[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Proposed Rules]
[Page 3487-3508]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja09-32]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Part 180
Office of the Secretary
49 CFR Part 80
Federal Railroad Administration
49 CFR Part 261
Federal Transit Administration
49 CFR Part 640
Maritime Administration
49 CFR Part 1700
[Docket No. DOT-OST-2009-0004]
RIN 2105-AD70
Credit Assistance for Surface Transportation Projects
AGENCIES: Federal Highway Administration (FHWA), Federal Railroad
Administration (FRA), Federal Transit Administration (FTA), Maritime
Administration (MARAD), Office of the Secretary of Transportation
(OST), Department of Transportation (DOT).
ACTION: Notice of proposed rulemaking (NPRM); request for comments.
-----------------------------------------------------------------------
SUMMARY: Recent changes to the Transportation Infrastructure Finance
and Innovation Act (TIFIA) statute require changes in the TIFIA rule.
In addition, the DOT has gained substantial administrative experience
since the TIFIA rule was last amended in 2000. The DOT proposes to
amend the TIFIA rule to implement the recent statutory changes and to
incorporate certain other changes to the rule that it considers will
improve the efficiency of the program and its usefulness to borrowers.
In addition, the DOT seeks comment on policy issues with potentially
significant impact on the TIFIA project selection process.
DATES: Comments must be received on or before March 23, 2009.
ADDRESSES: Mail or hand deliver comments to the U.S. Department of
Transportation, Dockets Management Facility, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, or submit comments
electronically at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov, or fax comments to (202)
493-2251. Alternatively, comments may be submitted via the Federal
eRulemaking Portal at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov (follow the on-line
instructions for submitting comments). All comments should include the
docket number that appears in the heading of this document. All
comments received will be available for examination and copying at the
above address from 9 a.m. to 5 p.m., e.t., Monday through Friday,
except Federal holidays. Those desiring notification of receipt of
comments must include a self-addressed, stamped postcard or you may
print the acknowledgment page that appears after submitting comments
electronically. All comments received into any docket may be searched
in electronic format by the name of the individual submitting the
comment (or signing the comment, if submitted on behalf of an
association, business, labor union, etc.). Persons making comments may
review DOT's complete Privacy Act Statement in the Federal Register
published on April 11, 2000 (Volume 65, Number 70, Pages 19477-78), or
you may view the statement at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://dms.dot.gov.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Sullivan, TIFIA Joint Program
Office (202) 366-5785, or Mr. Steven Rochlis, Office of the Chief
Counsel (202) 366-1395, Federal Highway Administration; Mr. Michael
Bouril, Office of Budget (202) 366-4587, Mr. Jacob Falk, Office of
Policy (202) 366-
[[Page 3488]]
8165, or Mr. Terence Carlson, Office of the General Counsel (202) 366-
9152, Office of the Secretary, 1200 New Jersey Avenue, SE., Washington,
DC 20590. Office hours for the FHWA are from 7:45 a.m. to 4:15 p.m.,
e.t., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access and Filing
You may submit or retrieve comments online through the Federal
eRulemaking portal at: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. The Web site is
available 24 hours each day, 365 days each year. Electronic submission
and retrieval help and guidelines are available under the help section
of the Web site.
An electronic copy of this document may also be downloaded from
Office of the Federal Register's home page at: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.archives.gov/federal_register and the Government Printing Office's Web page at:
http://www.gpoaccess.gov/.
Background
TIFIA was enacted in 1998 as part of the Transportation Equity Act
for the 21st Century (TEA-21) (Pub. L. 105-178, June 1998). TIFIA
established a new Federal credit program under which the DOT may
provide credit assistance to surface transportation investments of
regional or national significance. To be selected for TIFIA assistance,
projects must meet a number of statutorily specified criteria. As
funding for this program is limited, projects obtaining assistance
under the TIFIA program may be selected on a competitive basis. In
1999, the DOT promulgated a rule implementing TIFIA (64 FR 29742, June
2, 1999), and in 2000 amended the rule (65 FR 44936, July 19, 2000). In
2005, Congress enacted the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. L.
109-59, Aug. 10, 2005), which made a number of amendments to TIFIA. The
DOT proposes to amend the TIFIA rule to implement the changes required
by the SAFETEA-LU amendments and to incorporate a number of
programmatic features that the DOT considers, based on its experience
gained administering the program since the rule was last amended, would
improve TIFIA.
In enacting the original TIFIA legislation, Congress found that ``a
well-developed system of transportation infrastructure is critical'' to
the nation's economy, and it sought to ``attract new investment
capital'' to transportation infrastructure projects. Congress further
found that TIFIA could fill ``market gaps,'' thereby leveraging
additional capital from the private markets: ``a Federal credit program
for projects of national significance can complement existing funding
resources by filling market gaps, thereby leveraging substantial
private co-investment.'' Based on this initial guidance from Congress,
the DOT has viewed TIFIA as a means for the Federal Government to
attract more private investment capital, to accelerate investment, to
encourage a greater cost-beneficial approach to transportation
infrastructure investments, and to more efficiently utilize
infrastructure once constructed.
This NPRM proposes to amend and partially restate the existing
rule; it includes both proposed substantive changes and proposed
changes of an editorial, clarifying, or organizational nature. Proposed
substantive changes include both those mandated by SAFETEA-LU and those
determined by the DOT, based upon several years of administrative
experience with the TIFIA program, to improve the program. The DOT
seeks comments particularly on proposed changes in the latter category.
The proposed rule would amend the current TIFIA rule to incorporate
changes made by SAFETEA-LU to the TIFIA statute. Major changes of this
nature include a reduction in the minimum project size eligible for
TIFIA assistance and a broadening of the categories of projects
eligible to permit TIFIA assistance for private rail facilities
providing public benefit to highway users, and surface transportation
infrastructure modifications necessary to facilitate direct intermodal
transfer and access into and out of a port terminal. Further changes to
conform the rule to the statute would limit the amount of TIFIA
assistance in certain instances to the amount of the senior project
obligations, conform the interest rate setting mechanism for the line
of credit to that for secured loans, and eliminate the annual 20
percent cap on line of credit draws.
In the nature of non-statutory administrative improvements, we
propose changing the way the DOT will use the term sheet in TIFIA
transactions and in how we will apply the TIFIA statute's eight
selection criteria. For example, with regard to the selection criteria,
the DOT proposes to change ``creditworthiness'' to pass/fail and then
reallocate weights for the other seven statutory criteria.
In addition, we propose to reorganize the existing rule to make it
more understandable to users. The reorganized rule would generally
follow the steps a potential TIFIA user might follow in evaluating the
program and applying for assistance.
While the request for comments applies to the entire NPRM, the DOT
seeks specific feedback on several key issues noted below.
In order to accommodate emerging financing scenarios using TIFIA's
refinancing authority, DOT is seeking comments on the proposed
definitions of ``refinance,'' the ``maturity date'' (both defined in
section 80.3) associated with a refinancing, and DOT's proposed
refinancing procedures (section 80.23), which would require the
participation of a guaranteed lender receiving a TIFIA loan guarantee.
To facilitate the financing of projects that may result in
significant lease payments or concession fees to a public entity, the
proposed rule would clarify that such payments can be considered
eligible project costs for the purpose of establishing the maximum
amount of TIFIA credit assistance. Several provisons would apply: (1)
Such payments must represent a fair market value of the asset acquired,
(2) the proceeds of such payments must be dedicated to transportation
projects eligible under title 23 or chapter 53 of title 49, United
States Code, and (3) such payments must be part of a project in which
new capital costs constitute a significant portion of project costs. In
other words, the concession fee cannot comprise the only eligible
project cost, as in a transaction seeking only to monetize an existing
asset. To implement this policy, the DOT proposes to limit its
consideration of such payments to no more than 25 percent of total
eligible project costs.
To improve its internal credit analysis and capital allocation
process, the proposed rule would require (see section 80.11) each
applicant and borrower to provide a preliminary rating opinion letter
and final investment-grade rating from at least two rating agencies.
Finally, the DOT seeks comment on two additional policy issues with
potentially significant impact on the TIFIA project selection process.
These two issues are described immediately below.
Use of Benefit-Cost Analysis in Selecting Projects for TIFIA Assistance
In the years since TIFIA was enacted, borrowers have made use of
the legislation's inherent flexibility to accelerate creditworthy,
public-private projects of regional or national significance. The DOT
believes that TIFIA should be targeted to projects where the present
value of benefits to the public that result from project completion
exceed the costs of delivering the project, and that TIFIA be
[[Page 3489]]
targeted to advance user-financed projects instead of projects that
rely solely or predominantly on grant assistance. Supporting large-
scale projects that eliminate or reduce reliance on Federal grant
assistance allows the States to target grant assistance on projects
that cannot otherwise be financed.
The National Surface Transportation Policy and Revenue Study
Commission (Transportation for Tomorrow, 2008), the Government
Accountability Office (GAO-04-744, 2004; GAO-05-172, 2005; GAO-08-744T,
2008), the U.S. Department of Transportation (Refocus. Reform. Renew. A
New Transportation Approach in America, 2008), the Brookings
Institution (A Bridge to Somewhere, 2008) and other organizations have
recommended greater use of benefit-cost analysis (BCA) to maximize the
rate of return on Federal funds invested in transportation projects.
These recommendations are primarily directed at State and municipal
project selection, where application of BCA is currently limited. The
Federal Transit Administration and the Federal Aviation Administration
already require the use of BCA or similar economic analysis for
projects with large capital costs that are subject to Federal funding
discretion.
Benefit-cost analysis is conducted by assigning monetary values to
benefits (e.g., travel time saving) and costs, discounting future
benefits and costs using an appropriate discount rate, and then
comparing the sum total of discounted benefits to the sum total of
discounted costs. Discounting benefits and costs transforms gains and
losses occurring in different time periods to a common unit of
measurement in the form of present day dollars. The organizations cited
above recognize that BCA is a useful tool to help decision-makers
identify projects with the greatest net benefits relative to invested
public resources. In particular, the systematic process of BCA helps
decision-makers organize information about, and determine trade-offs
between, alternative transportation investments.
The DOT has responsibility under Executive Order 12893, Principles
for Federal Infrastructure Investments, 59 FR 4233, to evaluate its
programs using BCA. This requirement has not been construed to apply to
individual investments made by States of formula funds, but is deemed
to apply to overall programs and to discretionary Federal commitments
of budget authority to individual projects. The DOT is considering a
requirement that TIFIA applicants conduct BCA on their projects. These
analyses would inform Federal decisions to provide TIFIA support to
individual projects and would also enable the DOT to establish the
cost-beneficial status of the overall TIFIA program, thereby providing
a basis for future funding requests. The application of BCA to support
TIFIA decisions would be subject to guidance in the Office of
Management and Budget's Circular A-94, Revised, SUBJECT: Guidelines and
Discount Rates for Benefit-Cost Analysis of Federal Programs \1\, and
would follow other guidelines incorporated into the TIFIA application
process.
---------------------------------------------------------------------------
\1\ http;//http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.whitehouse.gov/omb/circulars/a094/a094.html.
---------------------------------------------------------------------------
[cir] The DOT therefore requests comment on the following options
for applying BCA to TIFIA applications:
[cir] Require BCA as a threshold condition for TIFIA consideration.
Under this option, projects must have public benefits that exceed their
costs by a sufficient threshold level. The DOT seeks comment on the
application of a threshold in general as well as the appropriate
minimum sufficient ratio of benefits divided by costs that projects
should be expected to demonstrate; or
[cir] Use BCA results to help prioritize projects for TIFIA
selection by translating the existing TIFIA selection criteria into
monetary values for purposes of project comparison, while eliminating
criteria weights. For instance, BCA results could be used to assess the
costs and benefits related to the project's ``regional or national
significance'', proposed in this rule as the highest weighted criteria.
Comments are also requested on how this approach might best be applied
to other criteria that do not readily lend themselves to such
monetization.
Interest Rate Policy
OMB Circular A-129, Policies for Federal Credit Programs and Non-
tax Receivables \2\, states that Federal agencies with credit programs
should establish interest and fee structures for direct loans and loan
guarantees and should review these structures at least annually. In
administering the TIFIA program, the DOT has set the rate, in all
transactions to date, regardless of the perceived credit quality of the
loan, at the minimum level allowed by the TIFIA statute: The rate on
United States Treasury securities of a similar maturity as the loan.
---------------------------------------------------------------------------
\2\ http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.whitehouse.gov/omb/circulars/a129/a129rev.html.
---------------------------------------------------------------------------
OMB Circular A-129 states that interest and fees should be set at
levels that minimize default and other subsidy costs of the direct loan
or loan guarantee, while supporting achievement of the program's policy
objectives. The OMB guidance goes on to state that, unless inconsistent
with program purposes, riskier borrowers should be charged more than
those who pose less risk.
The DOT seeks comment regarding the use of its authority to offer
different rates to different borrowers. For instance, the DOT could use
the selection criteria, including benefit cost analysis, to weight
applications by the social return to the public, consistent with
Federal credit policies and TIFIA programmatic goals. Those projects
with higher scores would receive the lower interest rates. Credit risk
should also be factored into final interest rate determinations.
Alternatively, some form of competitive loan pricing such as a reverse
auction could be used to allocate TIFIA's subsidized credit assistance
in a manner that maximizes social returns while protecting the
government's interests.
Section-by-Section Discussion of the Proposed Changes
Section 80.1 Purpose
The purpose of the proposed rule is to implement the TIFIA statute.
Readers should refer to the statute as well as the rule for a complete
understanding of the TIFIA program.
Section 80.3 Definitions
Definitions in the proposed rule generally follow the statutory
definitions. Two exceptions are the proposed definitions for
``guaranteed lender,'' which would replace the statutory ``lender,''
and ``borrower,'' which would replace the statutory ``obligor''; the
DOT believes both of these proposed changes would enhance the rule's
clarity and more closely conform the regulatory language to industry
convention.
Other proposed changes to the definitions in the current rule and
matters on which the DOT seeks comment include:
``Borrower'': For the definition of the newly defined term
``borrower,'' we propose to use the current rule's definition of
``obligor,'' which definition closely follows the language in the TIFIA
statute's definition of ``obligor.'' Additionally, we clarify that only
non-Federal entities are eligible borrowers.
