| Background
SAFETEA-LU Expands SIB Opportunities
SIB Assistance
SIB Activity
2002 U.S. DOT SIB Review
Resources
Legislation
Projects & Case Studies
Background
SAFETEA-LU establishes a new State Infrastructure Bank (SIB) program under which all states, Puerto Rico, the District of Columbia, American Samoa, Guam, the Virgin Islands, and the Commonwealth of the Northern Mariana Islands are authorized to enter into cooperative agreements with the Secretary of Transportation to establish infrastructure revolving funds eligible to be capitalized with Federal transportation funds authorized for fiscal years 2005-2009. SIBs were initially authorized under the National Highway System Designation (NHS) Act of 1995. States that established SIBs authorized by the NHS Act and TEA-21 may continue to operate those SIBs.
A SIB , much like a private bank, can offer a range of loans and credit assistance enhancement products to public and private sponsors of Title 23 highway construction projects or Title 49 transit capital projects. Under the initial pilot program, states were authorized to use a portion of their Federal-aid funds as "seed" money, matched with non-Federal funds. The 1997 USDOT appropriations act provided $150 million in Federal general revenue funds for SIB capitalization. TEA-21 extended Federal funding for SIBs in four states - California, Florida, Missouri, and Rhode Island - by allowing them to capitalize their banks with funds authorized by TEA-21 through FY 2003.
The NHS Act requires the USDOT to issue procedures and guidelines for establishing, operating, and providing assistance from the pilot SIB. This guidance relates primarily to the implementation of the highway portion of the pilot program. The FTA will issue separate guidance relating to the implementation of the transit portion of the pilot program.
States with SIBs established through the NHS Act and TEA-21 are show in the map below.
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SAFETEA-LU Expands SIB Opportunities
The new SAFETEA-LU SIB program gives states the capacity to increase the efficiency of their transportation investment and significantly leverage Federal resources by attracting non-Federal public and private investment.
Projects eligible under Title 23, United States Code, capital projects as defined in Section 5302 of Title 49, United States Code and any other projects related to surface transportation that the Secretary determines to be appropriate are eligible for assistance from the SIBs. Both the initial credit assistance funded with Federal capitalization grants, including the required non-Federal match, and any assistance funded with loan repayments and other recycled funds are subject to the requirements of Titles 23 and 49, as applicable.
States participating in the new SIB program may capitalize the account(s) in their SIBs with Federal surface transportation funds for each of fiscal years 2005-2009 as follows:
- Highway account – up to 10 percent of the funds apportioned to the state for the National Highway System Program, the Surface Transportation Program, the Highway Bridge Program, and the Equity Bonus;
- Transit account – up to 10 percent of funds made available for capital projects under Urbanized Area Formula Grants, Capital Investment Grants, and Formula Grants for Other Than Urbanized Areas; and
- Rail account – funds made available for capital projects under subtitle V (Rail Programs) of Title 49, United States Code.
A state must match the Federal funds used to capitalize the SIB on an 80-20 Federal/non-Federal basis, except that for the highway account, the sliding scale provisions apply.
While the state SIBs authorized by the USDOT under the pilot program began with an initial infusion of Federal funds and nonfederal matching contributions, states also have the opportunity to contribute additional state or local funds beyond the required nonfederal match.
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SIB Assistance
The types of assistance that may be provided by SIBs include loans (which may be at or below-market rates), loan guarantees, standby lines of credit, letters of credit, certificates of participation, debt service reserve funds, bond insurance, and other forms of non-grant assistance. As loans or other credit assistance forms are repaid, a SIB's initial capital is replenished and can be used to support a new cycle of projects.
SIB funds can be leveraged in several ways to enhance funding for transportation projects. By offering SIB support for a project, the sponsor may be able to attract private, local, and additional state financial resources, leveraging a small amount of SIB assistance into a larger dollar investment. Alternatively, SIB capital can be used as collateral to borrow in the bond market or to establish a guaranteed reserve fund. Loan demand, timing of needs, and debt financing considerations are factors to be considered by states in evaluating a leveraged SIB approach.
SIBs serve as a flexible and useful tool to meet a state's project financing demands, stretching both Federal and state dollars. Through the SIB financing mechanism, states can leverage additional transportation resources, accelerate construction timelines for projects with dedicated revenue source, and recycle assistance for future transportation projects. SIBs can be used in conjunction with traditional finance approaches and other innovative tools to maximize transportation infrastructure investment.
SIBs may provide the following forms of assistance:
- Loans:
- Loans at subsidized rates and/or with flexible repayment provisions
- Grant Anticipation Notes (GANs)
- Short-term construction or long-term debt financing
- Certificates of Participation
- Credit Enhancement:
- Capital reserves and other security for bond or debt instrument financing
- Letters of credit (direct pay or stand by)
- Lines of credit
- Bond insurance and loan guarantees
Other forms of proposed assistance may also be applied for.
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SIB Activity
SIB activity continues to grow. As shown in the table below, as of June 30, 2005, 33 states and one territory had entered into 457 SIB loan agreements with a total dollar value of $5.1 billion. This represents an increase of 84 loan agreements since March of 2004 and over $268 million in new investment.
