TIFIA Loan Changes Recommended at EPW Committee Hearing
During a July 11 hearing held by Senate Committee on Environment and Public Works on Capitol Hill, changes to Transportation Infrastructure Finance and Innovation Act or "TIFIA" loans were urged to help shorten the application period and the timeline for their disbursement – both key issues for state departments of transportations seeking such loans for funding a variety of highway projects.
"Overall the TIFIA program is great but there are areas to improve upon," explained Brian Motyl, transportation trust fund administrator for the Delaware Department of Transportation, in his testimony before the committee.
He referenced the agency's use of TIFIA loans to help complete a $635 million renovation and expansion of the portion of highway US 301 crossing through Delaware.
"For many years, the US 301 project was a priority for DelDOT. The new US 301 roadway was much needed to remove the 'neck in the bottle' of the regional highway network and increase safety," he explained.
"We knew that the new US 301 would improve safety, manage truck traffic, reduce congestion, [and] support economic development," Motyl (seen at right) added. "Over the years, all available financing options were looked at and a fiscally sound scenario could not be found with existing state and federal allocations; the TIFIA loan program became the only financing option that ultimately allowed the project to move forward."
He said the time from the submission of the letter of intent to apply for DelDOT's TIFIA loan to closing was almost three years in length. "The complete process was time consuming and substantial documentation had to be provided," he added.
Yet the 2.94 percent interest rate available with a TIFIA loan, far lower than the 4.27 percent interest rate available via a toll revenue-backed bond, "gave us a fiscally-sound project. We gained debt-service savings of over $25 million compared to borrowing all funds with a toll-revenue bond [and] interest accrual only when funds are drawn. With normal bond financing, the total loan amount starts accruing interest at closing," Motyl stressed. "A lot of projects would not move forward without a TIFIA loan, so it is worth doing that kind of work to save that kind of money."
He noted another fix should be made regarding the time-period between the initial expenditure and reimbursement from TIFIA loans. "That has potential to be burdensome to our agency due to the length of time it takes for expenditures to be reimbursed. Unlike FHWA [Federal Highway Administration] grant funding, which is reimbursed weekly, TIFIA funding is reimbursed monthly. As a result, reimbursement occurs for expenditures that are between 30 and 60 days old."
The EPW Committee's Chairman Sen. John Barrasso, R-Wyo., and Ranking Member Sen. Tom Carper, D-Del., both agreed in their comments during the hearing that TIFIA and similar low-interest federal loans are good infrastructure funding options and should be improved.
"I believe that leveraging programs like TIFIA are good for federal taxpayers and enable states to address their infrastructure backlog," Barrasso said.
"They provide value to our transportation infrastructure and the American people who use it [and they] help fill a gap in funding investment," added Carper. "The US 301 project is a good example of where federal [highway allocation] funds alone are just not sufficient. The TIFIA loan allowed it to go forward. Our goal should be to provide a full portfolio of infrastructure investment options."