``Conditional term sheet'': We propose to eliminate this definition
in light of our proposed change in the use of the defined term ``term
sheet,'' which proposed change is discussed in detail below in this
section under the heading ``Term sheet.''
[[Page 3490]]
``Current credit evaluation'': We propose to add a definition of
current credit evaluation and provide clarification related to project
monitoring requirements.
``Eligible project costs'': We propose to add to the definition of
``eligible project costs'' explicit language implementing current
Federal law excluding from eligibility certain project costs incurred
prior to environmental clearance. (See 23 CFR 771.113). The proposed
definition clarifies the eligibility of costs during construction
associated with the operations of a special purpose entity formed
solely to construct and operate the facility, in an amount not to
exceed 5 percent of total eligible project costs (see 80.25,
Limitations of Federal credit assistance). The proposed definition
clarifies the eligibility of concession payments made to a government
agency by a non-governmental concessionaire for the lease acquisition
and right to operate a transportation facility, provided that the
concessionaire and the State ensure that payments associated with lease
acquisition represent fair market value and are dedicated to
transportation projects eligible under title 23 or chapter 53 of title
49, United States Code (see 80.25, Limitations on Federal credit
assistance). In addition, lease acquisition payments must be part of a
project in which new capital costs constitute a significant portion of
project costs. In other words, the concession payment, in and of
itself, does not comprise an eligible project cost. In order to
implement this policy, the DOT proposes to limit such payments to 25
percent of total eligible project costs and seeks public comment on
this proposal. Further, the definition is expanded to include
specifically the costs associated with refinancing long-term project
obligations under 23 U.S.C. 603(a)(1)(C). In the case of a refinancing,
eligible project costs must be consistent with eligible project costs
for any TIFIA project. In the case of a refinancing, existing debt
would be considered an eligible project cost. Eligible project costs
must also be consistent with the Federal cost principles applicable to
the borrower: 2 CFR Part 225 (OMB Circular A-87 (State and local
governments)), 2 CFR Part 230 (OMB Circular A-122 (non-profit
organizations)), or 48 CFR Part 31 (commercial organizations). Lobbying
costs would continue to be excluded under existing law. (See 31 U.S.C.
1352, 2 CFR Part 225, App. B, 2 CFR Part 230, App. B, 48 CFR 31.205-22,
and 49 CFR 20.100.)
``Guaranteed lender'': The proposed definition is identical to the
current rule's, and to the TIFIA statute's, definition of ``lender.''
Applicants should note that the limitations the TIFIA statute imposes
on the types of institutions which may qualify to be a ``guaranteed
lender'' do not affect or limit who may hold project obligations.
``Investment-grade rating'': The proposed definition recognizes
that some projects receiving TIFIA assistance, particularly those with
private developers using bank financing rather than capital markets
debt, may not have a public rating, and it makes clear that, although
the investment-grade rating requirement still is imposed, the actual
rating would not need to be published. The proposed definition also
recognizes rating terminology used by rating agencies that have become
identified by the Securities and Exchange Commission (SEC) as
Nationally Recognized Statistical Rating Organizations (NRSROs) since
the TIFIA rule was last published. The SEC engaged in a rulemaking,
pursuant to the Credit Rating Agency Reform Act of 2006,\3\ which
modified the regulatory treatment of NRSROs.\4\ The TIFIA statute
relies on the SEC's determination of qualifications for NRSROs,
irrespective of the regulatory regime the SEC uses for making such
determination.
---------------------------------------------------------------------------
\3\ Public Law 109-291 (Sept. 29, 2006).
\4\ The Credit Rating Agency Reform Act of 2006 mandated that
firms desiring to be NRSROs register with the SEC and become subject
to certain record-keeping and financial reporting requirements. The
SEC's Final Rule implementing the Credit Agency Reform Act of 2006
is found at 72 FR 33564 (June 8, 2007). See 17 CFR 240.17g-1 through
240.17g-6.
---------------------------------------------------------------------------
``Local servicer'': The DOT services the TIFIA loan portfolio
centrally and does not expect ever to use local servicers for TIFIA
loans. In response, Congress eliminated the definition of ``local
servicer'' from the TIFIA statute and further expressed its intent that
TIFIA loan servicing should be managed by a single entity \5\;
therefore, we propose to eliminate the definition of local servicer
from the rule.
---------------------------------------------------------------------------
\5\ House of Representatives Report 109-203 (2005), p. 874.
---------------------------------------------------------------------------
``Maturity date'': The proposed definition recognizes that tying
scheduled loan repayments to the date of substantial completion is not
appropriate for credit assistance used to refinance long-term project
obligations under 23 U.S.C. 603(a)(1)(C). Therefore, the proposed
definition establishes the final maturity date for repayment of credit
assistance used for refinancing purposes as the lesser of not later
than 35 years after the date the credit agreement is executed, or the
useful life of the overall asset.
``Project'': The proposed rule would expand the current rule's
definition to reflect the expanded definition contained in 23 U.S.C.
601(a)(8). In accordance with the SAFETEA-LU amendments, the proposed
rule would permit TIFIA assistance for private freight-related rail
facilities that serve a public benefit for highway users, which the
proposed rule defines as the direct freight interchange between highway
and rail carriers. In further accordance with the SAFETEA-LU
amendments, the proposed rule would make eligible a group of such
freight-related projects (e.g., bridge clearances throughout a rail
corridor, traffic projects to improve port access) each of which
separately might not be large enough to meet the threshold
requirements, and surface transportation infrastructure improvements
(e.g., road, rail, gate, equipment) necessary to facilitate direct
intermodal transfer and access into and out of a port terminal.
``Project obligation'': We propose to interpret the statutory
definition contained in 23 U.S.C. 601(a)(9) to include a ``loan'' to
make clear that a bank loan or other private debt, and not just capital
markets debt, can be a ``project obligation'' for purposes of the TIFIA
program. With private entities now more frequently seeking TIFIA
assistance, the DOT is sometimes presented with plans of finance
relying on bank debt rather than capital markets debt for some or all
of the non-TIFIA portion of the financing. Adding ``loan'' to the
definition would make clear that in such financings bank debt would be
treated as a project obligation. This is not intended to add any new
forms of debt not currently available; rather it is intended to reflect
TIFIA's participation in bank financings.
``Project sponsor'': The DOT believes that this definition no
longer adequately characterizes those seeking or using TIFIA credit
assistance. Generally, such an entity can be characterized as either an
applicant or a borrower. If a public agency submits an application on
behalf of multiple competing concessionaires, it can be characterized
as an applicant. Therefore, we propose to eliminate this definition
from the regulation.
``Rating agency'': The proposed definition diverges from the
statute only in its substitution of the word ``organization'' for the
words ``rating agency'' in order to eliminate the statutory language's
circularity.
``Refinance'': The TIFIA statute at 23 U.S.C. 603(a)(1)(c) uses
``refinance'' without defining the term; the DOT proffers a defined
term. The proposed definition permits Borrowers to pay off existing
project obligations and any
[[Page 3491]]
TIFIA credit assistance owed by the Borrower with funds acquired by the
same Borrower (or its successor) through the creation of new project
obligations and TIFIA credit assistance.
``Subsidy cost'': The DOT proposes to change the defined term from
``subsidy amount'' to ``subsidy cost'' to reflect Federal credit
terminology.
``Substantial completion'': At 23 U.S.C. 601(a)(14), the TIFIA
statute defines this term to be ``the opening of a project.'' The DOT
believes that the statute's bare simplicity does not, in practice,
always provide clear guidance, and that the Secretary has discretion to
define, for a particular project, the circumstances constituting
``substantial completion.'' The current rule recognizes that
discretion. Since publication of the current rule, the DOT has often,
in individual TIFIA credit agreements, found it useful for both the DOT
and the borrower to state explicitly in the credit agreement the
precise circumstances the occurrence of which would constitute
``substantial completion.'' The proposed definition would continue to
incorporate, with clarifying language changes, this beneficial use of
Secretarial discretion.
``Term sheet'': The proposed change in the definition of ``term
sheet'' reflects a significant change in the procedure the DOT would
use for entering into TIFIA agreements with borrowers. The term sheet
would no longer be executed by both parties, but only by the DOT, and
it would no longer serve as the instrument that the DOT uses to
obligate Federal funds. The term sheet provides a transactional
blueprint between the DOT and the borrower for the purposes of
developing the credit agreement. The term sheet is subject to
cancellation at any time for any reason at the discretion of the
Secretary. Through this proposed administrative change, the DOT would
create a single point--the execution of a credit agreement--when funds
would be obligated.
Section 80.5 Federal Requirements
The current rule enumerates several specific Federal requirements
set out in the TIFIA statute to which TIFIA funds are subject and adds
to that list such other ``requirements as applicable.'' While carrying
forward the statutorily specified requirements, the proposed rule would
clarify the latter provision by providing that any such additional
requirements would be imposed by Secretarial determination of
applicability to a particular project. Each project would adhere to the
requirements associated with the relevant DOT administration's grant
program. For example, under the Federal-aid highway program, most
construction-related requirements apply only to those highway segments
constructed with Federal assistance. A segment constructed without
Federal assistance is not subject to these construction requirements.
Because many TIFIA projects combine Federal grant and TIFIA assistance,
adhering to the associated grant program requirements provides
administrative efficiencies to the borrower and the relevant DOT
administration.
Section 80.7 Threshold Criteria for TIFIA Projects
Eligibility for TIFIA financial assistance requires that the
project satisfies the applicable planning and programming requirements
of 23 U.S.C. 134 and 135 at the time an agreement to make available a
Federal credit instrument is entered into. 23 U.S.C. 602(a)(1).\6\
Prior to the SAFETEA-LU amendments, eligibility required specifically
that the project be included in an approved State Transportation
Improvement Program (STIP) at the time an agreement to make available a
Federal credit instrument was entered into.\7\ The NPRM proposes to
conform the current threshold eligibility criteria for projects to
changes mandated by the SAFETEA-LU amendments.
---------------------------------------------------------------------------
\6\ ``To be eligible to receive financial assistance under this
chapter, a project shall meet the following criteria: Inclusion in
transportation plans and programs.--The project shall satisfy the
applicable planning and programming requirements of sections 134 and
135 at such time as an agreement to make available a Federal credit
instrument is entered into under this chapter.'' 23 U.S.C 602(a)(1).
\7\ ``The project--(A) shall be included in the State
transportation plan required under section 135; and (B) at such time
as an agreement to make available a Federal credit instrument is
entered into under this chapter, shall be included in the approved
State transportation improvement program required under section
134.'' Public Law 109-59, Sec. 1601(b)(1).
---------------------------------------------------------------------------
The STIP is a multi-year \8\, statewide listing of all
transportation projects proposed for funding--Federal, State, and
local. It must include all federally supported transportation
expenditures within the State. 23 U.S.C. 123(g)(4)(A). Thus, a project
funded by TIFIA financial assistance must be included in the STIP when
an agreement to make available a Federal credit instrument is entered.
---------------------------------------------------------------------------
\8\ Each State must develop a STIP that covers a period of 4
years and is updated at least every 4 years. 23 U.S.C. 135(g)(1).
---------------------------------------------------------------------------
Congress was apparently concerned that this requirement could be
misinterpreted to constrain TIFIA assistance in the case of a project
with a construction timetable that extended beyond the typical four-
year approved STIP.\9\ We note that construction timetables for a
project are not limited to the time horizon of a STIP; and multi-phase,
large scale projects often appear on updated STIPs. There may be
circumstances where the Department, on a case-by-case basis, should
exercise the discretion to determine the applicable planning and
programming requirements that apply to a TIFIA project at the time a
credit assistance agreement is entered into, and we interpret the
SAFETEA-LU amendments as providing this discretionary authority.
---------------------------------------------------------------------------
\9\ While the House Bill does not make any change in threshold
criteria, the Senate Bill says: ``The change * * * clarifies the
provision regarding statewide and metropolitan planning
requirements. The existing provision contained language that could
be misinterpreted to constrain TIFIA assistance in the case of a
project with a construction timetable that extended beyond the
typical three-year approved State Transportation Improvement Program
(STIP).'' H. Rept. 109-203 (July 28, 2005) at H. 7458. The
Conference Substitute accepts the Senate amendment without
additional clarification: ``Subsection (b) amends Section 182 of
title 23 to clarify the requirements regarding statewide and
metropolitan planning.'' Id. at H. 7459.
---------------------------------------------------------------------------
The new provisions, mandated by the SAFETEA-LU amendments, would
permit smaller projects to participate in the TIFIA program. SAFETEA-LU
provided that the minimum size for TIFIA projects is $50 million or
one-third of a State's apportionment of Federal-aid funds, whichever is
less; SAFETEA-LU also provided that the minimum size for TIFIA projects
principally involving the installation of an intelligent transportation
system is $15 million.\10\ The proposed rule would amend the current
TIFIA rule to implement these new, lower minimum size thresholds, as
applicable.
---------------------------------------------------------------------------
\10\ 23 U.S.C. 602(a)(3).
---------------------------------------------------------------------------
The NPRM also proposes to amend the current rule to elaborate on
the statutory language with respect to security to make clear that the
term ``dedicated revenue sources'' encompasses not just user fees, but
also taxes pledged to secure the TIFIA instrument. The standard by
which taxes are deemed pledged is the same as for any revenue pledged
to secure the TIFIA loan, i.e., the legal and commercial terms of the
credit agreement. The proposed rule essentially would retain the
provision of the current rule under sections 80.13(a)(4) and 80.13(c)
permitting use of general obligation pledges or general corporate
promissory pledges as security or ``collateral'' for TIFIA credit
assistance. The policy of the Department, however, is that preference
will be given to user financed projects. The proposed rule would
continue the
[[Page 3492]]
current rule's bar against securing a TIFIA instrument with a pledge of
Federal funds from any source, including Federal-aid reimbursements.
Section 80.9 Application Process
The NPRM proposes to re-organize the existing rule's various
provisions relating to the TIFIA application and provides greater
detail than the current rule about the application process.
The NPRM proposes that, prior to submission of the TIFIA
application, the applicant must have submitted a letter of interest
satisfactory to the DOT. Although applications would be accepted only
during prescribed periods, the DOT would continue to accept letters of
interest at any time.
