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Alternative Financing

Alternative Financing. Pa Youa Xiong MnDOT Office of Financial Management. Alternative Financing. TRLF TIFIA Bonds LGA. TRLF. Transportation Revolving Loan Fund History 1995 NHS Designation Act - State Infrastructure Bank (SIB ) 1997 MN Legislation – TRLF (MN Statute 446A.085)

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Alternative Financing

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  1. Alternative Financing Pa Youa Xiong MnDOTOffice of Financial Management

  2. Alternative Financing • TRLF • TIFIA • Bonds • LGA

  3. TRLF • Transportation Revolving Loan Fund • History • 1995 NHS Designation Act - State Infrastructure Bank (SIB) • 1997 MN Legislation – TRLF (MN Statute 446A.085) • MnDOT in partnership with DEED and the PFA. • $4 million Federal Funds SEED (1998-2005) • $31 million Federal Funds (1998-2000) • $7 million State Trunk Highway Funds (1999-2000) • $16.5 million State General Fund (1998-2000) • $8.2 million of the State General Fund was rescinded in 2003 to help balance the state budget.

  4. TRLF • Eligible Projects • Title 23 or Title 49 • Eligible costs include but are not limited to preliminary and final design, engineering, construction, right-of-way acquisition and capitalized interest. • Eligible Borrowers • Governmental entities (Cities, Counties, MnDOT, etc.) • Private entities are not eligible but can coordinate with a transportation agency

  5. TRLF Forms of Repayment Property Tax Levies Special Assessments Tax Increment Financing (TIF) Local Government Option Sales Tax Future State-Aid Funds Future Federal-Aid Funds Future State Trunk Highway Funds

  6. TRLF Loan Repayment Interest payments must begin within one year after the loan agreement is executed. Principal payments can begin up to three years after the loan agreement is executed or one year after construction is completed, whichever is sooner. Payments occur semi-annually on February 20 and August 20. Loan Term Up to 30 years, or the “useful life” of the project, which ever is less. Determined by MnDOT

  7. TRLF Security Requirement All borrowers (except MnDOT) will be required to provide to the Authority either: General Obligation Bond (a pledge of a portion of the property taxes collected) OR Revenue Bond (a pledge of revenues such as sales tax revenue, parking revenues, user fees, future federal and/or state aid etc.) MnDOTcan provide the pledge of future federal or state funds as security for TRLF loans.

  8. TRLF Reimbursable Loan Payments for the project needs to be incurred before the PFA can disperse the funds to the borrow. Can bill PFA for ongoing payments Total amount dispersed cannot exceed agreement amount. More Questions? Contact Steve LaFontaine (PFA)Stephen.Lafontaine@state.mn.us 651-259-7471

  9. TRLF Interest Rates A market index to establish the base interest rates for the TRLF. Discounts General obligation note - couldreceive a 1.50% discount from the AAA rates. Revenue note - couldreceive a 1.50% discount from the BBB rates Discount is set on an annual basis and can be adjusted by the PFA. Population of less than 5,000 will receive an additional discount of 1.00%. Exception, adjusted interest rate cannot be below 1.00%.

  10. TRLF • Responsibilities - MnDOT • Coordination of respected MnDOT District Office • Completion of Application • Municipal Resolution • ATP Concurrence • MPO Concurrence (if applicable) • District forwards completed application to Central Office (OFM) • TRLF Review Committee reviews and scores projects • TPIC approves recommendation for Commissioner’s Certification • Commissioner certifies project • Certified project is forwarded to the Public Facilities Authority

  11. TRLF Responsibilities – Public Facilities Authority (PFA) Send’s potential borrow Financial Application Form Credit Check Underwriting of the Loan Execution of the Agreement Disbursing funds to borrower

  12. TRLF Application Record

  13. TIFIA • Transportation Infrastructure Finance and Innovation Act • Federal Loan Program for project of national or regional significance. • Minimum Anticipated Project Costs: • $10 million for Transit-Oriented Development, Local, and Rural Projects • $15 million for Intelligent Transportation System Projects • $50 million for all other eligible Surface Transportation Projects • Credit Limit – up to 33% of anticipated eligible project costs. • If sponsor has compelling justification, it can be up to 49%. • Eligible Applicants: State Governments, Local Governments, Private Firms, Special Authorities, Transportation Improvement Districts and State Infrastructure Banks.

  14. TIFIA Eligible Applicants State Governments, Local Governments, Private Firms, Special Authorities, Transportation Improvement Districts and State Infrastructure Banks Eligible Projects (not limited to) Highways and Bridges, ITS, Intermodal Connectors, Transit Vehicles and Facilities, Pedestrian Bicycle Infrastructure Networks, Rural Infrastructure Projects, Passenger Rail Vehicles and Facilities

  15. TIFIA Fees Application Fee (cover cost of outside advisors) $400,000 - $700,000 depending on project complexity Annual Loan Servicing Fee of $13,000, due Nov. 15th Montioring Fee (has not been charged to date)

  16. TIFIA Project Examples https://www.transportation.gov/tifia/projects-financed

  17. Bonds TH Bonds - are required to be used on the TH system. Project must have a useful life of 20 years. General Obligation Bonds – used for any purpose other than for Trunk Highways. Bonds for State Aid Projects Local Bridge Replacement Program Local Road Improvement Program Contact Patti Loken (SALT) for more information. Patti.Loken@state.mn.us (651) 366-3803

  18. TH Bonds • Chapter 152 (2008) $1.7B • $1.08B Non-Designated • $600M Bridges • $40M Interchanges • Chapter 36 (2009) • $40M Interchanges • Chapter 388 (2010) • $100M Highway Improvements & Interchanges • Chapter 117 (2013) • $300M for Corridors of Commerce • Chapter 5 (2015) • $140M Non-Designated

  19. LGA Local Government Advance MN Statute 161.361ADVANCE FUNDING FOR TRUNK HIGHWAY PROJECTS Local agencies have the ability to advance TH projects ahead of when the project is programmed/planned to be let by MnDOT using their own funds. Requirements Project has be identified in the CHIP (STIP is first 4 years) Funds for LGA projects are available for those years.

  20. LGA LGA Funding Accounts Advance Funding ($10,000,000 cap without interest) To expedite construction of all or part of a trunk highway in the Metro and/or the Greater Minnesota Interregional Corridors ($10,000,000 cap with interest) To expedite development of an interregional transportation corridor including design consultants, right-of-way purchases, construction, or other related expenditures in the Greater Minnesota Bottlenecks($10,000,000 cap with interest) To expedite bottleneck reduction including design consultants, right-of-way purchases, construction, or other related expenditures in the Metro areas

  21. LGA Project selected – District/ATP Communication with OTSM – Brian Gage OTSM and OFM will see if funding in specified years are available Cooperative Agreement Unit - Maryanne Kelly-Sonnek OFM monitors payments

  22. Questions? Contact: Pa Youa Xiong Pa.Youa.Xiong@state.mn.us (651) 366-3781

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