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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

June 2012: 

Surface Transportation: 

Financing Program Could Benefit from Increased Performance Focus and 
Better Communication: 

GAO-12-641: 

GAO Highlights: 

Highlights of GAO-12-641, a report to congressional committees. 

Why GAO Did This Study: 

Created in 1998, the TIFIA program is designed to fill market gaps and 
leverage substantial nonfederal investment by providing federal credit 
assistance to help finance surface transportation projects including 
highway, transit, rail, and intermodal projects. Since 2008, demand 
for the program has surged, annually exceeding budget resources for 
the program by a factor of more than 10 to 1. Given the increased 
demand and recent proposals to expand and modify the program, GAO was 
asked to review (1) the characteristics of TIFIA projects and how DOT 
tracks progress toward the program’s goals, (2) the process DOT used 
to evaluate and select projects that submitted LOIs to apply for 
credit assistance in fiscal years 2010 and 2011, (3) the factors that 
affect project sponsors’ decisions about whether to seek TIFIA credit 
assistance, and (4) the options proposed to modify the program. GAO 
reviewed laws and program guidance; interviewed DOT officials, project 
sponsors, and advisors involved in procuring credit assistance; and 
surveyed all state departments of transportation and other recent 
applicants about the TIFIA program. 

What GAO Found: 

Projects that received credit assistance through the Transportation 
Infrastructure Finance and Innovation Act (TIFIA) program, 
administered by the Department of Transportation (DOT), tend to be 
large, high-cost highway projects. As of April 2012, DOT has executed 
27 TIFIA credit agreements for 26 projects with project sponsors such 
as state DOTs and transit agencies. Overall, DOT has provided nearly 
$9.1 billion in credit assistance through 26 loans and one loan 
guarantee. By mode, there are 17 highway, 5 transit, and 4 intermodal 
projects. Most projects have a total cost of over $1 billion. DOT 
monitors individual credit agreements but does not systematically 
assess whether its TIFIA portfolio as a whole is achieving the program’
s goals of leveraging federal funds and encouraging private co-
investment. DOT has identified goals and objectives for the TIFIA 
program, but its limited use of performance measures makes it 
difficult to determine the degree to which the program is meeting 
these goals and objectives. Given that DOT already collects project 
data, it could use these data to better evaluate the program’s overall 
progress toward meeting its goals. 

In fiscal years 2010 and 2011, DOT used a competitive two-step process 
to evaluate and invite projects to apply for TIFIA credit assistance 
to address the considerable increase in demand for the program. First, 
a multimodal team scored and grouped letters of interest (LOI) using 
statutory criteria. Second, a group of senior DOT staff reviewed the 
LOIs based on the criteria and other factors, like available budget 
authority, and invited a subset to apply—the next step in securing 
TIFIA assistance. While recent applicants were satisfied with many 
aspects of the process, they also indicated, along with legal and 
financial advisors, that the selection process lacks transparency and 
creates uncertainty in their ability to implement projects. For 
example, some recent applicants told us it is difficult to understand 
what characteristics DOT uses to measure how well a project meets each 
criterion. DOT officials said the agency is taking steps to improve 
its evaluation process, but since many of the changes were initiated 
in 2012, it is too soon to tell if they will address recent applicants’
concerns. 

Several factors influence whether project sponsors seek TIFIA 
assistance. More than 30 of 36 recent applicants we surveyed cited TIFIA
’s repayment options (like deferring repayments for 5 years after 
project completion), low interest rate, and flexible structure (i.e., 
ability to subordinate TIFIA repayment) as important in their decision 
to seek assistance. To date, sponsors from 17 states have never sought 
TIFIA assistance. State DOT respondents from these states cited 
various reasons for this, including lack of eligible projects and 
state-imposed borrowing restrictions. Many of these state DOTs 
indicated that regardless of options for modifying the program, they 
have no plans to seek TIFIA assistance. 

Several options to change the TIFIA program have been proposed by, 
among others, Congress and DOT; these options include increasing the 
program’s funding, increasing the portion of costs that may be covered 
by TIFIA from 33 percent to 49 percent of project costs, and modifying 
the selection process. Each option has advantages and disadvantages 
and, if adopted, some could alter the original goals of the program-—
to leverage public funds and encourage private co-investment. 

What GAO Recommends: 

GAO recommends that DOT develop and use program performance measures 
to better assess progress in meeting TIFIA’s goals and objectives. DOT 
should better disclose information on how it selects projects to apply 
for TIFIA assistance through program guidance or other means to help 
ensure that the program is more transparent to Congress, applicants, 
and the public. DOT said it would consider the study’s results. 

View [hyperlink, http://www.gao.gov/products/GAO-12-641]. For more 
information, contact Susan Fleming at (202) 512-2834 or 
flemings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

TIFIA Projects Are Mostly Large Highway Projects; Performance Measures 
Are Needed to Better Evaluate Program Outcomes: 

DOT Used a Competitive Process to Evaluate Projects, but This Process 
Could Benefit from Increased Transparency: 

Flexible Repayment Terms and Other Factors Influence whether States 
and Other Sponsors Seek TIFIA Assistance; Future Demand Is Difficult 
to Gauge: 

Options Proposed to Modify the TIFIA Program: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: Projects Receiving TIFIA Credit Assistance: 

Appendix III: Responses to Questions from GAO's Survey on TIFIA: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: DOT Definitions and Clarifications of TIFIA Statutory 
Criteria: 

Table 2: Number of LOIs, by Fiscal Year and Outcome of Multimodal 
Team's Assessment: 

Table 3: Number of LOIs Invited to Apply, by Fiscal Year and Mode: 

Table 4: Status of Projects Invited to Apply, by Fiscal Year: 

Table 5: Top Factors That Affected Recent Applicants' Decisions to 
Seek TIFIA Assistance: 

Table 6: Other Factors That Affected Recent Applicants' Decisions to 
Seek TIFIA Assistance: 

Table 7: Factors That Affected State DOTs' Decisions to Not Seek TIFIA 
Assistance: 

Table 8: Summary of Proposed Changes to the TIFIA Program: 

Table 9: List of Interviewees--Sponsors, Financial and Legal Advisors, 
All Others: 

Table 10: List of Survey Recipients and Respondents, by Type of 
Organization: 

Table 11: Projects with TIFIA Credit Agreements: 

Table 12: How Important or Unimportant Were Each of the Following 
Factor(s) in Your Organization's Decision to Seek TIFIA Credit 
Assistance for Projects in Federal Fiscal Year 2010 or 2011? 

Table 13: How Satisfied or Dissatisfied Were You with Each of the 
Following Aspects of the Process for Submitting a Letter of Interest 
(LOI) for the TIFIA Program in Federal Fiscal Year 2010 or 2011? 

Table 14: Thinking about the Amount of Effort Your Organization Spent, 
How Much of a Burden, if at All, Were the Following Aspects of 
Submitting an LOI? 

Table 15: For Federal Fiscal Year 2010 or 2011, Did You Receive Any 
Feedback from DOT TIFIA Staff on Any Letters of Interest for TIFIA 
Credit Assistance? 

Table 16: If You Received Feedback on Any of the Following Topics, How 
Useful, if at All, Was the Feedback You Received from DOT TIFIA Staff? 

Table 17: How Much Do You Support or Oppose the Following Proposed 
Changes to the TIFIA Program? 

Table 18: Do You Support Modifying the TIFIA Selection Criteria? 

Table 19: How Much, if at All, Did Each of the Following Factors 
Impact Your State DOT's Decision to Not Submit an LOI to the TIFIA 
Program? 

Table 20: In Your Opinion, How Much, if at All, Does Each of the 
Following Proposed Changes Increase the Likelihood That Your 
Organization Would Seek TIFIA Credit Assistance in the Future? 

Table 21: In Your Opinion, How Much, if at All, Does Each of the 
Following Proposed Changes Increase the Likelihood That Your 
Organization Would Seek TIFIA Credit Assistance in the Future? 

Table 22: Do You Support Modifying the TIFIA Selection Criteria? 

Table 23: In the Next 5 years, Approximately How Many Projects Do You 
Anticipate Will Be Undertaken in Your State That Have a Total Cost of 
... 

Table 24: Of the Projects Identified in Table 23, for About How Many 
Do You Anticipate That Your Organization Will Seek TIFIA Credit 
Assistance? 

Table 25: Does Your State DOT Have the Legislative Authority to Use 
Any of the Following Tools for Transportation Projects? 

Table 26: Does Your State Have Access to Any of the Following Revenue 
Sources, at Either the State or Local Level, That Could Be Used to 
Repay a TIFIA Loan? 

Table 27: Does Your State DOT Have Either Bonding Authority OR Have 
Access to the Bond Market through Another State Entity? 

Table 28: Which, if Any, of the Following Legislative Restrictions on 
Conducting Bond Issuances for Capital Projects Apply? 

Figures: 

Figure 1: Requests for TIFIA Credit Assistance, Fiscal Years 1999-2012: 

Figure 2: Four Stages of TIFIA Credit Assistance: 

Figure 3: Location of Projects with TIFIA Credit Agreements: 

Figure 4: States That Had Submitted TIFIA Letters of Interest, through 
Fiscal Year 2012: 

Figure 5: TIFIA LOI Evaluation and Selection Process for Fiscal Years 
2010 and 2011: 

Abbreviations: 

AASHTO: American Association of State Highway and Transportation 
Officials: 

ARTBA: American Road and Transportation Builders Association: 

DOT: department of transportation: 

FCRA: Federal Credit Reform Act: 

FHWA: Federal Highway Administration: 

FRA: Federal Railroad Administration: 

FTA: Federal Transit Authority: 

GAN: Grant Anticipation Note: 

GARVEE: Grant Anticipation Revenue Vehicle: 

ITS: intelligent transportation system: 

LOI: letter of interest: 

MAP-21: Moving Ahead for Progress in the 21st Century Act: 

NOFA: Notice of Funding Availability: 

OMB: Office of Management and Budget: 

OST: Office of the Secretary of Transportation: 

RRIF: Railroad Rehabilitation and Improvement Financing: 

SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users: 

SANDAG: San Diego Association of Governments: 

SEP-15: Special Experimental Project Number 15: 

TIFIA: Transportation Infrastructure Finance and Innovation Act: 

TIGER: Transportation Investment Generating Economic Recovery: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

June 21, 2012: 

The Honorable Barbara Boxer: 
Chairman: 
The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Environment and Public Works: 
United States Senate: 

The Honorable Max Baucus: 
Chairman: 
The Honorable David Vitter: 
Ranking Member: 
Subcommittee on Transportation and Infrastructure: 
Committee on Environment and Public Works: 
United States Senate: 

The Transportation Infrastructure Finance and Innovation Act (TIFIA) 
program provides federal credit assistance in the form of direct 
loans, loan guarantees, and lines of credit to finance surface 
transportation projects including highway, transit, rail, port access, 
and intermodal projects. Created in 1998 as part of the Transportation 
Equity Act for the 21st Century (TEA-21),[Footnote 1] the program is 
designed to fill market gaps and leverage substantial private and 
other nonfederal investment to help advance projects of regional and 
national significance. For most of its history, the TIFIA program was 
underutilized. Beginning in fiscal year 2008, however, interest in the 
program increased substantially because of several factors, including 
the growing demand for infrastructure investment relative to available 
transportation funding and the economic downturn. For the past 3 
years, demand for credit assistance has exceeded the program's budget 
resources by a factor of more than 10 to 1. In part because of to this 
oversubscription, Members of Congress and others have offered 
reauthorization proposals to greatly expand and modify various aspects 
of the program. 

The Federal Highway Administration (FHWA) within the U.S. Department 
of Transportation (DOT) administers the TIFIA program. DOT awards 
credit assistance to eligible project sponsors, such as state 
departments of transportation, transit agencies, tolling authorities, 
and private entities. To receive assistance, projects must meet 
several eligibility requirements--such as having a total cost of at 
least $50 million[Footnote 2]--and sponsors must submit a letter of 
interest (LOI) and a formal application. Since the program's 
inception, 26 projects in 12 states, the District of Columbia, and 
Puerto Rico have received about $9.1 billion in TIFIA credit 
assistance through direct loans and one loan guarantee, and over a 
dozen more projects are working toward receiving credit assistance. 

In response to your request, this report addresses the following 
questions: (1) What are the characteristics of TIFIA projects and how 
does DOT track progress toward the program's stated goals? (2) How did 
DOT evaluate and select projects to apply for TIFIA credit assistance 
for fiscal years 2010 and 2011? (3) What factors affect states' and 
other project sponsors' decisions about whether to apply for TIFIA 
credit assistance? (4) What are the proposed options to modify the 
TIFIA program? 

To address these objectives, we reviewed DOT program guidance for 
TIFIA, relevant legislation and regulations, and DOT's biennial 
reports to Congress on the TIFIA program. We also reviewed documents 
developed by DOT to capture the evaluation and scoring decisions for 
projects seeking credit assistance in fiscal years 2010 and 2011. We 
analyzed data from DOT on LOIs submitted to the program since its 
creation and on projects in the TIFIA portfolio--projects with credit 
agreements--to describe the characteristics and results of the TIFIA 
program. We assessed the reliability of the data by reviewing DOT's 
data documentation, interviewing knowledgeable officials, and 
conducting independent validation through use of our web survey of 
states and recent applicants. We found the data to be sufficiently 
reliable for our purposes. In addition, we interviewed DOT officials 
on TIFIA program goals and performance measures, the selection and 
evaluation of projects, the demand for the program, and proposed 
options to modify TIFIA. We also interviewed project sponsors, 
including those that received credit assistance in California, 
Colorado, Florida, Texas, and Virginia, the 5 states with the most 
TIFIA awards; the state DOTs in North Carolina and Iowa; private 
concessionaires, private sector entities that have entered into 
agreements with public agencies to allow greater private sector 
participation in the delivery and financing of transportation 
projects; and legal and financial advisors that have been involved in 
securing TIFIA credit assistance to learn about their experience with 
the TIFIA program, including the application process, oversight and 
monitoring of credit assistance, future demand for the program, and 
proposed options to change the program. 

In addition, we surveyed all state departments of transportation and 
all recent applicants that submitted an LOI to the TIFIA program in 
fiscal years 2010 and 2011 using a web-based survey.[Footnote 3] The 
survey recipients fell into four categories: (1) state DOTs from 
states from which no sponsor had ever applied to the TIFIA program, 
(2) state DOTs from states for which a sponsor had applied to the 
TIFIA program but not in recent years--that is, 2010 or 2011, (3) 
state DOTs who had recently applied to the TIFIA program, and (4) 
other non-state DOT organizations, such as transit agencies, who had 
recently applied to the TIFIA program. Survey respondents were 
presented with different questions in the survey depending on their 
past experience with the TIFIA program and whether they were state 
DOTs. In general, the survey topics included the factors contributing 
to organizations' decisions about whether to seek TIFIA assistance, 
satisfaction with the process for submitting an LOI to the TIFIA 
program, opinions on proposed modifications to the TIFIA program, 
potential future demand for the TIFIA program, and characteristics of 
the state DOTs. We distributed a link for the survey to 83 
organizations by e-mail and also subsequently e-mailed and telephoned 
nonrespondents to encourage a higher response rate. We received 
completed surveys from 66 respondents (80 percent). Of the 66 
completed responses, 16 were state DOTs from states with no TIFIA 
experience, 14 were from state DOTs from states with no recent TIFIA 
experience, 12 were from state DOTs that were recent applicants, and 
24 were from non-state DOT organizations that were recent applicants. 

To determine options that had been proposed to change the TIFIA 
program, we reviewed the American Energy and Infrastructure Jobs Act 
of 2012,[Footnote 4] as reported out by the House Committee on 
Transportation and Infrastructure, and the Moving Ahead for Progress 
in the 21st Century Act (MAP-21),[Footnote 5] as passed by the Senate. 
We also reviewed other reauthorization proposals and documents 
prepared by, among others, DOT and the American Association of State 
Highway and Transportation Officials (AASHTO). In interviews, we 
discussed these and other options with DOT, select project sponsors, 
legal and financial advisors, and private concessionaires with 
investments in transportation infrastructure, all familiar with or 
recipients of TIFIA assistance. 

We conducted this performance audit from July 2011 to June 2012 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. For more 
information on our scope and methodology, see appendix I. 

Background: 

Most federal highway transportation funds are distributed as grants to 
states as part of the federal aid highway program through a set of 
complex formulas that take into account a number of factors, including 
the estimated share of taxes highway users in each state contributes. 
The Highway Trust Fund is the principal source of funding for federal 
aid highway programs and is funded through motor fuel and other 
highway use taxes.[Footnote 6] Grants for transit projects are 
distributed as part of the federal transit program through a 
collection of formula-based and discretionary programs and are funded 
primarily by the Mass Transit Account of the Highway Trust Fund. 
[Footnote 7] Supplementing these federal programs is a collection of 
financing methods that allow project sponsors--such as state DOTs and 
transit agencies--to borrow money through bonds, loans, or other 
mechanisms. State DOTs and other project sponsors can raise money in 
the bond market through, for example, revenue bonds backed by 
anticipated project revenues like tolls; bonds backed by future 
federal transportation funds, such as Grant Anticipation Revenue 
Vehicles (GARVEE) or Grant Anticipation Notes (GAN); or general 
obligation bonds backed by the full faith and credit of a state or 
municipality. Project sponsors may also seek private investment 
through bank debt, private equity, or private activity bonds. Through 
TIFIA, DOT provides loans or other credit assistance to sponsors of 
surface transportation projects. Declining Highway Trust Fund revenues 
and states' budget constraints, as well as the high cost and size of 
major transportation projects, have prompted project sponsors to seek 
alternative methods of funding transportation infrastructure. 

TIFIA Goals: 

The TIFIA program's primary goal is to leverage limited federal 
resources and stimulate private capital investment in transportation 
infrastructure by providing credit assistance to projects of national 
or regional significance. Underlying the TIFIA program is the notion 
that the federal government can perform a constructive role in 
financing large transportation infrastructure projects by 
supplementing, but not supplanting, existing capital finance markets. 
In this role, DOT identifies five key objectives for the TIFIA program: 

* facilitate projects with significant public benefits; 

* encourage new revenue streams and private participation; 

* fill capital market gaps for secondary (subordinate) capital; 

* be a flexible, "patient" investor willing to take on investor 
concerns about investment horizon, liquidity, predictability, and 
risk; and: 

* limit federal exposure by relying on market discipline. 

TIFIA Credit Assistance Terms and Eligibility Requirements: 

DOT provides TIFIA credit assistance in three forms: direct loans, 
loan guarantees, and standby lines of credit. The maximum maturity for 
all types of TIFIA credit assistance is 35 years after substantial 
completion of a project. Lines of credit can supplement project 
revenues during the first 10 years of project operations. In addition, 
DOT can defer the first TIFIA repayment until 5 years after 
substantial completion of a project, and most project sponsors avail 
themselves of this option. Other credit assistance terms include that 
(1) TIFIA assistance may provide no more than 33 percent of total 
project costs,[Footnote 8] (2) senior debt has an investment-grade 
credit rating (Baa3/BBB-or higher),[Footnote 9] and (3) TIFIA 
assistance can be subordinate to the project's senior debt, meaning 
that senior creditors may receive project revenues ahead of DOT. 
According to DOT officials, the TIFIA program is one of the few 
federal credit programs in which federal assistance routinely takes a 
subordinate position to other, nonfederal lenders with respect to cash 
flows. However, to protect taxpayers, TIFIA loans may not be 
subordinated to the claims of other creditors with respect to the loan 
recipients' bankruptcy, insolvency, or liquidation.[Footnote 10] 

Both public and private entities are eligible to receive TIFIA 
assistance for a range of surface transportation-related projects 
including highway, transit, railroad, intermodal freight, and port 
access. Borrowers can include entities like state DOTs, toll 
authorities, transit agencies, and private concessionaires.[Footnote 
11] Other eligibility requirements include that a project: 

* must have total costs of at least $50 million (or $15 million for 
intelligent transportation systems projects);[Footnote 12] 

* must be included in state and local transportation plans; and: 

* must have dedicated revenues, like tolls, user fees, or pledged 
taxes, for repayment. 