The NPRM maintains the current rule's requirement for the DOT to
publish an annual Federal Register notice to solicit applications for
credit assistance. In maintaining this provision, the DOT intends to
return to the practice of specifying timeframes during which it will
accept TIFIA applications. This use of application cycles will help DOT
manage the TIFIA project pipeline and enable consistent use of the
TIFIA selection criteria. This marks a departure from DOT practice
since 2001 of accepting applications at any time during the year.
The NPRM proposes to add a requirement that an applicant must
submit with its application a working model of the project's
comprehensive plan of finance. The DOT's current practice is to ask
applicants to submit such models. As many applicants consider such
models proprietary in nature, the DOT has not publicly disclosed them,
and the DOT will continue to treat them as confidential commercial
information. Applicants should prominently mark the model as
confidential and proprietary information. Having access to the models
has greatly enhanced the ability of the DOT and its financial advisors
to analyze and understand the plans of finance for which TIFIA
assistance is sought. The DOT believes that requiring applicants to
include models with their application is necessary to evaluate
applications, and will ensure our continued ability to conduct
appropriate analysis of plans of finance for proposed TIFIA projects.
The proposed rule would make clear that the preliminary rating
opinion letters must be submitted with the application. The NPRM also
proposes to include a provision that the Secretary may request such
additional information as necessary to determine whether TIFIA
assistance should be provided.
Section 80.11 Preliminary Rating Opinion Letter and Investment-Grade
Rating
We propose to add a requirement that each applicant and borrower
obtain a preliminary rating opinion letter and subsequent investment-
grade rating from at least two rating agencies, and seek public comment
on this proposal.
We propose to add a requirement that the preliminary rating opinion
letters and the subsequent ratings address the credit quality of the
TIFIA instrument; i.e., the preliminary rating opinion letter must
address the likely rating category of the TIFIA instrument, and the
borrower must obtain a rating for the TIFIA instrument when it obtains
the investment-grade rating for the project obligations. The DOT
already draws substantially on the credit analysis work of the rating
agencies, and this requirement would assist the internal capital
allocation process that results in a subsidy cost estimate for each
TIFIA transaction.
To provide flexibility for a governmental agency seeking to make
TIFIA assistance available to multiple potential borrowers as part of
its solicitation of a private concession, the DOT is proposing to
require submission of the credit ratings at a later stage in the
process. In such an instance, the governmental agency must submit a
TIFIA application that addresses the seven statutory criteria, and the
selected concessionaire must provide the preliminary rating opinion
letters with its submission of the project's finance plan.
The proposed rule would make clear that all debt senior to the
TIFIA instrument must receive an investment-grade rating, not just the
senior project obligations. While the DOT accepts multi-lien debt
structures, it believes that a non-investment-grade lien senior to the
TIFIA lien would not comport with the legislative intent underlying the
investment-grade rating requirement. Thus, the DOT considers this
proposed change a clarification of the TIFIA statute's requirement.
The proposed rule would require that the borrower deliver final
ratings, and other such evidence related to the most current project
financial plan upon which the rating evidence is based, to the DOT at
least two weeks before the credit agreement closing in order to give
the DOT adequate time to analyze any credit issues those ratings
identify. This requirement will be restated in the project term sheet.
The DOT believes that implicit in the statute's investment-grade
rating provision is a requirement that the TIFIA instrument itself
attain an investment-grade rating if there are no project obligations
senior to the TIFIA instrument. The statute, at 23 U.S.C. 602(b)(2)(B),
imposes such a requirement with respect to the preliminary rating
opinion letter. The proposed rule would make that requirement explicit
for both the preliminary rating opinion letter and the investment-grade
rating.
The proposed rule would elaborate and clarify the current rule's
specification that all TIFIA program credit rating requirements pertain
to ``underlying'' ratings.
Section 80.13 Selection Criteria for TIFIA Projects
As noted above, the DOT seeks comment on potential methods of
incorporating benefit-cost analysis into the project selection process.
The statute prescribes eight criteria for project evaluation,
without specifying any relative weighting or whether any of the
criteria is mandatory. The current rule assigns weights, ranging from 5
percent to 20 percent, to each of the 8 statutory criteria. In the
past, the DOT has assigned scores on a scale of zero to four to each of
the eight criteria for all projects for which it has received
applications and then weighted those scores to arrive at a composite
score.
The NPRM proposes to make several important changes to this
framework: First, a project's ``creditworthiness'' would now be
evaluated separately. For every TIFIA project, the DOT analyzes the
project economics and legal provisions supporting the Government's
credit security. This analysis is fundamentally important and should be
treated separately from the other seven statutory criteria. The
proposed rule would make creditworthiness a requirement. In order for a
project to be selected for TIFIA assistance under the proposed rule,
the Secretary must determine that it is creditworthy. This proposed
requirement that a project must be determined to be creditworthy does
not mean that a project's TIFIA instrument, if subordinated to project
obligations which are investment-grade itself, would be required to be
investment-grade. Guidelines on how DOT will evaluate and determine
creditworthiness will be published and updated regularly in the TIFIA
program guidance.
In addition, should project selection and ranking continue to
consist of a weighted scoring of statutory criteria, the DOT proposes
to realign the weights assigned to the remaining seven criteria to
match national transportation
[[Page 3493]]
policies and the goals of reducing congestion and improving system
performance. Because creditworthiness would be evaluated separately,
the weights attached to these criteria would be changed so that the
seven weightings, as revised, would total 100 percent. The DOT retains
the discretion not to advance projects that rate low in these seven
criteria even if the project is creditworthy.
Under the current rule, the extent to which a project is nationally
and regionally significant is weighted at 20 percent of the total
score, and is scored based on the extent to which a project generates
economic benefits, supports international commerce, or otherwise
enhances the national transportation system. The proposed change would
increase the weight to 40 percent and reorganize the evaluation factors
by creating 2 subcategories, and assigning each subcategory a
percentage of the total weight for this criterion. Under the proposed
revision, national and regional significance would be assessed based
on: (A) The ability of a project to enhance the national or regional
transportation system by reducing congestion and improving overall
system performance on a sustainable basis (30 percent), and (B) the
extent to which the project generates economic benefits beyond those
captured under (A) and furthers interstate or international commerce
(10 percent).
To accommodate the increased emphasis on national and regional
significance, the DOT proposes to reassign the weights given to the
following criteria: Likelihood that Federal credit assistance would
enable the project to proceed at an earlier date than the project would
otherwise be able to proceed (5 percent; currently 12.5 percent);
extent to which the project helps maintain or protect the environment
(10 percent; currently 20 percent); extent to which the project uses
new technologies (10 percent; currently 5 percent); and amount of
budget authority required to fund the Federal credit instrument made
available (10 percent; currently 5 percent). The DOT proposes to
evaluate the budget authority criterion by measuring the amount of
TIFIA budget authority required to fund the Federal credit instrument
relative to the total project investment.
Weights for the remaining two criteria--private participation (20
percent) and reduced Federal grant assistance (5 percent)--would remain
as under the current rule.
The proposed rule would clarify the DOT's preference for
applications for TIFIA loan guarantees over applications for secured
loans and lines of credit. Such a preference is in accordance with
Federal credit policies, as expressed in OMB Circular A-129, and is
further reflected in proposed section 80.23(d)(6) below concerning
refinancing of existing debt. The DOT seeks comments on how to increase
the participation of private sector lenders in providing guaranteed
loans consistent with the TIFIA statute and government-wide credit
policy.
Section 80.15 Term Sheet
We propose to add a new section on term sheets that would make
significant changes in how the DOT uses the TIFIA program term sheet
and in how we obligate Federal funds for TIFIA projects.
Currently, the term sheet is a letter contract between the DOT and
the borrower, and the DOT uses it to obligate budget authority. The DOT
proposes to streamline loan administration and use the term sheet as an
expression of the DOT's intent to proceed to negotiation of a credit
agreement with the borrower. Budget authority would be obligated at the
time the credit agreement is executed rather than, as is the current
practice, at the time the term sheet is executed.
Because the term sheet would no longer be used to obligate current
year budget authority, we propose to eliminate the ``conditional term
sheet'' provided for in the current rule. To aid budgetary planning,
the DOT may issue future-year term sheets which, like current-year term
sheets, also would be cancellable at any time by the DOT at its own
discretion.
Section 80.17 Interest Rate on Federal Credit Instruments
The proposed rule contains language that would implement the TIFIA
statute's various interest rate provisions. Under the amended TIFIA
statute, the interest rate on both TIFIA secured loans and TIFIA lines
of credit is set at the time the credit agreement is executed, and this
requirement is set forth in the proposed rule. The proposed rule
provides that the rate on a guaranteed loan would be negotiated between
the borrower and the guaranteed lender, but in accordance with the
TIFIA statute, makes such negotiated rate subject to the Secretary's
approval.
The proposed rule provides, in accordance with Federal credit
policies,\11\ that all TIFIA credit agreements impose an interest rate
penalty on outstanding loan balances in the event of a development
default. DOT will publish guidelines on development default penalties
in its program guidance.
---------------------------------------------------------------------------
\11\ See section V, paragraph 4 of OMB Circular A-129,
``Managing Federal Credit Programs'' (November 2000). This Circular
is available at the following URL: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.whitehouse.gov/omb/circulars/a129/a129rev.html.
---------------------------------------------------------------------------
The TIFIA statute specifies only a lower bound on the interest rate
for a TIFIA instrument: The rate on United States Treasury securities
of a similar maturity. The current rule contains no provision
implementing the statute's rate-setting provisions. Under both the
statute and the current rule, therefore, the DOT currently has broad
discretion to set the interest rate so long as the rate is at or above
the statutory minimum. In administering the TIFIA program, however, the
DOT has set the rate, in all transactions to date, at the statutory
minimum. As noted above, the DOT seeks comment regarding the use of its
authority to charge different interest rates to different borrowers, on
the basis of program policy goals and guidance in OMB Circular A-129.
The current rule is silent on the calculation method by which the
statutory minimum is determined. The DOT has determined the statutory
minimum for a specific transaction by reference on the closing date to
the rate table, published daily by the Treasury Department, for State
and Local Government Series (SLGS) securities, and we have previously
noted in the TIFIA Program Guide that we use this method of determining
interest rate minimums. The NPRM proposes to incorporate into the
regulation the calculation method for interest rate minimums heretofore
noted in the Program Guide.\12\
---------------------------------------------------------------------------
\12\ The DOT publishes detailed guidance for TIFIA borrowers in
a Program Guide. The Program Guide also includes the TIFIA
application form and the text of both the TIFIA statute and the
TIFIA rule, and will post a form loan template. The Program Guide
may be found on the TIFIA Web site at: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://tifia.fhwa.dot.gov/.
---------------------------------------------------------------------------
Section 80.19 Guaranteed Loans; Eligibility Requirements for Guaranteed
Lenders
The NPRM proposes to include a new section to provide that the
terms of a guaranteed loan, including the interest rate, would be
subject to approval by the Secretary. The proposed new section also
specifies eligibility requirements for guaranteed lenders and would
require that the Secretary approve all guaranteed lenders. Currently,
eligibility standards for guaranteed lenders are set
[[Page 3494]]
forth in the TIFIA Program Guide.\13\ The DOT believes these
eligibility standards should instead be incorporated in the regulation.
---------------------------------------------------------------------------
\13\ For information about the TIFIA Program Guide, see the
preceding note 13 and section 80.35 of the proposed rule.
---------------------------------------------------------------------------
Section 80.21 Draws on Line of Credit
The proposed rule would move the current rule's line of credit
provisions, contained in 49 CFR 80.5, into a new section with
modifications to implement the changes made by the SAFETEA-LU
amendments to the TIFIA statute. The proposed rule would limit draws
that are made to pay debt service on project obligations to the payment
of debt service on those project obligations which financed eligible
project costs, and it requires that draws for the purpose of paying
debt service may not be made until any capitalized interest fund is
exhausted. Consistent with the changes in SAFETEA-LU, the proposed rule
would make clear that a draw for payment of debt service may be made
even if a debt service reserve fund is available, thereby enabling
borrowers to use a line of credit to avoid the default which usually
arises when a debt service reserve fund is drawn.
There would be no limitation in the amount that may be drawn under
a line of credit in any one year, reflecting an amendment to the TIFIA
statute.
Section 80.23 Refinancing
This proposed rule creates a new section on refinancing to
implement the new TIFIA refinancing authority created by SAFETEA-LU and
contained in 23 U.S.C. 603(a)(1). In addition, the current rule's
provision dealing with refinancing of interim construction financing
not more than one year after substantial completion is moved into this
proposed new section.
SAFETEA-LU amended TIFIA to permit the use of TIFIA secured loans
and loan guarantees in certain refinancing transactions. In general,
the new provision authorizes the Secretary to enter into TIFIA secured
loan agreements, or loan guarantee agreements, to refinance long-term
project obligations, or Federal credit instruments, if such refinancing
will provide additional funding capacity that will be used to fund the
completion, enhancement, or expansion of a project. This proposed new
section provides guidance on the types of refinancing transactions the
DOT will consider for TIFIA credit assistance and specifies application
requirements and certain refinancing terms that the DOT believes are
consistent with Federal credit policies. In addition, in order to
minimize displacement of private sector credit markets while achieving
program goals, the DOT proposes to participate in a qualified
refinancing only by means of a TIFIA loan guarantee. As noted in the
section 80.13 discussion above, the DOT seeks comments on how to
increase the participation of private sector lenders in providing
guaranteed loans consistent with the TIFIA statute and government-wide
credit policy.
The DOT's new refinancing authority continues the TIFIA program's
principle emphasis: Stimulating investment in new transportation
infrastructure.
The DOT will require the applicant to demonstrate that the
refinancing will increase available funding capacity for the
completion, enhancement, or expansion of a project that qualifies for
funding under 23 U.S.C. 602. The new improvement facilitated as part of
the TIFIA refinancing must cost at least $50 million (in eligible
project costs) consistent with the SAFETEA-LU statutory minimum
threshold for a new TIFIA project. The DOT notes that certain selection
criteria tend to favor a project comprised entirely of new construction
over one that includes the refinancing of existing project debt. While
the new transportation project must follow the same Federal
requirements as any TIFIA project, the DOT believes that an asset
previously financed with the debt being refinanced under the TIFIA
program is subject to those Federal requirements to which it was
previously subject, including applicable Federal requirements
concerning operations, maintenance, and design standards for future
construction for a project receiving TIFIA refinancing assistance.
