Eno Transportation Weekly
TIFIA Loan Activity Slowed in FY18
November 2, 2018
The U.S. Department of Transportation only closed three TIFIA loans in fiscal 2018, totaling $1.8 billion in loan face value. This was less than half of the new loan authority provided by Congress for fiscal 2018 in the FAST Act, which then added to the already-sizable carryover of unused TIFIA funding that has ben building for 20 years.
The three TIFIA loans that closed in FY18 were:
|State||Project||Million $||Closing Date|
|VA||I-66 Toll Lanes||1,229||Nov 7 2017|
|MA||MBTA PTC||162||Dec 8 2017|
|CO||I-70 Toll Lanes||416||Dec 19 2017|
|TOTAL LOAN FACE VALUE||1,807|
The precise amount of federal funding used to make these loans (the “subsidy cost” under the Federal Credit Reform Act of 1990) won’t be made public until the FY 2020 budget supporting documents are released in three months, but in the FY 2019 Federal Credit Supplement, the Office of Management and Budget used a “notional” subsidy rate of FY 2018 TIFIA loans of 6.64 percent of face value. If that amount is close to accurate, then the amount of federal budget authority used to make these loans would be about 6.64 percent of $1.807 billion, or $120 million.
Total TIFIA loans made since the inception of the program in FY 1999 now total $30.6 billion, and those loans required $2.0 billion in federal contract authority or appropriations, for an overall subsidy rate for the program to date of about 6.6 percent.
|Actual TIFIA Subsidy Funding Used vs.Direct Loans Made|
|(Millions of dollars.)|
|FY||Subsidy BA||Loan Levels|
|Source: the Analytical Perspectives volume of the Budget of the United States for each year 2001-2019 plus FY18 subsidy rate estimate from the FY 2019 Federal Credit Supplement.|
The FAST Act (as limited and “lopped off” by the annual obligation limitation) provided $261 million in new subsidy cost budget authority for TIFIA in 2018, and $120 million would be less than half of that, so about $141 million is rolled over for future years. All told, about $346 million of TIFIA money provided under the first three years of the FAST Act was not used and then was carried over.
As this extensive ETW article from December 2015 made clear, the TIFIA program was receiving $1 billion per year in new loan subsidy authority before the FAST Act cut that amount by two-thirds. But that cut wasn’t reflected in actual loans made by the TIFIA program because there weren’t enough loans being made. The TIFIA program had to forfeit $640 million in carryover balances in April 2015 because they weren’t being used. Estimates of the amount of unused carryover TIFIA balances as of the end of FY 2015 (the beginning date of the FAST Act) are about $800 million, so with that additional $346 million, the unused carryover TIFIA balance from prior years is now around $1.15 billion.
In the FY 2019 Federal Credit Supplement, OMB made a notional estimate of a 6.30 percent subsidy cost for new FY 2019 TIFIA loans. (Actual subsidy costs vary on a loan-by-loan basis.) At that rate, the $1.15 billion carryover balance could be used to make over $18 billion in new TIFIA loans – if there were enough qualified applicants out there with dedicated revenue streams that could be used to repay the loans. But there aren’t.
The lack of qualified projects is important because much of President Trump’s infrastructure plan was based on the idea that giving an extra $14 billion to TIFIA and three other credit programs (WIFIA, RRIF, and RUS) would leverage between $800-900 billion in total project construction costs. But if TIFIA can only spend half of $250-260 million per year, and has over $1 billion laying around that it can’t spend because of a lack of qualified projects, throwing another $5-10 billion at the program won’t produce many measurable results.