July 2006

U.S./Mexico Joint Working Committee
Federal Highway Administration Resource Center Finance Team

Financing Techniques Guide for Project Sponsors

Table of Contents

I. What is a Project Sponsor?

II. TIFIA Credit Program

III. Private Activity Bonds

IV. RRIF Credit Program

V. BANOBRAS Credit Programs

VI. Miscellaneous Financing Techniques
(State Infrastructure Bank Lending; Grant Anticipation Revenue Vehicle Bonding; Tolling Initiatives; Other Federal Railroad Administration Funding)

I. What is a Project Sponsor?

A project sponsor is any legal entity that is proposing a transportation project. In the US, project sponsors include state departments of transportation, cities, counties, bridge authorities or districts, transit authorities or districts, border authorities or districts, metropolitan planning organizations, and regional mobility authorities. Project sponsors may also be private sector firms, or legal structures incorporating both public and private components.

For a given project, the project sponsor or sponsors may be a combination of the above legal entities, such as a partnership of a state department of transportation with a metropolitan planning organization, or a partnership of several state departments of transportation, several local government units, and private sector firms. The project sponsor(s) for a given project will vary depending on the project's size, complexity, geographical reach, and range of available financing options. Since the characteristics of projects will always differ, there really is no all-inclusive or "finite" list of legal entities that could potentially serve as a project sponsor

In order to identify or better understand what legal entity can act as a project sponsor, the following questions may be helpful:

1. What entity is authorized to enter into contracts for project-related activities?
2. What entity is authorized to enforce contract provisions?
3. What entity is authorized to borrow funds for project-related expenses?
4. What entity is obligated to repay funds borrowed for project-related expenses?

Again, there is no one size fits all solution to picking the "best" project sponsor. The needs of the project, as well as the public and private stakeholders, must be carefully considered.

II. TIFIA Credit Program

Summary of Program

TIFIA is an acronym that stands for the "Transportation Infrastructure Finance and Innovation Act". The TIFIA Program was established by the Transportation Equity Act for the 21st Century (TEA-21) and amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act - Legacy for Users (SAFETEA-LU). The strategic goal of the TIFIA program is to leverage limited Federal resources and stimulate private capital investment in transportation infrastructure by providing credit assistance in the form of direct loans, loan guarantees, and standby lines of credit (rather than grants) to projects of national or regional significance.

The key objectives of the TIFIA program are to:

1. Facilitate and accelerate projects with significant public benefits;
2. Encourage new revenue streams and private participation;
3. Fill capital market gaps for secondary/subordinate capital;
4. Provide credit assistance as a flexible, "patient" investor willing to take on investment concerns about investment horizon, liquidity, predictability and risk; and
5. Limit Federal exposure by relying on market discipline.

The Federal budget authority available for the TIFIA credit program is $122 million/year. At this funding level, assuming a conservative loan loss rate of 5%, the budget authority should be sufficient to accommodate $2.5 billion in annual lending.

Benefits of TIFIA Program

• Interest and principal payments may be deferred for up to five years after project completion.
• Repayment of debt may extend up to 35 years.
• Interest rates equal to the costs of borrowing to the federal government.
• No prepayment penalty.
• Project acceleration.
• Avoidance of future cost increases in right-of-way and construction.

Eight Project Selection Criteria

20% - Private participation (equity or debt)
20% - Favorable environmental impact
20% - Regional or national significance
12.5% - Project acceleration
12.5% - Credit worthiness
5% - Use of new technologies
5% - Reduction in Federal grant assistance
5% - Consumption of Federal budget authority allocated to TIFIA program

Eligible Projects

Public or private highway and bridge projects

Public freight rail facilities

Private rail facilities providing public benefit for highway users

Intermodal freight transfer facilities; access to such freight facilities and service improvements to such facilities including capital investment for intelligent transportation systems

Inter-city passenger bus and rail facilities and vehicles (including Amtrak and magnetic levitation systems)