Through the Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users (SAFETEA-LU), Congress amended and 
reauthorized the TIFIA program, authorizing budget authority of $122 
million for each of fiscal years 2005-2009 from the Highway Trust Fund 
for the program's credit subsidy cost and administrative expenses. 
[Footnote 13] The credit subsidy is the estimated long-term cost to 
the government of providing assistance.[Footnote 14] Extensions of 
SAFETEA-LU have authorized budget authority of $122 million for the 
TIFIA program for each subsequent fiscal year. Any uncommitted budget 
authority remains available for obligation in subsequent years, unless 
Congress chooses to reprogram or rescind these amounts. According to 
DOT, $10 million in TIFIA budget authority can generally be leveraged 
to provide $100 million in credit assistance.[Footnote 15] 

TIFIA Program History: 

In fiscal year 2008, total requests for TIFIA assistance exceeded 
DOT's available budgetary resources for the first time. Prior to this, 
when there was lower demand for the program, DOT allowed project 
sponsors to seek TIFIA assistance on a "first come, first served" 
basis defined by the sponsor's schedule.[Footnote 16] Figure 1 shows 
the number and amount of credit assistance requested each fiscal year. 

Figure 1: Requests for TIFIA Credit Assistance, Fiscal Years 1999-2012: 

[Refer to PDF for image: combination vertical bar and line graph] 

Year: 1999; 
Inferred total TIFIA requests: 2,656; 
Number of letters of interest: 14. 

Year: 2000; 
Inferred total TIFIA requests: 3,900; 
Number of letters of interest: 14. 

Year: 2001; 
Inferred total TIFIA requests: 1,301; 
Number of letters of interest: 9. 

Year: 2002; 
Inferred total TIFIA requests: 2,951; 
Number of letters of interest: 7. 

Year: 2003; 
Inferred total TIFIA requests: 2,471; 
Number of letters of interest: 6. 

Year: 2004; 
Inferred total TIFIA requests: 2,935; 
Number of letters of interest: 7. 

Year: 2005; 
Inferred total TIFIA requests: 1,787; 
Number of letters of interest: 6. 

Year: 2006; 
Inferred total TIFIA requests: 475; 
Number of letters of interest: 4. 

Year: 2007; 
Inferred total TIFIA requests: 606; 
Number of letters of interest: 3. 

Year: 2008; 
Inferred total TIFIA requests: 2,576; 
Number of letters of interest: 7. 

Year: 2009; 
Inferred total TIFIA requests: 1,295; 
Number of letters of interest: 6. 

Year: 2010; 
Inferred total TIFIA requests: 12,539; 
Number of letters of interest: 39. 

Year: 2011; 
Inferred total TIFIA requests: 14,016; 
Number of letters of interest: 34. 

Year: 2012; 
Inferred total TIFIA requests: 13,007; 
Number of letters of interest: 26. 

Source: GAO analysis of DOT data on letters of interest. 

Note: Not all letters of interest included a total project cost or 
TIFIA assistance request. To calculate a dollar estimate of the total 
TIFIA request for each fiscal year, we multiplied the number of 
letters of interest in a year by the average TIFIA request that year. 
We refer to this estimate as the inferred total TIFIA assistance 
request. Of the 182 letters of interest submitted to the program, 16 
did not include an estimate of TIFIA assistance. 

[End of figure] 

In its 2010 report to Congress on TIFIA, DOT attributed the increased 
demand for TIFIA assistance to several factors, including the growing 
demand for infrastructure investment relative to other sources of 
funding (like declining fuel tax receipts), the economic downturn and 
difficulty accessing capital markets, and the increasing use of 
innovative approaches, like public-private partnerships, to finance 
and deliver projects. After demand exceeded available budget 
resources, DOT terminated the open application process and instituted 
an annual, fixed-date solicitation process for sponsors to submit LOIs 
for credit assistance. In fiscal year 2010, DOT began evaluating and 
competitively selecting projects based on how well they align with the 
TIFIA selection criteria and the availability of budget resources. 
[Footnote 17] 

Primary Stages for Securing a TIFIA Credit Agreement: 

As shown in figure 2, there are four primary stages for securing TIFIA 
credit assistance. For each project, the amount of time needed to 
complete each stage varies. For instance, in its 2002 report to 
Congress, DOT stated that the length of credit agreement negotiations 
is affected by the complexities and uncertainties of large 
infrastructure projects as well as the learning curve of both project 
sponsors and DOT as they encounter unique legal and financial issues 
with projects. 

Figure 2: Four Stages of TIFIA Credit Assistance: 

[Refer to PDF for image: list] 

Letter of interest: 
* A sponsor submits a letter of interest to DOT, which DOT evaluates 
as part of its annual application process. 
* The letter of interest describes the project and its financial plan, 
identifies the borrower, explains how the project meets the TIFIA 
selection criteria, and discusses the benefits of the project and its 
use of TIFIA assistance. 
* On the basis of its review of the letter of interest, DOT invites 
the sponsor to apply for credit assistance.  

Applications: 
* Sponsor submits an application to DOT, along with an application 
fee. The application contains more information on the project and its 
financial plan than the letter of interest. 
* The TIFIA office, working with an outside financial adviser, 
evaluates the application and makes a recommendation to the DOT Credit 
Council.[A] 
* If approved, the Credit Council makes a recommendation to the 
Secretary of Transportation, who selects projects to receive credit 
assistance.  

Agreement: 
* The TIFIA office, working with an outside legal adviser, negotiates 
a credit agreement with the sponsor. 
* DOT issues a term sheet and obligates funds. 
* The TIFIA office executes the credit agreement.  

Monitoring: 
* DOT disburses funds.[B] 
* DOT monitors active credit agreements and a sponsor (now borrower) 
submits financial information and project updates to DOT.
* The borrower repays assistance. 

Source: GAO analysis of DOT documents. 

Notes: Sponsors of highway projects may seek waivers from the usual 
TIFIA application process through FHWA's Special Experimental Project 
Number 15 (SEP-15). SEP-15 allows for the modification of FHWA policy 
and procedure to facilitate public-private partnerships and other 
types of innovation in the federal aid highway process. Specifically, 
sponsors can seek waivers from FHWA procedures and policy, including 
those that apply to TIFIA. 

[A] The Credit Council provides policy direction to the TIFIA program 
and recommends projects to receive credit assistance. The DOT Credit 
Council is composed of the following DOT officials: the Deputy 
Secretary of Transportation, who serves as chair; Assistant Secretary 
for Budget and Programs, who serves as vice-chair; Under Secretary of 
Transportation for Policy; General Counsel; Assistant Secretary for 
Transportation Policy; and the Director of the Office of Small and 
Disadvantaged Business Utilization. The Federal Highway Administrator, 
Federal Transit Administrator, Federal Railroad Administrator, and 
Maritime Administrator also sit on the Credit Council. Finally, there 
can be up to three at-large members. 

[B] For loan guarantees, DOT disburses funds to the guaranteed lender 
only when there is a payment default by the borrower. Any funds that 
the guaranteed lender draws from the loan guarantee initiate a loan 
between DOT and the borrower. 

[End of figure] 

After determining that a project meets the eligibility requirements, 
DOT uses eight statutory criteria[Footnote 18] weighted by regulation 
[Footnote 19] to select projects to receive credit assistance. 
Beginning in fiscal year 2010, DOT defined the statutory criteria in 
the notice of funding availability (funding notice), which included 
clarification of the national or regional significance and environment 
criteria. (See table 1.) 

Table 1: DOT Definitions and Clarifications of TIFIA Statutory 
Criteria: 

Criterion (weight): National or regional significance (20%); 
Definition: Extent to which project is nationally or regionally 
significant in terms of generating economic benefits, supporting 
international commerce, or otherwise enhancing national transportation 
system. It includes: 
* livability--providing transportation options linked with housing and 
commercial development to improve the economic opportunities and 
quality of life for people in communities across the United States,; 
* economic competitiveness--contributing to the economic 
competitiveness of the United States by improving long-term efficiency 
and reliability in the movement of people and goods, and; 
* safety--improving the safety of U.S. transportation facilities and 
systems and the communities and populations they affect; 
2010 and 2011 clarifications: Livability; Economic competitiveness; 
Safety. 

Criterion (weight): Environment (20%); 
Definition: Extent to which the project helps maintain or protect the 
environment. It includes: 
* sustainability--improving energy efficiency, reducing dependence on 
oil, reducing greenhouse gas emissions and other transportation-
related impacts on ecosystems through use of tolling or pricing 
structures to reduce congestion and encourage the use of alternative 
transportation options, and; 
* state of good repair--improving the condition of existing 
transportation infrastructure with particular emphasis on projects 
that minimize life cycle costs and use environmentally sustainable 
practices and materials; 
2010 and 2011 clarifications: Sustainability; State of good repair. 

Criterion (weight): Private participation (20%); 
Definition: Extent to which TIFIA assistance would foster innovative 
public-private partnerships and attract private debt or equity 
investment; 
2010 and 2011 clarifications: [Empty]. 

Criterion (weight): Project acceleration (12.5%); 
Definition: Likelihood that TIFIA assistance would enable a project to 
proceed at an earlier date than the project would otherwise be able to 
proceed; 
2010 and 2011 clarifications: [Empty]. 

Criterion (weight): Creditworthiness (12.5%); 
Definition: The creditworthiness of the project, including a 
determination by the Secretary of Transportation that any financing 
for the project has appropriate security features to ensure repayment, 
such as rate covenants; 
2010 and 2011 clarifications: [Empty]. 

Criterion (weight): Use of new technologies (5%); 
Definition: Extent to which project uses new technologies, including 
intelligent transportation systems, to enhance project efficiency; 
2010 and 2011 clarifications: [Empty]. 

Criterion (weight): Reduced federal grant assistance (5%); 
Definition: Extent to which TIFIA assistance would reduce the 
contribution of federal grant assistance to the project; 
2010 and 2011 clarifications: [Empty]. 

Criterion (weight): Consumption of budget authority (5%); 
Definition: Amount of budget authority required to fund the federal 
credit instrument made available under TIFIA; 
2010 and 2011 clarifications: [Empty]. 

Source: GAO analysis of DOT documents. 

Note: On the basis of both the funding notices for fiscal years 2010 
and 2011, DOT did not consider two criteria--creditworthiness and 
consumption of budget authority--when evaluating LOIs as DOT did not 
believe project sponsors would have sufficient details regarding these 
criteria at the time of the LOI submission. Per the funding notice 
issued on November 3, 2011, DOT considered all eight criteria in its 
evaluation of LOIs beginning in fiscal year 2012. 

[End of table] 

In addition, projects that received funding through DOT's 
Transportation Investment Generating Economic Recovery (TIGER) grant 
program were eligible for TIFIA credit assistance. Specifically, 
project sponsors could use TIGER grant funds for TIFIA credit 
assistance, known as a TIGER TIFIA payment. In each of the four rounds 
through which DOT TIGER grants have been available, a portion of the 
funds could be used to support the credit subsidy and administrative 
costs of projects eligible for federal credit assistance. When a 
project sponsor is offered a TIFIA award through the TIGER program, 
the project goes through the regular TIFIA process, including the 
TIFIA credit evaluation, credit agreement negotiation, and oversight 
and monitoring.[Footnote 20] 

DOT implements and manages the program using internal staff and a pool 
of external financial and legal advisors. There are nine internal 
TIFIA office staff who are responsible for assisting with reviewing 
LOIs, selecting projects to apply for credit assistance, negotiating 
credit agreements, monitoring loan disbursements and the financial 
performance of executed credit agreements, and tracking credit subsidy 
calculations. Currently, DOT supplements its internal staff with a 
pool of five financial and legal advisors, contracted for 5-year 
periods, who assist in the review of applications and negotiation of 
credit agreements.[Footnote 21] 

TIFIA Projects Are Mostly Large Highway Projects; Performance Measures 
Are Needed to Better Evaluate Program Outcomes: 

TIFIA Projects Are Concentrated in Five States and Tend to Be Large 
Highway Projects: 

Since the TIFIA program was created in 1998, DOT has executed 27 
credit agreements for 26 projects.[Footnote 22] To date, assistance 
has been provided through 26 loans and one loan guarantee. Of the 26 
projects, 17 are located in 5 states--California, Colorado, Florida, 
Texas, and Virginia (see figure 3). 

Figure 3: Location of Projects with TIFIA Credit Agreements: 

[Refer to PDF for image: illustrated U.S. map] 

Austin, Texas: 
* US 183-A Turnpike: $66 million; 
* SH 130 Corridor: $430 million; 
* Central Texas Turnpike System: $900 million. 

Broward County, Florida: 
* I-595 Corridor Roadway Improvements: $603 million. 

Charleston, South Carolina: 
* Cooper River Bridge:  Refired-refinanced $215 million. 

Dallas, Texas: 
* President George Bush Turnpike Western Extension (SH 161): $418 
million. 

Dallas-Fort Worth, Texas: 
* North Tarrant Express: $650 million; 
* IH 635 Managed Lanes: $850 million. 

Denver, Colorado: 
* Denver Union Station: $146 million; 
* U.S. 36 Managed Lanes: $54 million; 
* Eagle Project: $280 million. 

Fairfax County, Virginia: 
* I-495 Capital Beltway HOT Lanes: $589 million. 

Leeville, Louisiana: 
* LA-1: $66 million.   

Miami, Florida: 
* Port of Miami Tunnel: $341 million; 
* Miami Intermodal Center: 
- Rental car facility: $270 million; 
- FDOT program elements: Retired--paid in full $269 million. 

Montgomery and Prince George's County, Maryland: 
* Intercounty Connector: $516 million. 

New York City, New York: 
* Staten Island Ferries: Retired--paid in full $159 million. 

Norfolk and Portsmouth, Virginia: 
* Midtown Tunnel: $422 million. 

Raleigh-Durham Expressway: 
* Triangle Expressway: $387 million. 

Reno, Nevada: 
* Reno Rail Corridor: Retired--paid in full $51 million. 

Richmond, Virginia: 
* Pocahontas Parkway/Richmond Airport Connector: $150 million. 
Airport Connector 

San Diego County, California: 
* South Bay Expressway: $140 million. 

San Francisco, California: 
* Transbay Transit Center: $171 million. 

San Juan, Puerto Rico: 
* Tren Urbano-Puerto Rico: Retired--paid in full $300 million. 

Warwick, Rhode Island: 
* Interlink (formally Warwick Intermodal Station): $42 million. 

Washington, D.C.: 
* Washington Metro Capital Improvement Program (CIP): $600 million. 

Total TIFIA assistance: $9.1 billion; 
Total project investment: $35.5 billion.  

Sources: DOT and Map Resources. 

Note: Dollar values indicate the amount of TIFIA assistance each 
project received, in millions of dollars. 

[End of figure] 

Overall, sponsors from 33 states, the District of Columbia, and Puerto 
Rico have submitted LOIs for projects that vary by mode and purpose, 
but most have high total costs. Highway projects account for a 
majority of all LOIs submitted to TIFIA program. According to DOT 
data, highway projects--such as building new roads and replacing 
bridges--accounted for about 60 percent of the 182 LOIs submitted to 
the TIFIA program from 1999 to 2012. Transit and intermodal projects--
such as building new transit systems and constructing parking garages 
and facilities linking various transport modes near airports--account 
for 18 percent and 10 percent of all LOIs, respectively. In addition, 
rail, ferry, and ITS projects account for 4 percent, 2 percent, and 1 
percent of LOIs during this time, respectively.[Footnote 23] However, 
no projects in these three modes have received TIFIA assistance to 
date. Over the history of the program, the average total cost of 
projects seeking TIFIA assistance has been $1.2 billion. Through 
fiscal year 2012, no sponsor in the other 17 states has submitted an 
LOI to the TIFIA program.[Footnote 24] (See figure 4.) 

Figure 4: States That Had Submitted TIFIA Letters of Interest, through 
Fiscal Year 2012: 

[Refer to PDF for image: illustrated U.S. map] 

0 letters of interest (18 states): 
Connecticut: 0; 
Hawaii: 0; 
Idaho: 0; 
Iowa: 0; 
Kansas: 0; 
Maine: 0; 
Mississippi: 0; 
Montana: 0; 
Nebraska: 0; 
New Hampshire: 0; 
New Mexico: 0; 
North Dakota: 0; 
Oklahoma: 0; 
Oregon: 0; 
South Dakota: 0; 
Utah: 0; 
Vermont: 0; 
Wisconsin: 0. 

1-2 letters of interest (15 states): 
Alabama: 1; 
Arizona: 2; 
Arkansas: 1; 
Delaware: 2; 
Georgia: 2; 
Illinois: 2; 
Indiana: 1; 
Minnesota: 1; 
Missouri: 1; 
Ohio: 2; 
Pennsylvania: 2; 
Rhode Island: 1; 
Tennessee: 1; 
West Virginia: 1; 
Wyoming: 1. 

3-4 letters of interest (10 states): 
Colorado: 4; 
District of Columbia: 4; 
Kentucky: 4; 
Louisiana: 3; 
Maryland: 3; 
Massachusetts: 4; 
Michigan: 3; 
Nevada: 4; 
New Jersey: 3; 
Puerto Rico: 4. 

5-9 letters of interest (4 states): 
Alaska: 5; 
Florida: 9; 
South Carolina: 5; 
Washington: 5. 

10 or more letters of interest (5 states): 
California: 26; 
New York: 13; 
North Carolina: 10; 
Texas: 29; 
Virginia: 18. 

Sources: GAO analysis of DOT information and Map Resources. 

Note: Counts include duplicate LOIs submitted for the same project in 
different years. 

[End of figure] 

According to DOT data, TIFIA credit agreements have been used mostly 
for large, high-cost highway projects. Overall, DOT has provided TIFIA 
assistance to 17 highway projects. Some of these projects--like the 
President George Bush Turnpike-Western Extension (SH 161) in Texas--
were to construct new roads, and others--like the I-595 Corridor 
Roadway Improvements project in Florida--to reconstruct and expand 
existing roads. Projects receiving credit assistance also tend to have 
high total costs. Of the 25 projects, 20 projects cost more than $500 
million and 16 projects cost more than $1 billion. The average total 
cost of projects receiving TIFIA credit assistance is $1.4 billion. 
[Footnote 25] According to DOT, TIFIA assistance can help advance 
large-scale projects that otherwise might be delayed or deferred 
because of size or complexity, and as such, TIFIA projects to date 
have mainly been large-scale projects. On average, TIFIA assistance 
accounts for 24 percent of total project costs, about 9 percent less 
than the 33 percent currently permitted by law. 