Go to resources to see historic annual
summaries of SIB activity dating back to the inception of the SIB
program in 1997.
| State
Infrastructure Bank Loan Agreements by State |
| As of June 30, 2005 |
| State |
Number
of Agreements |
Loan
Agreement Amount ($000) |
Disbursements
to Date |
| Alaska |
1 |
2,737 |
2,737 |
| Arizona |
49 |
564,000 |
474,000 |
| Arkansas |
1 |
31 |
31 |
| California |
2 |
1,120 |
1,120 |
| Colorado |
4 |
4,400 |
1,900 |
| Delaware |
1 |
6,000 |
6,000 |
| Florida |
50 |
867,000 |
281,000 |
| Indiana |
2 |
5,715 |
5,715 |
| Iowa |
2 |
2,879 |
2,879 |
| Maine |
23 |
1,635 |
1,635 |
| Michigan |
33 |
22,207 |
22,207 |
| Minnesota |
17 |
102,776 |
96,447 |
| Missouri |
15 |
92,557 |
82,770 |
| Nebraska |
2 |
6,792 |
6,792 |
| New Mexico |
4 |
25,216 |
17,815 |
| New York |
10 |
27,700 |
27,700 |
| North Carolina |
2 |
1,713 |
1,713 |
| North Dakota |
2 |
3,891 |
3,891 |
| Ohio |
70 |
221,739 |
177,379 |
| Oregon |
19 |
34,394 |
25,052 |
| Pennsylvania |
62 |
39,000 |
24,000 |
| Puerto Rico |
1 |
15,000 |
15,000 |
| Rhode Island |
1 |
1,311 |
1,311 |
| South Carolina |
8 |
2,605,000 |
2,092,000 |
| South Dakota |
3 |
28,776 |
28,776 |
| Tennessee |
1 |
1,875 |
1,875 |
| Texas |
54 |
277,237 |
260,358 |
| Utah |
1 |
2,888 |
2,888 |
| Vermont |
2 |
1,975 |
1,300 |
| Virginia |
1 |
18,000 |
17,985 |
| Washington |
3 |
2,376 |
487 |
| Wisconsin |
3 |
1,813 |
1,813 |
| Wyoming |
8 |
77,977 |
42,441 |
| |
| Total |
457 |
$5,067,730 |
$3,729,017 |
| |
As shown in the table below, while the use of SIBs is widespread across the United States, nearly 92 percent of the dollar amount of all SIB loans is concentrated in six states. South Carolina leads the nation in the value of SIB loan agreements, with a total of over $2.6 billion committed in eight agreements. Much of that money has been made available to the SIB through the South Carolina Department of Transportation. Other states with significant SIB activity include: Florida, Arizona, Texas, Ohio and Minnesota. SIB activity in these sates is summarized in the table below.
| Summary of Most Active SIBs through June 30, 2005 |
| |
|
|
|
| State |
Number of Agreements |
Loan Agreement Amount (thous.) |
Disbursements to Date (thous.) |
| |
|
|
|
| South Carolina |
8 |
$2,605,000 |
$2,092,000 |
| Florida |
50 |
$867,000 |
$281,000 |
| Arizona |
49 |
$564,000 |
$474,000 |
| Texas |
54 |
$277,237 |
$260,358 |
| Ohio |
70 |
$221,739 |
$177,379 |
| Minnesota |
17 |
$102,776 |
$96,447 |
| Subtotal |
248 |
$4,637,753 |
$3,381,184 |
| |
54.3% |
91.5% |
90.7% |
| |
|
|
|
| Other States |
209 |
$429,978 |
$347,833 |
| |
45.7% |
8.5% |
9.3% |
| |
|
|
|
| Total |
457 |
$5,067,730 |
$3,729,017 |
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2002 U.S. DOT SIB Review
In 2002 the U.S. DOT completed a comprehensive review of the SIB program as a national financial management improvement project (FMIP), an element of FHWA's quality initiative. The review was undertaken by a five-member team composed of financial staff from FHWA and the FTA. The team gathered information from States through distribution of a questionnaire to FHWA division offices in every State with an active SIB. The questionnaire addressed a range of SIB operational elements, including organizational structure, financial policies and outreach efforts.
The primary objectives of the SIB review were to:
- Document program implementation practices
- Identify the factors contributing to successful SIB programs
- Determine barriers or obstacles to implementation
- Highlight "best practices" in the operational/implementation aspects of the program
- Address opportunities to maximize the SIB benefits
- Recommend actions to enhance the future effectiveness of the SIB program under SAFETEA-LU
In meeting these objectives, the project was intended to provide State DOTs with comprehensive information that could be used to enhance their SIB operations and achieve a higher level of benefits over time. The information may also be useful to States who currently are not participating in the SIB pilot program, but who may have an opportunity to establish a SIB in the future.
To supplement the questionnaires, team members visited ten State DOTs. Of the States visited, seven were among the ten original States selected by FHWA to participate in the SIB Pilot Program authorized by the NHS Act, (Arizona, Florida, Missouri, Ohio, Oregon, South Carolina, and Texas). The remaining three SIBs (Maine, Michigan and Pennsylvania) were approved subsequent to the 1997 U.S. DOT Appropriations Act, which expanded the SIB Pilot Program. During these visits, State officials and SIB administrators answered questions regarding administrative procedures, financial policies, future capitalization plans, and the types of changes they would like to see implemented in the future for their individual SIB programs. In addition to interviewing State officials and SIB administrators, the FHWA/FTA staff toured projects that received assistance from a SIB. In total, 32 States (including the 10 States with site visits) responded to the questionnaire.
The findings resulting from this effort are contained in the State Infrastructure Bank Review, which is available on the FHWA Innovative Finance Website.
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