Federal transit grant funds can currently be used to repay debt and capital lease obligations, including issuance costs, at the allowed rate for capital reimbursements. SAFETEA includes a proposal to allow grantees to use Federal funds to create a debt service reserve. This proposal would allow public transportation agencies to issue bonds secured by local resources (such as a sales tax or other dedicated local revenue), but also credit-enhanced with a Federal debt service reserve. The grantee would obligate (but not draw) grant funds for the debt service reserve, allowing the bond issue to be as much as ten percent smaller than otherwise. The presence of the debt service reserve could raise the underlying rating of the bonds, thus lowering their cost significantly. If the debt service reserve was never actually drawn upon, once the bonds were repaid the grantee would de-obligate the debt service reserve and use the funds for another eligible transit project.