In 1995, the National Highway System Designation (NHS) Act authorized the establishment of State Infrastructure Banks (SIBs) in order to provide loans or other credit assistance for transportation projects to municipalities or other entities for the purpose of building infrastructure. A key feature of SIBs is their ability to issue bonds backed by SIB capital and secured by loan repayments from a pool of local borrowers, as opposed to one locality, which reduces risk for investors and therefore interest rate for borrowers. SIB loans can be repaid back from a number of different sources including dedicated tax revenues, special assessments, or toll revenues. SIBs can also offer credit enhancements such as loan guarantees, which enable private sponsors to borrow money at lower interest rates, and grants. However, the NHS Act prohibits federal funds that are contributed to the SIB from being used as grants. Instead, the SIB must use federal funds only for loans or credit enhancements.
By using a SIB, a state may bypass its own constitutional or legislative limits on debt, especially if the debt is backed only by toll or other user fee revenues and not by taxes.
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54 US Congressional Budget Office - http://www.cbo.gov/showdoc.cfm?index=320&sequence=4