For projects serving a port terminal, those surface transportation infrastructure modifications necessary to facilitate direct intermodal interchange, transfer, and access into and out of the port

In addition, eligibility is specifically extended to international bridges and tunnels

Other eligibility parameters are that:

1. The project's estimated costs are at least $50 million, or $15 million for intelligent transportation system projects;
2. The TIFIA contribution is limited to 33% of estimated project costs;
3. Senior debt on the project is rated investment grade;
4. Dedicated revenues will be available for repayment of the TIFIA credit assistance; and
5. Applicable Federal requirements (such as Civil Rights, NEPA, Uniform Relocation, Titles 23/49) are met.

Eligible Borrowers under TIFIA Program

Project sponsors often are also the borrowers under the TIFIA Program. However, sometimes there may be multiple borrowers for a given project. Eligible borrowers include state governments, agencies and authorities; local governments, agencies and authorities; bridge, border and transit authorities; multi-state consortia; joint ventures; private companies; and international entities. Generally, any legal entity would be defined as an eligible borrower for TIFIA purposes.

How to Apply for TIFIA Credit - Application Process

1. Sponsor or sponsor's representative may wish to contact the USDOT TIFIA Joint Program Office to discuss the planned project before submitting the Letter of Interest
2. Sponsor submits Letter of Interest to the USDOT, briefly addressing eight selection criteria.
3. Sponsor assesses comments and feedback provided by USDOT.
4. Sponsor ensures that the following TIFIA requirements are met prior to submitting an Application to USDOT:
   • Project is included in state transportation plan and, if applicable, metropolitan transportation plan;
   • Draft EIS is circulated (or Categorical Exclusion or FONSI obtained); and
   • Preliminary rating opinion letter (on senior debt) is obtained.
5. Sponsor prepares and submits Application to USDOT, following the Program Guide and Application available on the TIFIA homepage. Sponsor is responsible for paying a non-refundable application fee of $30,000.
6. DOT staff prepares preliminary evaluation and arranges sponsor presentation.
7. Sponsor ensures that ROD has been obtained and project is included in the STIP.
8. DOT staff prepares final evaluation and make recommendation to TIFIA Credit Council.
9. TIFIA Credit Council provides recommendations to the Secretary, who selects projects to receive TIFIA credit assistance.
10. DOT issues term sheet and obligates funds.
11. Sponsor ensures that an investment grade rating opinion letter (on senior debt) has been obtained before anticipated closing date.
12. DOT and sponsor negotiate credit agreement. Sponsor is responsible for paying a credit-processing fee equal to the portion of the costs incurred by the TIFIA Joint Program office in negotiating the credit agreement. These costs will vary, but typically range for $100,000 to $300,000.
13. DOT executes credit agreement and disburses funds according to terms of agreement.

Contact Information

TIFIA Joint Program Office (HCF-50)
U.S. Department of Transportation
Room 4310
400 Seventh Street, SW
Washington, DC 20590
http://tifia.fhwa.dot.gov

Mark Sullivan, Chief
(202) 366-5785
mark.sullivan@fhwa.dot.gov

III. Private Activity Bonds

Summary of Program

The current surface transportation legislation - the Safe, Accountable, Flexible, Efficient Transportation Equity Act - Legacy for Users (SAFETEA-LU) - has established a new borrowing option for transportation project sponsors: Private Activity Bonds (PABs). Specifically, SAFETEA-LU has amended Section 142 of the Internal Revenue code to add highway, bridge and freight transfer facilities to the types of privately developed and/or operated projects for which PABs may be issued. This amendment allows private activity on these types of projects, while maintaining the bonds' tax-exempt status.

Passage of private activity bond legislation reflects the Federal government's desire to increase private sector investment in US transportation infrastructure. Providing private developers and operators with access to tax-exempt interest rates lowers the cost of capital significantly, enhancing investment prospects.

