[Federal Register Volume 74, Number 231 (Thursday, December 3, 2009)]
[Notices]
[Pages 63497-63501]
From the Federal Register Online via the Government Publishing 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: [email protected]. 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 [email protected]
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
[[Page 63500]]
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
[[Page 63501]]
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]
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