[Federal Register Volume 74, Number 231 (Thursday, December 3, 2009)]
[Notices]
[Pages 63497-63501]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-28860]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary of Transportation

[Docket No. FHWA-2009-0123]


Notice of Funding Availability for Applications for Credit 
Assistance Under the Transportation Infrastructure Finance and 
Innovation Act (TIFIA) Program; Clarification of TIFIA Selection 
Criteria; and Request for Comments on Potential Implementation of Pilot 
Program To Accept Upfront Payments for the Entire Subsidy Cost of TIFIA 
Credit Assistance

AGENCY: Federal Highway Administration (FHWA), Federal Railroad 
Administration (FRA), Federal Transit Administration (FTA), Maritime 
Administration (MARAD), Office of the Secretary of Transportation 
(OST), U.S. Department of Transportation (DOT).

ACTION: Notice of Funding Availability; Clarification of Selection 
Criteria; Request for Comments.

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SUMMARY: The DOT's TIFIA Joint Program Office (JPO) announces the 
availability of a limited amount of funding in fiscal year (FY) 2010 to 
support new applications for credit assistance. Under TIFIA, the DOT 
provides secured (direct) loans, lines of credit, and loan guarantees 
to public and private applicants for eligible surface transportation 
projects of regional or national significance. Projects must meet 
statutorily specified criteria to be selected for credit assistance.
    Because demand for the TIFIA program now exceeds budgetary 
resources, the DOT hereby formally

[[Page 63498]]

announces the suspension of the program's open application process and 
the return to periodic fixed-date solicitations that will establish a 
competitive group of projects to be evaluated against program 
objectives. This notice outlines the process that applicants must 
follow for Federal FY 2010.
    Additionally, the DOT provides new language clarifying its use of 
the TIFIA selection criteria, incorporating explicit consideration of 
these policy objectives: livability, economic competitiveness, safety, 
sustainability, and state of good repair. Finally, in light of 
constrained resources vis-[agrave]-vis demand for TIFIA assistance, the 
DOT requests comments regarding the potential implementation of a pilot 
program to accept, from qualified borrowers, an upfront fee payment to 
offset the entire subsidy cost of TIFIA credit assistance.

DATES: For consideration in the FY 2010 funding cycle, Letters of 
Interest must be submitted by 4:30 p.m. EST on December 31, 2009, using 
the revised form on the TIFIA Web site: http://tifia.fhwa.dot.gov/guide_apps/. Applicants that have previously submitted Letters of 
Interest must restate them with additional information as outlined 
below.
    The application due date will be established after consultation 
between the TIFIA JPO and the applicant.
    Comments regarding the potential pilot program must be submitted by 
4:30 p.m. EST on December 31, 2009. Late-filed comments will be 
considered to the extent practicable.

ADDRESSES: Submit all Letters of Interest to the attention of Mr. Duane 
Callender via e-mail at: TIFIACredit@dot.gov. Submitters should receive 
a confirmation e-mail, but are advised to request a return receipt to 
confirm transmission. Only Letters of Interest received via e-mail, as 
provided above, shall be deemed properly filed.
    Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room PL-401, 1200 New 
Jersey Avenue, SE., Washington, DC 20590 or fax comments to (202) 493-
2251. Provide two copies of comments submitted by mail or courier. 
Alternatively, comments may be submitted via the Federal eRulemaking 
Portal at http://www.regulations.gov. All comments must 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. Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70, Pages 19477-78).

FOR FURTHER INFORMATION CONTACT: For further information regarding this 
notice please contact Duane Callender via e-mail at TIFIACredit@dot.gov 
or via telephone at 202-366-9644. A TDD is available at 202-366-7687. 
Substantial information, including the TIFIA Program Guide and 
application materials, can be obtained from the TIFIA Web site: http://tifia.fhwa.dot.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Eligible Projects
III. Types of Credit Assistance
IV. Threshold Requirements
V. Rating Opinions
VI. Letters of Interest and Applications
VII. Fees
VIII. Clarification of Selection Criteria
IX. Potential Pilot Program