The law limits the total amount of such bonds to $15 billion and directs the Secretary of Transportation to allocate this amount among qualified facilities. The $15 billion in exempt facility bonds is not subject to any state volume caps.

In order to obtain authority to use a portion of the $15 billion in PABs, the private project sponsor must work closely with a state or local government unit, since this government unit acts as the "conduit issuer" of the bond. That is, a local government will actually issue the bond, but the private company is responsible for making the periodic debt service payments and retiring the debt. In addition, since the underlying project must be on the STIP and eligible for Title 23 assistance, the private project sponsor needs to work with a local government unit to ensure that STIP and Title 23 requirements are met.

Benefits of Private Activity Bonds

• Low tax-exempt interest rates
• Elimination of the interest cost differential between debt issued by the public and private sectors

Qualified Projects

• Any surface transportation project that receives Federal assistance under Title 23
• Any project for an international bridge or tunnel for which an international entity authorized under Federal or State law is responsible and which receives Federal assistance under Title 23
• Any facility for the transfer of freight from truck to rail or rail to truck (including any temporary storage facilities directly related to such transfers) which receives Federal assistance under Title 23 or 49
• (Examples of facilities for the transfer of freight from truck to rail or rail to truck include cranes, loading docks and computer-controlled equipment that are integral to such freight transfers. Examples of facilities that are not freight transfer facilities include lodging, retail, industrial or manufacturing facilities)
• Any TIFIA-assisted public transportation, intercity bus or rail facilities and vehicles, including vehicles and facilities owned by Amtrak, public freight rail facilities, private freight rail facilities providing public benefit for highway users, and intermodal freight transfer facilities

Eligible Borrowers

Although private project sponsors will be developing and/or operating the highway, bridge and freight transfer facilities, a unit of state or local government will act as the "conduit issuer" of the PAB and will be considered the eligible borrower. Accordingly, the private project sponsor must coordinate closely with the government unit that is actually borrowing funds.

Application Review Criteria

USDOT will consider applications in light of applicable statutory requirements and the availability of tax-exempt authority for the type and location of the project for which the allocation is requested. If additional information is needed to conduct its review, the Department will contact the applicant to arrange for the submission of such required information. In submitting an application, applicants should note that there are no specific standards, beyond those set forth in applicable laws or regulations, applying to consideration of the applications. The intent is to provide maximum flexibility in the Secretary's award of the $15 billion bonding authority. The Department is particularly concerned that once it makes an allocation, tax-exempt facility bonds are issued in a timely fashion. Hence, if the schedules agreed upon in the final allocation action are not met, the allocation may be withdrawn.

The enabling legislation requires that at least 95 percent of the net proceeds of bond issues be expended for qualified highways or surface freight transfer facilities within a five-year period from the date of issue. If this does not occur, the issuer must use all unspent proceeds to redeem bonds of the issue with 90 days after the conclusion of the five-year period. Alternatively, the issuer may request an extension of the five-year period if it can establish that the failure to expend the funds was due to circumstances beyond its control.

How to Apply for Authority to Use Portion of $15 Billion in Private Activity Bonds - Application Process

USDOT is accepting applications from project sponsors interested in receiving authority to use a portion of the $15 billion in tax-exempt PABs. While USDOT has not specified a fixed format for bond applications, it has identified a number of pieces of information that would be helpful in facilitating its consideration of applications. These data elements include:

