1. Financing Techniques Guide For Project Sponsors along US/Mexico Border

2. Outline Outline What is a project sponsor? TIFIA Credit Program Private Activity Bonds RRIF Credit Program BANOBRAS Credit Programs Other financing techniques Contacts for more information

3. What is a project sponsor? Any legal entity proposing a transportation project: –State DOTs –Cities, counties –Bridge authorities or districts –Border authorities or districts –Private sector firms

4. What is a project sponsor? For a given project: – May be combination of legal entities – Will vary based on project size, complexity, geographic reach and available financing options

5. What is a project sponsor? What entity is authorized/obligated to: – Enter into contracts? – Enforce contract provisions? – Borrow funds? – Repay borrowed funds?

6. TIFIA Credit Program Summary of Program TIFIA = Transportation Infrastructure Finance and Innovation Act Strategic goal of TIFIA is to: – Leverage limited federal resources – Stimulate private capital investment

7. TIFIA Credit Program Federal credit assistance provided in several forms: –Direct loans –Loan guarantees –Standby lines of credit –Combinations of above For projects costing an estimated $50 million or more; $15 million threshold for ITS projects

8. TIFIA Credit Program TIFIA contribution limited to 33% of estimated project costs Senior debt must be investment grade Dedicated revenues available for repayment of credit assistance Federal requirements are met

9. TIFIA Credit Program Key objectives are to: –Accelerate projects –Encourage new revenue streams –Encourage private participation –Fill capital market gaps –Provide assistance as flexible, patient investor –Limit federal losses –Maximize use of budget authority

10. TIFIA Credit Program Eligible Borrowers –State governments, agencies, authorities –Local governments, agencies, authorities –Bridge, border, transit authorities –Multi-state consortia –Private companies –Joint ventures –Bi-national entities

11. TIFIA Credit Program Benefits of Program –Interest and principal payments may be deferred for up to five years –Repayment may extend up to 35 years –Interest rates equivalent to Treasury rates –No prepayment penalty –Accelerate projects; avoid cost increases

12. TIFIA Credit Program Project Selection Criteria –Regional or national significance –Private participation –Favorable environmental impact –Project acceleration –Credit worthiness –Reduction in grant assistance –Use of budget authority

13. TIFIA Credit Program Eligible Projects –Highways and bridges –Freight and passenger rail –Inter-city passenger bus facilities –Intermodal freight transfer facilities –Access to intermodal freight transfer facilities –Port terminal projects –International bridges and tunnels

14. TIFIA Credit Program Application Process –Contact TIFIA Joint Program Office and/or Resource Center Finance Team –Submit Letter of Interest to USDOT –Assess comments provided by USDOT and revise project, if appropriate –Ensure project is included in state transportation plan –Ensure environmental requirements are met –Obtain preliminary rating letter

15. TIFIA Credit Program Application Process, cont’d –Prepare and submit application to USDOT –Make presentation to TIFIA Joint Program Office –Ensure that ROD is obtained –Ensure that project is included in approved STIP –Ensure that investment grade opinion letter is obtained

16. TIFIA Credit Program Application Process, cont’d –Negotiate credit agreement with USDOT –Pay credit processing fee equal to USDOT costs incurred in negotiating agreement –Pay for financial and legal advisors working on project sponsor’s behalf

17. TIFIA Credit Program Contact Information Mr. Mark Sullivan TIFIA Joint Program Office (HCF-50) U.S. Department of Transportation Room 4310 400 Seventh Street, S.W. Washington DC 20590 (202) 366-5785 http://tifia.fhwa.dot.gov

18. Private Activity Bonds Summary of Program PABs = Private Activity Bonds $15 billion available Allow private project sponsors to issue tax- exempt bonds at low, tax-exempt interest rates PABs can be issued for highway, bridge, rail and freight transfer facilities

19. Private Activity Bonds Eligible Borrowers –Private project sponsors developing highway, bridge, rail or freight transfer facilities –Need to work closely with public sector “conduit issuer” selling bonds –Need to ensure project is included in STIP and is Title 23 eligible

20. Private Activity Bonds Qualified Projects –Surface transportation projects receiving assistance under Title 23 –Any project for an international bridge or tunnel which an international entity manages –Any facility for transfer of freight from truck to rail or rail to truck, including temporary storage facilities

21. Private Activity Bonds Qualified Projects, cont’d –Any TIFIA-assisted public transportation, intercity bus or rail facilities and vehicles –This includes vehicles and facilities owned by Amtrak –This also includes public freight rail facilities, private freight rail facilities, and intermodal freight transfer facilities

22. Private Activity Bonds Application Process Project sponsors requesting PAB authority should provide following data elements: –Amount of requested allocation –Proposed date of bond issuance –Date of bond issuer resolution –Draft bond counsel opinion letter

23. Private Activity Bonds Application process, cont’d Data elements: –Financing/development team information –Borrower information –Project description –Project schedule –Financial structure –Title 23/49 funding received