I. Background

    The Transportation Equity Act for the 21st Century (TEA-21), Public 
Law 105-178, 112 Stat. 107, 241, (as amended by sections 1601-02 of 
Pub. L. 109-59) established the Transportation Infrastructure Finance 
and Innovation Act of 1998 (TIFIA), authorizing the U.S. Department of 
Transportation (DOT) to provide credit assistance in the form of 
secured (direct) loans, lines of credit, and loan guarantees to public 
and private applicants for eligible surface transportation projects. 
The TIFIA regulations (49 CFR part 80) provide specific guidance on the 
program requirements.\1\ On January 5, 2001, at 65 FR 2827, the 
Secretary of Transportation (Secretary) delegated to the Federal 
Highway Administration (FHWA) the authority to act as the Executive 
Agent for the TIFIA program (49 CFR 1.48(b)(6)). The TIFIA Joint 
Program Office (JPO), a component of the FHWA Office of Innovative 
Program Delivery, has responsibility for coordinating program 
implementation.
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    \1\ The TIFIA regulations have not been updated to reflect 
changes enacted in Public Law 109-59, SAFETEA-LU. Where the statute 
and the regulation conflict, the statute takes precedence. See the 
TIFIA Program Guide for updated program information.
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    In 2005, Congress enacted the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) 
(Pub. L. 109-59, 119 Stat. 1144), which made a number of amendments to 
TIFIA including lowering the thresholds and expanding eligibility for 
TIFIA credit assistance. SAFETEA-LU authorized $122 million annually 
from the Highway Trust Fund (HTF) for fiscal years 2005 to 2009 in 
TIFIA budget authority to pay the subsidy cost of credit assistance. 
After reductions for administrative expenses and application of the 
annual obligation limitation, TIFIA has approximately $110 million 
available annually to provide credit subsidy support to projects. 
Although dependent on the individual risk profile of each loan, 
collectively, this budget authority represents approximately $1.1 
billion in annual lending capacity. As detailed below, the TIFIA JPO is 
able to provide a limited amount of credit assistance to new applicants 
in FY 2010.

II. Eligible Projects

    Highway, passenger rail, transit, and intermodal projects 
(including intelligent transportation systems) may receive credit 
assistance under TIFIA. Additionally, SAFETEA-LU expanded eligibility 
to 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. See the revised definition of ``project'' in 23 U.S.C. 
601(a)(8) and Chapter 3 of the TIFIA Program Guide for a description of 
eligible projects.

III. Types of Credit Assistance

    The DOT may provide credit assistance in the form of secured 
(direct) loans, lines of credit, and loan guarantees. These types of 
credit assistance are defined in 23 U.S.C. 601 and 49 CFR 80.3. Subject 
to certain conditions, the TIFIA credit facility can hold a subordinate 
lien on pledged revenues. The maximum amount of TIFIA credit assistance 
to a project is 33 percent of eligible project costs.

IV. Threshold Requirements

    Projects seeking TIFIA assistance must meet certain statutory 
threshold requirements. Generally, the minimum size for TIFIA projects 
is $50 million of eligible project costs; however, the minimum size for 
TIFIA projects principally involving the installation of an intelligent 
transportation system is

[[Page 63499]]

$15 million. Each project seeking TIFIA assistance must apply to the 
DOT, and must satisfy the applicable state and local transportation 
planning requirements. Each application must identify a dedicated 
revenue source to repay the TIFIA loan, and each private applicant must 
receive public approval for its project as demonstrated by satisfaction 
of the applicable planning and programming requirements. These 
eligibility requirements are detailed in 23 U.S.C. 602(a) and Chapter 3 
of the TIFIA Program Guide.

V. Rating Opinions

    The senior debt obligations for each project receiving TIFIA credit 
assistance must obtain an investment grade rating from at least one 
nationally recognized credit rating agency, as defined in 23 U.S.C. 
601(a)(10) and 49 CFR 80.3. If the TIFIA credit instrument is proposed 
as the senior debt, then it must receive the investment grade rating.
    To demonstrate this potential, each application must include a 
preliminary rating opinion letter from a credit rating agency that 
addresses the creditworthiness of the senior debt obligations funding 
the project (for example, those which have a lien senior to that of the 
TIFIA credit instrument on the pledged security) and the default risk 
of the TIFIA credit instrument, and that concludes there is a 
reasonable probability for the senior debt obligations to receive an 
investment grade rating. This preliminary rating opinion letter will be 
based on the financing structure proposed by the applicant. A project 
that does not demonstrate the potential for its senior obligations to 
receive an investment grade rating will not be considered for TIFIA 
credit assistance.
    Letters of Interest submitted pursuant to this notice do not need 
to include the preliminary rating opinion letter. Only those invited to 
submit applications will be required to obtain the preliminary rating 
opinion letter.
    Each project selected for TIFIA credit assistance must obtain an 
investment grade rating on its senior debt obligations (which may be 
the TIFIA credit facility) and a revised opinion on the default risk of 
the TIFIA credit instrument before the FHWA will execute a credit 
agreement and disburse funds. More detailed information about these 
TIFIA credit opinions and ratings may be found in the Program Guide on 
the TIFIA Web site at http://tifia.fhwa.dot.gov/guide_apps/.