1. Amount of allocation requested.
2. Proposed date of bond issuance. The approximate date when the tax-exempt bonds would be issued if the Department provides the authority to do so.
3. Date of inducement by the bond issuer. A copy of a resolution adopted in accordance with state or local law authorizing the issuance of a specific issue of obligations. The resolution may state that issuance of obligations is contingent upon receipt of an allocation from the Secretary of Transportation of a portion of the $15 billion national limitation.
4. Draft bond counsel opinion letter. This is a bond counsel opinion or the date by which such a draft letter will be submitted.
5. Financing/development team information. The names of the issuer of the bonds, the borrower, and any other key participants in the financing, with complete contact information, including Federal taxpayer identification numbers.
6. Borrower information. For each borrower, the official business name, ownership and legal structure (corporation, partnership, or sole proprietorship), Federal taxpayer identification number, and prior experience as it relates to carrying out projects similar to the proposed project. The term "borrower" includes any borrower of the bond proceeds or any other entity responsible for re-paying the bonds.
7. Project description. Describe the project as a whole and the proposed organizational and legal structure of the project (ownership, franchise or lease arrangements, etc.). Describe the portion of the project and all capital assets to be funded with the proceeds of the exempt facility bonds. If the application is for an international bridge or tunnel, the project description should include a statement that the international entity responsibile for the project is authorized under Federal or state law.
8. Project schedule. A timeline showing the estimated start and completion dates for each major phase or milestone of project development. Indicate the current status of milestones on this timeline, including all necessary permits and environmental approvals.
9. Financial structure. A statement of anticipated sources and uses of funds for the project, including separate line items, as applicable, for proceeds of exempt facility bonds or other borrowing, federal grants, state and local grants, other credit assistance, and private investment. Provide a projected drawdown schedule for the use of funds, project revenue and expenses, and sources of security and repayment for the bonds.
10. Description of Title 23/49 funding received by the project. The actual or estimated date that given categories and amounts of financial assistance will be received.
11. Project readiness. Describe the financing/development team's capacity to undertake this project. Discuss readiness to being the project. List all major permits and approvals necessary for construction of the project and the date, or projected date, of the receipt of such permits or approvals. Include information on engineering work as well as procurement of construction.
12. Signatures. Applications are to be signed by a duly authorized representative of the proposed issuer as well as each proposed borrower. The proposed issuer or proposed borrower may submit the application.
13. Declarations. Each application, including any supporting reports or other documents, should include the following declaration signed by an individual who has personal knowledge of the relevant facts and circumstances: "Under penalties of perjury, I declare that I have examined this document and, to the best of my knowledge and belief, the document contains all the relevant facts relating to the document, and such facts are true, correct, and complete".
14. Addresses. Applications should be submitted, with ten (10) copies, to the address noted in the Contact Information section, below.

Contact Information

Mr. Jack Bennett
U.S. Department of Transportation
Office of the Assistant Secretary for Transportation Policy
P-20, Room 10305 E
400 7th Street S.W.
Washington, DC 20590
(202) 366-6222

IV. RRIF Credit Program

Summary of Program

RRIF is an acronym that stands for the "Railroad Rehabilitation and Improvement Financing" Program. The RRIF Program was established by the Transportation Equity Act for the 21st Century (TEA-21) and amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act - Legacy for Users (SAFETEA-LU). Under this program, the Administrator of the Federal Railroad Administration (FRA) is authorized to provide loans and loan guarantees up to $35 billion. Up to $7 billion is reserved for projects benefiting freight railroads other than Class 1 carriers.

Benefits of RRIF Program

• Direct loans for up to 100% of the costs of the eligible project
• Repayment periods of up to 25 years
• Interest rates equal to the cost of borrowing to the government
• Loan guarantees also available
• Project acceleration
• Avoidance of future costs increases in right-of-way and construction

Criteria for Evaluating RRIF Applications

1. Eligibility of the applicant and the project
2. Creditworthiness of the project, including the present and probable demand for rail services and a reasonable likelihood that the loan will be repaid on a timely basis
3. Extent to which the project will enhance safety
4. Significance of the project on a local, regional, or national level in terms of generating economic benefits and improving the railroad transportation system
5. Improvement to the environment that is expected to result directly or indirectly by the implementation of the project
6. Improvement in service or capacity in the railroad transportation system or the reduction in service- or capacity-related problems that is expected to result directly or indirectly from the implementation of the project

Eligible Projects and Borrowers

RRIF funding may be used to:

1. Acquire, improve or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops;
2. Refinance outstanding debt incurred for the purposes listed above; and
3. Develop or establish new intermodal or railroad facilities.

