Innovative Financing for Water Transportation Infrastructure

1. Wednesday 21 September 2016 Standing Committee on Water Transportation Innovative Financing for Water Transportation Infrastructure Jennifer Brickett Director, The BATIC Institute: An AASHTO Center for Excellence American Association of State Highway and Transportation Officials

2. Agenda • Federal Funding Opportunities • Federal Financing Opportunities • Resources

3. Federal Funding Opportunities-- TIGER Grants-- FASTLANE Grants

4. Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grant Program

5. Authorized in the FAST Act $4.5 billion over 5 years for major highway and freight projects Five port projects FASTLANE DiscretionaryGrant Program

6. Federal Financing Opportunities-- Federal Credit Assistance (Loans / Guarantees)-- Tax Preferred (“Private Activity”) Bonds

7. Enacted in 1998 to leverage federal funds in financing major surface transportation projects Federal credit assistance for projects of national and regional significance Highway, transit, passenger rail, intermodal freight, and port access projects Direct loans (plus loan guarantees and standby lines of credit) Public and private entities are eligible for assistance Transportation Infrastructure Finance and Innovation Act (TIFIA)

8. FAST Act Funding $275 million in 2016 to cover loan subsidy costs, rising to $300 million in 2020 Can support approximately $20 billion of lending during next five years. Loan Provisions Treasury-rate borrowing (2.44% for 35-year loan on 9/19/16) Up to 33-49% of project costs Repayment flexibility Major Requirements Minimum anticipated project costs Investment grade rating Dedicated repayment source Applicable federal requirements TIFIA (Cont.)

9. Eligible Sponsors State governments State infrastructure banks Private firms Special authorities Local governments Transportation improvement districts TIFIA (Cont.) Eligible Projects • Highways and bridges • Intelligent Transportation Systems • Intermodal connectors • Transit vehicles and facilities • Intercity buses and facilities • Freight transfer facilities • Pedestrian and bicycle infrastructure networks • Transit-oriented development • Rural infrastructure projects • Passenger rail vehicles and facilities • Surface transportation elements of port projects

10. PortMiami (FL) Tunnel bypass to Interstate 95 $342M in TIFIA assistance out of $1,073M in total project costs. Construction completed in 2014. Primary revenue pledge: Availability payments Port of Long Beach (CA) Gerald Desmond Bridge Replacement $325M in TIFIA assistance out of $1,288M in total project costs. Construction will be completed in late 2017. Primary revenue pledge: Port revenues Cooper River Bridge (SC) Replacement $215M in TIFIA assistance out of $675M in total project costs. Project opened in 2005. Primary revenue pledge: SC Transportation Infrastructure Bank loan repayments TIFIA (Cont.)

11. Enacted in 1998 to leverage federal funds in financing railroad projects Provides direct loans (and potentially loan guarantees) of up to $35 billion for eligible rail projects Treasury-rate borrowing; flexible repayment options (similar to TIFIA) No subsidy funding provided by Congress – credit risk premium payments required from borrowers Railroad Rehabilitation & Improvement Financing (RRIF)

12. Eligible Sponsors Railroads State and local governments Government-sponsored authorities and corporations Joint ventures that include at least one railroad Limited option freight shippers who intend to construct a new rail connection Special authorities Local governments Transportation improvement districts RRIF Eligible Projects • Acquire, improve or rehabilitate intermodal or rail equipment or facilities • Track, track components, bridges, yards, buildings and shops • Refinance outstanding debt incurred for purposes above • Develop or establish new intermodal or railroad facilities

13. Credit program for Army Corps and EPA, initially authorized by the Water Resources Reform and Development Act (WRRDA) of 2014 Patterned after TIFIA, similar basic program structure Potential Army Corps-assisted projects: flood control or hurricane and storm damage reduction, environmental restoration, coastal or inland harbor navigation improvement, inland and intracoastal waterways navigation improvement. Potential EPA-assisted projects: wastewater treatment and community drinking water facilities, enhanced energy efficiency of water / wastewater facilities, repair / rehab of aging water / wastewater systems, desalinization or water recycling projects. But no subsidy funding for loan costs appropriated thus far U.S. Senate has just passed its latest version of Water Resources Development Act (WRDA, S. 2848, on 9/15/16) that includes $70 million authorization for WIFIA U.S. House still working on its version of WRDA Water Infrastructure Finance and Innovation Act (WIFIA)

14. Airports (public ownership, not capped) Mass Commuting Facilities (public, capped) High Speed Intercity Rail (either, private capped) Docks and Wharves (public, not capped) Highway or Surface Freight Transfer Facilities (either, special $15 billion cap) [Note there are several other categories for other purposes / sectors] Private Activity Bonds (PABs)for Transportation Infrastructure

15. Authorized by SAFETEA-LU in 2005, subject to special $15 billion volume cap Enables P3s to access tax-exempt debt for qualified projects USDOT can allocate up to $15 billion for qualified highway and surface freight transfer facilities (projects must receive title 23 or title 49 assistance) To date: $6.5 billion has been issued for 17 projects (including 2 transit and 2 intermodal projects) $4.7 billion has been allocated (but not yet issued) for 5 more projects (including 1 intermodal and 1 passenger rail project) $3.8 billion currently is available for allocation Highway / Surface Freight Transfer PABs

16. Future Financing Opportunities?-- National Infrastructure Bank (NIB) or Fund (credit assistance)-- Qualified Public Infrastructure Bonds (QPIBs)-- Build America Bonds (BABs)-- Qualified Tax Credit Bonds (QTCBs), America Fast Forward (AFF) Bonds-- Move America Bonds and Investment Tax Credits

17. Resources

18. About the BATIC Institute Mission • To promote public sector capacity building in the analysis, understanding, and use of transportation finance techniques through a program of training, education, and outreach to all State Departments of Transportation and their local partner agencies Goals To increase the capacity of policy makers and project sponsors to: • Understand project finance tools available to all types of projects • Create a sound environment for partnership among project delivery stakeholders • Assess projects for potential delivery via public-private partnership (P3), and, if suitable, empower their delivery of projects under this approach

19. BATIC Institute Partners USDOT’s Build America Bureau AASHTO Team • American Public Transportation Association (APTA) • National Conference of State Legislatures (NCSL) • WSP | Parsons Brinckerhoff • Mercator Advisors

20. BATIC Institute Online Services • Customized website • Webinars • Video Interviews • In-person Services • Peer exchanges • Listening sessions • Training and workshops Visit our website at: http://www.financingtransportation.org/

21. Outreach and Project Development Credit Programs FASTLANE Grants USDOT Build America Bureau

22. What are your Capacity Building Needs?

23. Jennifer BrickettDirector, The BATIC Institute An AASHTO Center for Excellence jbrickett@aashto.org202-624-8815