VI. Letters of Interest and Applications

    Because the demand for credit assistance now exceeds budgetary 
resources, it is no longer feasible for DOT to maintain, as it has 
since 2002, an open process whereby the TIFIA JPO accepts applications 
on a ``first come, first serve'' basis as defined by the optimal 
schedule of the applicant. Instead, pursuant to this notice, the DOT 
returns to periodic fixed-date solicitations that will establish a 
competitive group of projects to be evaluated against the TIFIA program 
objectives.
    Applicants seeking TIFIA credit assistance for FY 2010 must submit 
a Letter of Interest describing the project fundamentals and addressing 
the TIFIA selection criteria. For consideration in the FY 2010 funding 
cycle, Letters of Interest must be submitted by 4:30 p.m. EST on 
December 31, 2009, using the newly revised form on the TIFIA Web site: 
http://tifia.fhwa.dot.gov/guide_apps/. Applicants that have previously 
submitted Letters of Interest must restate them using the newly revised 
form. For the purpose of completing its evaluation, the TIFIA JPO staff 
may contact an applicant regarding specific information in the Letter 
of Interest.
    A public agency that seeks access to TIFIA on behalf of multiple 
competitors for a project concession must submit the project's Letter 
of Interest. Although the public agency would not become the TIFIA 
borrower, nor even have yet identified the TIFIA applicant, it must 
provide information sufficient for the DOT to evaluate the project 
against the TIFIA program objectives. The DOT will not consider Letters 
of Interest from entities that have not obtained rights to develop the 
project.
    After concluding its review of the Letters of Interest, the DOT 
will invite complete applications (including the preliminary rating 
opinion letter and detailed plan of finance) for the highest-rated 
projects. The application due date will be established after 
consultation between the TIFIA JPO and the applicant.
    An invitation to apply for credit assistance does not guarantee the 
DOT's approval, which will remain subject to evaluation based on 
TIFIA's statutory credit standards and the successful negotiation of 
all terms and conditions.

VII. Fees

    There is no fee to submit a Letter of Interest. Unless otherwise 
indicated in a subsequent notice published in the Federal Register, 
each invited applicant must submit, concurrent with its application, a 
non-refundable fee of $50,000, an amount based on historical costs 
incurred by the TIFIA JPO for financial advisory services to help 
evaluate TIFIA applications. The FHWA no longer accepts paper checks, 
so payments should be made via ACH, at https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=18446839. For successful 
applicants, this fee will be credited toward final payment of a credit 
processing fee (also referred to as a transaction fee), to be assessed 
at financial close, to reimburse the TIFIA JPO for actual financial and 
legal costs.
    For projects that enter credit negotiations, the DOT and the 
applicant will execute a term sheet that, among other conditions, will 
require the borrower to pay at closing or, in the event no final credit 
agreement is reached, upon invoicing by the TIFIA JPO, an amount equal 
to the actual costs incurred by the TIFIA JPO in procuring the 
assistance of outside financial advisors and legal counsel through 
execution of the credit agreement(s) and satisfaction of all funding 
requirements of those agreements. Typically, the amount of this fee has 
ranged from $200,000 to $300,000, although it has been greater for 
projects that require complex financial structures and extended 
negotiations.
    As described below, the DOT may charge the borrower a supplemental 
upfront fee to reduce the subsidy cost to the Federal Government of 
providing credit assistance. The subsidy cost calculation, also 
described below, is based on anticipated risk to the Federal 
Government. This fee is paid by or on behalf of the borrower at the 
DOT's point of obligation, usually at the execution of the credit 
agreement.
    The TIFIA JPO charges each borrower an annual fee for loan 
servicing activities associated with each TIFIA credit instrument. The 
current fee, adjusted annually per the Consumer Price Index, is $11,500 
per year.
    Finally, the TIFIA credit agreements will allow the TIFIA JPO to 
charge, as incurred, a monitoring fee equal to its costs of outside 
advisory services required to assist the TIFIA JPO to modify or enforce 
the agreement.
    Applicants may not include any of the fees described above--or any 
expenses associated with the application process (such as charges 
associated with obtaining the required preliminary rating opinion 
letter)--among eligible project costs for the purpose of calculating 
the maximum 33 percent credit amount.

