA called the Rural Projects Initiative (RPI)

3. About RRIF
The Railroad Rehabilitation & Improvement Financing (RRIF) program was established by the Transportation Equity Act for the 21st Century (TEA-21) and amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) to provide direct loans and loan guarantees totaling up to $35 billion to finance development of railroad infrastructure.

4. Interest rate on 10/31/2018 was 3.39% for a 30-year loan
RRIF Program Benefits
Long term, fixed interest, permanent, up-front financing
Funds are drawn as needed
Flexible amortization
No pre-payment penalty
Uses Treasury Rate
Current interest rate would depend on the term of the loan
Rates available at treasury.gov website
Low Interest Rate -
Interest rate on 10/31/2018 was 3.39% for a 30-year loan
Update interest rate

5. RRIF Major Requirements
No minimum project size requirements (we’ve closed RRIF loans from $55,000 to $2.5 billion)
Can finance up to 100% of reasonably anticipated eligible project costs
Borrower pays Credit Risk Premium
Borrower can often reduce costs by offering collateral
Terms can extend up to 35 years from substantial completion
Must comply with Federal requirements (NEPA, Buy America, etc.)
Project must have a dedicated revenue source, such as tolls or other user fees, that are pledged to secure debt service payments for RRIF financing

6. RRIF Eligible Borrowers and Projects
Railroads
State and Local Govs
Government sponsored authorities and corporations
Interstate compacts (410(a)) Amtrak Reform and Acc. Act of 1997
Limited option freight shippers
Joint Ventures
Design/planning
Freight Rail Facilities
Freight Transfer Facilities
FRA-Regulated Commuter Rail Facilities
Passenger Rail Vehicles and Equipment
Transit-Oriented Development
“Intermodal” or Rail Equipment or Facilities
Refinance of above
NO OPERATIONS!

7. RRIF Portfolio Statistics
Since program inception, RRIF has approved 37 loans to finance $5.36 billion towards infrastructure investments in 27 states.

8. About TIFIA
The Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) established a Federal credit program under the U.S. Department of Transportation (DOT) for eligible transportation projects.
Leverage limited Federal resources and stimulate capital market investment
Facilitate projects with significant public benefits
Encourage new revenue streams and private participation
Fill capital market gaps for secondary/subordinate capital
Be a flexible, “patient” investor willing to take on investor concerns about investment horizon, liquidity, predictability and risk
Limit Federal exposure by relying on market discipline

9. Interest rate on 10/31/2018 was 3.39% for a 35-year loan
TIFIA Major Benefits
Low Interest Rate -
Interest rate on 10/31/2018 was 3.39% for a 35-year loan
Long term, fixed cost,
permanent financing
Longer repayment periods
Up to 35 years
Deferred for 5 years following substantial completion
No prepayment penalty
Can be highly customized to meet borrower needs
Low interest rates

10. TIFIA Major Requirements
Minimum Anticipated Project Costs
$10 million for Local and Rural Projects
$15 million for Intelligent Transportation Projects
$50 million for all other eligible Surface Transportation Projects
Limited to 33% of reasonably anticipated eligible project costs (unless the sponsor provides a compelling justification for up to 49% or Rural Projects Initiative)
Investment Grade Rating
Senior debt must receive two investment grade ratings (BBB-/Baa3) from nationally recognized credit rating agencies
Only one investment grade rating is required from projects totaling $75 million or less
Dedicated Repayment Source
Pledged to secure both the TIFIA and senior debt financing
Comply with Federal requirements
Including but not limited to NEPA, Buy America, Titles 23 and 49

11. Eligible TIFIA Borrowers and Projects
ELIGIBLE BORROWERS
State Governments
Local Governments
State Infrastructure Banks
Private Firms
Special Authorities
Transportation Improvement Districts
ELIGIBLE PROJECTS
Highways and Bridges
Intelligent Transportation Systems
Intermodal Connectors
Transit Vehicles and Facilities
Intercity Buses and Facilities
Freight Transfer Facilities
Pedestrian and Bicycle Infrastructure Networks
Transit-Oriented Development
Rural Infrastructure Projects
Passenger Rail Vehicles and Facilities
Surface Transportation Elements of Port Projects
NO OPERATIONS!