A borrower will have the flexibility to apply the proceeds of a
TIFIA guaranteed loan to the refinancing, the new project, or apportion
an amount to each element of the transaction. It is not required that
guaranteed loan proceeds be used to build the new project. If the
guaranteed loan is made available for both the refinancing and the new
project, the assistance will be structured in two tranches. The
proposed rule establishes a maximum maturity date of 35 years from the
date the credit agreement is executed for the portion of credit
assistance used for the refinancing. The maximum maturity date for the
new project will be 35 years from the date of substantial completion,
the same as for any new project receiving TIFIA credit assistance. In
no case will the term of the loan guarantee exceed the useful life of
the asset being financed.
The DOT is proposing to provide credit assistance in connection
with a refinancing in an amount no greater than the eligible project
costs of the new transportation investment that is facilitated through
the additional funding capacity provided by the refinancing. However,
to provide an incentive to the private sector to invest in
transportation infrastructure, consistent with the objectives of the
TIFIA program, DOT may approve an increase in this limit up to an
amount equal to the amount of equity actually committed at financial
close. For any refinancing transaction, the maximum amount of credit
assistance is limited to 33 percent of the combined total of eligible
project costs of the refunding and new project.
The DOT considers that generating new investment in transportation
is the essential purpose of a TIFIA-assisted refinancing transaction.
For that reason, it will require that construction of the new project
commence within a reasonable period of time. This requirement will
apply even if the new construction is financed from sources other than
TIFIA. To ensure timely advancement and completion of project
construction, the DOT will require a penalty interest rate in the
guaranteed loan in the event there is a development default. Guidelines
on development default penalties for refinancing transactions will be
published in the TIFIA program guidance.
An applicant seeking TIFIA refinancing assistance must submit an
application, including the new transportation asset construction
project, using the TIFIA application form contained in the DOT's TIFIA
Program Guide. The application should describe in detail the
refinancing plan of finance and demonstrate that it conforms to
statutory and regulatory requirements. The fee for a refinancing
application is proposed to be the same as the fee for a new TIFIA
project application.
Section 80.25 Limitations on Federal Credit Assistance
The proposed rule would impose certain limitations on TIFIA
assistance.
Amount of credit assistance: The current rule incorporates the
statutory limitation of 33 percent of reasonably anticipated eligible
project costs, and the proposed rule would retain that provision. In
addition, we propose to incorporate the new statutory provision,
contained in 23 U.S.C. 603(b)(2), further limiting the amount of TIFIA
credit assistance to the sum of project obligations senior to the TIFIA
instrument when the TIFIA instrument
[[Page 3495]]
does not have an investment-grade rating.
Look-back in determining project costs: The current rule permits
costs incurred prior to submission of the TIFIA application to be
included in the calculation of eligible project costs if approved by
the Secretary. The proposed rule would permit costs incurred up to
three years prior to the TIFIA application to be used in the
calculation of eligible project costs, while allowing for further look-
backs only in exceptional circumstances and if approved by the
Secretary. However, the proposed rule would limit the consideration of
such total costs to no more than 20 percent of total eligible project
costs.
Operating costs during construction: The proposed rule clarifies
that the operating costs of a special purpose entity formed solely to
construct and operate the facility for which the TIFIA credit
assistance is provided would be included in the calculation of eligible
project costs. The proposed rule would limit the consideration of such
total costs to no more than 5 percent of total eligible project costs.
Lease acquisition payments or concession fees: To be considered
eligible project costs, payments to a public entity associated with the
lease acquisition or concession fee must be dedicated to transportation
projects eligible under title 23 or chapter 53 of title 49, United
States Code. Lease acquisition payments must be part of a project in
which new capital costs constitute a significant portion of project
costs and represent fair market value. In other words, the concession
fee, in and of itself, does not comprise an eligible project cost. In
order to implement this policy, the DOT proposes to limit its
consideration of such concession payments to 25 percent of total
eligible project costs and seeks public comment on this proposal.
Timing of funding of assistance: The current rule specifies that
the DOT will fund a secured loan ``based on a project's funding
needs.'' In practice, the DOT has funded TIFIA loans on a reimbursement
basis; i.e., borrowers may draw funds only for the payment of costs
already incurred. This reimbursement practice aligns TIFIA assistance
with assistance provided to Federal-aid grant-funded projects. In
addition, the DOT has typically included in the credit agreement a
provision specifying the maximum frequency (e.g., monthly or quarterly)
with which draw requests can be submitted. Therefore, we propose to
incorporate these practices into the regulation.
Section 80.27 Credit Agreement Closing and Obligation of Funds
The proposed new section states that obligation of Federal funds
would occur at the closing of the credit agreement, thus making clear
that the DOT is changing its current practice of obligating funds at
the time a term sheet is executed.
Section 80.29 Reporting Requirements and Credit Monitoring
The proposed rule reorganizes the current rule to consolidate
within a single section all reporting and monitoring requirements. The
NPRM proposes to provide that the DOT may impose, in a particular
credit agreement, additional reporting requirements which it considers
necessary in order to properly monitor the credit performance of the
specific project.
The proposed rule moves the current rule's annual credit reporting
requirement to this section. It would require borrowers to maintain a
credit rating at their own expense and furnish it annually to the DOT.
The current rule requires borrowers to provide ongoing credit
evaluations to the DOT annually. The proposed rule makes clear that
such credit evaluations must be current credit ratings. It is not the
intent of this provision to require borrowers with project obligations
that have published credit ratings to obtain new ratings, but rather
merely to require that the borrower establish that such ratings are
still in effect. Borrowers which do not have project obligations with
published credit ratings, such as borrowers which use bank debt and
fulfill the statutory investment-grade rating requirement by obtaining
a private rating, would be required to obtain a credit rating each
year.
The current rule provides that the DOT may conduct periodic
financial and compliance audits of TIFIA borrowers. The proposed rule
would make clear that such audits conducted by the DOT are at the
borrower's expense.
Section 80.31 Fees
Consistent with section 603(b)(7), section 604(b)(9), and 605(b) of
title 23, United States Code, the proposed rule identifies several fees
the DOT would assess program participants to recover the program's
various administrative and transactional costs. The following fees
cannot be considered eligible project costs for the purpose of
calculating the maximum amount of credit assistance.
The proposed rule would not specify amounts for fees that are
fixed, i.e., fees that are not transaction-based, namely the
application fee and the servicing fee. The DOT needs to retain the
flexibility to change these fixed fees from time to time, in response
to changes in its own costs. Thus, rather than specify the fee amounts
in the regulation, the DOT would announce changes in these fees by
notice published from time to time in the Federal Register. A schedule
of fees currently in effect will also be posted on the TIFIA Web site.
The current rule prohibits payment of the application fee or the
processing fee by anyone other than the applicant. The DOT is not aware
of any circumstance where such fees were not paid by the applicant or
an affiliated entity; even if a third party were to pay such fees, the
DOT does not believe the TIFIA program would be adversely affected. The
DOT has concluded this prohibition is unnecessary, and thus proposes to
eliminate it.
The NPRM proposes that the DOT would assess the following fees:
1. Application fee. The applicant would be required to remit the
application fee with its application for TIFIA assistance. There would
be a single application fee for each application, irrespective of the
number of TIFIA instruments the applicant is seeking. The current rule
provides that the application fee is non-refundable, and the proposed
rule would leave that provision unchanged. The purpose of the
application fee is to cover, in part, the DOT's cost for outside
consulting services engaged to assist in reviewing the application. The
amount of the application fee will be posted on the TIFIA Web site. The
DOT may change the amount of the application fee from time to time, and
will publish these changes in the Federal Register and post on the
TIFIA Web site. The application fee is not considered an eligible
project cost for the purpose of calculating the maximum amount of
credit assistance.
2. Subsidy fee. As authorized by section 603(b)(7) and section
604(b)(9) of Title 23, United States Code, the current rule, in section
80.17(c), permits the payment of a supplemental fee to reduce the
subsidy cost of a project. The proposed rule would identify this as a
``subsidy fee'' and restate the current rule's language. If, in any
given year, there is insufficient budget authority to fund the credit
instrument for a qualified project that has been selected to receive
assistance under TIFIA, the DOT and the approved applicant may agree
upon a supplemental fee to be paid by or on behalf of the approved
applicant at the time of execution of the term sheet to reduce the
subsidy cost of
[[Page 3496]]
that project. Although such a fee has yet to be imposed, the DOT
anticipates use of this provision as the demand for TIFIA assistance
increases. The subsidy fee is not considered an eligible project cost
for the purpose of calculating the maximum amount of credit assistance.
3. Transaction fee. The transaction fee would be a one-time fee,
set at an amount sufficient to reimburse the DOT for the actual costs,
other than Federal employee costs, incurred in evaluating the
application and negotiating the credit agreement. Such costs consist
principally of fees the DOT pays to its consultants and outside legal
advisors. The transaction fee would be due at closing of the credit
agreement or within 30 days of financial close as specified in the
credit agreement. The proposed rule provides that the transaction fee
would be an obligation of the applicant, payable irrespective of
whether or not the credit agreement was ever executed. The transaction
fee is not considered an eligible project cost for the purpose of
calculating the maximum amount of credit assistance.
4. Servicing fee. The DOT would assess the servicing fee annually
in accordance with section 605(b)(1)(B) of SAFETEA-LU. There would be a
servicing fee for each credit instrument so that a single borrower
could be assessed more than one servicing fee. The servicing fee would
offset, in part, the DOT's costs in servicing its portfolio of TIFIA
loans. The amount of the servicing fee will be posted on the TIFIA Web
site. The DOT may change the amount of the servicing fee from time to
time, and will publish these changes in the Federal Register and post
on the TIFIA Web site. The servicing fee is not considered an eligible
project cost for the purpose of calculating the maximum amount of
credit assistance.
5. Monitoring fee. The DOT would include in each credit agreement a
provision obligating the borrower to reimburse the DOT for costs
incurred in connection with monitoring the credit performance of a
project, the enforcement of credit agreement provisions, amendments to
the credit agreement and related documents, and other performance-
related activities in accordance with section 603(b)(7) of SAFETEA-LU.
The monitoring fee is not considered an eligible project cost for the
purpose of calculating the maximum amount of credit assistance.
The proposed rule provides that the DOT would seek administrative
offset to recoup the above fees in the event the applicant or borrower
fails to pay them.
Section 80.33 Use of Administrative Offset
The proposed rule carries forward the current rule's provision
making clear that the DOT does not intend to recoup by means of
administrative offset losses incurred through TIFIA credit instruments
except under circumstances relating to fraud, misrepresentation, false
claims or similar acts. It clarifies the DOT's intent, as stated in the
rule, to recover through administrative offset any fees assessed under
the TIFIA program and not paid.
Section 80.35 Program Guide; TIFIA Web site
The proposed rule would establish a new section advising those
interested in the TIFA program of the TIFIA Program Guide and the TIFIA
Web site (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://tifia.fhwa.dot.gov). The proposed new section would be
informational only, intended to notify the public of where to find
additional program information, including information relating to a fee
schedule.
Section 80.37 Applicant Information Requirements
The proposed rule would establish a new section addressing certain
requirements that apply to all recipients of Federal assistance,
including entities receiving credit assistance. First, an applicant
must obtain a Data Universal Number System (DUNS) number. The DUNS
number, which is a unique nine-character number that identifies an
organization, is a tool used by the Federal Government to track how
Federal money is distributed. Second, an applicant must register with
the Central Contractor Registration (CCR). The Federal Government
requires that Federal agencies collect certain information from
recipients of Federal assistance. This information is collected through
the CCR system, which is the primary registrant database for the
Federal Government. Registration in the CCR requires a DUNs number.
Distribution and Derivation Tables
For ease of reference, distribution and derivation tables are
provided for the current sections of the proposed rule as follows.
Derivation Table
------------------------------------------------------------------------
New section Old section
------------------------------------------------------------------------
80.1......................... 80.1.
80.3......................... 80.3 Administrative offset.
80.3 Borrower................ None.
80.3 Budget authority........ None.
None..................... 80.3 Conditional term sheet.
80.3......................... 80.3 Credit Agreement.
80.3 Current Credit 80.3 None.
Evaluation.
80.3......................... 80.3 Eligible project costs.
80.3......................... 80.3 Federal credit instrument.
80.3 Guaranteed lender....... None.
80.3......................... 80.3 Investment-grade rating.
None..................... 80.3 Lender.
80.3......................... 80.3 Line of credit.
80.3......................... 80.3 Loan guarantee.
None..................... 80.3 Local servicer.
80.3 Maturity Date........... None.
None..................... 80.3 Obligor.
80.3 Preliminary rating None.
opinion letter.
80.3......................... 80.3 Project.
80.3......................... 80.3 Project obligation.
None..................... 80.3 Project sponsor.
80.3......................... 80.3 Rating agency.
80.3 Refinance............... None.
[[Page 3497]]
80.3 Secretary............... None.
80.3......................... 80.3 Secured loan.
80.3......................... 80.3 State.
80.3 Subsidy cost............ 80.3 Subsidy amount.
80.3......................... 80.3 Substantial completion.
80.3......................... 80.3 Term sheet.
80.3......................... 80.3 TIFIA.
80.5(a)-(e).................. 80.3(a)-(e).
80.7(a)...................... 80.13(a).
80.7(a)(1)................... 80.13(a)(1) and (a)(5).
80.7(a)(2) through (a)(2)(i). 80.13(a)(3).
80.7(a)(2)(ii)............... 80.13(b).
80.7(a)(3)................... 80.13(a)(4).
80.7(b) through (c).......... 80.13(c).
80.9(a)...................... 80.7(d) Added to new section.
80.9(b)...................... None.
80.9(c)...................... 80.7(b).
80.9(c)(1)................... 80.7(b)(1).
80.9(c)(2)................... None.
80.9(c)(3)................... 80.7(b)(1).
80.9(c)(4)................... 80.7(b)(2).
80.9(c)(5)................... 80.7(b)(3).
80.9(c)(6)................... 80.7(b)(4).
