If federal aid is used for the construction or improvement of a toll system or for the approach of a toll system, or when a state plans to rebuild and transform a highway, bridge or tunnel previously built with federal funds for highways into a toll system, a toll agreement is required (see Title 23, U.S. Code, Section 129 (a) (3)). The toll agreement will be implemented between the FHWA, the DOT State and the toll authority. The report to Congress is available on the TIFIA website at www.transportation.gov/buildamerica/programs-services/tifia. Jim has 27 years of experience in municipal finance, including 10 years in the public sector. As an investment banker, Jim has funded hundreds of infrastructure projects through a wide range of exempt and taxable instruments, including general bonds, industrial product development bonds, corporate tax obligations, collective income bonds, special tax obligations, credit and credit obligations, and tax and income anticipation obligations. During his public sector activities, he used loan guarantees, bonds, leases, advance bonds and borrowing to advance government programs in the states and California to support municipal infrastructure. On June 28, 2002, the U.S. Department of Transportation (U.S. DOT) and the City of Reno, Nevada, completed the first of three Transportation Infrastructure Finance and Innovation Act (TIFIA) loan contracts for the Reno Transport Rail Corridor (ReTRAC). When completed in 2006, the $283 million project will have a 2.25-mile rail corridor across downtown Reno, with two main tracks, one access road and one stop at Amtrak.
Bridges over the corridor will replace 10 level crossings. Rail transport will remain uninterrupted during construction on a temporary “Shoofly” line built as part of the project. One of the unique features of the SRF programme is the ability of states to use their credit funds through the communal bond market. States have used one of two basic structures to use public capitalization subsidies for sanitation and drinking water facilities: the cash flow model or the reserve fund model. State law and program objectives were key factors in the choice of models. The diagrams on the right describe both models. Under the cash flow model, loans are financed by borrowing revenues and capitalization subsidies, while, under the reserve fund model, federal capitalization grants and government offsets are not used for direct loans. The use has had a significant impact on the activities of the SRF. In June 2001, 23 states mobilized their wastewater funds and generated almost double the amount of states that did not raise funds. As shown in the table below, bonds increased SRF funding by $10.1 billion. Income from financial bonds is mixed with capitalization funds to lend at subsidized interest rates and be subject to debt servicing. The debt service reserve is financed by borrowing revenues.
The agreement may also include a provision for toll revenues that exceed the revenue required for the required uses mentioned above. This provision would allow these surpluses authorized under Title 23 to be used for highway and transit purposes when the state certifies annually that the toll system is properly maintained. The ability of states to maximize the potential of their SIBs to finance transportation investment needs can be leveraged to issue bonds against the capitalization of an SIB. This edition of the IFQ highlights the experience of South Carolina and Minnesota in using their SIBs to support necessary national transportation projects. The TIFIA Loan Indicative Term Sheet and Loan Agreement reflects USDOT`s current credit policies.