VIII. Clarification of Selection Criteria

    The eight TIFIA selection criteria are described in statute at 23 
U.S.C. 602(b) and assigned relative weights via regulation at 49 CFR 
80.15. The criteria

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are restated below with (where appropriate) clarifying language 
indicating how the DOT will interpret them. In general, these 
clarifications indicate the DOT's desire to give priority to projects 
that have a significant impact on desirable long-term outcomes for the 
Nation, a metropolitan area, or a region. The clarifying language is 
provided in italics.
    Listed in order of relative weight, the TIFIA selection criteria 
are as follows:
    (i) The extent to which the project is nationally or regionally 
significant, in terms of generating economic benefits, supporting 
international commerce, or otherwise enhancing the national 
transportation system. This includes consideration of livability: 
providing transportation options that are linked with housing and 
commercial development to improve the economic opportunities and 
quality of life for people in communities across the U.S.; economic 
competitiveness: contributing to the economic competitiveness of the 
U.S. by improving the long-term efficiency and reliability in the 
movement of people and goods; and safety: improving the safety of U.S. 
transportation facilities and systems and the communities and 
populations they impact. Relative weight: 20 percent.
    (ii) The extent to which TIFIA assistance would foster innovative 
public-private partnerships and attract private debt or equity 
investment. Relative weight: 20 percent.
    (iii) The extent to which the project helps maintain or protect the 
environment. This includes sustainability: improving energy efficiency, 
reducing dependence on oil, reducing greenhouse gas emissions, and 
reducing other transportation-related impacts on ecosystems; and the 
state of good repair: improving the condition of existing 
transportation facilities and systems, with particular emphasis on 
projects that minimize lifecycle costs and use environmentally 
sustainable practices and materials. Relative weight: 20 percent.
    (iv) The creditworthiness of the project, including a determination 
by the Secretary of Transportation that any financing for the project 
has appropriate security features, such as a rate covenant, to ensure 
repayment. Relative weight: 12.5 percent.
    (v) The likelihood that TIFIA assistance would enable the project 
to proceed at an earlier date than the project would otherwise be able 
to proceed. Relative weight: 12.5 percent.
    (vi) The extent to which the project uses new technologies, 
including intelligent transportation systems, to enhance the efficiency 
of the project. Relative weight: 5 percent.
    (vii) The amount of budget authority required to fund the Federal 
credit instrument made available under TIFIA. Relative weight: 5 
percent.
    (viii) The extent to which TIFIA assistance would reduce the 
contribution of Federal grant assistance to the project. Relative 
weight: 5 percent.
    Note that, when evaluating the Letters of Interest, the information 
needed to address criterion (iv), creditworthiness, and criterion 
(vii), budget authority, is unlikely to be available in sufficient 
detail. Therefore, the DOT will not employ these two criteria when 
reviewing the Letters of Interest. However, DOT will consider these 
criteria when reviewing project applications.