80.9(c)(7)................... 80.7(b)(5).
80.9(c)(8)................... None.
80.9(c)(9)................... None.
80.9(c)(10).................. None.
80.9(d)...................... 80.7(c).
80.11(a) through (a)(1)...... 80.11(a).
80.11(a)(2).................. None.
80.11(b)..................... None.
80.11(c)(1) through 80.11(b).
80.11(c)(1)(i).
80.11(c)(1)(ii).............. None.
80.11(c)(2).................. None.
80.11(d)..................... None.
80.11(e)..................... 80.11(c).
80.13(a)..................... 80.15(a)(2).
80.13(b)..................... 80.15(a).
80.13(b)(1).................. 80.15(a)(1).
80.13(b)(2).................. 80.15(a)(3).
80.13(b)(3).................. 80.15(a)(4).
80.13(b)(4).................. 80.15(a)(5).
80.13(b)(5).................. 80.15(a)(6).
80.13(b)(6).................. 80.15(a)(7).
80.13(b)(7).................. 80.15(a)(8).
80.13(c)..................... 80.15(c).
80.15(a) through (b)......... 80.5(d)(1) through (d)(2).
80.17(a) through (d)......... None.
80.19(a) through (c)......... None.
80.21(a) through (b)......... 80.5(e).
80.23(a)..................... 80.5(c).
80.23(b) through (e)(7)...... None.
80.25(a) through (a)(1)...... 80.5(a).
80.25(a)(2).................. None.
80.25(b)(1).................. 80.5(b).
80.25(b)(2).................. None.
80.25(b)(3).................. None.
80.25(c)..................... None.
80.25(d)..................... 80.5(g) in part.
80.27 Heading................ None.
80.27(a)..................... None.
80.27(a)(1).................. 80.13(a)(1).
80.27(a)(2).................. 80.5(f).
80.27(a)(3).................. 80.11(b).
80.27(a)(4).................. None.
80.27(b)..................... 80.5(d)(2).
80.29 Heading................ 80.19.
80.29(a)..................... 80.11(d).
80.29(b)..................... 80.19 First sentence.
80.29(c) through (c)(2)...... None.
80.29(d)..................... 80.19 Second sentence.
80.29(e)..................... 80.19(d) Last sentence.
[[Page 3498]]
80.31 Heading................ 80.17.
80.31........................ None.
80.31(a)..................... 80.17(a).
80.31(b)..................... 80.17(c).
80.31(c)..................... 80.17(a).
80.31(d)..................... 80.17(d).
80.31(e)..................... None.
80.33........................ 80.21.
80.35........................ None.
80.37........................ None.
------------------------------------------------------------------------
Distribution Table
----------------------------------------------------------------------------------------------------------------
Old section Part 80 New section Part 80
----------------------------------------------------------------------------------------------------------------
80.1 Heading....................... 80.1 Heading text unchanged.
Purpose............................ 80.1 Revised.
80.3 Heading....................... 80.3 Heading text unchanged.
Administrative offset.............. Revised.
None........................... 80.3 Borrower replaced obligor; definition revised.
None........................... 80.3 Budget authority added.
Conditional term sheet............. 80.3 Removed.
Credit Agreement................... 80.3 Revised.
None........................... 80.3 Current Credit Evaluation added.
Eligible project costs............. 80.3 Revised.
Federal credit instrument.......... 80.3 Revised.
None........................... 80.3 Guaranteed lender replaces lender.
Investment-grade rating............ 80.3 Revised.
Lender............................. Removed, replaced by Guaranteed lender.
Line of credit..................... 80.3 Revised.
Loan guarantee..................... 80.3 Revised.
Local Servicer..................... 80.3 Removed.
None........................... 80.3 Maturity date added.
Obligor............................ Removed, replaced by Borrower.
None........................... 80.3 Preliminary rating opinion letter added.
Project............................ 80.3 Revised.
Project obligation................. 80.3 Revised.
Project sponsor.................... 80.3 Removed.
Rating agency...................... 80.3 Revised.
None........................... 80.3 Refinance added
None........................... 80.3 Secretary added.
Secured loan....................... 80.3 Revised.
State.............................. 80.3 ``States''capitalized.
Subsidy amount..................... 80.3 Changed to Subsidy cost.
Substantial completion............. 80.3 Revised.
Term sheet......................... 80.3 Revised.
TIFIA.............................. 80.3 Revised.
80.5 Heading....................... 80.25 Heading redesignated and revised.
80.5(a)............................ 80.25(a) through (a)(1) Redesignated and revised.
None........................... 80.25(a)(2) Added.
80.5(b)............................ 80.25(b)(1) Redesignated and revised.
None........................... 80.25(b)(2) Added.
None........................... 80.25(b)(3) Added.
80.5(c)............................ 80.23(a) Redesignated and revised.
80.5(d)(1) through (d)(2).......... 80.15(a) through (b) Conditional term sheet deleted; redesignated and
revised with regard to term sheet.
80.5(e)............................ 80.21(a) through (b) Redesignated and revised.
80.5(f)............................ 80.27(a)(2) Redesignated and revised.
None........................... 80.25(c) Added.
80.5(g)............................ 80.25(d) Redesignated and revised.
80.7 Heading....................... 80.9 Heading redesignated.
80.7(a)............................ Removed.
None........................... 80.9(a) Added; language from 80.7(d) incorporated.
None........................... 80.9(b) Added.
80.7(b)............................ 80.9(c) Redesignated and revised.
80.7(b)(1)......................... 80.9(c)(1) and (c)(3) Redesignated and revised.
None........................... 80.9(c)(2) Added.
80.7(b)(2)......................... 80.9(c)(4) Redesignated and revised.
80.7(b)(3)......................... 80.9(c)(5) Redesignated and revised.
80.7(b)(4)......................... 80.9(c)(6) Redesignated and revised.
80.7(b)(5)......................... 80.9(c)(7) Redesignated and revised.
[[Page 3499]]
80.7(c)............................ 80.9(d) Redesignated and revised.
80.7(d)............................ 80.9(a) Language incorporated.
80.9 Heading....................... 80.5 Redesignated and heading text unchanged.
80.9............................... 80.5 Redesignated and revised.
80.9(a)............................ 80.5(a) Redesignated and revised.
80.9 through (d)................... 80.5(b) through (d) Redesignated and text unchanged.
80.9(e)............................ 80.5(e) Redesignated.
80.11 Heading...................... 80.11 Heading revised.
80.11(a)........................... 80.11(a) through (a)(1) Revised.
None........................... 80.11(a)(2) Added.
None........................... 80.11(b) Added.
80.11(b)........................... 80.11(c)(1) through (c)(1)(i) Redesignated and revised.
None........................... 80.11(c)(1)(ii) Added.
None........................... 80.11(c)(2) Added.
None........................... 80.11(d) Added.
80.11(c)........................... 80.11(e) Redesignated and revised.
80.11(d)........................... 80.29(a) Redesignated and revised.
80.13 Heading...................... 80.7 Redesignated and heading revised.
80.13(a)........................... 80.7(a) Redesignated and revised.
80.13(a)(1)........................ 80.7(a)(1) Redesignated and revised.
80.13(a)(2)........................ Removed.
80.13(a)(3)........................ 80.7(a)(2)(i) Redesignated and revised.
80.13(a)(4)........................ 80.7(a)(3) Redesignated and revised.
80.13(a)(5)........................ 80.7(a)(1) Redesignated and revised.
80.13(b)........................... 80.7(a)(2)(ii) Redesignated and revised.
80.13(c)........................... 80.7(b) through (c) Redesignated and revised.
80.15 Heading...................... 80.13 Redesignated and heading revised.
80.15(a)........................... 80.13(b) Redesignated and revised.
80.15(a)(1)........................ 80.13(b)(1) Redesignated
80.15(a)(2)........................ 80.13 Redesignated and revised.
80.15(a)(3)........................ 80.13(b)(2) Redesignated and revised.
80.15(a)(4)........................ 80.13(b)(3) Redesignated and revised.
80.15(a)(5)........................ 80.13(b)(4) Redesignated and revised.
80.15(a)(6)........................ 80.13(b)(5) Redesignated and revised.
80.15(a)(7)........................ 80.13(b)(6) Redesignated and revised.
80.15(a)(8)........................ 80.13(b)(7) Redesignated.
80.15(b)........................... 80.11(a) Redesignated and revised.
80.15(c)........................... 80.13(c) Redesignated and revised.
80.17 Heading...................... 80.31 Redesignated and revised.
None........................... 80.31 Added.
80.17(a)........................... 80.31(a) and (c) Redesignated and revised.
80.17(b)........................... Removed.
80.17(c)........................... 80.31(b) Redesignated.
80.17(d)........................... 80.31(d) Redesignated and revised.
None........................... 80.31(e) Added.
80.19 Heading...................... 80.29 Redesignated and revised.
80.19 First sentence............... 80.29(b) Redesignated and revised.
None........................... 80.29(c)(1) through (c)(2) Added.
80.19 Second sentence.............. 80.29(d) Redesignated and revised.
80.19 Last sentence................ 80.29(e) Redesignated and revised.
80.21 Heading...................... 80.33 Redesignated.
80.21.............................. 80.33 Redesignated and revised.
None............................... 8015 New heading added.
80.5(d)(1) through (d)(2).......... 80.15(a) through (b) Redsignated and revised.
None........................... 80.17 New heading added.
None........................... 80.17(a) through (d) Added.
None........................... 80.19 New heading added.
None........................... 80.19(a) through (c) Added.
None........................... 80.21 New heading added
80.5(e)............................ 80.21(a) through (b) Redesignated and revised.
None........................... 80.23 New heading added.
80.5(c)............................ 80.23(a) Redesignated and revised.
None........................... 80.23(b) through (e)(7) Added.
None........................... 80.27 New heading added.
None........................... 80.27(a) Added
80.13(a)(1)........................ 80.27(a)(1) Redesignated and revised.
80.5(f)............................ 80.27(a)(2) Redesignated and revised.
80.11(b)........................... 80.27(a)(3) Redesignated and revised.
None........................... 80.27(a)(4) Added.
80.5(d)(1) through (d)(2).......... 80.27(b) Redesignated and revised.
None........................... 80.35 New heading added.
None........................... 80.35(a) through (c) Added.
[[Page 3500]]
None........................... 80.37 Added.
----------------------------------------------------------------------------------------------------------------
Rulemaking Analyses and Notices
All comments received before the close of business on the comment
closing date indicated above will be considered and will be available
for examination in the docket at the above address. Comments received
after the comment closing date will be filed in the docket and will be
considered to the extent practicable. In addition to late comments, the
DOT will also continue to file relevant information in the docket as it
becomes available after the comment period closing date, and interested
persons should continue to examine the docket for new material. A final
rule may be published at any time after close of the comment period.
Executive Order 12866 (Regulatory Planning and Review) and U.S. DOT
Regulatory Policies and Procedures
The DOT has determined preliminarily that this action would be an
economically significant regulatory action within the meaning of
Executive Order 12866, and that it would it be significant within the
meaning of Department of Transportation regulatory policies and
procedures because it implements important changes made to statutory
law and makes a number of substantive changes to the current TIFIA
regulation. Our determination is based on the activity to date of the
program, which has had an annual effect on the economy of $100 million
or more.
This action proposes to update and streamline the DOT's regulation
on Credit Assistance for Surface Transportation Projects. It implements
the changes SAFETEA-LU made to the TIFIA statute, and reorganizes the
current rule to make it more comprehensible to users.
As of May 2008, the TIFIA program has provided approximately $4.8
billion in Federal credit assistance which has supported an aggregate
of $18.6 billion in combined public and private sector capital
investment, at a budgetary cost of approximately $346 million.
The proposed regulation would affect only those entities that elect
to apply for TIFIA assistance and are selected to receive a Federal
credit instrument. It would not impose any direct costs on non-
participants.
Recognizing the significant impact of this program, SAFETEA-LU
directed the Secretary of Transportation to submit biannually to
Congress a report summarizing the financial performance of the projects
receiving assistance under the TIFIA credit program. Two reports have
been submitted to date, and a June 2008 report was recently submitted.
The June 2006 report briefly updates financial information originally
presented in the Department's comprehensive June 2002 report to
Congress.\14\
---------------------------------------------------------------------------
\14\ These reports to Congress are available on the TIFIA Web
site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://tifia.fhwa.dot.gov.
---------------------------------------------------------------------------
The DOT and industry research has indicated that there are economic
productivity gains to be derived from efficient capital investment in
surface transportation facilities. According to a 2005 GAO report,
``[t]ransportation improvements also lead to increased productivity and
economic growth, through improving access to goods and services for
businesses and individuals and increasing the geographic size of
potential labor pools for employers and potential jobs for
individuals.'' \15\ This GAO report cited a September 2003 study, which
estimated that average annual returns on highway investment of
approximately 14 percent between 1990 and 2000.\16\ The DOT continues
research, updating the returns on highway capital investment for 2000-
2005. Preliminary results show positive returns but lower than the
1990-2000 time period. TIFIA can serve to efficiently allocate public
and private investment in surface transportation infrastructure and
encourage de-politicizing investments. In addition to the direct
returns it produces, transportation capital investment typically
generates spillover benefits, which may yield financial and non-
financial benefits, such as reduced pollution, increased safety,
improved international competitiveness, and enhanced accessibility.
---------------------------------------------------------------------------
\15\ Government Accountability Office, Highway and Transit
Investments: Options for Improving Information on Projects' Benefits
and Costs and increasing Accountability for Results (GAO)-05-172),
Washington, DC, January 2005.
\16\ Theofanis P. Mamuneas and M. Ishaq Nadiri, ``Production,
Consumption and the rates of Return to Highway Infrastructure
Capital,'' (September 2003).
---------------------------------------------------------------------------
Just as transportation investment produces benefits, failure to
invest results in cost increases. According to the DOT,
``transportation system congestion is one of the single largest threats
to our nation's economic prosperity and way of life.'' \17\ In 2003,
Americans lost 3.7 billion hours and 2.3 billion gallons of fuel due to
traffic jams, resulting in an estimated cost of $200 billion per
year.\18\ According to the Texas Transportation Institute, ``The
solutions to this problem will require commitment by the public and by
national, state and local officials to increase investment levels and
identify projects, programs and policies that can achieve mobility
goals.'' \19\
---------------------------------------------------------------------------
\17\ See http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fightgridlocknow.gov.
