The much awaited FHWA Innovative Finance Primer is a comprehensive resource guide to support the use of innovative finance techniques for highway projects financed with Federal funds. The intended audience includes Federal, state, and local transportation officials who seek to overcome cash flow shortages and attract new sources of capital to transportation investment.

The techniques covered in the primer range from fairly modest strategies that permit states greater flexibility in satisfying the standard matching requirements for receipt of Federal funds, to very ambitious credit enhancement strategies suitable for capital-intensive projects. Key to the effective use of innovative finance is the ability to recognize what techniques are suitable to what types of projects. An appreciation for how tools operate and what they are designed to accomplish is an important first step in this analysis, and it is this kind of understanding that the primer seeks to foster.

Following an introductory chapter, the primer is organized around four major types of techniques:

Grant management strategies, suitable mainly for traditional grant-funded projects and as a companion to other less traditional techniques;

Grant Anticipation Revenue Vehicles, or GARVEE bonds, whereby future Federal funds provide the revenue stream needed to pay debt service and other bond-related costs for debt-financed projects;

Credit assistance strategies, by which Federal funds can help improve the financial feasibility of debt-financed projects; and

Tolling options, which allow greater flexibility in the use of Federal funds for tolled facilities.

For each technique, the primer explains the nature of the innovation, discusses what kinds of projects are good candidates for use of the technique, catalogues some of the key requirements that attach to use of the technique, and offers a step-by-step overview of how the technique functions in practice. Brief case studies illustrate how techniques have been used to finance specific projects; more detailed case studies are provided in the second part of this primer.

Electronic copy of the Innovative Finance Primer is available on the FHWA Innovative Finance Website at: http://www.fhwa.dot.gov/innovativefinance/ifp/index.htm