To a lesser extent, TIFIA has also been used for transit and 
intermodal projects. Four intermodal projects have received credit 
assistance, including the Reno ReTRAC project in Nevada, which 
includes rail and roadway improvements to improve freight capacity and 
address environmental and safety concerns. Five transit projects have 
received TIFIA assistance. The Tren Urbano project in Puerto Rico, for 
example, constructed a new, fixed-guideway transit system to relieve 
congestion in the San Juan area. DOT officials told us that the 
balance of projects is becoming more diverse in terms of mode. They 
noted that sponsors of transit projects have been slower to use TIFIA 
assistance in the past, primarily because transit projects have access 
to low-cost municipal debt and do not generate revenue in excess of 
their operating costs to repay assistance. Moreover, it can be 
difficult to integrate TIFIA assistance with federal funding for 
transit provided through the New Starts program.[Footnote 26] However, 
in fiscal years 2010 and 2011, DOT invited the sponsors of 12 projects 
to apply for TIFIA assistance, which is the next stage in securing 
TIFIA assistance, 4 of which were transit projects.[Footnote 27] 

Projects financed with TIFIA credit agreements also have other 
attributes. According to DOT data, roughly one-third of projects are 
public-private partnerships that include private equity investments. 
For these projects, the private equity accounts for about 17 percent 
of total project costs. Defining private participation more broadly, 
17 projects with active credit agreements include either private 
equity or debt. The average private investment for projects with 
active credit agreements, including equity and debt, is 37 percent of 
total project costs.[Footnote 28] The North Tarrant Express, for 
example, is a public-private partnership between the Texas Department 
of Transportation and a private concessionaire--NTE Mobility Partners--
to design, build, finance, operate, and maintain a 13-mile section of 
highway in the Dallas-Fort Worth area. Project funds include $426 
million in equity from NTE Mobility Partners and $398 million from 
private activity bonds. These two sources of private investment 
account for about 40 percent of the project's total cost. Projects 
with credit agreements typically pledge user fees or dedicated tax 
revenue to repay TIFIA assistance. For 16 credit agreements, user fees 
like tolls are pledged to repay assistance, while for 8 credit 
agreements, tax-backed revenue streams like local sales taxes are 
pledged to repay assistance. The remaining 3 credit agreements use 
other dedicated revenues, like availability payments,[Footnote 29] to 
repay assistance.[Footnote 30] 

As of April 2012, DOT reported that it has provided nearly $9.1 
billion--$8.5 billion through direct loans and $600 million in loan 
guarantees--to projects at a budgetary cost of about $654 million. The 
budgetary cost of TIFIA assistance is the total credit subsidy for all 
projects, with the credit subsidy, as noted earlier, being the 
estimated long-term cost to the government of providing assistance 
calculated on a net present value basis, excluding administrative 
costs. As such, the credit subsidy reflects the estimated risk of the 
loan or assistance. According to DOT, the original credit subsidy cost 
for credit agreements ranges from less than 1 percent to over 15 
percent of the amount of TIFIA assistance. Projects that pledge user 
fees tend to have higher subsidy costs and, thus, generally entail 
greater risk to the federal government because actual usage and fees 
for a project (such as traffic and toll revenue on a new road) may not 
meet projections, particularly early in its operation. In such cases, 
where repayment of TIFIA assistance relies solely on revenues from 
user fees, poor performance--such as less than projected use of a 
facility--could result in nonpayment. 

Most Sponsors Are Drawing Funds for Projects: 

Project sponsors are actively drawing funds from DOT for about half of 
the projects with TIFIA credit agreements.[Footnote 31] Many of these 
projects--14 of 26 projects--are currently under construction. As a 
result, many sponsors are drawing and not yet repaying TIFIA loans. 
Six project sponsors have retired their TIFIA credit agreements 
through early repayment, by refinancing the loan, or because of 
expiration of the credit agreement in the case of a loan guarantee. 
For example, the Puerto Rico Highway and Transportation Authority 
refinanced its TIFIA loan for the Tren Urbano project with tax-exempt 
debt about 3 years after DOT fully disbursed the loan. The sponsor 
paid back the TIFIA loan 32 years ahead of schedule and anticipated 
saving about $31.7 million in interest payments to DOT by refinancing 
the TIFIA loan. 

The sponsor of one TIFIA project--the South Bay Expressway in San 
Diego County, California--declared bankruptcy in 2010 but has not 
defaulted on any TIFIA payments. At the time of the bankruptcy filing, 
the outstanding balance of the TIFIA loan was $172 million, including 
interest. The Plan of Reorganization ordered by the U.S. bankruptcy 
court reduced the value of the loan's principal. DOT's unsecured claim 
was $73 million, or 42 percent of the outstanding loan balance. 
Following the sale of the project to and the assumption of the TIFIA 
loan by the San Diego Association of Governments (SANDAG) in December 
2011, DOT expects to recover the original loan value through higher 
interest rates charged on the restructured loan. 

TIFIA Program Could Benefit from Use of Performance Measures to 
Evaluate Progress toward Goals: 

While DOT tracks certain aspects of a project, such as monitoring 
whether the project is meeting its construction timeline and comparing 
actual and projected receipts of the revenue pledged to repay TIFIA 
assistance, the agency does not systematically assess whether its 
portfolio as a whole is achieving the program's goals of leveraging 
federal funds and encouraging private co-investment. The Secretary of 
Transportation is required to report biennially to Congress on the 
financial performance of projects that are receiving or have received 
TIFIA assistance and whether the goals of the TIFIA program are best 
served by continuing the program under the authority of the Secretary, 
establishing another entity to administer to program, or phasing out 
the program.[Footnote 32] 

As DOT administers a growing portfolio of TIFIA credit agreements, 
decision making and program implementation could be aided by 
additional use of performance measures to assess how well the agency 
is meeting its goals. Moreover, knowing the degree to which the agency 
is meeting its goals could augment the information DOT uses to fulfill 
the above stated requirement to make recommendations to Congress. 
According to our work on leading performance management practices, 
agencies should have plans for managing their programs that identify 
goals, strategies, time frames, resources, and stakeholder involvement 
in decision making.[Footnote 33] Though DOT has identified goals and 
objectives for the TIFIA program, its limited use of performance 
measures makes it difficult to determine the degree to which the TIFIA 
program is meeting these goals and objectives. Other programs 
administered by DOT do have performance measures. Programs 
administered by the Federal Railroad Administration (FRA) and the 
Federal Motor Carrier Safety Administration, for example, have created 
a set of performance goals and measures to address program 
performance.[Footnote 34] For example, FRA set goals to reduce the 
rate of train accidents in its proposed fiscal year 2013 budget, and 
FRA tracks these goals and actual accident rates over time to measure 
whether or not it is meeting its safety goals. Also, for FHWA's 
Express Lanes Demonstration program, DOT developed performance 
measures to evaluate projects' performance along four program goals--
such as travel, traffic, and air quality--and uses information 
collected annually from project sponsors to report to Congress on the 
projects' performance.[Footnote 35] 

In its first report to Congress in 2002, DOT examined the extent to 
which projects approved to receive assistance collectively met key 
TIFIA goals and objectives. For instance, DOT calculated that the 
amount of private co-investment in projects totaled $3.1 billion, or 
about 20 percent of the projects' total costs.[Footnote 36] DOT also 
calculated that TIFIA had a federal leverage ratio of 4.8, meaning 
that every dollar of federal investment in projects approved to 
receive assistance--including TIFIA as well as other federal funds--
represented nearly $5 in total infrastructure investment. However, DOT 
has not presented similar data on its progress in meeting the 
program's goals in any of the subsequent reports to Congress. In these 
reports, DOT provides only broad descriptive information on the 
financial status of the projects and highlights project innovations, 
such as reporting on the use of new revenue sources like availability 
payments to repay assistance. DOT provides information on each project 
with a TIFIA credit agreement that describes each project and lists 
funding sources, but DOT does not aggregate this information for the 
portfolio of projects on its website or in other program documents. 
Given that the agency collects such data on projects that received 
TIFIA assistance, it could use these data--in particular, the amount 
of federal and nonfederal funding and financing, as well as the amount 
of private equity and debt--to better evaluate the progress toward 
meeting program goals and objectives, like leveraging limited federal 
resources and stimulating private capital investment in transportation 
infrastructure. 

DOT Used a Competitive Process to Evaluate Projects, but This Process 
Could Benefit from Increased Transparency: 

DOT Developed a Competitive, Two-Step Process to Evaluate and Select 
Projects Using the Statutory Criteria: 

In response to increased program demand and the uncertain budget 
environment, DOT used a competitive, two-step process to assess LOIs 
and select projects to apply for credit assistance in fiscal years 
2010 and 2011.[Footnote 37] DOT officials told us that they began 
using the current evaluation process--focusing on the LOIs to pre-
assess a project's alignment with TIFIA's statutory criteria--to 
address the significant increase in demand for the program coupled 
with the current uncertain and limited budgetary environment due in 
part to a lack of a long-term surface transportation reauthorization 
bill. These circumstances, according to DOT, required the agency to 
establish a process that allows the agency to choose amongst best-
qualified projects in each fiscal year instead of accepting eligible 
projects on a first-come, first-served basis as was the case when the 
program was undersubscribed. 

DOT's process for competitively selecting amongst LOIs involved two 
steps; first, DOT convened a multimodal team to assess, score, and 
group projects using statutory criteria, and second, DOT used a team 
of senior-level staff--called the executive leadership team--to review 
the multimodal team's assessments and invite select project sponsors 
to submit an application for credit assistance (see figure 5). 

Figure 5: TIFIA LOI Evaluation and Selection Process for Fiscal Years 
2010 and 2011: 

[Refer to PDF for image: illustration] 

DOT receives letters of interest: 
DOT received 39 LOIs in fiscal year 2010 and 34 in fiscal year 2011 in 
response to each funding notice.  

Multimodal team conducts individual evaluations of letters of interest: 
Team members individually score each LOI against the statutory  
criteria.  

Multimodal team develops consensus scores/ratings: 
Team members meet to discuss individual team member ratings (and 
compare the relative merits of each LOI with one another) to agree 
upon final scores for each LOI.  

Multimodal team groups letters of interest into categories: 
Team members group letters of interest into three categories-—A, B, 
and C—-based on natural breaks in the numerical scores.  

Letters of interest presented to executive leadership team: 
Team members receive a presentation about merits of all projects from 
multimodal team.  

Executive leadership team reviews letters of interest: 
Team members review LOIs in category A to  determine extent to which 
they meet statutory criteria and consider other factors to make 
selection decisions. 

Executive leadership team invites project sponsors to apply: 
Team members choose projects to invite to apply for TIFIA credit 
assistance. 

Source: GAO analysis of DOT documents.             

[End of figure] 

Multimodal Team: 

The multimodal team--composed of staff from different DOT modal 
administrations[Footnote 38]--individually assessed each LOI against 
the statutory criteria to assign preliminary scores. Multimodal team 
members read and assigned each LOI a numeric score of 0 to 4 for each 
of the six criteria, with 0 indicating that a project was not 
consistent with a criterion and 4 indicating that a project was most 
consistent with a statutory criterion.[Footnote 39] While the funding 
notices defined each of the statutory criteria, they did not describe 
specific project qualifications or benefits that would merit a higher 
or lower score. Additionally, multimodal team members did not use any 
guidance beyond the funding notices to delineate what the possible 
range of scores signified in terms of project qualifications and 
benefits. DOT officials said that evaluators relied primarily on 
content in the submitted LOIs, as well as their own modal expertise as 
necessary, to evaluate projects. Each LOI contained information to 
describe the project and its proposed financial plan, identify the 
proposed borrower, explain how the TIFIA statutory selection criteria 
are met, and describe the benefits of the proposed project and its use 
of TIFIA assistance. 

To finalize their individual scores for each LOI, multimodal team 
members compared LOIs with one another to determine the relative 
merits of each project when assigning scores. For example, if an LOI 
received a preliminary score of 3.5 for the private participation 
criterion, but when compared with other projects in its cohort 
appeared less well aligned with the private participation criterion, 
its score would be lowered to reflect its relative rank among the 
LOIs. Also, multimodal team members met over several weeks to discuss 
and compare LOIs in an effort to help ensure reliability in scoring 
across team members. To arrive at a final score for each LOI, 
individual team members' final scores were combined for each criterion 
and a cumulative weighted total score based on assigned weights in 
regulation was calculated for each project. 

Last, the multimodal team rank ordered the LOIs by the total score and 
grouped them into three categories--A, B, and C. DOT officials said 
that the multimodal team grouped LOIs based on natural breaks in the 
numerical scores. LOIs placed in category A were those that scored the 
highest numerically, and thus were considered to be the most 
consistent with the statutory criteria. Table 2 details the category 
grouping for LOIs by fiscal year. 

Table 2: Number of LOIs, by Fiscal Year and Outcome of Multimodal 
Team's Assessment: 

Fiscal year: 2010; 
Number of LOIs in category A: 7; 
Number of LOIs in category B: 17; 
Number of LOIs in category C: 15; 
Total: 39. 

Fiscal year: 2011; 
Number of LOIs in category A: 21; 
Number of LOIs in category B: 6; 
Number of LOIs in category C: 5; 
Total: 32[A]. 

Source: GAO analysis of DOT data. 

[A] DOT did not assign a category for two additional LOIs in 2011, as 
these projects had received TIGER grants to cover the subsidy cost of 
a TIFIA loan. 

[End of table] 

As shown in table 2, there was a threefold increase in the number of 
category A LOIs from fiscal year 2010 to fiscal year 2011. DOT 
officials attributed this increase to higher-quality LOI submissions 
as well as improved project readiness of resubmitted projects. For 
projects that submitted an LOI in fiscal year 2011, 10 of the 34 had 
previously submitted an LOI in 2010. For projects that submitted an 
LOI in fiscal year 2012, 16 of 26 had applied in either fiscal year 
2010 or 2011. 

Executive Leadership Team: 

After the multimodal team grouped LOIs and provided a briefing about 
its assessment of all projects to the executive leadership 
team,[Footnote 40] this second team reviewed the projects and selected 
a subset of the category A projects to advance. According to DOT 
officials, in its review of projects, the executive leadership team 
was not aware of the scoring or ranking distinctions amongst LOIs in 
the category because numerical scores assigned by the multimodal team 
were removed. Instead, only basic project information, including high-
level project summaries and category groupings (A, B, or C), were 
provided to the executive leadership team.[Footnote 41] Similar to the 
multimodal team evaluation, the executive leadership team did not use 
any guidance beyond the funding notice in its review of LOIs and 
relied primarily on content in the LOIs to score projects. However, in 
some cases, the team sought clarification from DOT staff, including 
FHWA division offices in various states, to gather additional 
information on a project's readiness, like its status in the 
environmental review process. 

The executive leadership team reviewed the LOIs to determine the 
extent to which they met statutory criteria and, to choose projects to 
advance from among category A LOIs, considered other factors including 
available budget authority and geographic diversity.[Footnote 42] In 
making final selections, the executive leadership team had to consider 
projects that could be funded within TIFIA's limited budget authority. 
Further, with limited budget authority, DOT officials said that 
project acceleration--which encompasses factors like the project's 
progress in completing environmental review requirements--was an 
important consideration in picking among projects that were consistent 
with the statutory criteria, particularly in 2011, when there were a 
higher number of category A LOIs. As a result of its review, the 
executive leadership team invited 4 projects in fiscal year 2010 and 8 
projects in fiscal year 2011 to submit a full TIFIA 
application.[Footnote 43] (See table 3.) 

Table 3: Number of LOIs Invited to Apply, by Fiscal Year and Mode: 

Fiscal year: 2010: Invited to apply; 
Total number of projects: 4; 
Highway: 2; 
Transit: 1; 
Intermodal: 0; 
Other: 1. 

Fiscal year: 2010: Total; 
Total number of projects: 39; 
Highway: 29; 
Transit: 5; 
Intermodal: 3; 
Other: 2. 

Fiscal year: 2011: Invited to apply; 
Total number of projects: 8; 
Highway: 4; 
Transit: 3; 
Intermodal: 1; 
Other: 0. 

Fiscal year: 2011: Total; 
Total number of projects: 34; 
Highway: 24; 
Transit: 8; 
Intermodal: 1; 
Other: 1. 

Source: GAO analysis of DOT data. 

Note: Other includes projects like those for truck technology systems 
and multimodal transportation improvements. 

[End of table] 

Overall, this two-step process ensured that projects invited to apply 
were from among the highest-scoring LOIs overall--that is, from 
category A--but did not ensure that the projects selected were those 
that scored the highest numerically by the multimodal team. According 
to DOT officials, relying on numerical scores alone could provide a 
false sense of precision in selecting projects to advance. To date, 
because only category A projects are forwarded, no category B or C 
projects from the multimodal team evaluation have advanced over 
category A projects in the executive leadership team evaluation. DOT 
officials said that while there are no specific requirements to do so, 
the executive leadership team has only considered advancing LOIs in 
category A. 

After the executive leadership team has invited the sponsors of 
projects to apply for credit assistance, project sponsors must submit 
a full TIFIA application, after which DOT conducts a full evaluation 
of the application and makes a recommendation to the Credit Council. 
Then, the Secretary of Transportation makes the final decision on 
whether to approve a project to receive TIFIA credit assistance. Six 
of the 12 of the project sponsors that were invited to apply in fiscal 
years 2010 and 2011 have not yet submitted an application to DOT but 
all are still pursuing TIFIA loans. (See table 4.) 

Table 4: Status of Projects Invited to Apply, by Fiscal Year: 

Fiscal year: 2010; 
Total number invited to submit a full application: 4; 
Number with an executed credit agreement: 1; 
Number with an application under review: 2; 
Number for which DOT is awaiting an application: 1. 

Fiscal year: 2011; 
Total number invited to submit a full application: 8; 
Number with an executed credit agreement: 1; 
Number with an application under review: 2; 
Number for which DOT is awaiting an application: 5. 

Source: DOT, as of April 2012. 

[End of table] 

DOT officials and project sponsors that had executed TIFIA credit 
agreements said that the amount of time it takes for sponsors to 
complete the application and negotiation process varies by project. 
Several factors--such as the status of a project's environmental 
review, the complexity of the project's finance and delivery approach, 
and changes to the project--can influence the length of these 
processes. According to DOT, sponsors of four invited projects that 
have not yet submitted an application are completing work to comply 
with federal environmental requirements. Also, some project sponsors 
we spoke with said that the TIFIA application and negotiation 
processes can be longer for projects that have more complex financial 
plans, such as having a less frequently used revenue stream or relying 
on future state appropriations. For example, after being invited to 
apply, one sponsor we interviewed had to complete the process to 
select a private concessionaire for the project; then, since 
submitting the TIFIA application, the sponsor has been working with 
the TIFIA office regarding uncertainty around appropriations from the 
state legislature before beginning the negotiation process. 

For projects not invited to apply, staff from the TIFIA office 
provided feedback to sponsors on their LOIs upon request. According to 
DOT officials, the primary aim of feedback is to explain how the LOI 
performed against each criterion. In addition, feedback included 
information on how a project sponsor could improve an LOI for 
resubmission, such as explaining that it needs to provide more details 
on specific project benefits. However, through this feedback, a 
project sponsor is not informed about the numeric scoring or ranking 
of its LOI relative to other LOIs. In some cases, DOT officials said 
that the feedback provided indicated that there was nothing "wrong" 
with a project's LOI but that it was not invited to apply given the 
strength of the pool of LOIs submitted in that round. 

TIFIA Selection Process Could Benefit from Greater Transparency: 

While project sponsors and other stakeholders we interviewed were 
satisfied with many aspects of DOT's selection process, they cited two 
areas of the TIFIA selection process that they found to be less 
satisfactory--DOT's application of selection criteria and the 
uncertainty of the timing of the process. Twenty-seven of the 36 
recent TIFIA applicants that responded to our survey indicated that 
they were satisfied with DOT's explanation of the application process 
in funding notices, and 28 of the recent applicants reported that the 
LOI format allowed them to provide sufficient detail about their 
project.[Footnote 44] In addition, several applicants told us that the 
TIFIA selection process was fairly simple to understand and not overly 
burdensome, and many applicants and advisors we interviewed told us 
that they found the TIFIA staff to be very cooperative and helpful. 
Moreover, many recent applicants told us that they appreciated that 
DOT gave feedback to the sponsors of unsuccessful LOIs. 

Recent applicants we surveyed and interviewed, however, expressed two 
primary concerns about the process: the lack of transparency with 
which DOT applies statutory criteria to select LOIs to advance, and 
the uncertainty of the timing of the process. Only 7 of the recent 
applicants that responded to our survey were satisfied with the 
transparency of DOT's project selection decisions. In addition, some 
recent applicants we interviewed and surveyed indicated that 
clarifications made to two criteria--national or regional significance 
and environment[Footnote 45]--are highly subjective, and that it is 
difficult to understand what characteristics DOT is using to determine 
the extent to which a project does or does not meet these criteria. 
For example, one survey respondent indicated that it is unclear how 
one qualified project is selected over another in the competitive 
process. In addition, one recent applicant we interviewed said that it 
does not know what characteristics DOT looks for or uses to determine 
if a project does or does not meet a criterion, particularly for the 
livability clarification in national or regional significance. Some 
recent applicants also indicated that the LOI evaluation and selection 
process remained unclear, even after receiving feedback from DOT. Of 
the 21 recent applicants that indicated they received feedback, 8 
reported that it was slightly or not at all useful in understanding 
the scoring of their LOIs--the primary aim of feedback. 