12. TIFIA Portfolio Statistics
Since program inception, TIFIA has approved 80 loans totaling over $30 billion to stimulate over $108 billion of transportation infrastructure investments in 22 states (plus the District of Columbia and Puerto Rico).

13. Rural Projects Initiative
Rural project definition: Project located in an area that is outside of an urbanized area with a population less than 150,000 individuals
Project size: Total eligible project cost of $ million
Loan size: TIFIA can finance up to 49% of eligible project costs (traditionally TIFIA has financed up to 33%)
Loan term: Up to 35 years with potential for deferred repayment (up to five years after substantial completion
Interest rate: Fixed rate of ½ Treasury rate; on 10/31/18, 35-year rural rate was 1.7%
DOT’s advisory fees: Borrower fees may be covered by DOT
I would like to talk to you today about a new initiative we have at DOT. It is aimed at helping improve transportation infrastructure in America’s rural communities.
Rural communities frequently find it challenging to identify the financial resources required to fund critical infrastructure projects, which are key to improving the economy and the quality of life of all Americans. Without adequate roads, bridges, tunnels, freight and transit systems, we can’t access medical support, get to school and work, or even the grocery store – transportation is key to our livelihoods. For example, according to the Federal Highway Administration, roughly 40 percent of county roads are inadequate for current travel, and 38,000 rural bridges longer than 20 feet are structurally deficient.
The Department of Transportation’s Build America Bureau provides loans -in support of a variety of transportation projects across the Nation. However, they have primarily been tailored to larger projects , which typically help urbanized, metropolitan areas. Now, the Rural Project Initiative places an emphasis on rural America’s transportation needs and offers some significant benefits and savings to rural sponsors.
Under this initiative, if you are in a qualified rural area and have an eligible surface transportation project between $10 million and $75 million in cost, we can offer some significant savings. For example;
We can offer a fixed rate loan for 35 years or longer  
We can pay for all the application fees, which often amount to hundreds of thousands of dollars. The funds set aside for this purpose are limited and we can only do this while they last.
We can loan up to 49 percent of the project’s eligible costs.
We can charge a below market interest rate, which is equal to one half of the treasury rate at the time of closing. For example, a loan closed in early September, 2018 would have had an interest rate of slightly over 1 ½ percent.
Eligible projects include:
Roads, bridges and tunnels,
Transit systems such as buses and passenger rail vehicles and facilities, including bus and train station improvements,
Intermodal connectors,
Pedestrian and bicycle infrastructure,
Freight transfer facilities,
Sea and inland waterway ports, and even,
Airports - under certain circumstances.
It is important to note that Federal funding or financing triggers certain requirements that can add to the time required and increase project costs over non-Federally funded projects. The Build America Bureau staff can help sponsors understand and navigate these requirements.

14. Rural Projects Initiative
Rural project definition: Project located in an area that is outside of an urbanized area with a population greater than 150,000 individuals
Project size: Total eligible project cost of $10-75 million
Loan size: TIFIA can finance up to 49% of eligible project costs
Loan term: Up to 35 years with potential for deferred repayment (up to five years after substantial completion
Interest rate: Fixed rate of ½ Treasury rate; on 10/31/18, 35-year rural rate was 1.7%
DOT’s advisory fees: Borrower fees may be covered by DOT
Eligible projects: Airport projects must be eligible as TOD/public infrastructure projects or surface transportation projects that are eligible under Title 23 (Highways) or Title 49 (Transit)