\18\ United States Department of Transportation, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fightgridlocknow.gov.
\19\ ``Urban Traffic Congestion Costs the USA $63 Billion per
Annum,'' September 14, 2004, Texas Transportation Institute. (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.citymayors.com/transport/congestion_usa.html;).
---------------------------------------------------------------------------
According to a recent study by the American Association of State
Highway and Transportation Officials (AASHTO), the U.S. population will
grow at a more rapid pace in the next 50 years than during the previous
50 years when the nation's modern highway system was first being
constructed. As a result of this growth, the number of vehicles on U.S.
highways, estimated at 246 million in 2007 (compared to 65 million cars
and trucks in 1955), could rise to nearly 400 million by 2055. The
AASHTO report also estimated that between 2004 and 2035 truck tonnage
could increase 114 percent and rail tonnage could increase 63 percent;
truck traffic, measured in trucks per day, per mile, is expected to
more than double in the same period.\20\
---------------------------------------------------------------------------
\20\ ``Transportation Investment in our Future Needs of the U.S.
Transportation System'' by the American Association of State Highway
and Transportation Officials, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.transportationl.org/tiflreport/, March 2007.
---------------------------------------------------------------------------
The TIFIA program was established to provide fractional credit
assistance to major transportation infrastructure projects--such as
highway, transit, passenger rail, certain freight facilities, and
certain port projects--that have the potential of generating
substantial economic benefits both regionally and nationally. In many
cases, such projects are capable of being supported through direct user
charges or dedicated revenue streams that can be used to access private
capital and other non-Federal funding sources. The TIFIA program is
designed to fill market gaps through providing supplemental and/or
subordinate capital to such projects,
[[Page 3501]]
facilitating access to the capital markets or other financing sources
for the majority of project funding needs. Through the TIFIA program's
leverage of limited Federal funds with private capital, these capital-
intensive projects can be advanced without displacing smaller, more
traditional grant-supported projects. Federal risk exposure is
mitigated by substantial co-investment from non-Federal parties and the
use of objective, market-based credit evaluation criteria.
Through SAFETEA-LU, Congress authorized $122 million for each
Federal Fiscal Year (FFY) from 2005 through 2009. Under TEA-21,
Congress had authorized up to a total of $530 million for FFY 1999
through FFY 2003. These funds pay the subsidy cost to the Federal
Government of providing credit assistance, and are available until
expended by the DOT or reprogrammed by Congress. Based on experience,
this funding amount can support more than $2 billion of average annual
credit assistance. Under the terms of the legislation, the Federal
share is limited to 33 percent of total eligible project costs. In many
cases, however, the actual share of TIFIA assistance is considerably
less. For example, the average request for TIFIA assistance by
applicants to the TIFIA program between October 1998 and March 2007 was
approximately 26 percent of total project cost.
Under the Federal Credit Reform Act of 1990 (FCRA), the amount of
budget authority necessary to support a Federal credit instrument
depends upon the subsidy cost (i.e., the estimated present value cost
of estimated losses that will be incurred as a result of defaults, net
of any fee income or recoveries on default). Each project is assigned a
subsidy cost based upon an evaluation of its creditworthiness and the
specific terms and conditions of the loan or loan guarantee agreement.
As noted previously, since the inception of the TIFIA program, total
subsidy costs have amounted to nearly $346 million, supporting
approximately $4.8 billion in Federal credit with an aggregate of $18.6
billion in public and private capital investment.
The TIFIA program can promote the efficient functioning of project
delivery and the private markets, and can generate both direct and
indirect benefits, including reduced congestion, greater mobility,
improved safety, an enhanced environment, and greater economic growth,
all of which further interstate commerce.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (Pub. L. 96-354,
5 U.S.C. 601-612) the DOT has evaluated the effects of this proposed
action on small entities and has determined preliminarily that the
proposed action would not have a significant economic impact on a
substantial number of small entities.
The TIFIA program is generally intended to assist large
transportation projects and large entities and has little effect on
small entities. This action proposes to extend availability of TIFIA
credit assistance to smaller projects than those heretofore eligible;
thus, to the degree they affect small entities, the changes will have a
positive effect on small entities by making it possible for such
smaller projects to obtain Federal credit assistance. The DOT expects,
nevertheless, that the bulk of TIFIA assistance will go to large
projects and that most small entities will be unaffected by the
proposed action.
Unfunded Mandates Reform Act of 1995
This proposed rule would not impose unfunded mandates as defined by
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22,
1995, 109 Stat. 48). The proposed updates are applicable only to
Federal and federally-assisted programs. This proposed rule will not
result in the expenditure by State, local, and tribal governments, in
the aggregate, or by the private sector, of $128.1 million or more in
any one year (2 U.S.C. 1532).
Executive Order 13132 (Federalism)
This proposed action has been analyzed in accordance with the
principles and criteria contained in Executive Order 13132, and the DOT
has determined that this proposed action would not have a substantial
direct effect or sufficient federalism implications on States that
would limit the policymaking discretion of the States. The DOT has also
determined that this proposed action would not preempt any State law or
State regulation or affect the States' ability to discharge traditional
State governmental functions.
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.205,
Highway Planning and Construction. The regulations implementing
Executive Order 12372 regarding intergovernmental consultation on
Federal programs and activities apply to this program.
Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et
seq.), Federal Agencies must obtain approval from the Office of
Management and Budget (OMB) for each collection of information they
conduct, sponsor, or require through regulations. This proposed rule
does not contain information collection requirements for the purpose of
the PRA. Since the inception of the TIFIA program, the DOT has never
received 10 or more applications for Federal credit assistance in a
single year. During the years the program has been in existence, the
DOT has received an average of three TIFIA applications per year.
Preparing a TIFIA application requires a significant commitment of
resources on the part of the applicant, and even with the lower
project-size thresholds enacted by the SAFETEA-LU amendments, the DOT
does not expect to receive 10 or more applications for TIFIA assistance
in a single year. If in the future it appears that there will be 10 or
more applications in a year, the DOT will take immediate steps to seek
approval from OMB for an information collection control number, as
required under the PRA.
National Environmental Policy Act
This proposed rule would make a number of changes in the way the
TIFIA Federal credit assistance program is administered. As specified
under 23 U.S.C. 602(c)(2), each project obtaining such assistance under
the TIFIA program is required to adhere to the National Environmental
Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.) (NEPA). None of
the changes this NPRM proposes would affect the applicability of NEPA
to TIFIA projects. Therefore, this proposed rule would not have any
effect on the quality of the environment.
Executive Order 12630 (Taking of Private Property)
This proposed action would not affect a taking of private property
or otherwise have taking implications under Executive Order 12630,
Government Actions and Interface with Constitutionally Protected
Property Rights.
Executive Order 12988 (Civil Justice Reform)
This proposed action meets applicable standards in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.
[[Page 3502]]
Executive Order 13045 (Protection of Children)
We have analyzed this proposed action under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. This proposed action does not concern an environmental risk to
health or safety that may disproportionately affect children.
Executive Order 13175 (Tribal Consultation)
The DOT has analyzed this proposal under Executive Order 13175,
dated November 6, 2000, and believes that the proposed action will not
have substantial direct effects on one or more Indian tribes; will not
impose substantial direct compliance costs on Indian tribal
governments; and will not preempt tribal law. Therefore, a tribal
summary impact statement is not required.
Executive Order 13211 (Energy Effects)
We have analyzed this proposed rule under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a significant
energy action under that order because although it is a significant
regulatory action under Executive Order 12866, it is not likely to have
a significant adverse effect on the supply, distribution, or use of
energy. Therefore, a Statement of Energy Effects under Executive Order
13211 is not required.
Regulation Identification Number
A regulation identification number (RIN) is assigned to each
regulatory action listed in the Unified Agenda of Federal Regulations.
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. The RIN contained in the heading of
this document can be used to cross reference this action with the
Unified Agenda.
List of Subjects
23 CFR Part 180
Credit programs--transportation, Highways and roads, Investments.
49 CFR Part 80
Credit programs--transportation, Highways and roads, Investments,
Public transportation, Railroads, Reporting and recordkeeping
requirements.
49 CFR Part 261
Credit programs--transportation, Investments, Railroads.
49 CFR Part 640
Credit programs--transportation, Investments, Mass transit.
49 CFR Part 1700
Credit programs--transportation.
Issued on: January 13, 2009.
Mary E. Peters,
Secretary of Transportation.
For the reasons set forth in the preamble, and under the authority
of 23 U.S.C. 601-609 it is proposed to amend Chapter I of Title 23,
Code of Federal Regulations by amending part 180, and to amend Title
49, Code of Federal Regulations, by revising part 80, and amending
parts 261 and 640, and adding Chapter XIII consisting of part 1700
respectively as set forth below:
Title 23--Highways
CHAPTER I
PART 180--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS
1. Revise the authority citation for part 180 to read as follows:
Authority: Secs. 1501 et seq., Pub. L. 105-178, 112 Stat. 107,
241, as amended; sec. 1601, 1602 Pub. L. 109-59, 119 Stat. 1144; 23
U.S.C. 601-609 and 315; 49 CFR 1.48.
Title 49--Transportation
Subtitle A--Office of the Secretary of Transportation
2. Revise Part 80 to read as follows:
PART 80--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS
Sec.
80.1 Purpose.
80.3 Definitions.
80.5 Federal requirements.
80.7 Threshold criteria for TIFIA projects.
80.9 Application process.
80.11 Preliminary rating opinion letter and investment-grade rating.
80.13 Selection criteria for TIFIA projects.
80.15 Term sheet.
80.17 Interest rate on Federal credit instruments.
80.19 Guaranteed loans; eligibility requirements for guaranteed
lenders.
80.21 Draws on line of credit.
80.23 Refinancing.
80.25 Limitations on Federal credit assistance.
80.27 Credit agreement closing and obligation of funds.
80.29 Reporting requirements and credit monitoring.
80.31 Fees.
80.33 Use of administrative offset.
80.35 Program Guide; TIFIA Web site.
80.37 Applicant Information Requirements.
Authority: Secs. 1501 et seq., Pub. L. 105-178, 112 Stat. 107,
241, as amended; Sec. 1601, 1602, Pub. L. 109-59. 119 Stat. 1144; 23
U.S.C. 601-609 and 315; 49 CFR 1.4, 1.48, 1.49, and 1.51.
Sec. 80.1 Purpose.
This part implements TIFIA (as defined within), a statute
establishing a Federal credit assistance program for surface
transportation projects.
Sec. 80.3 Definitions.
The following definitions apply to this part:
Administrative offset means the withholding of funds, otherwise
payable by the government, to satisfy a claim due the government from a
debtor.
Borrower means an obligor primarily liable for payment of the
principal of or interest on a Federal credit instrument, which obligor
may be a corporation, partnership, joint venture, trust, or a non-
Federal governmental entity, agency, or instrumentality.
Budget authority means the authority provided by Federal law for
the government to incur financial obligations.
Credit agreement means the definitive agreement between the DOT and
the borrower (or between the DOT and the guaranteed lender, for the
benefit of the borrower) pursuant to which the DOT provides a Federal
credit instrument to, or for the benefit of, the borrower.
Current credit evaluation means:
(1) In the case of a project with a published rating, either a
current rating or the borrower's certification stating the rating and
outlook then in effect, and;
(2) In the case of a project without a published rating, a current
rating of the project obligations and the Federal credit instrument.
Eligible project costs mean amounts substantially all of which are
paid by, or for the account of, a borrower in connection with a
project, including the cost of:
(1) Development phase activities, including planning, feasibility
analysis, technical studies, revenue forecasting, environmental review
and related engineering studies, preliminary engineering and
preliminary design work, and other pre-construction activities that are
eligible for funding consistent with 23 CFR 771.113 and 771.117;
(2) Final design, construction (including the associated operating
costs during construction of a special purpose entity formed solely to
construct and operate the facility), reconstruction, rehabilitation,
replacement, permitting, acquisition of real property (including land
related to the project and improvements to land), lease acquisition
[[Page 3503]]
payments (including concession payments acceptable to the Secretary)
made under an acquisition agreement, environmental mitigation,
construction contingencies, and acquisition of equipment after the
project has completed the National Environmental Policy Act (NEPA)
process and the DOT has made an environmental finding, unless the cost
activity is eligible for a categorical exclusion under 23 CFR 771.117;
(3) Capitalized interest necessary to meet market requirements,
reasonably required reserve funds, capital issuance expenses, other
carrying costs during construction; and
(4) Refinancing of long-term project obligations or Federal credit
instruments pursuant to 23 U.S.C. 603(a)(1)(C).
Federal credit instrument means Federal credit assistance in the
form of a secured loan, loan guarantee, or line of credit authorized to
be made available under TIFIA with respect to a project.
Guaranteed lender means any non-Federal qualified institutional
buyer (as defined in 17 CFR 230.144A(a), known as Rule 144A(a) of the
Securities and Exchange Commission and issued under the Securities Act
of 1933 (15 U.S.C. 77a et seq.)), including:
(1) A qualified retirement plan (as defined in section 4974(c) of
the Internal Revenue Code of 1986, 26 U.S.C. 4974(c)) that is a
qualified institutional buyer; and
(2) A governmental plan (as defined in section 414(d) of the
Internal Revenue Code of 1986, 26 U.S.C. 414(d)) that is a qualified
institutional buyer.
Investment-grade rating means a rating, published or unpublished,
not lower than BBB minus, Baa3, bbb minus, BBB (low), or an equivalent
assigned by a rating agency.
Line of credit means an agreement entered into by the Secretary
with a borrower under section 604 of Title 23, United States Code to
provide a secured loan at a future date upon the occurrence of certain
events.
Loan guarantee means an agreement by the Secretary under section
603 of Title 23, United States Code to pay all or part of the principal
of and interest on a loan or other debt obligation issued by a borrower
and funded by a guaranteed lender.
Maturity date means the final maturity date of the Federal credit
instrument which shall be the lesser of not later than 35 years after
the date of substantial completion of the project, or the remaining
useful life of the project. For a refinancing pursuant to 23 U.S.C.