Project sponsors often are also the borrowers under the RRIF Program. However, there may be multiple borrowers for a given project. Eligible borrowers include railroads, state and local governments, government-sponsored authorities and corporations, joint ventures that include at least one railroad, and limited option freight shippers who intend to construct a new rail connection.

How to Apply for RRIF Credit Assistance - Application Process

1. Sponsor or sponsor's representative is encouraged to contact the FRA Office of Freight Programs to discuss the possibility of funding planned project with a loan or loan guarantee, or to schedule a meeting with the Office of Freight Programs' staff to discuss or explain the project.
2. Sponsor should compile the following Preliminary Application information before meeting with FRA representatives:
   • A description of the project, including the amount of the direct loan or loan guarantee requested;
   • A description of the benefits and/or savings that will be generated by the project;
   • A discussion of whether the project:
     - Will enhance safety and the environment
     - Will promote economic development and US competitiveness
     - Will preserve rail or enhance intermodal service to small communities and rural areas
     - Is included in the State transportation plan
   • A description of the collateral to be offered as security, and its net liquidation value;
   • Financial statements, including balance sheet, income statement, and cash flow statement for the past five years (if available);
   • Projected revenues for the next five years, if available; and
   • Information regarding potential environmental impacts of the project.
3. Sponsor assesses comments on feedback provided by FRA.
4. Sponsor submits the Loan Application to FRA. The Loan Application includes the following information:
   - Applicant identification
   - Incorporation status
   - Contact information
   - Other participant(s) in Loan Application, if any
   - Executive summary of application, outlining the project, the recent traffic volumes moved, and gross and net revenues
   - Project description
   - Project purpose
   - Description of affected facilities and equipment
   - Project components and schedule for completion
   - Project timing
   - Railroad and project map
   - Collateral description
   - Financial claims involving the US Government
   - Debits and credits with the US Government
   - Market analysis
   - Traffic
   - Cost savings and other benefits
   - Safety improvements
   - Description of applicant's maintenance program
   - Environmental impacts
   - Financial statements
   - Financial projections
   - Credit rating
   - Business plan
   - Management team
5. Sponsor is responsible for paying an evaluation fee that cannot exceed one-half of one percent of amount of credit assistance provided. This fee generally is no higher than $40,000 to $50,000.
6. Sponsor is responsible for paying the Credit Risk Premium (CRP). The applicant - or some other entity on behalf of the applicant - is required to pay the cost of the CRP before the loan can be disbursed. The CRP reflects the risk of loan default, and essentially serves as a loan loss reserve. The FRA Administrator will calculate the Credit Risk Premium payable on each loan before loan proceeds are disbursed.

Contact Information

(RRIF Application)
Federal Railroad Administration
Office of Freight Programs (RDV-12)
400 7th Street NW
Washington, DC 20590
(202) 493-6381

V. BANOBRAS Credit Programs

Summary of Program

BANOBRAS is an acronym that stands for Banco Nacional de Obras y Servicios Publicos, which translates as the National Bank for Public Works and Services.

BANOBRAS provides financial assistance to state and municipal administrations for projects designed to improve public services and infrastructure, thereby improving society's well-being and stimulating local economic development.

These projects promote the planning, modernization and maintenance of roadway infrastructure, control and reduction of environmental pollution, and quality and efficiency of the roadway and transportation systems.

The public works and project financed by BANOBRAS include:

• Construction and improvement of roadways;
• Streets, pedestrian bridges and intersection improvements;
• Underpasses and roadway signing;
• Lighting and traffic signals;
• Construction of public parking;
• Construction of passenger and cargo terminals;
• Construction of bus lanes and stops;
• Equipment for pollution monitoring and control;
• Construction and maintenance of highways, bypasses and bridges;
• Planning and paving of streets, including facilities to control storm water drainage.

