State Infrastructure Banks (SIBs) specifically and revolving loan funds more generally are lending organizations initially funded, or capitalized, with federal grants and/or state funds and operated at the state rather than federal level. (See Box 7-4.) SIBs provide an opportunity to leverage federal and state resources by lending rather than granting federal-aid funds, which can then attract both non-federal public and private investment. SIB funds offer borrowers several advantages: the funds may be loaned on a low-interest basis; SIB loans can be secured by a subordinate lien on pledged revenues with flexible repayment terms; and they may be used to provide credit enhancement to projects through loan guarantees, reserve funds, and other means.
BOX 7-3: FEDERAL CREDIT (TIFIA) |
The TIFIA program, enacted in 1998 as part of TEA-21 and expanded in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), provides credit assistance to major transportation investments in the form of direct loans, loan guarantees, and lines of credit and is designed to fill market gaps and leverage private co-investment by providing supplemental and subordinate capital to projects. TIFIA may cover up to 33 percent of eligible project costs. The TIFIA instruments may be subordinate to other debt obligations, and the payment schedule may be deferred. |
As of December 2008, a total of $4.8 billion of TIFIA assistance was committed to 15 projects, facilitating over $18 billion of capital investment at a credit subsidy cost of just $345 million. Nearly a third of the borrowed funds have been prepaid in full, and there have been no defaults. |
Source: Federal Highway Administration.