Among the factors often cited for the relatively slow acceptance of the P3 delivery model in the U.S. has been the lower cost capital available to state DOTs via the tax-exempt bond market. In comparison and as evidenced by the high cost of borrowing for one of the early privately developed toll road projects, the Dulles Greenway, private borrowing was nearly cost prohibitive. As such, efforts to attract an increased level of private participation and investment in transportation infrastructure in the U.S were unlikely to succeed without private sector access to lower cost financing.
In 1998 Congress passed the TEA-21 authorization bill creating the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA). Through the TIFIA Federal credit program, public and private sponsors could obtain direct loans, loan guarantees, and standby lines of credit for surface transportation projects in amounts up to one-third of the eligible costs. The TIFIA credit program was created to provide access to much needed capital for critical transportation projects facing challenges accessing debt through the regular capital markets. TIFIA credit assistance also provides loans at attractively low interest rates tied to U.S. Treasury bonds. TIFIA loan rates are typically lower than those available in the open market.
Credit assistance through the TIFIA program has provided a major boost to the development of the transportation P3 market in the U.S. The program is widely supported by members of the P3 industry who actively lobby Congress for the continuation of and increased financial support for the program. Approximately two-thirds of the P3 projects included in this report received credit support from TIFIA. In fact, during the height of the financial markets crisis, the only P3 projects to achieve financial close, did so with TIFIA credit assistance as a component of the plan of finance.