IX. Potential Pilot Program

    As noted above, SAFETEA-LU authorized $122 million annually from 
the HTF for fiscal years 2005-2009 in TIFIA budget authority to pay the 
subsidy cost of credit assistance. As of the publication date of this 
notice, two short-term extensions of the surface transportation 
reauthorization act have been enacted continuing highway programs that 
were authorized through FY 2009, and the expectation is that Congress 
will reauthorize an equivalent amount of budget authority for the TIFIA 
program in FY 2010. Any budget authority not obligated in the fiscal 
year for which it is authorized remains available for obligation in 
subsequent years. The TIFIA budget authority is subject to an annual 
obligation limitation that may be established in appropriations law. 
Like all funds subject to the annual Federal-aid obligation ceiling, 
the amount of TIFIA budget authority available in a given year may be 
less than the amount authorized for that fiscal year.
    Beginning in FY 2008, for the first time since the inception of the 
TIFIA program, the total credit requests from TIFIA applicants exceeded 
available resources. This new imbalance immediately proved substantial, 
as requests far exceeded the remaining authority provided by SAFETEA-
LU, as well as an additional year (for example, FY 2010) funded at the 
equivalent level. In response, the Department suspended its 
consideration of new applications and reserved the anticipated fiscal 
years 2009 and 2010 appropriations with the expectation that several, 
if not all, of the existing applicants would--for the first time--
contribute to the Government's cost of providing credit assistance in 
the form of an upfront fee as contemplated by the authorizing statute 
and the implementing regulation.
    As stated in 23 U.S.C. 603(b)(7), 603(e) and 604(b)(9), the DOT may 
establish fees at a level sufficient to cover all or a portion of its 
costs of making a secured loan, loan guarantee, or line of credit. From 
this authority, 49 CFR 80.17(c) states:

    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 that project. No such fee 
may be included among eligible project costs for the purpose of 
calculating the maximum 33 percent credit amount [of eligible TIFIA 
assistance].

    Consistent with the Federal Credit Reform Act of 1990 and the 
requirements of the Office of Management and Budget (OMB), the subsidy 
cost of a loan is affected by recovery assumptions, allowance for 
defaults, the borrower's interest rate, and fees. The factors that most 
heavily influence the subsidy cost of a TIFIA loan fall into the 
recoveries category (for example, the repayment pledge and whether the 
debt is senior or subordinate) and the allowance for defaults category 
(including the credit rating on the debt and the degree of back-
loading). The borrower's interest rate will also affect the subsidy 
cost of the TIFIA loan. The final subsidy cost estimate is expressed as 
a percentage of the principal amount of the credit assistance.
    By charging borrowers an upfront fee, the DOT is able to support 
more projects than under its previous policy--established when budget 
resources were ample--of funding a portion of the subsidy cost with its 
own monies. In fact, to meet existing applicant demand, the DOT used 
this authority to limit the maximum amount of funds it would obligate 
for any single project's subsidy cost, thus requiring borrowers in 
several instances to pay an upfront fee to offset the subsidy cost of 
TIFIA credit assistance. Even with this limitation, the DOT has had to 
reserve much of its anticipated FY 2010 TIFIA budget authority to 
support these projected commitments, relying primarily on future years' 
authorizations and appropriations to fund more credit assistance.
    Several potential applicants, however, rather than waiting to 
compete for scarce TIFIA funds in FY 2010 and beyond, have indicated an 
interest in

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the option of paying a fee to offset the entire budgetary cost to the 
Federal Government. As a result, the DOT hereby announces that it is 
exploring the potential of implementing a pilot program under which the 
DOT would accept applications for projects where the borrowers are 
willing and able to pay a fee to offset the entire subsidy cost of 
TIFIA credit assistance. The purpose of this pilot program would be to 
extend credit, consistent with policy objectives, to qualified projects 
that the DOT otherwise might not select for TIFIA assistance merely due 
to insufficient budgetary resources. This pilot program would be 
undertaken under authority of 23 U.S.C. 603(a)(7), 603(e), (604)(b)(9), 
and 49 CFR 80.17(c), which allow successful applicants to pay a fee to 
reduce the cost to the Federal Government associated with the credit 
assistance provided to the project. Such a project would be evaluated 
based on satisfaction of the same TIFIA selection criteria, as 
clarified in this notice, which apply to all applicants.
    The DOT will take all comments regarding the potential pilot 
program into consideration and, if it decides to proceed with the pilot 
program, may revise some elements of this notice. Depending on the 
nature of the comments and the number of Letters of Interest submitted, 
the DOT may invite applications without publishing a supplemental 
notice. If the DOT decides to proceed with the pilot program, qualified 
applicants that have responded to this notice would become eligible to 
pay an upfront fee to offset the entire cost of providing TIFIA credit 
assistance.

    Authority: 23 U.S.C. 601-609; 49 CFR 1.48(b)(6); 23 CFR part 
180; 49 CFR part 80; 49 CFR part 261; 49 CFR part 640.

    Issued on: November 20, 2009.
Victor M. Mendez,
Administrator.
[FR Doc. E9-28860 Filed 12-2-09; 8:45 am]
BILLING CODE 4910-9X-P