DOT Makes $1B in New TIFIA Loans
In the last seven days, the U.S. Department of Transportation has announced over $1 billion in new federal direct loans under the TIFIA transportation finance program, for a pair of new road projects in Virginia and North Carolina.
A $502.9 million direct loan was announced on December 12 to the Hampton Roads Transportation Accountability Commission for a slate of regional priority projects on Interstate 64 to increase capacity through the addition of both general purpose and HOV lanes and also by upgrading design elements. The loan will be repaid by local sales taxes and motor fuel taxes (subject to annual appropriation by the state legislature). Total project cost is $1.43 billion, with the TIFIA loan providing 35 percent of the financing.
Then, on December 18, a $501.5 million direct loan was announced for the “Complete 540” project in Raleigh – a 17-mile extension of the Triangle Expressway toll road with three tolled lanes in each direction running from Interstate 40, south of Raleigh, west to Apex. The total cost of this phase of the project is $1.37 billion and the TIFIA loan will provide 37 percent of the financing, to be repaid with toll revenues. When finally completed with a subsequent north-south segment, Complete 540 will give Raleigh its own outer beltway.
Because of the changes made by the Federal Credit Reform Act of 1990, the $1 billion cost of these TIFIA loans are not recorded as part of the federal budget. Only the “subsidy cost” of the loan is recorded in the budget, and paid for with Highway Trust Fund contract authority. The subsidy cost of each loan is a unique calculation, but the FY 2020 Federal Credit Supplement estimated that the average subsidy rate for direct loans closed in FY 2020 would be 5.72 percent, meaning that the two new $500 million loans would only cost the Federal Highway Administration about $29 million per loan in contract authority.
Once these two new loans close in a few months, that will bring the total amount of TIFIA loans closed by the Trump Administration to $6.65 billion, supporting projects that total $22.57 billion in capital costs (for an average TIFIA share of 29 percent). We don’t have precise estimates for the subsidy cost of each of those loans, but using the annual averages from the Federal Credit Supplement (as shown in the table below), that $6.65 billion in loans will only have cost the Federal Highway Administration about $420 million in contract authority.
(However, under the FAST Act, TIFIA gets between $250 and $270 million per year in usable contract authority, and in FY 2018 they only used about $140 million and in FY 2019 about $100 million, so the unused balances keep building up, as discussed in this ETW article from December 2015.)
|FY Closed||State/Project||Cost||Size||Rate||Contr. Auth.|
|FY17||CO||C-470 Express Lanes||$325.1||$107.0||5.28%||$5.6|
|FY17||WA||Bellevue Belred Street Network||$323.2||$99.6||5.28%||$5.3|
|FY17||WA||Sound Transit O&M Facility||$449.2||$87.7||5.28%||$4.6|
|FY17||CA||San Diego Mid-Coast Transit Corridor||$2,017.0||$537.5||5.28%||$28.4|
|FY17||NY||NYC Moynihan Station Train Hall||$1,850.0||$526.1||5.28%||$27.8|
|FY17||CA||Riverside County I-15 Express Lanes||$471.0||$152.2||5.28%||$8.0|
|FY17||CA||Orange County I-405 Improvement||$1,905.8||$628.9||5.28%||$33.2|
|FY18||MA||MBTA PTC Implementation||$516.7||$162.0||7.90%||$12.8|
|FY18||VA||I-66 Toll Lanes||$3,724.0||$1,229.0||7.90%||$97.1|
|FY19||CA||SBCTA I-10 Express Lanes||$928.9||$225.0||6.30%||$14.2|
|FY19||TX||Manor Expressway Phase 3||$143.0||$46.9||6.30%||$3.0|
|FY19||TX||Grand Parkway Segments H&I||$1,924.0||$605.3||6.30%||$38.1|
|FY19||WA||Lynnwood Link Extension||$3,124.8||$657.9||6.30%||$41.4|
|FY20||VA||Hampton Roads Priority Projects||$1,430.1||$502.9||5.72%||$28.8|
|FY20||NC||Complete 540 Project||$1,365.3||$501.5||5.72%||$28.7|
|Total, TIFIA Under Trump Administration||$22,569.1||$6,652.1||$418.6|