603(a)(1)(C), the final maturity date for the repayment of that portion
of the TIFIA credit assistance applied to the refinancing of long-term
obligations shall not be later than 35 years after the date the credit
agreement is executed.
Preliminary rating opinion letter is a letter from an NRSRO that
assigns a preliminary rating opinion of the project's creditworthiness
as described in section 80.11 of this Part.
Project means:
(1) Any surface transportation project eligible for Federal
assistance under Title 23, United States Code or under chapter 53 of
Title 49, United States Code;
(2) An international bridge or tunnel for which an international
entity authorized under Federal or State law is responsible;
(3) Intercity passenger bus or rail facilities and vehicles,
including facilities and vehicles owned by the National Railroad
Passenger Corporation, and components of magnetic levitation
transportation systems; and
(4) A project that:
(i) Is a project:
(A) For a public freight rail facility or a private facility
providing public benefit for highway users via direct freight
interchange between highway and rail carriers
(B) For an intermodal freight transfer facility
(C) For a means of access to a facility described in subparagraph
(A) or (B);
(D) For a service improvement for a facility described in
subparagraph (A) or (B) (including a capital investment for an
intelligent transportation system); or
(E) That comprises a series of projects described in subparagraphs
(A) through (D) with the common objective of improving the flow of
goods;
(ii) May involve the combining of private and public sector funds,
including investments of public funds in private sector facility
improvements;
(iii) If located within the boundaries of a port terminal, includes
only such surface transportation infrastructure modifications as are
necessary to facilitate direct intermodal interchange, transfer, and
access into and out of the port.
Project obligation means any note, bond, debenture, loan, or other
debt issued by a borrower in connection with the financing of a
project, other than a Federal credit instrument.
Rating agency means an organization identified by the Securities
and Exchange Commission as a Nationally Recognized Statistical Rating
Organization.
Refinance means to pay off existing project obligations and any
TIFIA credit assistance owed by the Borrower with funds acquired by the
same Borrower (or its successor) through the creation of new project
obligations and TIFIA credit assistance, pursuant to section 603(a)(1)
of Title 23, United States Code.
Secretary means the United States Secretary of Transportation.
Secured loan means a direct loan or other debt obligation issued to
a borrower and funded by the Secretary in connection with the financing
of a project under section 603 of Title 23, United States Code.
State means any one of the fifty States, the District of Columbia,
or Puerto Rico.
Subsidy cost means the amount of budget authority sufficient to
cover the estimated long-term cost to the Federal Government of a
Federal credit instrument, calculated on a net present value basis,
excluding administrative costs and any incidental effects on
governmental receipts or outlays in accordance with the provisions of
the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
Substantial completion means the opening of a project to vehicular
or passenger traffic or, if determined by the Secretary and specified
in the Credit Agreement, the occurrence of a comparable event.
Term sheet means a letter from the Secretary or the Secretary's
designee to the borrower (and the guaranteed lender, if applicable)
that sets forth the essential terms and conditions of a Federal credit
instrument. A term sheet may be cancelled at any time by the Secretary
for any reason, and does not obligate budget authority.
TIFIA means the Transportation Infrastructure Finance and
Innovation Act of 1998, Pub. L. 105-178, 112 Stat. 107, 241 (1998), as
amended by the Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users, Pub. L. 109-59, 119 Stat. 1239 (2005).
Sec. 80.5 Federal requirements.
All projects receiving Federal credit assistance must comply with:
(a) The relevant requirements of Title 23, United States Code, for
highway projects; chapter 53 of Title 49, United States Code,
specifically including, without limitation, section 5333(b) dealing
with employee protective arrangements, for transit projects; and
section 5333(a) of Title 49, United States Code, for rail projects, as
appropriate;
(b) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d, et
seq.);
(c) The National Environmental Policy Act of 1969 (42 U.S.C. 4321,
et seq.);
[[Page 3504]]
(d) The Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (42 U.S.C. 4601, et seq.); and
(e) Other Federal and compliance requirements as may be applicable.
Sec. 80.7 Threshold criteria for TIFIA projects.
(a) To be eligible to receive a Federal credit instrument, a
project must meet the following threshold criteria:
(1) The project must have satisfied the applicable planning and
programming requirements of section 134 and 135 of Title 23 of the
United States Code;
(2) The project must have eligible project costs that are
reasonably anticipated to equal or exceed the lesser of $50 million or
one-third of the amount of Federal-aid highway funds apportioned for
the most recently completed fiscal year to the State in which the
project is located, provided that:
(i) In the case of a project principally involving the installation
of Intelligent Transportation Systems (ITS), eligible project costs
shall be reasonably anticipated to equal or exceed $15 million; and
(ii) In the case of a project located in more than one State,
eligible project costs must be reasonably anticipated to equal or
exceed the lesser of $50 million or one-third of the amount of Federal-
aid highway funds apportioned for the most recently completed fiscal
year to the participating State that receives the least amount of such
funds; and
(3) The proposed Federal credit instrument must be secured by and
payable from, in whole or in part, tolls, user fees, rentals, taxes, or
other dedicated revenue sources. In order to fulfill the requirements
of Sec. 80.11, any of these dedicated revenue sources that secure any
project obligations senior to or on a parity with the Federal credit
instrument must also secure, in similar proportion, the Federal credit
instrument.
(b) In addition to or in lieu of the dedicated revenue sources
specified in paragraph (a)(3) of this section, the Secretary may accept
municipal general obligation pledges, general corporate promissory
pledges, or other pledges and forms of collateral as security for a
Federal credit instrument.
(c) A pledge of Federal funds, regardless of source, may not be
used to secure a Federal credit instrument.
Sec. 80.9 Application process.
(a) Letter of interest. Prior to submission of an application for
Federal credit assistance, the applicant must have submitted to the DOT
a letter of interest and been notified by the DOT that the letter of
interest adequately addresses threshold criteria discussed in this
paragraph. The letter of interest required by this section should
describe the project, the project's plan of finance, and the amount and
type of Federal credit instrument(s) sought. An applicant who has been
notified by the DOT that its letter of interest is satisfactory may
apply for Federal credit assistance in accordance with the schedule set
forth by the DOT.
(b) At least once each fiscal year for which Federal assistance is
available under this part, the DOT shall publish a Federal Register
notice to solicit applications for credit assistance. Such notice will
specify the relevant due dates, the estimated amount of funding
available to support TIFIA credit instruments for the current and
future fiscal years, contact name(s), and other details for that cycle
of application submissions and funding approvals.
(c) Application. An application for Federal credit assistance must
provide:
(1) Documentation sufficient to demonstrate that the project
satisfies each of the threshold criteria in 49 CFR 80.7;
(2) The applicant's confirmation that it has complied with the
environmental clearance requirement of 49 CFR 80.9(a);
(3) A description of the extent to which the project satisfies each
of the selection criteria in 49 CFR 80.13;
(4) A description of the project for which Federal credit
assistance is sought, status of environmental and other major
governmental permits and approvals, and the construction schedule;
(5) A description of the applicant and borrower;
(6) Historical information, if applicable, concerning the
applicant's financial condition, including, for example, independently
audited financial statements and certifications concerning bankruptcies
or delinquencies on other debt;
(7) Current financial information concerning both the project and
the applicant, and a comprehensive project plan of finance, including
sources and uses of funds for the project and a forecast of cash flows
available to service all project obligations and the Federal credit
instrument(s). Spreadsheets and cash flows must be submitted in both
hard copy and in the form of a working computer model. Computer models
should include among other things intact logic functions and assumption
drivers, all business cases considered by the borrower and project
sponsors, and an analysis of expected returns for each source of
capital;
(8) If the Federal credit assistance applied for is not a loan
guarantee, a statement as to why a loan guarantee would not be as
useful as the Federal credit assistance sought;
(9) Preliminary rating opinion letters from at least two rating
agencies; and
(10) Such additional information as the Secretary may from time to
time prescribe.
(d) An application for a project located in or sponsored by more
than one State or other entity may be submitted to the DOT. The
sponsoring States or entities must designate a single borrower for
purposes of receiving and repaying the Federal credit instrument.
Sec. 80.11 Preliminary rating opinion letter and investment-grade
rating.
(a) An applicant must submit with its application preliminary
rating opinion letters from at least two rating agencies. The letters
must be current and based on the same project plan of finance that is
submitted as part of the TIFIA application per Sec. 80.9(b)(7). Each
preliminary rating opinion letter must provide a conditional credit
assessment of the project's overall creditworthiness and must
specifically address:
(1) The potential of all project obligations having a lien senior
to that of the Federal credit instrument on the pledged security to
achieve an investment-grade rating; and,
(2) The likely credit rating category of the Federal credit
instrument.
(b) If a governmental agency is submitting an application on behalf
of potential borrowers in connection with a concession procurement
process, the governmental entity does not need to submit a preliminary
rating opinion letter. Rather, the DOT will require the selected
concessionaire seeking TIFIA assistance to provide the preliminary
rating opinion letters, which meet all of the requirements of Sec.
80.11(a), with its submission of its comprehensive financial plan.
(c) Not later than 14 days prior to the closing of the credit
agreement, the borrower must cause to be delivered to the DOT:
(1) Satisfactory evidence, such as a rating letter or rating
confirmation letter, that at least two rating agencies have assigned
ratings:
(i) To all project obligations that have a lien senior to that of
the Federal credit instrument on the pledged security, which ratings
must be investment-grade; and
(ii) To the Federal credit instrument.
(2) Other such evidence related to the most current project
financial plan upon which the rating evidence is based.
(d) If no project obligations have a lien senior to that of the
Federal credit
[[Page 3505]]
instrument, then the requirements of paragraphs (a) and (b) of this
section apply to the Federal credit instrument.
(e) The ratings required by this section are underlying ratings.
Neither the preliminary rating opinion letter, nor the investment-grade
rating, may reflect the effect of bond insurance or other private
credit enhancement, unless such private credit enhancement secures the
Federal credit instrument.
Sec. 80.13 Selection criteria for TIFIA projects.
(a) For a project to be selected for Federal credit assistance, the
Secretary must have determined that it is creditworthy. The Secretary's
determination will ensure that any financing for the project has
appropriate security features, such as a rate covenant, to ensure
repayment. Notwithstanding the creditworthiness of the project, the
Secretary retains the discretion not to advance a project that is not
highly rated under the criteria discussed below.
(b) In addition to making a determination with respect to
creditworthiness, the Secretary will consider the degree to which a
project advances the policy objectives embodied in the following seven
criteria. The Secretary will assign weights as indicated in evaluating
and selecting which eligible projects will receive Federal credit
assistance:
(1) The extent to which the project is nationally or regionally
significant, in terms of:
(i) The ability of the project to enhance the national or regional
transportation system by reducing congestion and improving overall
system performance (30 percent); and
(ii) The extent to which the project generates economic benefits
not accounted for above in 80.13(b)(1)(i), and supports interstate and
international commerce (10 percent). (Total: 40 percent);
(2) The extent to which Federal credit assistance would foster
innovative public-private partnerships and attract private debt or
equity investment (20 percent);
(3) The likelihood that Federal credit assistance would enable the
project to proceed at an earlier date than the project would otherwise
be able to proceed (5 percent);
(4) The extent to which the project uses new technologies,
including Intelligent Transportation Systems (ITS), that enhances the
efficiency of the project (10 percent);
(5) The amount of budget authority, relative to total dollars
invested in the project, required to fund the Federal credit instrument
made available (10 percent);
(6) The extent to which the project helps maintain or protect the
environment (10 percent); and
(7) The extent to which such assistance would reduce the
contribution of Federal grant assistance to the project (5 percent).
(c) The Secretary will give preference to applications for loan
guarantees rather than other forms of Federal credit instruments. Such
preference is consistent with Federal credit policies under OMB
Circular A-129 that state when Federal credit assistance is necessary
to meet a Federal objective, loan guarantees should be favored over
loans, unless attaining the Federal objective requires a subsidy, as
defined by the Federal Credit Reform Act of 1990 (2 U.S.C. 661, et
seq.), deeper than can be provided by a loan guarantee.
Sec. 80.15 Term sheet.
(a) When the Secretary has approved the project for Federal credit
assistance processing, the Secretary will issue a term sheet to the
approved applicant. Although the term sheet will be used to
administratively reserve the requisite budget authority, it is subject
to cancellation at the discretion of the Secretary.
(b) Subject to the limitation of 33 percent of eligible project
costs, the Secretary may make a future-year administrative reservation
of budget authority and the associated commitment of Federal credit
assistance. This reservation will ensure that a project with a future
reservation will have a priority (along with the priority of any other
projects receiving such future reservations) on budget authority
becoming available in the specified year(s).
Sec. 80.17 Interest rate on Federal credit instruments.
(a) Except as described in section (b) below, the interest rate on
secured loans and lines of credit will be set at the discretion of the
Secretary.
(b) The minimum interest rate on secured loans and lines of credit
will be set as follows:
(1) The interest rate on a secured loan will be not less than the
yield on United States Treasury securities of a similar maturity to the
final maturity of the secured loan on the date of execution of the
credit agreement.
(2) The interest rate on any draw made on a line of credit will be
not less than the yield on United States Treasury securities of a 30-
year maturity on the date of execution of the credit agreement.
(c) The interest rate on a guaranteed loan is the rate agreed to by
the borrower and the guaranteed lender, subject to approval by the
Secretary.
(d) For purposes of this section, the DOT may determine the ``yield
on United States Treasury securities'' by reference to the published
rate for State and Local Government Series (``SLGS'') securities,
adjusted as appropriate to reflect the market yield of publicly traded
United States Treasury securities.
(e) Consistent with Section V, Paragraph 4, of OMB Circular A-129,
and 31 U.S.C. 3717, the DOT will include in the credit agreement a
provision imposing a default interest rate.
Sec. 80.19 Guaranteed loans; eligibility requirements for guaranteed
lenders.
(a) Terms of a guaranteed loan must be approved by the Secretary.
(b) To participate in this program, a guaranteed lender must be
approved by the Secretary and must:
(1) Not be debarred or suspended from participation in any Federal
program;
(2) Not be delinquent on any Federal debt or loan;
(3) Be duly organized and legally authorized to enter into the
transaction;
(4) Demonstrate experience in originating and servicing loans for
large-scale developments; and
(5) Have sufficient capital to originate the loan and disburse its
own portfolio.
