As discussed in the 2004 Report, the Transportation Infrastructure Finance and Innovation Act of 1998 ("TIFIA") is another Federal program that provides significant support for PPPs. TIFIA authorizes USDOT to provide Federal credit assistance to major transportation investments of national importance. TIFIA credit assistance is flexible, subordinated to senior debt and may be provided in the form of a direct loan, a loan guarantee or a line of credit. TIFIA credit assistance can be provided for as much as 33 percent of total project costs. Since the passage of SAFETEA-LU, a project can be eligible for credit assistance if it costs more $50 million or 33 percent of the state's annual apportionment of Federal-aid funds, whichever is less. Eligible projects must be supported in whole or in part from user charges or other non-Federal dedicated funding sources.
For direct loans, scheduled repayments may commence up to five years after the date of substantial completion of the project. Final maturity of the loan may be up to 35 years after the date of substantial completion of the project. In the event revenues are insufficient to meet scheduled TIFIA loan payments, USDOT may allow payment deferrals. The flexible repayment and subordination terms of TIFIA credit assistance make it easier and less costly for the private sector to obtain senior debt and to invest in transportation infrastructure. Recently, the private sector has begun to combine TIFIA credit assistance with PABs to obtain favorable senior and subordinated debt packages for complicated PPP transactions.
TIFIA credit assistance has been used for four innovative PPP projects. First, as noted in the 2004 Report, TIFIA credit assistance was used to supplement the financing of the concession to design, build, finance, operate and maintain the 10-mile South Bay Expressway toll road in San Diego, which opened to traffic in November 2007. TIFIA provided $140 million in subordinated debt for the South Bay Expressway.
Since the 2004 Report, TIFIA has provided credit assistance for two PPP projects in Virginia, the Pocahontas Parkway refinancing and the Capital Beltway HOT Lanes project, which are discussed in Sections IV(A) and IV(B), respectively. The Pocahontas Parkway refinancing included a $150 million TIFIA loan to finance the 1.5-mile Richmond Airport Connector and refinance a portion of the outstanding project debt. The Capital Beltway HOT Lanes Project included a $588 million TIFIA loan which is subordinate to $589 million of PABs. Between the TIFIA loan and the PABs allocation USDOT approved a significant portion of the financing for the HOT lanes project. In March 2008, TIFIA closed a $430 million loan with the private concessionaire for the $1.36 billion SH-130 Segments 5&6 project in central Texas. As noted in Section IV(B), this project will provide a new north-south alternative to the congested I-35 corridor between Austin and San Antonio.