Several financial and legal advisors as well as private 
concessionaires we interviewed also said that there is a lack of 
transparency in the application of the criteria. These advisors 
indicated that DOT could be more transparent about the selection 
criteria and scoring process it uses to select projects. As we 
reported previously regarding competitively selected funding programs, 
were DOT to make additional information on its selection decisions 
publicly available, potential applicants would have better information 
on how to create and submit well-developed projects.[Footnote 46] When 
such information is not made available, DOT may invite speculation 
that projects were selected for reasons other than merit. 

In addition, recent applicants and financial and legal advisors we 
interviewed said the timing of the LOI evaluation and selection 
process is inconsistent from year to year and therefore creates 
uncertainty. Specifically, several applicants and advisors we 
interviewed told us that the inconsistent timing in both the dates of 
the release of DOT's funding notice and LOI submission deadline, as 
well as the announcement of the outcome of the selection process, 
contributes to this uncertainty.[Footnote 47] Because TIFIA projects 
are typically high-cost projects with multiple funding and financing 
streams, the uncertainty about when a project can submit an LOI and 
more importantly, when a project can count on a TIFIA credit agreement 
to fill a funding gap, can affect the financial feasibility of these 
projects. For example, one financial advisor said that because the 
current LOI process occurs only once per year, it makes it difficult 
to plan and to coordinate with other vital project planning pieces, 
like state budget cycles, environmental reviews, and private 
investors' timelines. If a project sponsor misses the solicitation for 
a particular year, it has to wait another year to submit an LOI. The 
uncertainty as to when the outcome of the selection process will be 
announced can also affect projects. According to one financial 
advisor, project delays can affect construction costs or public 
support for the project, among other things. DOT officials said that 
the timing of the annual solicitation is due, in part, to receiving 
budget authority for the TIFIA program on a year-to-year rather than a 
multiyear basis. On the basis of feedback from fiscal year 2010 
applicants, DOT has also tried to shorten the LOI evaluation and 
selection process in subsequent years so that applicants learn 
outcomes sooner. For fiscal year 2010, this process, measured from the 
date LOIs were due to the announcement of which LOIs were invited to 
apply, took about 6 months, but for fiscal years 2011 and 2012, the 
process took 5 months and 4 months, respectively. 

DOT Is Taking Steps to Improve the LOI Evaluation Process: 

DOT has made changes to try to improve the LOI evaluation process 
since returning to a competitive fixed-date selection process. In 
particular, DOT officials said that they are applying best practices 
from other DOT discretionary programs such as the TIGER program and 
learning from past rounds of TIFIA solicitations. The changes include 
the following: 

* In fiscal year 2011, DOT increased its documentation of key 
decisions for the LOI evaluation and selection process. For each LOI, 
the multimodal team summarized its deliberations on the extent to 
which a project met each statutory criterion in a standard form. In 
addition, to aid in providing feedback to unsuccessful applicants, 
TIFIA office staff produced an internal memo to document the 
multimodal team's rationale for LOI scores and grouping as well as the 
executive leadership team's concurrence with these evaluations. 

* In fiscal year 2012, DOT made changes to the LOI evaluation process 
at the multimodal team level.[Footnote 48] Specifically, the team 
assigned qualitative scores--"not aligned," "somewhat aligned," "well 
aligned," and "very well aligned"--rather than numeric scores to LOIs 
for each criterion. According to DOT officials, these changes 
facilitate discussion within the team and accelerate progress to 
consensus on project scores and impressions. In addition, DOT 
officials said the qualitative scores are more reflective of the 
actual evaluation process than the numeric scoring system used in past 
rounds of solicitation and prevent the team from focusing too heavily 
on the numeric scores. 

* In fiscal year 2012, DOT further clarified the TIFIA funding notice. 
In particular, DOT included the two statutory selection criteria that 
had not been considered as part of the LOI selection process for 
fiscal year 2010 or 2011--creditworthiness and consumption of budget 
authority. It also stated that in selecting LOIs to advance, it may 
give priority to projects that enhance the geographic diversity of the 
TIFIA portfolio and may consider the project's readiness and timeline 
to proceed to financial close. DOT officials said it did so as part of 
its efforts to improve its communication of the criteria and selection 
process to applicants through the funding notices over time. 

* For fiscal year 2012, DOT invited the sponsors of five projects to 
apply for TIFIA credit assistance. In addition, in response to 
concerns raised by project sponsors as well as the lack of certainty 
about future funding levels associated with the TIFIA program because 
of the absence of a long-term surface reauthorization, DOT officials 
said that an expedited review process would be created for additional 
highly-rated projects if TIFIA budgetary resources are significantly 
increased based on the President's Budget Request for fiscal year 
2013.[Footnote 49] 

Since many of DOT's changes to the selection process occurred in the 
fiscal year 2012 TIFIA solicitation, it is too soon to know whether 
these changes will address the transparency and uncertainty concerns 
raised by recent applicants and financial and legal advisors. DOT 
officials said that they will continue to explore other changes to the 
process, such as creating additional internal guidance on scoring 
projects or changing feedback. Additionally, DOT officials said that 
the variety of TIFIA projects by size and mode could make it difficult 
for DOT to specify how particular benefits translate to a score for an 
LOI. For instance, in 2010 sponsors submitted LOIs for projects that 
varied greatly in terms of benefits, size, and mode, as exemplified by 
the $360 million Southeast Waterfront project--a 5-mile bus, auto, 
bicycle, and pedestrian corridor that is part of a redevelopment 
project in San Francisco--and the $1.5 billion Goethals Bridge project-
-the replacement of a existing bridge connecting New York and New 
Jersey. DOT officials said that the current LOI selection process was 
developed in response to the combination of high demand and uncertain 
budgetary environment, and indicated that it would likely modify the 
evaluation and selection process in response to an increase in TIFIA's 
budget authority. 

Flexible Repayment Terms and Other Factors Influence whether States 
and Other Sponsors Seek TIFIA Assistance; Future Demand Is Difficult 
to Gauge: 

The TIFIA program's flexibility and low interest rates are the 
predominant reasons why sponsors seek TIFIA assistance. TIFIA's 
flexibility extends to both repayment terms and debt structuring. For 
states that have not sought TIFIA assistance, state DOTs indicated 
that a variety of factors contributed to their decision not to use 
TIFIA, such as a lack of projects that met the eligibility 
requirements or the availability of other financing options. Looking 
ahead, future demand for TIFIA is difficult to gauge because it is 
influenced by a number of factors such as changes to interest rates or 
state fiscal conditions. 

A Number of Factors Influence whether States and Sponsors Seek TIFIA 
Assistance: 

As shown in table 5, most recent applicants we surveyed cited TIFIA's 
repayment terms and options, low interest rate, and ability to serve 
as subordinate debt as very or somewhat important in their decision to 
seek assistance in fiscal years 2010 and 2011.[Footnote 50] 

Table 5: Top Factors That Affected Recent Applicants' Decisions to 
Seek TIFIA Assistance: 

Repayment terms and options offered by TIFIA credit assistance; 
Very or somewhat important: 34; 
Neither important nor unimportant: 0; 
Very or somewhat unimportant: 0; 
Don't know/not applicable/missing: 2; 
Total: 36. 

Low interest rate of TIFIA relative to other financing options; 
Very or somewhat important: 34; 
Neither important nor unimportant: 0; 
Very or somewhat unimportant: 1; 
Don't know/not applicable/missing: 1; 
Total: 36. 

Ability of TIFIA credit assistance to serve as subordinate debt in a 
project finance plan[A]; 
Very or somewhat important: 32; 
Neither important nor unimportant: 0; 
Very or somewhat unimportant: 3; 
Don't know/not applicable/missing: 1; 
Total: 36. 

Source: GAO survey of recent TIFIA applicants. 

[A] TIFIA assistance can be subordinate to a project's senior debt in 
a project finance plan, meaning that senior creditors may receive 
project revenue ahead of DOT, except in the event of a borrower's 
bankruptcy, insolvency, or liquidation. 

[End of table] 

In addition to recent applicants we surveyed, other project sponsors, 
financial and legal advisors, and private concessionaires we 
interviewed consistently cited TIFIA's flexible terms as a major 
benefit of the program. According to DOT officials, the major benefits 
of TIFIA are that it can be a patient, flexible lender and can help a 
sponsor secure a portion of the project's lending to attract other 
financing. For example, one project sponsor said that deferring 
payment for 5 years after substantial completion is very important for 
new toll road projects to allow time for usage to grow and thus 
revenues to ramp up after opening. Beyond favorable repayment terms, 
TIFIA assistance can be subordinate to other debt, meaning that this 
other debt may receive project revenue ahead of DOT except in the case 
of bankruptcy, insolvency, or liquidation.[Footnote 51] All six of the 
private concessionaires we interviewed said that this structure is a 
key benefit of the program, as it can help improve their ability to 
raise senior debt. Many project sponsors we spoke to also cited 
TIFIA's relatively low interest rate as a main benefit of the program. 
The interest rate of TIFIA assistance is based on U.S. Treasury 
securities of a similar maturity and, since 2008, these Treasury rates 
have been lower than municipal bond interest rates. 

To a lesser extent, recent applicants we surveyed cited several other 
factors as important in their decision to seek TIFIA assistance in 
fiscal years 2010 and 2011. (See table 6.) 

Table 6: Other Factors That Affected Recent Applicants' Decisions to 
Seek TIFIA Assistance: 

Availability of user fees to repay TIFIA credit assistance; 
Very or somewhat important: 27; 
Neither important nor unimportant: 2; 
Very or somewhat unimportant: 4; 
Don't know/not applicable/missing: 3; 
Total: 36. 

Ability to accelerate delivery of project through use of TIFIA credit 
assistance; 
Very or somewhat important: 27; 
Neither important nor unimportant: 4; 
Very or somewhat unimportant: 3; 
Don't know/not applicable/missing: 2; 
Total: 36. 

Lack of other funding options; 
Very or somewhat important: 26; 
Neither important nor unimportant: 5; 
Very or somewhat unimportant: 4; 
Don't know/not applicable/missing: 1; 
Total: 36. 

Source: GAO survey of recent TIFIA applicants. 

[End of table] 

For instance, survey responses indicate that the TIFIA program can 
provide financing to projects that is unavailable in the financial 
markets, particularly for projects with unproven revenue streams. For 
example, one project sponsor we interviewed that received a TIFIA loan 
said that obtaining subordinate debt in the financial markets would 
have been prohibitively expensive, since the project was a new toll 
road. In addition, the ability of TIFIA to help accelerate the 
delivery of projects was also important among recent applicants. 
Officials from the Florida Department of Transportation estimated that 
its TIFIA loan helped accelerate completion of the Miami Intermodal 
Center by 10 years. Two other project sponsors we interviewed said 
TIFIA plays an important role in accelerating not only the projects 
for which they received assistance but other major capital projects 
too, as TIFIA assistance helps free up funds for other projects. 

However, our survey also indicated that some states have neither 
sought nor plan to seek TIFIA assistance. In states where sponsors 
have never sought TIFIA assistance, the extent to which certain 
factors affected state DOTs' decisions to not seek credit assistance 
varied, but many of these state DOTs indicated that they have not 
submitted LOIs because they (1) do not have projects that meet the 
eligibility requirements including the required cost threshold, (2) 
get financing from other source(s), or (3) have state restrictions on 
borrowing funds for transportation projects.[Footnote 52] (See table 
7.) 

Table 7: Factors That Affected State DOTs' Decisions to Not Seek TIFIA 
Assistance: 

A lack of either user fees or dedicated revenues to repay assistance; 
Very great or great impact: 8; 
Moderate impact: 1; 
Some or little to no impact: 6; 
Don't know/not applicable/missing: 1; 
Don't know/not applicable/missing: 16. 

No projects in the state met the required cost threshold ($50 million); 
Very great or great impact: 6; 
Moderate impact: 1; 
Some or little to no impact: 7; 
Don't know/not applicable/missing: 2; 
Don't know/not applicable/missing: 16. 

Other financing options were available; 
Very great or great impact: 8; 
Moderate impact: 2; 
Some or little to no impact: 5; 
Don't know/not applicable/missing: 1; 
Don't know/not applicable/missing: 16. 

State is subjected to restrictions on borrowing[A]; 
Very great or great impact: 6; 
Moderate impact: 0; 
Some or little to no impact: 9; 
Don't know/not applicable/missing: 1; 
Don't know/not applicable/missing: 16. 

Source: GAO survey of recent TIFIA applicants. 

Notes: For the remaining factors on the survey, at least 9 of 16 state 
DOTs indicated that the factor had some or little to no impact on its 
decision not to submit an LOI. See appendix III for a table of the 
survey results for this question. 

[A] These restrictions include, among others, that states do not have 
authorizing legislation to allow its governments or public agencies to 
borrow funds, or that states require legislative approval to borrow 
funds through bonds and other financing tools. 

[End of table] 

Regarding lack of eligible projects, one state DOT indicated in the 
survey that a lack of dedicated revenues or private investment 
prevents TIFIA from being a viable option for rural states now and in 
the future. Several financial and legal advisors we interviewed also 
said that some states lack projects that are large enough to benefit 
from the TIFIA program. For the TIFIA program, a sponsor must pay a 
$50,000 application fee if invited to apply after the LOI stage. Then, 
if selected to receive assistance, the TIFIA borrower must pay a 
transaction fee, typically between $300,000 and $400,000, to cover the 
costs incurred by DOT to negotiate and execute the credit agreement, 
like costs for external advisors. Borrowers can also incur additional 
costs from hiring their own advisors and obtaining a credit rating for 
the project. Therefore, the cost of applying for TIFIA may outweigh 
the benefits of TIFIA for lower-cost projects. 

Moreover, DOT officials as well as several financial advisors, a 
private concessionaire, and an industry association we spoke to said 
that the TIFIA program may be better suited to states with more urban 
populations and a greater need for large-scale projects. States with 
sponsors that have never sought TIFIA assistance tend to have a 
smaller portion of their population living in urban areas--that is, 
areas with a total population of 50,000 or more--than states with 
sponsors that have sought TIFIA assistance.[Footnote 53] DOT officials 
said that to date, TIFIA projects have been located in states with 
large urban areas that have major transportation needs and can more 
easily charge tolls or generate other project revenues. 

Based on our survey, it is unlikely that many of the states that have 
not sought TIFIA assistance will seek such assistance in the future. 
Of the 16 state DOTs from states that have never sought assistance 
that responded to our survey, only 1 indicated that it anticipated 
seeking TIFIA assistance in the next 5 years. In addition, most of 
these state DOTs indicated that changes to the program--such as making 
more funds available for the program or increasing the portion of 
project costs that TIFIA assistance could cover--would have somewhat 
or little to no increase on the likelihood that they would seek TIFIA 
assistance.[Footnote 54] 

Future TIFIA Demand Exists, but Its Magnitude Is Difficult to Gauge: 

According to our interviews with DOT, project sponsors, advisors, and 
private concessionaires, overall demand for the TIFIA program is 
likely to continue. However, the magnitude of this demand is difficult 
to estimate because it is influenced by a variety of external factors 
like changes to interest rates, use of public-private partnerships, 
and state fiscal conditions. 

Changes to the TIFIA interest rate relative to municipal debt interest 
rates could considerably affect the demand for TIFIA credit 
assistance. For the last 3 fiscal years, sponsors submitted LOIs for 
credit assistance totaling more than 10 times what the program's 
current budget authority can support. Several legal and financial 
advisors we interviewed said that many project sponsors sought TIFIA 
in recent years because of depressed market conditions and attractive 
TIFIA interest rates, relative to interest rates on municipal debt, 
and a few of these advisors and one industry association said that 
demand for TIFIA will likely decrease if TIFIA interest rates become 
less attractive relative to municipal debt interest rates. The 
relatively low TIFIA interest rates made the program attractive to a 
greater number of sponsors, even those with access to other financing 
options. For example, one recent applicant we interviewed said that in 
the past, TIFIA was a more expensive finance option than issuing its 
own debt, and its interest in TIFIA during the last few years is 
primarily driven by the program's relatively low interest rates. The 
applicant noted that should interest rates on TIFIA loans increase in 
the future, it will likely seek financing in the private capital 
markets. 

Two other factors will influence the demand for TIFIA assistance. 

* Greater use of public-private partnerships and other alternative 
project delivery approaches could result in a greater demand for TIFIA 
credit assistance. Many private concessionaires we interviewed said 
that TIFIA is an important financing tool for public-private 
partnerships. According to DOT officials, TIFIA credit assistance has 
been part of the financing package for most large-scale public-private 
partnership projects in the United States in recent years. In 
addition, some states, like Colorado and Virginia, have set up offices 
to facilitate public-private partnerships, so sponsors in such states 
may be more likely to use this approach given this support. 

* State-specific conditions will also influence the demand for TIFIA 
assistance. As federal and state fuel taxes may not be a sustainable 
long-term source of transportation funding, state DOTs may make 
greater use of finance tools like TIFIA to deliver projects. We have 
previously reported that state and local governments face persistent 
and long-term fiscal pressures.[Footnote 55] At the same time, 
estimates to repair, replace, or upgrade aging transportation 
infrastructure--as well as expand capacity to meet increased demand--
top hundreds of billions of dollars. As a result, DOT anticipates more 
demand for the TIFIA program as states and localities look to leverage 
limited funds. One state we interviewed, for example, said that pay-as-
you-go funding--a more traditional means of funding transportation 
infrastructure whereby a sponsor builds projects in phases or 
increments as funds are available--no longer keeps pace with 
infrastructure needs. Therefore, the state DOT has turned to TIFIA to 
help finance big, high-cost projects that need federal assistance to 
advance. Looking ahead, 15 of the 42 state DOTs that responded to our 
survey indicated that they have projects for which they will likely 
seek TIFIA in the next 5 years. Most of these state DOTs (13) have 
sought TIFIA assistance in the past and indicated that they are likely 
to seek TIFIA for 1-5 projects, while a few indicated they are likely 
to seek TIFIA for 6-10 projects.[Footnote 56] 

Options Proposed to Modify the TIFIA Program: 

With the pending reauthorization of the surface transportation 
programs, the tight budgetary environment, and the increase in demand 
for TIFIA, government and industry officials have proffered options to 
modify the program. We reviewed surface transportation reauthorization 
bills--H.R. 7, the American Energy and Infrastructure Jobs Act as 
reported by the House Committee on Transportation and Infrastructure, 
and S. 1813, Moving Ahead for Progress in the 21st Century Act (MAP-
21) as adopted by the Senate, respectively--to identify proposed 
changes to the program. Based on our interviews with select project 
sponsors, financial and legal advisors, and others, as well as our 
survey of state DOTs and recent applicants, we identified several 
recurring options that have been proposed to modify the TIFA program. 
Some options require congressional action to implement, while others 
would require DOT to change program-level policies. Each option has 
advantages and disadvantages, and thus implementing any of these 
options would require policy trade-offs. Moreover, some options could 
affect the overall demand for the program and the sphere of projects 
that could apply for or benefit from TIFIA. 

Table 8 provides a list of proposed options to modify the TIFIA 
program in the surface transportation reauthorization bills and the 
President's fiscal year 2013 budget. 

Table 8: Summary of Proposed Changes to the TIFIA Program: 

Proposed change: Increase authorized budget authority; 
Fiscal year 2013 President's budget: [Check]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Increase funding for program administration; 
Fiscal year 2013 President's budget: [Check]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Explicitly allow any project sponsor to pay subsidy 
cost; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Empty]. 

Proposed change: Increase the portion of costs covered by TIFIA (from 
33% to 49%)[B]; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Allow exceptions to the nonsubordination clause; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Remove all selection criteria; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Return to a rolling application process; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Allow program of projects to apply[C]; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Decrease the required total project costs required 
for rural infrastructure projects; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Expand eligible costs (e.g., development phase and 
preconstruction costs); 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Empty]. 

Proposed change: Offer lower interest rates to rural infrastructure 
projects; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Empty]; 
MAP-21[A]: [Check]. 

Proposed change: Require two credit ratings agencies to rate senior 
debt; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Check]. 

Proposed change: Require DOT to notify applicants on the status of 
their applications within mandated timeframes; 
Fiscal year 2013 President's budget: [Empty]; 
American Energy and Infrastructure Jobs Act of 2012[A]: [Check]; 
MAP-21[A]: [Empty]. 

Source: GAO analysis of proposals and legislation. 

