January 12, 2018

The U.S. Department of Transportation closed two more TIFIA loans in December, bringing the total loan volume for the Trump Administration’s first year to $4.1 billion. That $4.1 billion in financing will enable new transportation projects with a total cost of $13.7 billion.

The Colorado Department of Transportation received a $416 million loan to upgrade Interstate 70-East through Denver. The “Central 70” project is a public-private partnership between Colorado DOT, Kiewit Infrastructure, and Meridian Capital, which also relies on $121 million in private activity bonds (PABs).

And the Boston-area commuter rail authority (MBTA) got a $162 million TIFIA loan (coupled with a separate $220 million RRIF loan) to install positive train control (PTC) technology throughout its system. MBTA joins the New York commuter railroads (Metro-North and LIRR) which got a $967 million RRIF loan for their PTC costs in 2015.

Under federal budget rules, the $4.1 billion face value of the loans is not counted towards federal spending totals. Only the “subsidy cost” of the loans (a calculation of default risk, interest differentials, etc.) counts, and is determined by DOT and the Office of Management and Budget on a case-by-case basis. In the FY 2018 Budget, OMB estimated that the average subsidy cost of FY 2017 TIFIA loans would be 6.85 percent. Using that guesstimate, the $4.1 billion in CY 2017 TIFIA loans would only cost the program about $283 million in contract authority. This is right around the $285 million in new contract authority for the TIFIA program provided by the FAST Act in FY 2018, but does not begin to spend down the $800 million in carryover contract authority balances provided by previous authorizations but not used. (See this article for details.)