24. Private Activity Bonds Application process, cont’d Data elements: –Project readiness –Signatures –Declarations –Addresses

25. Private Activity Bonds Contact Information Mr. Jack Bennett U.S. Department of Transportation Office of the Asst. Secy. for Transportation Policy P-20, Room 10305 E 400 7 th Street S. W. Washington DC 20590 (202) 366-6222

26. RRIF Credit Program Summary of Program RRIF = Railroad Rehabilitation and Improvement Financing program Administrator of FRA is authorized to provide up to $35 billion in loans and loan guarantees

27. RRIF Credit Program Eligible Borrowers –Railroads –State and local governments –Government-sponsored authorities and corporations –Joint ventures including at least one railroad –Freight shippers

28. RRIF Credit Program Benefits of Program –Loans for up to 100% of eligible project costs –Repayment periods up to 25 years –Interest rates equivalent to Treasury rates –Project acceleration –Avoidance of future ROW and construction cost increases

29. RRIF Credit Program Evaluation Criteria –Eligible borrower and project –Creditworthiness of project –Extent to which project will enhance safety –Significance of project on local, regional, national level –Improvement to the environment –Improvement in service or capacity in railroad transportation system

30. RRIF Credit Program Eligible Projects RRIF credit may be used to: –Acquire, improve, or rehabilitate intermodal or rail equipment or facilities –Refinance outstanding debt incurred for the above purposes –Develop or establish new intermodal or railroad facilities

31. RRIF Credit Program Application Process –Contact FRA Office of Freight Programs –Compile preliminary application information: a. Description of project, including amount of loan or loan guarantee requested; b. Description of benefits and/or savings to be generated by project; c. Description of collateral; d. Financial statements; and

32. RRIF Credit Program Application Process, cont’d e. Discussion whether project: Will enhance safety and the environment Will promote economic development and US competitiveness Will preserve rail or enhance intermodal service Is included in the state’s transportation plan

33. RRIF Credit Program Application Process, cont’d –Assess FRA comments/feedback –Submit Loan Application to FRA –Pay evaluation fee –Pay Credit Risk Premium

34. RRIF Credit Program Contact Information Federal Railroad Administration Office of Freight Programs (RDV-12) 400 7 th Street SW Washington DC 20590 (202) 493-6381

35. BANOBRAS Credit Programs Summary of Program BANOBRAS = Banco Nacional de Obras y Servicios Publicos (National Bank for Public Works and Services) Provides financial assistance to state and municipal administrations in Mexico

36. BANOBRAS Credit Programs Eligible Projects, examples –Construction and improvement of highways, bypasses and bridges –Construction of passenger and cargo terminals –Intersection improvements –Lighting and traffic signals –Planning and paving of local streets

37. BANOBRAS Credit Programs Available Financial Assistance –Direct loans to concessionaires –Other financial support to concessionaires, such as contingent and revolving credit –Long-term refinancing –Partial guarantees for a public sale or offering –Support for federal New Concession Plan for Toll Highways

38. BANOBRAS Credit Programs Supports New Concession Plan by providing funds to Investment Fund for Infrastructure (FINFRA) In turn, FINFRA: –Grants public funds to reduce equity investment and/or bank loans needed by concessionaire to finance construction –Provides guarantees supporting concessionaire debt

39. BANOBRAS Credit Programs Contact Information Direccion de Promocion y Proyectos BANOBRAS, S.N.C. Av. Javier Barros Sierra 515 Pisos 5, 6 y 8 Colonia Lomas de Santa Fe CP 01219 Tel. 5270-1200

40. Other Financing Techniques State Infrastructure Bank (SIB) Lending –All states are now allowed to establish SIBs –States can use up to 10% of FHWA and FTA funding to capitalize SIBs –States must provide matching state funds –SIBs can provide direct loans and credit enhancement to public entities or private firms

41. Other Financing Techniques GARVEE Bonding GARVEE = Grant Anticipation Revenue Vehicles –All states are now allowed to issue GARVEEs –GARVEEs are secured by future federal funds for federal-aid eligible projects –Expand state’s borrowing capacity –Accelerate construction of critical projects

42. Other Financing Techniques Tolling Initiatives –Interstate Construction Toll Pilot Program –Express Lanes Demonstration Program –HOV to HOT Lane Conversion Program –Interstate System Reconstruction and Rehabilitation Toll Pilot Program –One-stop FHWA application procedure

43. Other Financing Techniques Other Funding from Federal Railroad Administration –Congressional appropriations for specific high-priority rail projects –Congressional appropriations for research and development projects for passenger and freight rail

44. Contacts for more information Ms. Thay Bishop, Team Leader USDOT FHWA Resource Center Innovative Finance Team 61 Forsyth Street SW, Suite 17T26 Atlanta GA 30303 (404) 562-3695 thay.bishop@fhwa.dot.gov