When the Transportation Infrastructure Financing and Innovation Act program was first established, it was largely ignored. After all, it was created at a time when federal spending and earmarks still seemed endless and plentiful.
But as gas tax revenues have declined and states have struggled to maintain their aging transportation networks, TIFIA has become wildly popular. In fact, the level of TIFIA financing requested in the last two annual cycles has been more than 10 times the amount appropriated to it.
Signed into law last month and known as MAP-21, the new federal transportation bill included a major overhaul of TIFIA. Funding was dramatically increased from $122 million in fiscal year 2012 to $750 million in fiscal year 2013 and $1 billion the following year. Federal lawmakers also decided to declare projects eligible for TIFIA based solely upon a project sponsor’s ability to repay its loans, thereby eliminating a previously used scoring system that moved applications forward based on a series of subjective criteria.
There’s one major metropolitan region that is poised to benefit from these changes as soon as they are implemented: Los Angeles. It’s no coincidence that it’s the very same place where the plan to rewrite TIFIA was conceived.
In 2008, Los Angeles County officials proposed Measure R to increase the county’s sales tax by a half-cent, thereby generating $40 billion in new revenues to pay for a full slate of gridlock-easing highway and transit projects over the next three decades. Assured that the dramatic influx of public spending would create hundreds of thousands of construction jobs, traffic-weary Angelenos approved the measure by a whopping two-thirds margin.
Officials at the Metropolitan Transportation Authority quickly realized that their electoral achievement had unlocked a massive opportunity, which became known as the 30/10 Initiative. By pledging a portion of the stream of anticipated Measure R revenues as a funding mechanism for federally backed loans in the form of bonds, the county could potentially stretch its revenues far beyond what they could buy without the leverage. The initiative would save more money, create more jobs, and deliver projects more quickly. Metro determined that if it could secure a $2.3 billion TIFIA direct loan to monetize the Measure R revenue stream more efficiently, all of the proposed infrastructure projects could be completed not in 30 years, but in 10.
Knowing that TIFIA was too small to come close to meeting the region’s needs, Metro officials realized that the only possible solution was to somehow get Congress to rewrite the program. More specifically, TIFIA would need to allow the U.S. Transportation Department to make upfront credit commitments on large programs of related projects, increase the maximum allowable portion of federal funding committed to a project from 33 percent to 49 percent and eliminate the selection criteria by qualifying any creditworthy project. Then they’d need to convince Congress to authorize a huge boost in funding.
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