A necessary prerequisite for sustained and sustainable economic development is the existence of a suitable, extensive and efficient highway system moving both goods and services. This is especially true given the trends of globalization and economic opening that Mexico is currently facing.

A high quality network of toll highways is a critical factor that reduces costs, improves the national standard of living, and enhances competitiveness, while at the same time achieves a greater regional and sector-wide integration.

There currently is a long-term need to extend the highway network in the border zone and at certain critical communication hubs. Investments in bypasses and access roads are needed to improve highways' connectivity with urban roadway systems, seaports and border ports of entry.

Available Financial Assistance

BANOBRAS contributes to the development of highway infrastructure, through designing finance plans for federal and state toll highway projects that generate funds for repayment of debt service.

This type of project, where the source of repayment is project-related toll revenue, relates principally to concession arrangements with the private sector, whose objective is to ensure that the toll revenue is sufficient to pay for the investment needed to construct or improve toll highways, bridges and bypasses.

1. To provide financial support for construction, BANOBRAS provides direct loans to concessionaire firms, based on project finance plans tailored to each project.
2. Once construction is complete and revenue projections are clear, BANOBRAS designs long-term refinancing plans. These plans allow concessionaires to recover the capital invested in developing new projects and earn a reasonable return on capital.
3. For projects in revenue operation where BANOBRAS did not provide financial assistance for the construction phase, BANOBRAS develops refinancing plans intended to refinance the same project under better terms and conditions and/or to finance new projects.
4. In the case of a public sale or offering, BANOBRAS provides partial guaranties designed to improve the offering's terms, as in reducing the interest rate and amount of interest paid.
5. In the case of a state concession for highway projects, BANOBRAS provides collateral financial support, such as contingent and revolving credit, designed to strengthen the plan of finance.

In addition, BANOBRAS provides support for the New Concession Plan for Toll Highways, under which the Federal Government's Secretariat of Communication and Transport and state governments grant concessions to the private sector to construct toll highways that cannot be financed solely on projected toll revenues. Under the New Concession Plan, BANOBRAS acts for the Federal Government in providing funds to the Investment Fund for Infrastructure (FINFRA). FINFRA, in turn, is used to:

1. Grant public funds to reduce the equity investment and/or bank loans needed by concessionaires to finance the cost of construction.
2. Provide guarantees to ensure that concessionaires can make debt service payments on debt incurred to finance project construction.

Benefits of BANOBRAS Programs
Additional information to be provided in future Guide

Project Selection Criteria
Additional information to be provided in future Guide

Eligible Projects
Additional information to be provided in future Guide

Eligible Borrowers
Additional information to be provided in future Guide

How to Apply for Banobras Credit Assistance - Application Process
Additional information to be provided in future Guide

Contact Information

Direccion de Promocion y Proyectos
Banco Nacional de Obras y Servicios Publicos, S.N.C.
Avenida Javier Barros Sierra No. 515, Pisos 5, 6 y 8
Colonia Lomas de Santa Fe
CP 01219
Tel. 5270-1200

VI. Miscellaneous Financing Techniques

State Infrastructure Bank Lending

SAFETEA-LU has expanded the State Infrastructure Bank financing technique to all states. That is, all states are now allowed to establish a State Infrastructure Bank, or SIB, with FY 2005-2009 Federal and matching state funds. Up to 10% of major Federal Highway Administration and Federal Transit Administration funding categories can be used to capitalize (provide initial start-up capital) for these banks. The state must match the Federal funds used to capitalize an SIB on an 80-20 Federal/non-Federal basis.

Once established, SIBs serve as state investment banks that can loan funds and provide credit enhancement to public entities or private firms. SIBs operate as revolving funds, with interest and other income added to bank capital. Under the SIB program, loans and credit enhancement can be provided for any state approved project eligible for either Title 23 or Title 49, or for surface transportation projects specifically approved by the Secretary. Credit assistance to be provided includes below market rate loans, interest rate buy-downs, and loan guarantees. Loan repayments must begin no later than five years after project completion, with a repayment term no longer than 30 years. Interest rates are never higher than market.