[A] This analysis is based on H.R.7 The American Energy and 
Infrastructure Jobs Act of 2012 as reported to the House of 
Representatives by the House Committee on Transportation and 
Infrastructure (H.R. 7, 112th Cong. (Feb. 13, 2012)) and S. 1813 the 
Moving Ahead for Progress in the 21st Century Act (MAP-21) as adopted 
by the Senate (S.1813, 112th Cong. (Feb. 6, 2012)). 

[B] In MAP-21, TIFIA lines of credit may not exceed 33 percent of the 
anticipated eligible project costs. 

[C] Currently only individual projects with dedicated revenues may 
apply for credit assistance through the TIFIA program. This proposed 
change would allow a set of related projects that will be phased in 
over a period of several years to apply and be approved under a single 
master credit agreement. As with individual projects, a program of 
projects would have to meet other statutory requirements before 
entering into a master credit agreement. 

[End of table] 

Increase the Number of Projects the TIFIA Program Can Support: 

Two proposed changes, increasing the amount of authorized budget 
authority and allowing project sponsors to pay fees to contribute to 
the credit subsidy cost, could potentially allow the TIFIA program to 
provide more assistance to projects. 

Increase amount of authorized budget authority. Members of Congress, 
DOT, and others have proposed increasing the amount of authorized 
budget authority to cover the subsidy costs for the TIFIA program. 
Proposals vary from increasing this amount to $1 billion, as in the 
reauthorization bills, to a smaller increase of $500 million proposed 
in DOT's fiscal year 2013 budget. Congressional support for an 
increase in authorized budget authority for TIFIA is rooted in the 
program's ability to leverage funds and stretch federal dollars 
further than a traditional grant program. These proposals represent 
significant increases to TIFIA's current annual authorized budget 
authority of $122 million. Proposals to increase the amount of 
authorized budget authority for the TIFIA program occur during an 
austere federal budget environment. The Budget Control Act of 2011 
places limits on discretionary spending for the next 10 fiscal years. 
[Footnote 57] As a result, an increase in one area of discretionary 
spending, like the TIFIA program, requires a decrease in another area 
of discretionary spending. 

Increasing the amount of authorized budget authority is strongly 
supported by recent applicants we surveyed as well as legal and 
financial advisors we interviewed. For example, 32 out of 36 recent 
applicants that responded to our survey strongly support expanding 
funding for the TIFIA program. An increase in funding would likely 
allow the program to provide more credit assistance, in terms of the 
number of projects receiving credit assistance or the amount of credit 
assistance provided to each project. An increase in funding could also 
allow the program to come closer to meeting the current demand for the 
program, which is more than 10 times what the current budget authority 
could support. However, DOT officials and other stakeholders told us 
that an increase in funding would need to be accompanied by an 
increase in administrative resources. According to project sponsors 
and other stakeholders, the TIFIA office has been very responsive and 
helpful, but a few said that response time has slowed in recent years. 
With increased funding, DOT would likely see an increase in the number 
of applications to review, credit agreements to negotiate, and credit 
agreements to monitor. DOT officials said they are prepared to adjust 
staffing levels in the event that Congress provides the TIFIA program 
with an increase in authorized budget authority as is proposed in the 
surface transportation reauthorization bills. Further, DOT officials 
said that an increase in TIFIA funding may require DOT to reexamine 
how it manages the program--such as how it selects projects and 
negotiates credit agreements--and issue new regulations. 

Allow sponsors to pay fees to contribute to the credit subsidy cost of 
assistance. H.R. 7 would mandate that DOT allow project sponsors to 
pay fees to reduce the credit subsidy cost of assistance if DOT funds 
run out.[Footnote 58] According to DOT, current law allows but does 
not require DOT to let the approved sponsor pay a fee to reduce the 
credit subsidy cost of the project in the event that there is 
insufficient budget authority to fund credit assistance for a selected 
TIFIA project. Over the life of the TIFIA program, three project 
sponsors have paid fees to reduce the credit subsidy cost of their 
TIFIA assistance; all three cases occurred after the program became 
oversubscribed in fiscal year 2008. 

Among recent applicants we surveyed and project sponsors we 
interviewed, many supported this program change.[Footnote 59] 
Supporters of this option said that given the high demand for TIFIA 
credit assistance and limited budget authority, allowing project 
sponsors to pay fees to cover the credit subsidy cost when DOT's 
budget authority runs out would allow more eligible projects to be 
built and reduce the oversubscription of the program. However, DOT 
previously decided against instituting this option more broadly 
through a pilot program in 2010. DOT officials told us that while 
allowing project sponsors to pay fees to cover the credit subsidy cost 
provides flexibility, especially when demand outpaces budget 
authority, it complicates the negotiation of credit agreements. While 
DOT would have to follow its subsidy estimation methodology to 
determine a project sponsor's fee, the project sponsor may want to 
negotiate the fee. Project sponsors we interviewed said that for this 
option to work, DOT would need to provide them with more information 
on how the credit subsidy cost is calculated. Under FCRA, OMB is 
responsible for subsidy cost estimates. OMB may delegate this 
authority to the agency providing credit assistance, but the 
delegation should be based on the written guidelines or criteria 
developed by OMB.[Footnote 60] OMB retains the responsibility and 
final approval of subsidy cost estimates. Given these complexities, 
this option may be difficult to implement, though it could be done 
relatively quickly. In addition, to the extent that DOT underestimates 
the initial subsidy costs and does not collect enough fees from 
borrowers, taxpayers will ultimately have to pay for any shortfalls. 
[Footnote 61] 

Allowing project sponsors to pay fees to cover the credit subsidy cost 
could remove the congressional limit on the size of the TIFIA program 
and thus increase the federal government's exposure. According to DOT, 
SAFETEA-LU removed the cap on the amount of credit assistance the 
TIFIA program could provide each year, so the only limit on the TIFIA 
program's size currently is the budget authority provided by Congress. 
DOT officials said that allowing project sponsors to pay the subsidy 
cost could allow the program to grow larger than Congress authorized 
through budget authority. DOT officials told us that for other DOT 
credit programs, such as the Railroad Rehabilitation and Improvement 
Financing (RRIF) program, project sponsors are required to pay fees 
towards the credit subsidies for loans because they do not have budget 
authority for this purpose, but the RRIF program has a statutory limit 
on total outstanding credit assistance.[Footnote 62] When Congress 
imposes such a limit, it can control the government's exposure to 
financial losses. Moreover, if this proposed change were adopted in 
combination with other proposed changes to the program--requiring the 
Secretary to approve all qualifying applications--the total size and 
exposure of the TIFIA program could expand dramatically. 

Increase the Portion of Costs Covered by TIFIA: 

Another option in the reauthorization bills would increase the portion 
of eligible project costs TIFIA assistance could cover from 33 percent 
to 49 percent.[Footnote 63] Among think tank and industry group 
proposals, project sponsors, and other stakeholders we interviewed, 
support for this option varied. Those that support increasing the 
TIFIA share said it would reduce the burden on sponsors to find 
nonfederal sources of debt and allow them to borrow more funds on 
favorable terms. For example, several project sponsors said that for 
very large infrastructure projects, finding a combination of federal, 
state, and private financing can be difficult. Those that do not 
support this option expressed concern that it would reduce the 
incentive to find private and other nonfederal financing and 
potentially reduce market discipline that comes from other lenders to 
projects. For example, several stakeholders we interviewed said that 
increasing the percentage of total project costs that TIFIA can 
finance could result in project sponsors substituting TIFIA credit 
assistance for private debt or private equity investments. Others 
expressed concern that increasing the share of costs TIFIA covers 
would potentially reduce the availability of TIFIA assistance, 
especially if Congress does not increase budget authority for the 
TIFIA program. 

Moreover, increasing the portion of costs covered by TIFIA could 
decrease the program's ability to achieve one of its key goals--
leveraging federal funds. DOT officials told us that changing the 
statute to increase the TIFIA share could reduce the number of 
projects supported (for a given amount of budget authority) and reduce 
the leveraging of federal funds as project sponsors seek more 
financing through TIFIA rather than other sources. Currently, DOT 
estimates that each $10 million in budget authority can provide up to 
$100 million in TIFIA credit assistance and leverage $300 million in 
transportation infrastructure investment. If the limit on TIFIA 
assistance were increased to 49 percent, this same amount of budget 
authority could leverage about $200 million in transportation 
infrastructure investment.[Footnote 64] This change could also 
increase the exposure of the federal government to the risk of loan 
defaults if the size of the credit assistance for each project 
increases. 

Eliminate or Waive the Nonsubordination Clause: 

The reauthorization bills propose exceptions to the nonsubordination 
clause. For example, the Senate reauthorization bill, S. 1813, allows 
exceptions to the nonsubordination clause for certain types of 
borrowers.[Footnote 65] Specifically, public agencies that are 
financing ongoing capital programs and have senior bonds outstanding 
could be exempt from the nonsubordination clause if (1) the 
outstanding bonds are rated A or higher, (2) the TIFIA assistance and 
outstanding bonds are secured by revenues not affected by project 
performance (e.g., sales tax), and (3) the TIFIA assistance is 33 
percent or less of the total project costs. Among recent applicants we 
surveyed, 22 out of 36 strongly or moderately support allowing waivers 
to the nonsubordination clause. Several legal and financial advisors 
and other project sponsors we interviewed support removing the 
nonsubordination clause altogether. 

While there is general support for allowing waivers to or eliminating 
the nonsubordination clause, many of those we interviewed indicated 
that the clause does not pose an insurmountable challenge to 
negotiating a credit agreement, and that it provides needed protection 
for the federal government. Eliminating or waiving the 
nonsubordination clause could address some issues identified by 
financial advisors and credit ratings agencies we interviewed. For 
example, the TIFIA nonsubordination clause can be difficult to 
integrate with existing terms for outstanding bonds secured by the 
same revenue stream. If the nonsubordination clause is triggered due 
to project bankruptcy or insolvency, project sponsors must make 
special arrangements to ensure this bond covenant is not violated. 
However, despite these issues, many project sponsors and legal and 
financial advisors said that the nonsubordination clause provides an 
important protection to taxpayers. Moreover, few if any could point to 
instances where it prevented the closing of a credit agreement. 

DOT officials said that the nonsubordination clause helps protect the 
federal government and taxpayers. For the TIFIA program, the 
nonsubordination clause is used to lessen the risk to the federal 
government.[Footnote 66] While the nonsubordination clause can cause 
issues for borrowers, DOT officials said that they can work with 
borrowers to try to address financial difficulties before they must 
legally invoke the clause. For example, DOT can defer invoking the 
nonsubordination clause for up to a year after a missed payment, but 
to date no sponsor has missed a payment. In addition, DOT officials 
told us that removing the nonsubordination clause would increase the 
federal government's risk because it would lower the likelihood of 
recovering funds. According to DOT officials, the nonsubordination 
clause facilitated its involvement in bankruptcy discussions for the 
South Bay Expressway and, as a result, DOT expects to recover, through 
the restructuring of the project's debt and assumption of the loan by 
SANDAG, up to 100 percent of the original loan value. Further, DOT 
officials said that without the nonsubordination clause, the credit 
subsidy cost required for a project would increase significantly, 
because of the increased risk to the federal government, and thus 
reduce the amount of assistance the TIFIA program could provide. 

Modify the Selection Process: 

Modify selection criteria. Both the reauthorization bills propose 
eliminating TIFIA's selection criteria and adding to the current 
eligibility requirements.[Footnote 67] H.R. 7 would expand eligibility 
requirements to include creditworthiness, regional significance, 
beneficial effects, and project readiness.[Footnote 68] S. 1813 adds 
creditworthiness to the program's current eligibility requirements. 

Twenty-three of 36 recent applicants that responded to our survey 
support modifying the TIFIA selection criteria, but when asked how the 
criteria should be modified, these respondents most often indicated 
that they want more transparency in how selection criteria are 
applied.[Footnote 69] Project sponsors and advisors we interviewed 
said they would prefer more transparency in the evaluation of LOIs and 
a better explanation of how selection criteria are applied. Several 
project sponsors and advisors expressed concern about the definitions 
of some criteria--in particular, the livability and sustainability 
clarifications--as well as how the criteria are applied to LOIs. 

However, altering or eliminating the selection criteria could modify 
the nature of the TIFIA program, changing it from a discretionary 
program where select projects receive assistance to more of an 
eligibility-based program where all eligible, creditworthy projects 
can receive assistance. DOT supports retaining the statutory criteria 
to use in selecting projects to receive credit assistance. In this 
way, the TIFIA program would continue to provide assistance to 
projects that meet DOT's national transportation goals. DOT officials 
added that just because a project is creditworthy does not ensure that 
it will have positive transportation benefits. Further, modifying or 
eliminating the selection criteria could be implemented in several 
ways, each entailing different trade-offs. For example, one of the new 
eligibility requirements in H.R. 7 is "beneficial effects," which 
collapses some existing statutory criteria and program goals--
specifically, fostering public-private partnerships, attracting 
private debt or equity investment, enabling a project to proceed 
faster than without the credit assistance, and reducing federal grant 
assistance--into one category. While fostering public-private 
partnerships, for example, is one of the selection criteria for the 
current TIFIA program, projects without a public-private component are 
still eligible to apply. Depending on how the beneficial effects 
eligibility requirement, if enacted, is defined and implemented, it 
could render some projects--including some that recently received 
credit assistance--ineligible. 

Return to an open application cycle. The reauthorization bills propose 
returning to an open application process and prohibiting a fixed-date 
solicitation. Several project sponsors as well as financial and legal 
advisors we interviewed support a return to an open application cycle. 
Some project sponsors said this would allow sponsors to seek TIFIA 
credit assistance according to a project's schedule, rather than 
trying to alter this schedule to fit the annual TIFIA solicitation. 
One state DOT said that the projects applying for TIFIA credit 
assistance are very complex and must manage multiple timelines for 
various financing stakeholders, which is further complicated by 
TIFIA's once-a-year solicitation. A few financial advisors and one 
project sponsor we spoke with also indicated that increasing the 
number of solicitations per year would be an improvement if DOT did 
not return to an open application cycle. Moreover, due to the fixed-
date solicitation process, some project sponsors may be submitting 
LOIs for projects not yet ready to use TIFIA assistance. DOT 
previously reported that based on its use of an annual, fixed-date 
application process from 1999 to 2001, project sponsors may have been 
applying for assistance prematurely in response to the limited 
application window. DOT switched to an open application process to 
allow sponsors to apply based on a project's schedule. For example, 
one recent applicant told us it submitted an LOI early, as it planned 
and obtained permits for the project, to familiarize DOT with the 
project and improve its chances of obtaining TIFIA credit assistance 
in the next few years. DOT officials told us the fixed-date 
application cycle is currently a necessity because of limited 
resources; however, if they had more funds to pay the credit subsidy 
costs for credit assistance, they would prefer to use an open 
application system that allows a sponsor to seek TIFIA when it best 
fits a project's schedule. 

Importantly, returning to an open application cycle removes the 
competitive nature of the TIFIA program. If the TIFIA program's 
authorized budget authority remains at current levels or does not meet 
total demand, a project's order in line would determine whether it 
receives assistance, not its relative merit. Further, if this option 
were adopted, DOT would have to reconsider its current two-step 
selection process and determine the extent to which it has the 
discretion to distribute assistance based on geographic location, 
project readiness, or other factors not included in the statutory 
eligibility requirements. 

Conclusions: 

Until recently, the innovative credit assistance offered by the TIFIA 
program to finance the construction of large-scale surface 
transportation projects was underutilized. However, demand for the 
program surged, in part because of the tightening of commercial credit 
markets and low federal treasury interest rates. TIFIA is increasingly 
becoming a more recognized approach for filling funding and financing 
gaps for complex transportation projects that can help to mitigate 
mobility and other transportation issues in many congested urban areas 
in the United States. DOT, project sponsors, legal and financial 
advisors, and other stakeholders in the transportation industry have 
expressed strong support for the program, and Members of Congress have 
recently developed several reauthorization proposals aimed at greatly 
increasing the authorized budget authority for the program and 
modifying other aspects of the program to make it more accessible. DOT 
has taken some steps to monitor and assess the program through its 
project oversight and credit monitoring of individual TIFIA credit 
agreements and, early in the program's tenure, by tracking and 
reporting on the private investment and leveraging effect of TIFIA to 
gauge its progress in meeting program goals. However, since that time, 
DOT has not publicly reported on these or other measures to assess the 
program as a whole. Without other measures in place going forward, 
Congress will not have the complete and aggregated data needed to make 
informed decisions about the program's size and structure. 

Additionally, in response to increased demand for the program and 
multiple extensions of the surface transportation reauthorization over 
the last 3 years, DOT has had to adapt its process for selecting 
projects, focusing its review of projects on applicants' LOIs and 
selecting projects based on their relative merits. The new process, 
whereby DOT balances a limited program budget authority with selecting 
projects that are most consistent with the statutory selection 
criteria, is a work in progress. In response to feedback from 
applicants and lessons from this and other discretionary programs, DOT 
has taken steps to make the TIFIA selection process transparent by 
publicizing the selection criteria and other factors that contribute 
to project selection and providing feedback to unsuccessful 
applicants, and many think these steps have been useful. However, many 
recent applicants and financial and legal advisors that assist 
applicants in developing projects still feel that the process lacks 
transparency, making it difficult for them to advance well-developed 
LOIs. While federal agencies rarely publicly disclose the reasons for 
their selection decisions in a competitive review process, the 
considerable demand for TIFIA and changes to the selection process 
suggest that publicly disclosing additional information about how 
selection decisions are made would better enable potential applicants 
to identify how DOT is using the statutory criteria to select projects 
and develop effective LOIs. 

Recommendations for Executive Action: 

To improve the implementation of the TIFIA program and enable Congress 
and DOT to better assess program performance, we recommend that the 
Secretary of Transportation further develop and define performance 
measures to monitor and evaluate progress toward meeting the program's 
goals and objectives. 

To ensure that future project selections in the TIFIA program are 
transparent to Congress, applicants, and the public, we recommend that 
the Secretary of Transportation better disclose information, through 
notices of funding availability or other program guidance, regarding 
how DOT evaluates and selects projects. 

Agency Comments: 

We provided a draft of this report to DOT for review and comment. In 
response, DOT said it would carefully consider the results of our 
review but did not take a position on whether it agreed with our 
recommendations. DOT told us that it objectively evaluates 
applications for TIFIA participation using comprehensive, data-driven 
processes to identify the most highly qualified projects, and that DOT 
encourages strong communication with applicants and offers transparent 
discussion of applicants' submittals to ensure they are fully informed 
of the basis for program participation decisions. Further, the agency 
stated that it is continuously reevaluating its processes to ensure 
they are as effective as possible. The agency also provided technical 
comments, which we incorporated, as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
Secretary of Transportation, the Administrator of the Federal Highway 
Administration, and appropriate congressional committees. In addition, 
the report will be available at no charge on the GAO website at 
[hyperlink, http://www.gao.gov]. 

If you have any questions about this report, please contact me at 
(202) 512-2834 or flemings@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Major contributors to this report are listed in 
appendix IV. 

Signed by: 

Susan Fleming: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Scope and Methodology: 

To address our objectives, we reviewed Department of Transportation 
(DOT) program guidance for the Transportation Infrastructure Finance 
and Innovation Act (TIFIA) program, relevant legislation and 
regulations, and DOT's biennial reports to Congress on the TIFIA 
program. To describe the characteristics and results of the TIFIA 
program, we analyzed DOT data on past letters of interest (LOI) and 
applications for assistance to describe the projects that sought 
credit assistance. We also analyzed data on the projects receiving 
TIFIA credit agreements through April 2012 to describe these projects, 
including mode of transport, total cost, amount of TIFIA assistance, 
amount of private investment, and geographic location. For mode of 
transport, we used DOT's available characterizations for all projects 
with credit agreements and for LOIs for fiscal year 2011, while for 
the remaining LOIs we determined the mode for projects by applying 
DOT's characterization scheme. When considering the amount of private 
investment, we followed DOT's convention established in its 2002 
report to Congress on TIFIA. Namely, (1) the project must feature 
investor-held debt or equity and (2) the investment return must be 
derived from project-generated revenues or other revenues levied 
specifically to support the project. We only included active credit 
agreements--those for which sponsors had not repaid or refinanced 
their credit agreements--as we did not have complete information on 
the funding sources for all the retired credit agreements. We assessed 
the reliability of the data by reviewing DOT's data documentation, 
interviewing knowledgeable officials, and conducting independent 
validation through use of our web survey. We found the data to be 
sufficiently reliable for our purposes. In addition, we interviewed 
DOT officials to learn about the program's goals and the tools DOT 
uses or plans to use to track and evaluate the performance of credit 
agreements and the program. 