15. Private Activity Bonds
The Secretary of Transportation is authorized to allocate $15 billion in Private Activity Bonds (PABs) for qualified highway or surface freight transfer facilities.
State or local government issues tax-exempt bonds on behalf of a private entity
Private entity/developer responsible for all PABs debt service
To date, over $11 billion of PABs have issued or allocated
Over $8.3 billion of PABs issued for 23 projects
Additional nearly $2.7 billion of PABs allocated for five projects
Can be used in alone or in combination with TIFIA or RRIF
Passage of the private activity bond legislation reflects the Federal Government's desire to increase private sector investment in U.S. transportation infrastructure.
Providing private developers and operators with access to tax-exempt interest rates lowers the cost of capital significantly, enhancing investment prospects.
Increasing the involvement of private investors in highway and freight projects generates new sources of money, ideas, and efficiency
The term “qualified highway or surface freight transfer facilities” means—
(A)any surface transportation project which receives Federal assistance under title 23, United States Code (as in effect on the date of the enactment of this subsection),
(B)any project for an international bridge or tunnel for which an international entity authorized under Federal or State law is responsible and which receives Federal assistance under title 23, United States Code (as so in effect), or
(C)any facility for the transfer of freight from truck to rail or rail to truck (including any temporary storage facilities directly related to such transfers) which receives Federal assistance under either title 23 or title 49, United States Code (as so in effect).
The law limits the total amount of such bonds to $15 billion and directs the Secretary of Transportation to allocate this amount among qualified facilities.
DOT accepts applications on a rolling basis.
The PABs team reviews the application, and can ask for additional information or clarification if appropriate.
Applications are ultimately brought before the Council on Credit and Finance for a recommendation to the Under Secretary.

16. BUILD Grants Better Utilizing Investments to Leverage Development Transportation Discretionary Grants Program
$1.5 billion multimodal, merit-based discretionary grant program, BUILD funding can support roads, bridges, transit, rail, ports or intermodal transportation.
Modal and geographic equity requirements
DOT intends to award a greater share of grants to projects in rural areas than in urban areas
$25 million max to a single project, $150 million maximum to a single state
The Better Utilizing Investments to Leverage Development, our BUILD grant program, replaced the pre-existing TIGER grants program.
BUILD is a discretionary grant program that provides investments in surface transportation infrastructure
Grants are provided on a competitive basis for projects that will have a significant local or regional impact
The application period for the most recent BUILD Notification of Funding Opportunity closed at 8pm on July 19, For this round of BUILD, $1.5 billion is available for investment in surface transportation projects. Of that, no more than $25 million can be awarded for a single project, and no more than $150 million can be awarded to a single state
BUILD transportation funds may cover up to 80 percent of project costs in urban areas and 100 percent of project costs in rural areas
We are in the process of reviewing the applications that were submitted and have a congressional deadline to get BUILD awards out by the end of this year
The next round of BUILD needs to be authorized as part of the FY 19 appropriations process before the Department can determine the timeframe of the next BUILD Notice Of Funding Opportunity

17. Infrastructure for Rebuilding America (INFRA)
Discretionary grant program authorized under the FAST Act through previously known as FASTLANE
INFRA program for highway, bridge, freight and intermodal projects, as well as railway-highway grade crossings.
Leveraging increased investment by state, local, and private partners.
At least 25% of funding reserved for rural projects (>200,000 pop.)
Providing project sponsors maximum flexibility to propose innovative solutions to address specific, local needs.
Next INFRA – expecting the next NOFO announced this Fall
Fiscal year
2016
2017
2018
2019
2020
Authorization
$800 M
$ 850 M
$ 900 M
$ 950 M
$1.00 B
The Department received 234 applications for $1.5 billion in FY17- FY18 INFRA funding.  Collectively, those applications were requesting nearly $12.3 billion.  26 projects were selected to receive an award
The INFRA program reserves 90% funding per fiscal year for large projects with costs in excess of $100 million.  20 large projects (out of 116 applications) were selected to receive approximately $1.45 billion
The INFRA program reserves 10% of funding per fiscal year for small projects with costs below $100 million.  Only 6 projects were selected (out of 118 applications) to receive approximately $82.5 million, a less than 5% selection rate.
(For this reason, Small projects should strongly consider applying for BUILD funding (deadline Thursday July 19), which, while there will be many more applications, will also has nearly 18 times the amount of funding available.)
Next INFRA rounds:
The Department has 2 more years of authorized funding for the INFRA program, FY 19 and FY 20, which are authorized at $950 million and $1 billion respectively.  The Department anticipates publishing the next NOFO sometime later this Fall