For information on SIB programs available in US southern border states, contact:

Arizona State Infrastructure Bank
Mr. John Fink, Finance Administrator
(602) 712-8023
jfink@dot.state.az.us

California State Infrastructure Bank
Weijan Ni, (916) 651-9539
Mr. Jeff Ingles, (916) 651-9539

New Mexico State Infrastructure Bank
Mr. Mark Martinez, (505) 476-3118

Texas State Infrastructure Bank
Mr. Dorn Smith, (512) 463-8721
Dmith1@dot.state.tx.us

Grant Anticipation Revenue Vehicle (Garvee) Bonding

All states are allowed to issue Garvee bonds, as long as appropriate authorizing legislation has been passed at the state level. Under the Garvee bonding concept, states sell bonds to raise the cash needed to construct transportation projects, and pledge future Federal transportation funds (Federal-aid highway funds as well as some categories of Federal transit funds) to pay the debt service on these bonds. While Garvee bonds are not a source of new or additional funding, their use can significantly accelerate the construction of essential projects.

In order to be financed under a Garvee bond program, projects must be included on the appropriate state transportation plan. In addition, once the Garvee bond has been sold, the Federal project authorization relating to a given project must identify that Garvee bond proceeds will be used pay debt service.

Tolling Initiatives

Interstate System Construction Toll Pilot Program - Under SAFETEA-LU, a new Interstate Construction Pilot Program allows a state or compact of states to collect tolls on an Interstate highway, bridge or tunnel for the purpose of constructing Interstate highways. This Program allows three toll projects to help finance new Interstate highways. The applicant is required to show that tolling is the most efficient and economical way to advance the highway project in question.

Express Lanes Demonstration Program - SAFETEA-LU also allows fifteen demonstration projects through FY 2009 on the Interstate system to manage congestion, reduce emissions in non-attainment or maintenance areas, and finance additional lanes. A state, public authority, or public or private entity designated by a state may apply. Eligible toll facilities include existing toll facilities, existing High Occupancy Vehicle (HOV) facilities, and newly created toll lanes. Tolls charged on HOV facilities under this program must use pricing that varies according to time of day or level of traffic. Automatic toll collection is required.

HOV to HOT Lane Conversion - SAFETEA-LU also permits the conversion of HOV lanes to HOT lanes. The only requirement is that the tolls need to be variable (according to time of day or level of traffic). In addition, the tolling entity may choose to grant transit, low emission or high fuel efficiency vehicles an exemption from tolls.

Interstate System Reconstruction and Rehabilitation Toll Pilot Program - This Program was established in the Transportation Equity Act for the 21st Century (TEA-21) to allow up to three Interstate tolling projects for the purpose of reconstructing or rehabilitating Interstate highway corridors that could not be adequately maintained or improved without the collection of tolls. SAFETEA-LU makes no revisions to the program; therefore, it continues without change.

One-Stop FHWA Application Procedures - Since there are now multiple tolling initiatives, each with its own rules, FHWA has established a new "Tolling and Pricing Team" to provide a one-stop review and application process. This website is: www.ops.fhwa.dot.gov/tolling_pricing/index.htm

Other Federal Railroad Administration Funding (other than RRIF Credit Program) - Congress may provide funding for specific rail projects as part of the Department of Transportation's annual appropriations for a given Federal fiscal year or years. These funds are generally available until expended and typically are transferred to state Departments of Transportation through federal grants. The Federal Railroad Administration manages all rail related projects. Appropriated funding may also be available for research and development projects related to both passenger and freight rail.

For additional information on these and other financing techniques available to accelerate border projects, please feel free to contact:

Ms. Thay Bishop, Team Leader
USDOT Federal Highway Administration Resource Center Innovative Finance Team
61 Forsyth Street SW, Suite 17T26
Atlanta, GA 30303
(404) 562-3695
thay.bishop@fhwa.dot.gov