To describe and assess DOT's process for evaluating and selecting 
projects to invite to apply in fiscal years 2010 and 2011, we examined 
legislation, regulations, and agency guidance, including notices of 
funding availability, to describe the statutory and regulatory 
criteria DOT uses to select projects for credit assistance. We also 
analyzed and summarized data and documents provided by DOT--including 
scores assigned and reviewers' assessments of project letters of 
interest--and interviewed DOT officials to describe the decision-
making processes used by the agency to select projects for credit 
assistance. We focused on federal fiscal years 2010 and 2011, the 
years for which DOT used a fixed-date competitive solicitation for 
projects after demand for credit assistance exceeded the program's 
budget authority and for which the evaluation and selection processes 
were complete. To assess DOT's process for selecting projects, we 
compared DOT's process with statute, regulations, and guidance; GAO's 
Standards for Internal Control in the Federal Government; and, as 
appropriate, past GAO work on federal credit assistance and grant 
programs. 

In addition, we gathered and analyzed data on state-level 
characteristics, such as federal highway apportionments and whether 
states have legislative restrictions on borrowing, to determine 
whether such characteristics were correlated to past demand for the 
TIFIA program. To explore the potential future demand for TIFIA credit 
assistance, we analyzed data from DOT on interest in the program in 
the last 2 fiscal years. To identify the options proposed to modify 
the TIFIA program, we reviewed reauthorization proposals for surface 
transportation programs from congressional committees, DOT, and 
industry and research organizations. 

We also interviewed a variety of stakeholders to inform our 
objectives. We interviewed select current and potential project 
sponsors (such as state DOTs and transit agencies) to learn about 
their experiences with the TIFIA selection process and the factors 
that influenced whether they sought TIFIA assistance. In particular, 
we interviewed project sponsors in the 5 states--California, Colorado, 
Florida, Virginia, and Texas--that constitute the majority of TIFIA 
awards to date, as well as a few states that have had little or no 
experience with the program--North Carolina and Iowa--that varied in 
terms of geographic location and legislative authority to borrow and 
use public-private partnerships. In each of these states, we 
interviewed the state DOT and all project sponsors that received TIFIA 
credit assistance as of April 1, 2012. In addition, we interviewed 
legal and financial advisors that help sponsors apply for TIFIA credit 
assistance and private concessionaires that invest in large 
infrastructure projects to learn about their experiences with the 
TIFIA program, including the selection process. We also interviewed 
credit rating agencies and industry associations such as the American 
Association of State Highway and Transportation Officials (AASHTO) and 
the American Road and Transportation Builders Association (ARTBA), to 
learn about their experiences with the TIFIA program and to gain 
additional information about the types of projects that have sought or 
received TIFIA credit assistance. In our interviews, we also asked 
about the factors that would influence future demand for the program 
as well as options to modify the program and the potential trade-offs 
of implementing such changes to the TIFIA program. Table 9 lists the 
organizations we interviewed. 

Table 9: List of Interviewees--Sponsors, Financial and Legal Advisors, 
All Others: 

AASHTO; 
ARTBA; 
Nossaman LLP; 
White and Case LLP; 
Jeffrey Parker and Associates; 
KPMG; 
Mercator Advisors; 
Public Financial Management; 
Cintra; 
Macquarie; 
Meridiam; 
Transurban; 
Miami Access Tunnel LLC; 
ACS Infrastructure; 
Fitch Ratings; 
Moody's; 
Standard and Poor's; 
California DOT; 
Central Texas Regional Mobility Authority; 
Colorado DOT; 
Denver Union Station; 
Florida DOT; 
Iowa DOT; 
Los Angeles County Metropolitan Transportation Authority; 
North Carolina DOT; 
North Texas Tollway Authority; 
Denver Regional Transportation District; 
Riverside County Transportation Commission; 
San Diego Association of Governments; 
Southern California Association of Governments; 
Texas DOT; 
Transbay Joint Powers Authority; 
Virginia DOT. 

Source: GAO. 

[End of table] 

In order to gather opinions of the TIFIA program from the users' 
standpoint, we designed and administered a web-based survey. The 
survey was administered to the state DOTs in all 50 states, the 
District of Columbia, and Puerto Rico, as well as to all recent 
applicants that submitted an LOI to the TIFIA program in fiscal years 
2010 and 2011.[Footnote 70] The survey population consisted of four 
unique groups of respondents: state DOTs from states from which no 
sponsor had ever applied to the TIFIA program; state DOTs from states 
from which a sponsor had applied to the TIFIA program but not in 
recent years--that is, 2010 and 2011; state DOTs who had recently 
applied to the TIFIA program; and other, non-state DOT organizations 
who had recently applied to the TIFIA program. Survey respondents were 
presented with different questions in the survey depending on their 
past experience with the TIFIA program, and whether or not they were 
from a state DOT. In general, the survey topics included the following: 

* factors contributing to organizations' decision to seek, or not to 
seek, TIFIA assistance; 

* satisfaction with the process for submitting an LOI to the TIFIA 
program; 

* opinions on proposed modifications to the TIFIA program; 

* potential future demand for the TIFIA program; and: 

* characteristics of the state DOTs. 

In developing the survey, we took steps to ensure the accuracy and 
reliability of responses. We cognitively tested the survey with 
representatives from 5 state DOTs and one other organization included 
in the respondent population to ensure that questions were clear, 
comprehensive, and unbiased, and to minimize the burden the survey 
placed on respondents. On the basis of feedback from the six pretests 
we conducted, we made changes to the content and format of some survey 
questions. We obtained contact information for the survey recipients 
from two sources. First, we obtained contact information for the state 
DOTs from AASHTO, specifically, from its Standing Committee on Finance 
and Administration. Second, we obtained contact information for recent 
applicants from DOT. We also contacted all of the survey recipients in 
advance, by e-mail, to ensure that we had identified the correct 
respondents and to request their completion of the questionnaire. 

The survey was administered between January 25, 2012, and April 4, 
2012. We distributed a link for the survey to the 83 organizations by 
e-mail and also subsequently e-mailed and telephoned nonrespondents to 
encourage a higher response rate. Because this was not a sample 
survey, there are no sampling errors. However, the practical 
difficulties of conducting any survey may introduce errors, commonly 
referred to as nonsampling errors. For example, difficulties in how a 
particular question is interpreted, in the sources of information that 
are available to respondents, or in how the data were analyzed can 
introduce unwanted variability into the survey results. We took steps 
in the development of the questionnaire, the data collection, and the 
data analysis to minimize these nonsampling errors. Most of the survey 
questions included close-ended response categories; however, a few 
survey questions asked respondents to provide a written response to an 
open-ended question. When analyzing written responses, one analyst 
read the responses and assigned them to different categories, while a 
second analyst reviewed this categorization. We received completed 
surveys from 66 respondents for an overall response rate of 80 
percent. The survey response rates for the four groups of respondents 
are presented in table 10 below: 

Table 10: List of Survey Recipients and Respondents, by Type of 
Organization: 

Type of recipient: State departments of transportation; 
Number of responses: 42; 
Total number of recipients: 52; 
Response rate: 81%. 

Type of recipient: No TIFIA experience; 
Number of responses: 16; 
Total number of recipients: 18; 
Response rate: 89. 

Type of recipient: No recent TIFIA experience; 
Number of responses: 14; 
Total number of recipients: 19; 
Response rate: 74. 

Type of recipient: Recent applicant/TIFIA experience; 
Number of responses: 12; 
Total number of recipients: 15; 
Response rate: 80. 

Type of recipient: Other organizations with recent TIFIA experience; 
Number of responses: 24; 
Total number of recipients: 31; 
Response rate: 77. 

Type of recipient: All respondents; 
Number of responses: 66; 
Total number of recipients: 83; 
Response rate: 80. 

Source: GAO. 

[End of table] 

We conducted this performance audit from July 2011 to June 2012 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Projects Receiving TIFIA Credit Assistance: 

DOT has awarded 27 TIFIA credit agreements to projects through 26 
loans and one loan guarantee. Table 11 provides information on each 
credit agreement, including the name and location of the project 
receiving assistance, the amount of credit assistance, and the status 
of the credit agreement. 

Table 11: Projects with TIFIA Credit Agreements: 

Dollars in millions: 

Active credit agreements: 

Project (location): Miami Intermodal Center (Miami, FL)[A]; 
Mode: Intermodal; 
Total project cost: $1,664; 
Type of assistance: Direct loan; 
Amount of assistance: $270; 
Primary revenue pledge: User charges[B]; 
Status of assistance: Drawing funds. 

Project (location): Central Texas Turnpike System (Austin, TX); 
Mode: Highway; 
Total project cost: $3,278; 
Type of assistance: Direct loan; 
Amount of assistance: $900; 
Primary revenue pledge: User charges; 
Status of assistance: Repaying partial interest. 

Project (location): South Bay Expressway-formerly SR 125 South (San 
Diego County, CA)[C]; 
Mode: Highway; 
Total project cost: $658; 
Type of assistance: Direct loan; 
Amount of assistance: $140; 
Primary revenue pledge: User charges; 
Status of assistance: Repaying principal and interest. 

Project (location): 183-A Turnpike (Austin, TX); 
Mode: Highway; 
Total project cost: $305; 
Type of assistance: Direct loan; 
Amount of assistance: $66; 
Primary revenue pledge: User charges; 
Status of assistance: Repaying principal and interest. 

Project (location): LA 1 Improvements (Leeville, LA); 
Mode: Highway; 
Total project cost: $372; 
Type of assistance: Direct loan; 
Amount of assistance: $66; 
Primary revenue pledge: User charges; 
Status of assistance: Deferring interest. 

Project (location): Interlink-formerly Warwick Intermodal Station 
(Warwick, RI); 
Mode: Intermodal; 
Total project cost: $267; 
Type of assistance: Direct loan; 
Amount of assistance: $42; 
Primary revenue pledge: User charges; 
Status of assistance: Repaying interest. 

Project (location): Pocahontas Parkway/Richmond Airport Connector 
(Richmond, VA); 
Mode: Highway; 
Total project cost: $597; 
Type of assistance: Direct loan; 
Amount of assistance: $150; 
Primary revenue pledge: User charges; 
Status of assistance: Deferring interest. 

Project (location): I-495 Capital Beltway HOT Lanes (Fairfax County, 
VA); 
Mode: Highway; 
Total project cost: $1,938; 
Type of assistance: Direct loan; 
Amount of assistance: $589; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Project (location): SH 130 Segments 5-6 (Austin, TX); 
Mode: Highway; 
Total project cost: $1,328; 
Type of assistance: Direct loan; 
Amount of assistance: $430; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Project (location): Intercounty Connector (Montgomery and Prince 
George's County, MD); 
Mode: Highway; 
Total project cost: $2,566; 
Type of assistance: Direct loan; 
Amount of assistance: $516; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Project (location): I-595 Corridor Roadway Improvements (Broward 
County, FL); 
Mode: Highway; 
Total project cost: $1,834; 
Type of assistance: Direct loan; 
Amount of assistance: $603; 
Primary revenue pledge: Availability payments[D]; 
Status of assistance: Drawing funds. 

Project (location): Triangle Expressway (Raleigh-Durham, NC); 
Mode: Highway; 
Total project cost: $1,172; 
Type of assistance: Direct loan; 
Amount of assistance: $387; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Project (location): Port of Miami Tunnel (Miami, FL); 
Mode: Highway; 
Total project cost: $1,073; 
Type of assistance: Direct loan; 
Amount of assistance: $341; 
Primary revenue pledge: Availability payments; 
Status of assistance: Drawing funds. 

Project (location): North Tarrant Express (Dallas-Fort Worth, TX); 
Mode: Highway; 
Total project cost: $2,047; 
Type of assistance: Direct loan; 
Amount of assistance: $650; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Project (location): Transbay Transit Center (San Francisco, CA); 
Mode: Transit; 
Total project cost: $1,189; 
Type of assistance: Direct loan; 
Amount of assistance: $171; 
Primary revenue pledge: Real estate tax increment; 
Status of assistance: Not yet drawing funds. 

Project (location): IH 635 Managed Lanes (Dallas-Fort Worth, TX); 
Mode: Highway; 
Total project cost: $2,615; 
Type of assistance: Direct loan; 
Amount of assistance: $850; 
Primary revenue pledge: User charges; 
Status of assistance: Disbursing. 

Project (location): Denver Union Station Project (Denver, CO); 
Mode: Intermodal; 
Total project cost: $519; 
Type of assistance: Direct loan; 
Amount of assistance: $145.6; 
Primary revenue pledge: Sales tax/real estate tax increment; 
Status of assistance: Drawing funds and repaying partial interest. 

Project (location): President George Bush Turnpike Western Extension-
SH 161 (Dallas, TX); 
Mode: Highway; 
Total project cost: $1,268; 
Type of assistance: Direct loan; 
Amount of assistance: $418.4; 
Primary revenue pledge: User charges; 
Status of assistance: Not yet drawing funds. 

Project (location): U.S. 36 Managed Lanes/Bus Rapid Transit Project: 
Segments 1 and 2 (Denver, CO); 
Mode: Highway; 
Total project cost: $307; 
Type of assistance: Direct loan; 
Amount of assistance: $54; 
Primary revenue pledge: User charges; 
Status of assistance: Not yet drawing funds. 

Project (location): Eagle Project (Denver, CO); 
Mode: Transit; 
Total project cost: $2,047; 
Type of assistance: Direct loan; 
Amount of assistance: $280; 
Primary revenue pledge: Tax revenues; 
Status of assistance: Not yet drawing funds. 

Project (location): Downtown Tunnel/Midtown Tunnel/MLK Extension 
(Hampton Roads, VA; 
Mode: Highway; 
Total project cost: $2,089; 
Type of assistance: Direct loan; 
Amount of assistance: $422; 
Primary revenue pledge: User charges; 
Status of assistance: Drawing funds. 

Active credit agreements: Total; 
Total project cost: $29,524; 
Amount of assistance: $7,490.70. 

Retired credit agreements: 

Project (location): Washington Metro Capital Improvement Program 
(Washington, DC); 
Mode: Transit; 
Total project cost: $2,324; 
Type of assistance: Guarantee; 
Amount of assistance: $600; 
Primary revenue pledge: Interjurisdictional funding agreements; 
Status of assistance: Retired. 

Project (location): Tren Urbano (San Juan, PR); 
Mode: Transit; 
Total project cost: $2,250; 
Type of assistance: Direct loan; 
Amount of assistance: $300; 
Primary revenue pledge: Tax revenues; 
Status of assistance: Retired. 

Project (location): Cooper River Bridge Replacement (Charleston, SC); 
Mode: Highway; 
Total project cost: $675; 
Type of assistance: Direct loan; 
Amount of assistance: $215; 
Primary revenue pledge: Infrastructure bank loan repayments; 
Status of assistance: Retired. 

Project (location): Staten Island Ferries and Terminals (New York 
City, NY); 
Mode: Transit; 
Total project cost: $482; 
Type of assistance: Direct loan; 
Amount of assistance: $159.23; 
Primary revenue pledge: Tobacco settlement revenues; 
Status of assistance: Retired. 

Project (location): Reno Transportation Rail Access Corridor-ReTRAC 
(Reno, NV); 
Mode: Intermodal; 
Total project cost: $280;
Type of assistance: Direct loan; 
Amount of assistance: $50.5; 
Primary revenue pledge: Room and sales tax; 
Status of assistance: Retired. 

Project (location): Miami Intermodal Center (Miami, FL); 
Mode: Intermodal; 
Total project cost: [E]; 
Type of assistance: Direct loan; 
Amount of assistance: $269.08; 
Primary revenue pledge: Tax revenues; 
Status of assistance: Retired. 

Retired credit agreements: Total; 
Total project cost: $6,011; 
Amount of assistance: $1,593.80. 

Total all agreement: 
Total project cost: $35,535; 
Amount of assistance: $9,084.50. 

Source: GAO analysis of DOT data as of April 16, 2012. 

[A] This loan, originally for $170 million in credit assistance, was 
closed on April 25, 2005. An additional $100 million was requested and 
approved, and the loan was amended on August 1, 2007. 

[B] User charges include tolls and rental car customer facility 
charges. 

[C] Under the plan of reorganization approved by the bankruptcy court 
in April 2011, the restructured principal amount of the loan is $93 
million; see project fact sheet for details: 

[D] An availability payment is a payment made by the public sponsor of 
a project to the private concessionaire for its responsibility to 
design, construct, operate, or maintain a project. The payment is 
based on particular project milestones or facility performance 
standards, irrespective of usage of the asset, such as ridership or 
toll revenue. 

[E] Project cost included in first listing of the Miami Intermodal 
Center. 

[End of table] 

[End of section] 

Appendix III: Responses to Questions from GAO's Survey on TIFIA: 

We distributed a survey to all state departments of 
transportation,[Footnote 71] as well as the organizations who have 
submitted a letter of interest for TIFIA assistance during federal 
fiscal years 2010-2011, to gain insight into their experience with and 
opinions regarding the TIFIA program. In total the survey went to 83 
recipients, and we received completed surveys from 66 of 83 recipients 
for a response rate of 80 percent. Tables 12-28 below show responses 
to questions from the survey related to the TIFIA program and project 
finance. We also provided examples and definitions for certain terms 
used in the questions, which are reprinted below. Survey respondents 
were presented with different questions in the survey depending on 
their past experience with the TIFIA program, and whether or not they 
were from a state DOT. For example, we only asked organizations that 
submitted an LOI in 2010 or 2011 (recent applicants) about their 
experience with the TIFIA evaluation and selection process. For more 
information about our methodology for designing and distributing the 
survey, see appendix I. 

Responses to Questions for Recent Applicants to the TIFIA program: 

Table 12: How Important or Unimportant Were Each of the Following 
Factor(s) in Your Organization's Decision to Seek TIFIA Credit 
Assistance for Projects in Federal Fiscal Year 2010 or 2011? 

Availability of user fees to repay TIFIA credit assistance; 
Very important: 20; 
Somewhat important: 7; 
Neither important nor unimportant: 2; 
Somewhat unimportant: 0; 
Very unimportant: 4; 
Don't know/not applicable: 3; 
Total: 36. 

Availability of other dedicated revenue stream(s) to repay TIFIA 
credit assistance; 
Very important: 12; 
Somewhat important: 7; 
Neither important nor unimportant: 5; 
Somewhat unimportant: 0; 
Very unimportant: 7; 
Don't know/not applicable: 5; 
Total: 36. 

Use of TIFIA to attract private equity; 
Very important: 12; 
Somewhat important: 3; 
Neither important nor unimportant: 5; 
Somewhat unimportant: 1; 
Very unimportant: 10; 
Don't know/not applicable: 5; 
Total: 36. 

Low interest rate of TIFIA credit assistance relative to other 
financing options; 
Very important: 28; 
Somewhat important: 6; 
Neither important nor unimportant: 0; 
Somewhat unimportant: 1; 
Very unimportant: 0; 
Don't know/not applicable: 1; 
Total: 36. 

Ability of TIFIA credit assistance to serve as subordinate debt in 
project finance plan; 
Very important: 26; 
Somewhat important: 6; 
Neither important nor unimportant: 0; 
Somewhat unimportant: 1; 
Very unimportant: 2; 
Don't know/not applicable: 1; 
Total: 36. 

Repayment terms and options offered by TIFIA credit assistance; 
Very important: 30; 
Somewhat important: 4; 
Neither important nor unimportant: 0; 
Somewhat unimportant: 0; 
Very unimportant: 0; 
Don't know/not applicable: 2; 
Total: 36. 