(c) The Secretary will periodically review lender eligibility,
consistent with Federal credit policies under OMB Circular A-129.
Sec. 80.21 Draws on line of credit.
(a) Use of proceeds. A borrower may draw on a line of credit to pay
debt service on project obligations, extraordinary repair and
replacement costs, operation and maintenance expenses, and costs
associated with unexpected Federal or State environmental restrictions
imposed after credit agreement closing; provided, however, that when
the line of credit is drawn to pay debt service, it may be applied only
to debt service on project obligations which were used to finance
eligible project costs.
(b) Eligibility to draw. A draw on the line of credit may be made
only if net revenues from the project are insufficient to pay the costs
specified in the preceding paragraph. With respect to any shortfall in
the sufficiency of net revenues to pay debt service, a draw on the line
of credit may be made only after application of any funds in a
capitalized interest account. The borrower may draw on the line of
credit before
[[Page 3506]]
drawing on a debt service reserve fund. A draw on the line of credit
may not be made to replenish a debt service reserve fund.
Sec. 80.23 Refinancing.
(a) Proceeds of a secured loan provided under 23 U.S.C. 603 may be
used to refinance interim construction financing of eligible project
costs, provided that such refinancing is completed not later than one
year after substantial completion. Otherwise secured loans used for
this purpose are generally made available under the same provisions as
loans under 23 U.S.C. 603(a)(1)(A).
(b) Except for the purpose described in section (a) above, proceeds
of a secured loan provided under section 603 of Title 23, United States
Code may not be used to refinance long-term project obligations or
Federal credit instruments.
(c) Proceeds of a loan provided by a guaranteed lender receiving a
TIFIA loan guarantee may be used to refinance long-term project
obligations or Federal credit instruments if the project applicant
demonstrates to the DOT's satisfaction that such refinancing will
provide at least $50 million of additional funding capacity and that
such capacity will be used to fund the completion, enhancement, or
expansion of a project that:
(1) Is selected under section 602 of Title 23, United States Code,
or
(2) Otherwise meets the requirements of section 602 of Title 23,
United States Code.
(d) The fee for a refinancing application is the same as the fee
for a new TIFIA project application.
(e) The following special provisions, terms, and limitations are
applicable to the Federal loan guarantee for a refinancing made
available under 23 U.S.C. 603(a)(1)(C):
(1) The borrower will have the flexibility to apply the guaranteed
loan proceeds to the refinancing, the new project, or apportion an
amount to each element of the transaction. It is not required that the
guaranteed loan proceeds be used to build the new project. However,
Federal requirements (see Sec. 80.5) will apply to the new project.
(2) The loan guarantee made available in connection with a
refinancing under this paragraph will be in an amount not larger than
the greater of:
(i) The amount applied to funding the completion, enhancement, or
expansion of the project; and
(ii) The amount of equity invested in the project, provided that in
no event will the amount of the secured loan exceed 33 percent of the
amount of the financing.
(3) Returns and payouts on equity investments in a financing
transaction under this paragraph must be subordinated to the Federal
credit instrument for so long as the TIFIA debt is outstanding,
consistent with OMB Circular A-129 requirements that business borrowers
have equity at risk. (Appendix A, section II, 3a. (2)).
(4) If the guaranteed loan proceeds are disbursed to fund both the
refinancing of the long-term obligations and the completion,
enhancement, or expansion of the project, the following provisions
apply to the repayment:
(i) The guaranteed loan will be structured in two tranches. The
first tranche will be that portion funding the refinancing of the long-
term obligations and the second tranche will be that portion funding
the project.
(ii) Repayments of principal or interest on the first tranche shall
be scheduled to commence six months following the first disbursement of
funds and to conclude, with full repayment of principal and interest,
by the date that is the lesser of not later than 35 years after the
date the credit agreement is executed, or the remaining useful life of
the asset.
(iii) Repayments of principal or interest on the second tranche
shall be scheduled based on project cash flow and shall commence not
later than five years after substantial completion of the capital
improvement. The final maturity of the tranche shall be the lesser of
no later than 35 years after substantial completion of the project, or
the remaining useful life of the asset.
(5) For improvements financed with guaranteed loan proceeds under
this section, terms and conditions will be incorporated into the
guaranteed loan agreement to ensure that the completion, enhancement,
or expansion of the refinanced facility will commence and be completed
within a reasonable period after the closing of the transaction. The
DOT will require a binding commitment assuring the project will be
completed and shall require a penalty interest rate on the guaranteed
loan in the event of a development default.
(6) An applicant seeking a TIFIA loan guarantee under this section
must submit an application that addresses the proposed refinancing and
the improvement(s) facilitated by the refinancing using the TIFIA
application form contained in the DOT's TIFIA Program Guide, describing
in detail the plan of finance associated with the refinancing, and
demonstrate conformance with TIFIA requirements, and how the
refinancing will increase the funding capacity and enable the
completion, enhancement, or expansion of the facility.
(7) The improvement being financed with proceeds of a guaranteed
loan must adhere to the requirements in Sec. 80.5.
Sec. 80.25 Limitations on Federal credit assistance.
(a) The total dollar amount of Federal credit assistance offered to
a project in the form of Federal credit instruments will not exceed the
lesser of:
(1) 33 percent of the reasonably anticipated eligible project
costs, as measured on an aggregate cash (year-of-expenditure) basis; or
(2) If the Federal credit instrument does not receive an
investment-grade rating, the amount of project obligations senior to
the Federal credit instrument.
(b) The costs used to calculate eligible project costs may not
include:
(1) Costs incurred more than three years prior to the submission of
an application for a Federal credit instrument unless exceptional
circumstances exist, and inclusion of such costs is approved by the
Secretary.
(2) Costs incurred prior to submission of an application for a
Federal credit instrument that are in excess of 20 percent of total
eligible project costs.
(3) Operating costs incurred prior to substantial completion of the
project by a special purpose entity formed solely to construct and
operate the facility that are in excess of 5 percent of total eligible
project costs.
(c) To be considered eligible project costs, payments to a public
entity associated with the lease acquisition or concession fee must
reflect fair market value and be dedicated to transportation projects
eligible under title 23 or chapter 53 of title 49, United States Code.
Further, the eligibility of such payments is limited to 25 percent of
total eligible project costs. The final amount of eligible project
costs associated with such payments is subject to the approval of the
Secretary.
(d) Any loan made in connection with a credit agreement, whether a
secured loan, a guaranteed loan, or a loan made by drawing on a line of
credit, will be funded on a reimbursement basis, at such intervals as
specified in the credit agreement. In the case of a secured loan or a
guaranteed loan, the credit agreement will include the anticipated
schedule for such loan disbursements, which schedule the parties may
amend from time to time.
Sec. 80.27 Credit agreement closing and obligation of funds.
(a) Closing conditions. The DOT will enter into a credit agreement
only when
[[Page 3507]]
the project to receive Federal credit assistance meets the following
requirements:
(1) The project or project elements, as appropriate, comply with
applicable planning and programming requirements in 23 U.S.C. 134 and
135;
(2) The project has received an environmental Categorical
Exclusion, Finding of No Significant Impact, or Record of Decision;
(3) The requirements of 49 CFR 80.11 with respect to the
investment-grade rating must have been satisfied; and
(4) The project, if eligible pursuant to Section 5302 of 49 U.S.C.,
Chapter 53, has complied with 49 U.S.C. 5333(b) as evidenced by a
letter from the U.S. Department of Labor.
(b) Obligation of Federal funds. The DOT will obligate the subsidy
amount at the time it executes the credit agreement.
Sec. 80.29 Reporting requirements and credit monitoring.
(a) Credit rating maintenance. Throughout the life of the Federal
credit instrument, the borrower must obtain annually, at no cost to the
Federal government, current credit evaluations of the project, the
project obligations, and the Federal credit instrument. The current
credit evaluations must be performed by a rating agency. In the case of
an unpublished rating, the credit evaluation must consist of a formal
credit rating letter.
(b) Annual financial plan. Each recipient of Federal credit
assistance must submit an annual financial plan, elements of which may
be specified in the credit agreement, and audited financial statements
to the DOT not later than 180 days following the recipient's fiscal
year-end for each year during which the Federal credit instrument
remains outstanding. The annual financial plan must include a current
credit evaluation, as described in the preceding paragraph 80.29(a).
(c) The borrower will furnish the DOT with:
(1) Any information it submits to any rating agency; and
(2) Any report of which the borrower has knowledge relating to the
project credit, whether prepared by a rating agency or other
institution and irrespective of whether prepared at the direction of
the borrower or otherwise.
(d) Periodic audits. The DOT may periodically conduct, so long as a
Federal credit instrument is outstanding, such financial and compliance
audits as it deems necessary. Such audits will be at the borrower's
expense.
(e) Additional reporting requirements. The DOT may require
additional reporting requirements in the credit agreement which it
deems necessary to enable it properly to monitor the credit performance
of the project.
Sec. 80.31 Fees.
Section 603(b)(7) and section 604(b)(9) of Title 23, United States
Code, and Appendix A, Part II, Section 3b of OMB Circular A-129
authorize the Secretary to establish fees at a level sufficient to
recover all or a portion of the cost of making credit assistance
available under the TIFIA program. The following fees are not
considered eligible project costs for the purpose of calculating the
maximum amount of credit assistance.
(a) Application fee. An applicant must remit with its application
for Federal credit assistance a non-refundable application fee. The
amount of the application fee will be posted on the TIFIA Web site. The
DOT may change the application fee from time to time by notice
published in the Federal Register.
(b) Subsidy fee. If, in any given year, there is insufficient
budget authority to fund the credit instrument for a qualified project
that has been selected to receive assistance under TIFIA, the DOT and
the approved applicant may agree upon a supplemental fee to be paid by
or on behalf of the approved applicant at the time of execution of the
credit agreement to reduce the subsidy cost of that project. No such
fee may be included among eligible project costs for the purpose of
calculating the maximum 33 percent credit amount referenced in Sec.
80.25(a).
(c) Transaction fee. The DOT will assess each borrower a
transaction fee to reimburse the DOT for its actual costs incurred in
evaluating the application and processing the transaction, which
transaction fee the borrower must pay not later than thirty days after
closing. In the event a transaction does not result in a credit
agreement closing, the approved applicant must pay the transaction fee
not later than 30 days after notifying the DOT that it will no longer
seek credit assistance, or if the approved applicant fails to give the
DOT such notice, the Secretary establishes by objective evidence that
the approved applicant is no longer seeking credit assistance and so
notifies the approved applicant, not later than 30 days after such
notification.
(d) Servicing fee. The DOT will assess each borrower a servicing
fee for each Federal credit instrument to reimburse the DOT for the
costs of servicing Federal credit instruments. The amount of the
servicing fee will be posted on the TIFIA Web site. The DOT may change
the servicing fee from time to time by notice published in the Federal
Register.
(e) Monitoring fee. The DOT will include in each credit agreement
terms and conditions obligating the borrower to reimburse the DOT for
costs incurred in connection with monitoring the credit performance of
a project, the enforcement of credit agreement provisions, amendments
to the credit agreement and related documents, and other performance-
related activities.
Sec. 80.33 Use of administrative offset.
(a) The DOT will not apply an administrative offset to recover any
losses to the Federal Government resulting from project risk the DOT
has assumed under a Federal credit instrument.
(b) The DOT will employ an administrative offset to recover fees
assessed under 49 CFR 80.31 and also in cases of fraud,
misrepresentation, false claims, or similar criminal acts or acts of
malfeasance or wrongdoing.
Sec. 80.35 Program Guide; TIFIA Web site.
(a) Program Guide. The DOT will from time to time publish updates
to a TIFIA Program Guide, which will include updated information, a
loan template, and may reflect modifications to the application process
to provide more flexibility to project sponsors who are advancing
projects as private concessions. Reference should be made to the
Program Guide for additional information about the TIFIA program.
(b) Web site. The DOT maintains a Web site for the TIFIA program:
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://tifia.fhwa.dot.gov. The DOT will post on the TIFIA Web site:
(1) Amounts of application fee and monitoring fee assessed under 49
CFR 80.31;
(2) Promptly after execution, each term sheet, and;
(3) Promptly after closing of each credit agreement, the credit
agreement for such transaction to the extent that the credit agreement
does not contain confidential commercial information.
(c) Additional information. Additional DOT records related to the
TIFIA program may be requested through a Freedom of Information Act
request pursuant to 49 CFR Part 7.
Sec. 80.37 Applicant Information Requirements.
An applicant must obtain a Data Universal Number System (DUNS)
number and register on the Central Contractor Registration (CCR) site.
These requirements apply to all recipients of Federal assistance,
including entities receiving credit
[[Page 3508]]
assistance. If an applicant does not have a DUNS number, it can be
obtained free of charge through the Dun & Bradstreet (D&B) online Web
process at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://fedgov.dnb.com/webform. Information on CCR's on-line
registration can be found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ccr.gov. Additional information
on these requirements can be found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.grants.gov/applicants/register_your_organization.jsp.
CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF
TRANSPORTATION
PART 261--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS
3. Revise the authority citation for part 261 to read as follows:
Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107,
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat.1144; 23
U.S.C. 601-609 and 315; 49 CFR 1.49.
CHAPTER VI--FEDERAL TRANSIT ADMINISTRATION, DEPARTMENT OF
TRANSPORTATION
PART 640--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS
4. Revise the authority for Part 640 to read as follows:
Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107,
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat.1144; 23
U.S.C. 601-609 and 315; 49 CFR 1.51.
5. Add 49 CFR Chapter XIII to read as follows:
CHAPTER XIII--MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
PART 1700--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS
Sec.
1700.1 Cross-reference to credit assistance.
Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107,
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat. 1144; 23
U.S.C. 601-609 and 315; 49 CFR 1.66.
Sec. 1700.1 Cross-reference to credit assistance.
The regulations in 49 CFR Part 80 shall be followed in complying
with the requirements of this part. Title 49, CFR Part 80 implements
the Transportation Infrastructure Finance and Innovation Act of 1998,
secs. 1501, et seq., (Pub. L. 105-178, 112 Stat. 107, 241), as amended;
sec. 1601, 1602, Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 601-609.
[FR Doc. E9-1117 Filed 1-16-09; 8:45 am]
BILLING CODE 4910-62-P