Political support given to use of alternative project delivery and 
financing tools; 
Very important: 10; 
Somewhat important: 13; 
Neither important nor unimportant: 9; 
Somewhat unimportant: 2; 
Very unimportant: 2; 
Don't know/not applicable: 0; 
Total: 36. 

Prior experience using alternative financing and delivery tools to 
implement projects; 
Very important: 4; 
Somewhat important: 10; 
Neither important nor unimportant: 13; 
Somewhat unimportant: 0; 
Very unimportant: 6; 
Don't know/not applicable: 3; 
Total: 36. 

Lack of other funding options; 
Very important: 13; 
Somewhat important: 13; 
Neither important nor unimportant: 5; 
Somewhat unimportant: 2; 
Very unimportant: 2; 
Don't know/not applicable: 1; 
Total: 36. 

Ability to accelerate delivery of project through use of TIFIA credit 
assistance; 
Very important: 12; 
Somewhat important: 15; 
Neither important nor unimportant: 4; 
Somewhat unimportant: 1; 
Very unimportant: 2; 
Don't know/not applicable: 1; 
Total: 35. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). Totals may not add to 36 because respondents did not all 
answer every question. 

[End of table] 

Table 13: How Satisfied or Dissatisfied Were You with Each of the 
Following Aspects of the Process for Submitting a Letter of Interest 
(LOI) for the TIFIA Program in Federal Fiscal Year 2010 or 2011? 

Explanation of the application process in DOT's Notice of Funding 
Availability (NOFA); 
Very satisfied: 15; 
Somewhat satisfied: 12; 
Neither satisfied nor dissatisfied: 4; 
Somewhat dissatisfied: 3; 
Very dissatisfied: 1; 
Don't know/not applicable: 1; 
Total: 36. 

Clarity of DOT's selection criteria in the NOFA; 
Very satisfied: 6; 
Somewhat satisfied: 15; 
Neither satisfied nor dissatisfied: 3; 
Somewhat dissatisfied: 9; 
Very dissatisfied: 2; 
Don't know/not applicable: 1; 
Total: 36. 

Ability to provide sufficient project details in LOI format; 
Very satisfied: 12; 
Somewhat satisfied: 16; 
Neither satisfied nor dissatisfied: 5; 
Somewhat dissatisfied: 1; 
Very dissatisfied: 0; 
Don't know/not applicable: 1; 
Total: 35. 

Length of time it took from submission of LOI to announcement of 
projects invited to apply; 
Very satisfied: 3; 
Somewhat satisfied: 15; 
Neither satisfied nor dissatisfied: 4; 
Somewhat dissatisfied: 7; 
Very dissatisfied: 5; 
Don't know/not applicable: 2; 
Total: 36. 

Transparency of DOT's project selection decisions; 
Very satisfied: 4; 
Somewhat satisfied: 3; 
Neither satisfied nor dissatisfied: 13; 
Somewhat dissatisfied: 5; 
Very dissatisfied: 8; 
Don't know/not applicable: 3; 
Total: 36. 

Technical assistance on LOI provided by TIFIA office; 
Very satisfied: 8; 
Somewhat satisfied: 8; 
Neither satisfied nor dissatisfied: 10; 
Somewhat dissatisfied: 2; 
Very dissatisfied: 1; 
Don't know/not applicable: 7; 
Total: 36. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). Totals may not add to 36 because respondents did not all 
answer every question. 

[End of table] 

Table 14: Thinking about the Amount of Effort Your Organization Spent, 
How Much of a Burden, if at All, Were the Following Aspects of 
Submitting an LOI? 

Cost associated with submitting an LOI; 
Great burden: -; 
Moderate burden: 15; 
Some burden: 11; 
Little to no burden: 9; 
Don't know/not Applicable: 1; 
Total: 36. 

Time associated with submitting an LOI; 
Great burden: 4; 
Moderate burden: 15; 
Some burden: 12; 
Little to no burden: 4; 
Don't know/not Applicable: 1; 
Total: 36. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). 

[End of table] 

Table 15: For Federal Fiscal Year 2010 or 2011, Did You Receive Any 
Feedback from DOT TIFIA Staff on Any Letters of Interest for TIFIA 
Credit Assistance? 

Yes; 
Frequency: 21. 

No; 
Frequency: 10. 

Don't know; 
Frequency: 5. 

Total; 
Frequency: 36. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). 

[End of table] 

Table 16: If You Received Feedback on Any of the Following Topics, How 
Useful, if at All, Was the Feedback You Received from DOT TIFIA Staff? 

Clarification of selection criteria; 
Highly useful: 4; 
Moderately useful: 5; 
Slightly useful: 4; 
Not at all useful: 4; 
Don't know/not applicable: 4; 
Total: 21. 

Scoring of your LOI; 
Highly useful: 3; 
Moderately useful: 6; 
Slightly useful: 6; 
Not at all useful: 2; 
Don't know/not applicable: 4; 
Total: 21. 

Areas for improvement on future submissions; 
Highly useful: 6; 
Moderately useful: 6; 
Slightly useful: 1; 
Not at all useful: 2; 
Don't know/not applicable: 6; 
Total: 21. 

Source: GAO. 

[End of table] 

Table 17: How Much Do You Support or Oppose the Following Proposed 
Changes to the TIFIA Program? 

Expand funding for the TIFIA program; 
Strongly support: 32; 
Moderately support: 0; 
Neither support nor oppose: 0; 
Moderately oppose: 1; 
Strongly oppose: 2; 
Don't know/not applicable: 0; 
Total: 35. 

Change eligibility requirements to decrease total project cost to 
below $50 million; 
Strongly support: 3; 
Moderately support: 5; 
Neither support nor oppose: 9; 
Moderately oppose: 9; 
Strongly oppose: 9; 
Don't know/not applicable: 1; 
Total: 36. 

Change eligibility requirements to decrease total ITS project cost to 
below $15 million; 
Strongly support: 0; 
Moderately support: 7; 
Neither support nor oppose: 15; 
Moderately oppose: 3; 
Strongly oppose: 9; 
Don't know/not applicable: 2; 
Total: 36. 

Increase the portion of costs that TIFIA can cover from 33 percent; 
Strongly support: 19; 
Moderately support: 7; 
Neither support nor oppose: 4; 
Moderately oppose: 2; 
Strongly oppose: 3; 
Don't know/not applicable: 1; 
Total: 36. 

Allow waivers for the nonsubordination clause; 
Strongly support: 13; 
Moderately support: 9; 
Neither support nor oppose: 8; 
Moderately oppose: 1; 
Strongly oppose: 1; 
Don't know/not applicable: 3; 
Total: 35. 

Eliminate the nonsubordination clause; 
Strongly support: 9; 
Moderately support: 6; 
Neither support nor oppose: 12; 
Moderately oppose: 1; 
Strongly oppose: 3; 
Don't know/not applicable: 4; 
Total: 35. 

Allow project sponsors to contribute to the subsidy costs of 
assistance; 
Strongly support: 10; 
Moderately support: 9; 
Neither support nor oppose: 10; 
Moderately oppose: 0; 
Strongly oppose: 1; 
Don't know/not applicable: 5; 
Total: 35. 

Add separate eligibility requirements and terms to encourage rural 
infrastructure projects to seek credit assistance; 
Strongly support: 3; 
Moderately support: 7; 
Neither support nor oppose: 11; 
Moderately oppose: 4; 
Strongly oppose: 7; 
Don't know/not applicable: 3; 
Total: 35. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). Totals may not add to 36 because respondents did not all 
answer every question. 

[End of table] 

Table 18: Do You Support Modifying the TIFIA Selection Criteria? 

Yes; 
Frequency: 23. 

No; 
Frequency: 2. 

Don't know; 
Frequency: 10. 

Total; 
Frequency: 35. 

Source: GAO. 

Note: We received completed surveys from 36 of 46 recent applicants 
(78 percent). Totals may not add to 36 because respondents did not all 
answer every question. 

[End of table] 

Responses to Questions for State DOTs from States That Were Not Recent 
Applicants: 

Table 19: How Much, if at All, Did Each of the Following Factors 
Impact Your State DOT's Decision to Not Submit an LOI to the TIFIA 
Program? 

No projects within the state that met the required cost thresholds for 
the TIFIA program; 
Very great impact: 4; 
Great impact: 2; 
Moderate impact: 1; 
Some impact: 2; 
Little to no impact: 5; 
Don't know/not applicable: 2; 
Total: 16. 

Lack of either user fees or dedicated revenues to repay assistance; 
Very great impact: 6; 
Great impact: 2; 
Moderate impact: 1; 
Some impact: 3; 
Little to no impact: 3; 
Don't know/not applicable: 1; 
Total: 16. 

State has no legal authority to use alternative finance and delivery 
approaches; 
Very great impact: 3; 
Great impact: 1; 
Moderate impact: 1; 
Some impact: 2; 
Little to no impact: 8; 
Don't know/not applicable: 1; 
Total: 16. 

State is subjected to restrictions on borrowing; 
Very great impact: 4; 
Great impact: 2; 
Moderate impact: 0; 
Some impact: 2; 
Little to no impact: 7; 
Don't know/not applicable: 0; 
Total: 15. 

Other financing options were available; 
Very great impact: 5; 
Great impact: 3; 
Moderate impact: 2; 
Some impact: 1; 
Little to no impact: 4; 
Don't know/not applicable: 1; 
Total: 16. 

State does not use debt financing for transportation projects; 
Very great impact: 2; 
Great impact: 1; 
Moderate impact: 1; 
Some impact: 1; 
Little to no impact: 9; 
Don't know/not applicable: 2; 
Total: 16. 

Inclusion of nonsubordination clause in TIFIA credit agreements; 
Very great impact: 1; 
Great impact: 0; 
Moderate impact: 0; 
Some impact: 0; 
Little to no impact: 9; 
Don't know/not applicable: 6; 
Total: 16. 

Cost associated with federalizing projects; 
Very great impact: 1; 
Great impact: 0; 
Moderate impact: 1; 
Some impact: 0; 
Little to no impact: 12; 
Don't know/not applicable: 2; 
Total: 16. 

Unfamiliarity with the TIFIA program; 
Very great impact: 0; 
Great impact: 0; 
Moderate impact: 2; 
Some impact: 4; 
Little to no impact: 9; 
Don't know/not applicable: 1; 
Total: 16. 

Resources needed to apply for and negotiate a TIFIA credit agreement; 
Very great impact: 1; 
Great impact: 1; 
Moderate impact: 2; 
Some impact: 2; 
Little to no impact: 9; 
Don't know/not applicable: 1; 
Total: 16. 

Resources needed to maintain an executed TIFIA credit agreement; 
Very great impact: 1; 
Great impact: 1; 
Moderate impact: 1; 
Some impact: 3; 
Little to no impact: 8; 
Don't know/not applicable: 1; 
Total: 15. 

Source: GAO. 

Note: We received completed surveys from 16 of 18 state DOTs from 
states from which no sponsor had ever submitted a letter of interest 
(89 percent). Totals may not add to 16 because respondents did not all 
answer every question. 

[End of table] 

Table 20: In Your Opinion, How Much, if at All, Does Each of the 
Following Proposed Changes Increase the Likelihood That Your 
Organization Would Seek TIFIA Credit Assistance in the Future? 

Expand funding for the TIFIA program; 
Significantly increase: 2; 
Greatly increase: 2; 
Moderately increase: 3; 
Somewhat increase: 5; 
Little to no increase: 17; 
Don't know/not applicable: 1; 
Total: 30. 

Change eligibility requirements to decrease total project cost to 
below $50 million; 
Significantly increase: 2; 
Greatly increase: 3; 
Moderately increase: 5; 
Somewhat increase: 3; 
Little to no increase: 16; 
Don't know/not applicable: 1; 
Total: 30. 

Change eligibility requirements to decrease total ITS project cost to 
below $15 million; 
Significantly increase: 2; 
Greatly increase: 2; 
Moderately increase: 3; 
Somewhat increase: 6; 
Little to no increase: 16; 
Don't know/not applicable: 1; 
Total: 30. 

Increase the portion of costs that TIFIA can cover from 33 percent; 
Significantly increase: 4; 
Greatly increase: 4; 
Moderately increase: 4; 
Somewhat increase: 5; 
Little to no increase: 12; 
Don't know/not applicable: 1; 
Total: 30. 

Allow waivers for the nonsubordination clause; 
Significantly increase: 2; 
Greatly increase: 2; 
Moderately increase: 2; 
Somewhat increase: 4; 
Little to no increase: 12; 
Don't know/not applicable: 8; 
Total: 30. 

Eliminate the nonsubordination clause; 
Significantly increase: 3; 
Greatly increase: 2; 
Moderately increase: 0; 
Somewhat increase: 3; 
Little to no increase: 14; 
Don't know/not applicable: 8; 
Total: 30. 

Allow project sponsors to contribute to the subsidy costs of 
assistance; 
Significantly increase: 2; 
Greatly increase: 2; 
Moderately increase: 4; 
Somewhat increase: 6; 
Little to no increase: 11; 
Don't know/not applicable: 5; 
Total: 30. 

Add separate eligibility requirements and terms to encourage rural 
infrastructure projects to seek credit assistance; 
Significantly increase: 2; 
Greatly increase: 4; 
Moderately increase: 5; 
Somewhat increase: 7; 
Little to no increase: 9; 
Don't know/not applicable: 3; 
Total: 30. 

Source: GAO. 

Note: Of the 37 state DOTs from states from which no sponsor had 
either not submitted a letter of interest during fiscal years 2010 and 
2011 or not ever submitted a letter of interest, we received completed 
surveys from 30 state DOTs (81 percent). 

[End of table] 

Table 21: In Your Opinion, How Much, if at All, Does Each of the 
Following Proposed Changes Increase the Likelihood That Your 
Organization Would Seek TIFIA Credit Assistance in the Future? 

(Only with Responses from State DOTs from Which No Sponsor Had Ever 
Sought Credit Assistance.) 

Expand funding for the TIFIA program; 
Significantly increase: 1; 
Greatly increase: 0; 
Moderately increase: 1; 
Somewhat increase: 3; 
Little to no increase: 10; 
Don't know/not applicable: 1; 
Total: 16. 

Change eligibility requirements to decrease total project cost to 
below $50 million; 
Significantly increase: 2; 
Greatly increase: 1; 
Moderately increase: 2; 
Somewhat increase: 2; 
Little to no increase: 8; 
Don't know/not applicable: 1; 
Total: 16. 

Change eligibility requirements to decrease total ITS project cost to 
below $15 million; 
Significantly increase: 2; 
Greatly increase: 1; 
Moderately increase: 1; 
Somewhat increase: 2; 
Little to no increase: 9; 
Don't know/not applicable: 1; 
Total: 16. 

Increase the portion of costs that TIFIA can cover from 33 percent; 
Significantly increase: 3; 
Greatly increase: 1; 
Moderately increase: 2; 
Somewhat increase: 4; 
Little to no increase: 5; 
Don't know/not applicable: 1; 
Total: 16. 

Allow waivers for the nonsubordination clause; 
Significantly increase: 2; 
Greatly increase: 0; 
Moderately increase: 0; 
Somewhat increase: 3; 
Little to no increase: 6; 
Don't know/not applicable: 5; 
Total: 16. 

Eliminate the nonsubordination clause; 
Significantly increase: 2; 
Greatly increase: 0; 
Moderately increase: 0; 
Somewhat increase: 2; 
Little to no increase: 7; 
Don't know/not applicable: 5; 
Total: 16. 

Allow project sponsors to contribute to the subsidy costs of 
assistance; 
Significantly increase: 2; 
Greatly increase: 0; 
Moderately increase: 2; 
Somewhat increase: 3; 
Little to no increase: 6; 
Don't know/not applicable: 3; 
Total: 16. 

Add separate eligibility requirements and terms to encourage rural 
infrastructure projects to seek credit assistance; 
Significantly increase: 2; 
Greatly increase: 3; 
Moderately increase: 2; 
Somewhat increase: 4; 
Little to no increase: 3; 
Don't know/not applicable: 2; 
Total: 16. 

Source: GAO. 

Note: We received completed surveys from 16 of 18 state DOTs from 
states from which no sponsor had ever submitted a letter of interest 
(89 percent). 

[End of table] 

Table 22: Do You Support Modifying the TIFIA Selection Criteria? 

Response: 
Yes: 11. 

Response: 
No: 3. 

Response: 
Don't know: 15. 

Response: 
Total: 29. 

Source: GAO. 

Note: Of the 37 state DOTs from states from which no sponsor had 
either not submitted a letter of interest during fiscal years 2010 and 
2011 or not ever submitted a letter of interest, we received completed 
surveys from 30 state DOTs (81 percent). The totals may not add to 30 
because respondents did not all answer every question. 

[End of table] 

Responses to Questions for All State DOTs: 

Table 23: In the Next 5 years, Approximately How Many Projects Do You 
Anticipate Will Be Undertaken in Your State That Have a Total Cost 
of... 

Less than $10 million? 
None: 0; 
1 to 2: 0; 
3 to 5: 0; 
6 to 10: 0; 
More than 10: 39; 
Total: 39. 

$10 to less than $25 million? 
None: 0; 
1 to 2: 0; 
3 to 5: 1; 
6 to 10: 5; 
More than 10: 33; 
Total: 39. 

$25 to less than $50 million? 
None: 0; 
1 to 2: 3; 
3 to 5: 6; 
6 to 10: 8; 
More than 10: 21; 
Total: 38. 

$50 to less than $100 million? 
None: 6; 
1 to 2: 8; 
3 to 5: 5; 
6 to 10: 7; 
More than 10: 12; 
Total: 38. 

$100 to less than $150 million? 
None: 13; 
1 to 2: 10; 
3 to 5: 5; 
6 to 10: 7; 
More than 10: 5; 
Total: 40. 

$150 to less than $200 million? 
None: 16; 
1 to 2: 7; 
3 to 5: 7; 
6 to 10: 7; 
More than 10: 2; 
Total: 39. 

$200 million or more? 
None: 17; 
1 to 2: 8; 
3 to 5: 8; 
6 to 10: 4; 
More than 10: 2; 
Total: 39. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Table 24: Of the Projects Identified in Table 23, for About How Many 
Do You Anticipate That Your Organization Will Seek TIFIA Credit 
Assistance? 

None; 
Recent TIFIA experience: 2; 
No recent TIFIA experience: 7; 
No TIFIA experience: 12; 
Total: 21. 

1 to 2; 
Recent TIFIA experience: 3; 
No recent TIFIA experience: 2; 
No TIFIA experience: 1; 
Total: 6. 

3 to 5; 
Recent TIFIA experience: 4; 
No recent TIFIA experience: 3; 
No TIFIA experience: 0; 
Total: 7. 

6 to 10; 
Recent TIFIA experience: 2; 
No recent TIFIA experience: 0; 
No TIFIA experience: 0; 
Total: 2. 

Don't know; 
Recent TIFIA experience: 1; 
No recent TIFIA experience: 1; 
No TIFIA experience: 3; 
Total: 5. 

Total; 
Recent TIFIA experience: 12; 
No recent TIFIA experience: 13; 
No TIFIA experience: 16; 
Total: 41. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Table 25: Does Your State DOT Have the Legislative Authority to Use 
Any of the Following Tools for Transportation Projects? 

Design-build: Legislative authority? 
Yes: 35; 
No: 6; 
Don't know: 1; 
Total: 42. 

Design-build: If yes, has this authority been used? 
Yes: 32; 
No: 3; 
Don't know: 0; 
Total: 35. 

Public-private partnerships: Legislative authority? 
Yes: 28; 
No: 11; 
Don't know: 2; 
Total: 41. 

Public-private partnerships: If yes, has this authority been used? 
Yes: 17; 
No: 11; 
Don't know: 0; 
Total: 28. 

Levy tolls for roads, bridges and tunnels: Legislative authority? 
Yes: 24; 
No: 17; 
Don't know: 0; 
Total: 41. 

Levy tolls for roads, bridges and tunnels: If yes, has this authority 
been used? 
Yes: 16; 
No: 8; 
Don't know: 0; 
Total: 24. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Table 26: Does Your State Have Access to Any of the Following Revenue 
Sources, at Either the State or Local Level, That Could Be Used to 
Repay a TIFIA Loan? 

Tolling; 
Yes: 20; 
No: 19; 
Don't know: 3; 
Total: 42. 

Sales tax; 
Yes: 11; 
No: 24; 
Don't know: 5; 
Total: 40. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Table 27: Does Your State DOT Have Either Bonding Authority OR Have 
Access to the Bond Market through Another State Entity? 

Response: Yes; 
Frequency: 41. 

Response: Don't know; 
Frequency: 1. 

Response: Total; 
Frequency: 42. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Table 28: Which, if Any, of the Following Legislative Restrictions on 
Conducting Bond Issuances for Capital Projects Apply? 

Limitations on the amount that can be issued; 
Yes: 31; 
No: 8; 
Don't know: 2; 
Total: 41. 

Limitations on the frequency with which bonds can be issued; 
Yes: 7; 
No: 31; 
Don't know: 3; 
Total: 41. 

Bond issuances require legislative approval; 
Yes: 23; 
No: 15; 
Don't know: 2; 
Total: 40. 

Source: GAO. 

Note: We received completed surveys from 42 of 52 state DOTs (81 
percent). Totals may not add to 42 because respondents did not all 
answer every question. 

[End of table] 

Glossary/Examples: 

ITS stands for intelligent transportation system. 

The nonsubordination clause (also known in the context of the TIFIA 
program as the springing lien) means that the TIFIA lien on project 
revenues can be subordinated to those of senior lenders except in the 
event of bankruptcy, insolvency, or liquidation of the obligor. In 
such an instance, the TIFIA lien would rise to parity with senior 
creditors. This provision can be effected through a master trust 
agreement, an intercreditor agreement, or other agreement entered into 
at the time of execution of the credit agreement. 

Examples of other dedicated revenue stream(s) to repay TIFIA credit 
assistance may include pledged sales taxes, tax increment financing, 
and availability payments. 

The TIFIA eligibility requirements are (1) the project shall be 
consistent with the state transportation plan, if located in a 
metropolitan area shall be included in that area's metropolitan 
transportation plan, and shall appear in an approved state 
transportation improvement program before the DOT and the project 
sponsor execute a term sheet or credit agreement that results in the 
obligation of funds; (2) the state, local servicer, or other entity 
undertaking the project shall submit a project application to the 
Secretary of Transportation; (3) a project shall have eligible project 
costs that are reasonably anticipated to equal or exceed the lesser of 
$50 million or 33 1/3 percent of the amount of federal aid highway 
funds apportioned for the most recently completed fiscal year to the 
state in which the project is located (in the case of a project 
principally involving the installation of intelligent transportation 
systems (ITS), eligible project costs shall be reasonably anticipated 
to equal or exceed $15 million); (4) project financing shall be 
repayable, in whole or in part, from tolls, user fees or other 
dedicated revenue sources; and (5) in the case of a project that is 
undertaken by an entity that is not a state or local government or an 
agency or instrumentality of a state or local government, the project 
that the entity is undertaking shall be included in the state 
transportation plan and an approved State Transportation Improvement 
Program. 

The TIFIA selection criteria are (1) national or regional significance 
(including consideration of livability, economic competitiveness, and 
safety), (2) private participation, (3) environment (including 
consideration of sustainability and state of good repair), (4) project 
acceleration, (5) credit worthiness, (6) use of new technology, (7) 
consumption of budget authority, and (8) reduced federal grant 
assistance. 

Examples of user fees to repay TIFIA credit assistance may include 
tolls and rental car customer facility charges. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Susan Fleming, (202) 512-2834 or flemings@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Susan Zimmerman, Assistant 
Director; Sarah Arnett; Carl Barden; Marcia Carlsen; Carol Henn; Bert 
Japikse; David Lin; Joanie Lofgren; Ruben Montes de Oca; Josh Ormond; 
Amy Rosewarne; Andrew Von Ah; and Elizabeth Wood made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 105-178, 112 Stat. 107 (1998) (codified as 23 U.S.C. 
ch.6). 

[2] Intelligent transportation systems (ITS) projects must have a 
total cost of at least $15 million. 

[3] These two groups were not mutually exclusive, in that some state 
DOTs are also recent TIFIA applicants. For the purposes of this 
report, our definition of state DOTs includes those from the 50 
states, the District of Columbia, and Puerto Rico. 

[4] H.R. 7, 112th Cong. (Feb. 13, 2012). 

[5] S. 1813, 112th Cong. (Feb. 6, 2012). 

[6] 23 U.S.C. §§ 104, 105. 

[7] 49 U.S.C. ch. 53. 

[8] 23 U.S.C. §§ 603(b)(2), 604(b)(2). 

[9] 23 U.S.C. §§ 601(a)(3), 603(a)(4), 604(a)(4). In order to receive 
TIFIA assistance, the senior debt obligations funding the project 
(i.e., those obligations having a lien senior to that of the TIFIA 
credit instrument on the pledged security) must achieve an investment 
grade rating. 

[10] 23 U.S.C. §§ 603(b)(6), 604(b)(8). 

[11] Private concessionaires are private sector entities that have 
entered into agreements with public agencies to allow greater private 
sector participation in the delivery and financing of transportation 
projects. 

[12] ITS encompasses a broad range of electronics and communication 
technologies to enhance the capacity and efficiency of surface 
transportation systems, including traveler information, public 
transportation, and commercial vehicle operations. 

[13] Pub. L. No. 109-59, § 5309(j), 119 Stat. 1144, 1584 (2005). 

[14] Budgeting for the cost of credit programs, including the TIFIA 
program, is governed by the Federal Credit Reform Act (FCRA) of 1990, 
Pub. L. 93-344, Title V, as amended (codified at 2 U.S.C. §§ 661-
661f), which requires federal agencies to receive budget authorities 
to cover the estimated long-term cost to the government (which 
includes defaults, delinquencies, and interest subsidies) of providing 
credit assistance, calculated on a net present value basis and 
excluding administration costs. The amount of budget authority DOT may 
use is subject to annual obligation limitations in annual 
appropriations acts. Of the $122 million in budget authority that has 
been authorized per year, DOT has the authority to use up to $2.2 
million annually to administer the program, and to collect and spend 
fees, subject to authority being provided in appropriations acts, to 
cover expenses related to reviewing, negotiating, and servicing credit 
agreements. 

[15] Actual TIFIA lending capacity is subject to the calculation of 
the estimated subsidy cost for each credit assistance transaction. The 
amount varies based on the risk profile of the project and the 
repayment stream. According to DOT, actual original subsidy rates have 
ranged from less than 1 percent to over 15 percent of the TIFIA credit 
assistance received. 

[16] For fiscal years 1999, 2000, and 2001, DOT used a fixed-date 
solicitation process for the TIFIA program but used the open, first-
come first-served process after these initial years. 

[17] Though the program was oversubscribed in fiscal year 2008, DOT 
did not institute the fixed-date process until fiscal year 2010 
because it reserved most of its anticipated fiscal year 2009 and 
fiscal year 2010 appropriations for existing applicants. 

[18] 23 U.S.C. § 602(b)(2)(A). 

[19] 47 C.F.R. § 80.15(a). 

[20] To date, six projects have been selected to receive TIGER grants 
to support TIFIA credit assistance. The sponsors for two of these 
projects have executed credit agreements and the sponsors for the 
remaining four projects are working with DOT to apply for and 
negotiate a credit agreement. 

[21] To avoid conflicts of interest, DOT prohibits key external 
personnel (financial and legal advisors) from also representing TIFIA 
applicants. The TIFIA office is currently conducting a new 
solicitation for its advisors. 

[22] The number of TIFIA credit agreements and projects differs 
because one project, the Miami Intermodal Center, has three credit 
agreements for two loans, one of which was amended. See appendix II 
for a full list of the TIFIA credit agreements and projects. 

[23] Other projects, such as construction of visitors' centers and 
truck technology systems, account for 7 percent of all LOIs. 

[24] Though no sponsor from Mississippi has submitted an LOI, the 
Mississippi DOT submitted an application for TIFIA in September 2008. 
The Mississippi DOT met the LOI requirement through FHWA's SEP-15 
program. 

[25] To date, the smallest TIFIA project cost $267 million and 
received a loan for $42 million (Interlink). The largest TIFIA project 
cost $3.3 billion and received a loan for $900 million (Central Texas 
Turnpike System). 

[26] The Federal Transit Administration's (FTA) New Starts program, 
part of the Capital Investment Grant program, is the federal 
government's primary financial resource for supporting new major 
transit capital projects that are locally planned, implemented, and 
operated, such as light rail and bus rapid transit. 

[27] During this time, transit projects composed about 18 percent of 
submitted LOIs, while highway projects composed about 73 percent of 
submitted LOIs. 

[28] In calculating this figure, we used DOT's convention from its 
2002 report to Congress on TIFIA. Namely, (1) the project must feature 
investor-held debt or equity and (2) the investment return must be 
derived from project-generated revenues or other revenues levied 
specifically to support the project. We only included active credit 
agreements--those for which sponsors had not repaid or refinanced 
their credit agreements--as we did not have complete information on 
the funding sources for all the retired credit agreements. 

[29] An availability payment is a payment made by the public sponsor 
of a project to the private concessionaire for its responsibility to 
design, construct, operate, or maintain a project. The payment is 
based on particular project milestones or facility performance 
standards, irrespective of usage of the asset, such as ridership or 
toll revenue. Typically, the private sector concessionaire is the 
TIFIA borrower when availability payments are pledged to repay 
assistance. 

[30] One project--the Miami Intermodal Center--received two loans. The 
sponsor pledged different forms of revenue to repay each loan--user 
fees from rental car users and fuel tax revenues. See appendix II for 
a full list of the revenues pledged to repay assistance for all 
projects with TIFIA credit agreements. 

[31] All but one of the TIFIA credit agreements are for loans. Each 
credit agreement includes an annual disbursement schedule and outlines 
the conditions and forms for drawing funds. For loans, DOT will 
disburse funds as often as monthly on a reimbursement basis as costs 
are incurred for eligible project purposes. For the one loan guarantee 
made to date, no funds were drawn for the project before the credit 
agreement expired. 

[32] 23 U.S.C. § 609. 

[33] In the past, we also recommended that a Department of Energy 
credit assistance program develop performance measures to evaluate 
program progress. See GAO, Department of Energy: New Loan Guarantee 
Program Should Complete Activities Necessary for Effective and 
Accountable Program Management, [hyperlink, 
http://www.gao.gov/products/GAO-08-750] (Washington, D.C.: July 7, 
2008). 

[34] GAO, Rail Transit: FTA Programs Are Helping Address Transit 
Agencies' Safety Challenges, but Improved Performance Goals and 
Measures Could Better Focus Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-11-199] (Washington, D.C.: Jan. 14, 
2011). 

[35] GAO, Traffic Congestion: Road Pricing Can Help Reduce Congestion, 
but Equity Concerns May Grow, [hyperlink, 
http://www.gao.gov/products/GAO-12-119] (Washington, D.C.: Jan. 12, 
2012). 

[36] The projects selected to receive TIFIA assistance as of 2002 had 
a total cost of $15.4 billion. The private co-investment in these 
projects consisted of about $3 billion in debt and $100 million in 
equity. 

[37] DOT officials told us that they also used a competitive, two-step 
process in fiscal year 2012. 

[38] The multimodal team comprised five members representing the 
Federal Transit Administration, Federal Highway Administration, and 
the Office of the Secretary of Transportation (OST). This team design 
meant that LOIs were reviewed by members with subject matter expertise 
from several transportation modes. 

[39] As noted earlier, the eight statutory criteria are National or 
Regional Significance, Creditworthiness, Private Participation, 
Project Acceleration, Use of New Technologies, Consumption of Budget 
Authority, Environment, and Reduced Federal Grant Assistance; however, 
DOT did not consider the Creditworthiness and Budget Authority 
criteria when evaluating LOIs in fiscal years 2010 and 2011, since it 
did not believe project sponsors would have sufficient information 
regarding these two criteria at the time of the LOI submission. 
Further, for these two fiscal years, DOT provided additional 
clarification on two of the criteria through funding notices; 
specifically, livability, safety, and economic competitiveness for 
National or Regional Significance and sustainability and state of good 
repair for Environment. 

[40] The executive leadership team is composed of the Deputy 
Secretary, Under Secretary for Policy, Assistant Secretary for Budget 
and Program and Chief Financial Officer, and the General Counsel (in 
2010 only), all of whom sit on the DOT Credit Council. 

[41] In 2010, the executive leadership team invited all seven sponsors 
with LOIs in category A to give an oral presentation on their 
projects. In 2011, DOT officials said sponsors were not invited to 
give presentations because (1) the number of projects in category A 
increased and (2) the executive leadership team developed familiarity 
with several projects that had submitted in successive solicitation 
rounds. According to DOT officials, the executive leadership team 
relied more heavily on the modal administrations, in particular FHWA 
division offices and FTA regional offices, to collect additional 
information on projects in 2011. 

[42] In the fiscal year 2012 funding notice DOT further clarified that 
it would use factors like budget authority and geographic dispersion 
to select from amongst highly rated projects. 

[43] The fiscal year 2010 funding notice stated that the TIFIA program 
had a limited amount of credit assistance for new applicants that 
year. According to the Transportation Infrastructure Finance and 
Innovation Act 2010 Report to Congress, DOT reserved part of its 
fiscal year 2010 appropriation to cover the 2008 oversubscription to 
the program. As a result of DOT's invitations, the TIFIA program's 
fiscal years 2010 and 2011 budget authority is fully committed. 

[44] We received completed surveys from 36 of 46 recent applicants (78 
percent). 

[45] DOT provided these clarifications beginning in fiscal year 2010 
in the annual TIFIA funding notices. The livability, economic 
competitiveness, and safety clarifications are part of the National or 
Regional Significance criterion and sustainability and state of good 
repair clarifications are part of the Environment criterion. 

[46] GAO, Surface Transportation: Competitive Grant Programs Could 
Benefit from Increased Performance Focus and Better Documentation of 
Key Decisions, [hyperlink, http://www.gao.gov/products/GAO-11-234] 
(Washington, D.C.: Mar. 30, 2011), and Intercity Passenger Rail: 
Recording Clearer Reasons for Awards Decisions Would Improve Otherwise 
Good Grantmaking Practices, [hyperlink, 
http://www.gao.gov/products/GAO-11-283] (Washington, D.C.: Mar. 10, 
2011). 

[47] In fiscal year 2010, the funding notice was released on December 
3, 2009, and in fiscal year 2011, the funding notice was released 
January 19, 2011; for both these fiscal years, LOIs were due in March 
after an extension. For fiscal year 2012, the funding notice was 
released on November 3, 2011, with a December 30, 2011, deadline. 

[48] In fiscal year 2012, DOT considered all eight statutory criteria 
in its evaluations. On the basis of its experience in 2010 and 2011, 
DOT officials believe applicants can provide sufficient information on 
the creditworthiness and consumption of budget authority criteria that 
will enable them to be scored in the LOI evaluation process. 

[49] The President's Budget Request for fiscal year 2013 and the 
current reauthorization proposals include significant increases in the 
amount of authorized budget authority for the TIFIA program. 

[50] As noted previously, we received completed surveys from 36 of 46 
recent applicants (78 percent). Recent applicants include both state 
DOTs and other non-state DOT organizations, such as transit agencies, 
that submitted LOIs to the TIFIA program in fiscal year 2010 or 2011. 
See appendix III for a complete list of responses to this and other 
survey questions. 

[51] In the event of bankruptcy, insolvency, or liquidation, DOT's 
claim would be on parity with senior creditors. 

[52] We received completed surveys from 16 of 18 state DOTs from 
states where a sponsor has never submitted an LOI (89 percent). 

[53] A metropolitan statistical area (metro area) is a geographic 
entity defined by the Office of Management and Budget (OMB) for use by 
federal statistical agencies in collecting, tabulating, and publishing 
federal statistics. A metro area contains a core urban area of 50,000 
or more population, and it includes the counties containing the core 
urban area, as well as any adjacent counties that have a high degree 
of social and economic integration (as measured by commuting to work) 
with the urban core. 

[54] For all but the option to add separate eligibility requirements 
and terms to encourage rural infrastructure projects, half or more of 
the 16 state DOTs indicated the changes would have somewhat or little 
to no increase on the likelihood that they would seek TIFIA credit 
assistance. For this one other option, five state DOTs indicated that 
the change would significantly or greatly increase the likelihood that 
they would seek TIFIA credit assistance in the future. See appendix 
III for survey results for this and other questions. 

[55] GAO, State and Local Governments' Fiscal Outlook April 2011 
Update, [hyperlink, http://www.gao.gov/products/GAO-11-495SP] 
(Washington, D.C.: Apr. 6, 2011). 

[56] Of the remaining 27 state DOTs, 21 state DOTs indicated that they 
have no projects for which they will likely seek TIFIA in the next 5 
years, 5 state DOTs did not know, and 1 did not respond to that item. 

[57] Pub. L. No. 112-25, 125 Stat. 240 (2011). 

[58] As noted earlier, budget authority is used to pay the credit 
subsidy cost and administrative expenses of TIFIA credit assistance. 
The credit subsidy cost, as required by the FCRA, is based on the 
estimated long-term cost to the government calculated on a net present 
value basis, excluding administrative costs. 

[59] Nineteen of the 36 recent applicants that responded to our survey 
supported allowing project sponsors to contribute to the subsidy costs 
of assistance. 

[60] 2 U.S.C. § 661b. 

[61] Under FCRA, DOT is required to update, or reestimate, the subsidy 
costs to reflect actual loan performance and changes in expected 
future loan performance. Shortfalls identified in annual reestimates 
are funded through a permanent indefinite appropriation and are not 
subject to the annual appropriations process. 

[62] 45 U.S.C. § 822(d). 

[63] S. 1813 raises the portion of project costs TIFIA loans and loan 
guarantees may cover but retains the 33 percent limit for lines of 
credit. H.R. 7 increases the portion of project costs that may be 
covered by loans, loan guarantees, and lines of credit to 49 percent. 

[64] This estimate assumes that projects receive the maximum amount of 
credit assistance (either 33 or 49 percent of total project costs) and 
uses DOT's general rule of thumb that $1 in budget authority can be 
leveraged to provide $10 in credit assistance. 

[65] TIFIA credit assistance is designed with patient repayment terms 
to encourage private debt as part of the total financing package. To 
do this, TIFIA assistance can be subordinate to other debt, meaning 
that this other (senior) debt may receive project revenue ahead of 
DOT. However, TIFIA credit agreements include, pursuant to the TIFIA 
statute, a nonsubordination clause (also known as the springing lien), 
which states that in the event of a borrower's bankruptcy, insolvency, 
or liquidation, DOT's claims on project revenues will not be 
subordinate to the claims of other creditors. 

[66] OMB Circular A-129, Appendix B, II.3.c. (2) says that to protect 
the government's interest, the government's claims on assets should 
not be subordinated to the claim of other lenders in the case of a 
borrower's default. 

[67] The TIFIA program has five statutory eligibility requirements for 
projects: (1) inclusion in transportation plans and programs; (2) 
application submitted by state or local government, public authority, 
or public-private partnership; (3) project costs of equal to or 
greater than $50 million or $15 million for intelligent transportation 
system projects; (4) dedicated revenue sources; and (5) public 
sponsorship of private entities. 

[68] In H.R. 7, the proposed regional significance eligibility 
requirement states that the project shall be regionally significant or 
otherwise significantly enhance the national transportation system. 
Currently, one of the statutory selection criteria is national or 
regional significance, which is the extent to which the project is 
nationally or regionally significant, in terms of generating economic 
benefits, supporting international commerce, or otherwise enhancing 
the national transportation system. 

[69] Sixteen respondents provided an open-ended response elaborating 
on that question, with 6 indicating that they wanted more transparency. 

[70] These two groups were not mutually exclusive, in that some state 
DOTs are also recent TIFIA applicants. For the purposes of this 
report, our definition of state DOTs includes those from the 50 
states, the District of Columbia, and Puerto Rico. 

[71] For the purposes of this report, our definition of state DOTs 
includes those from the 50 states, the District of Columbia, and 
Puerto Rico. 

[End of section] 

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