State Infrastructure Banks
Overview
Background
SAFETEA-LU established 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. The 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.
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.
SIBs were initially authorized under the 1995 NHS Act. Under the initial pilot program,
10 states were selected for participation 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, and the SIB pilot program was expanded to 39 states (including Puerto
Rico), 33 of which were actually established.
In 1998, TEA-21 established a new SIB pilot program, continuing to fund four of
the 39 states' SIBs through FY 2003. The remaining 35 states were allowed to continue
their SIBs with funds capitalized with FY 1996 and FY 1997 appropriations. States
that established SIBs authorized by the NHS Act and TEA-21 are allowed to continue
to operate those SIBs under SAFETEA-LU.
Funding Sources
States participating in the current 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
- Rail account - funds made available for capital projects under subtitle V
(Rail Programs) of Title 49
A state must match the Federal funds used to capitalize the SIB on an 80-20 Federal/non-Federal
basis, except for the highway account where the sliding scale provisions apply.
States also have the opportunity to contribute additional state or local funds beyond
the required nonfederal match.
Types of SIB Assistance
SIBs may provide the following forms of assistance:
Loans
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 non-grant assistance may also be sought. 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.
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 sources, 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. 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 weighed by states in evaluating a leveraged SIB approach.
State-funded SIBs
Several states-Kansas, Ohio, Georgia, and Florida-have established SIBs (or a SIB
account) capitalized solely with state funds. In this way, these states have not
funded their SIBs with Federal-aid money and did not enter into cooperative agreements
with USDOT. Projects funded by these state SIBs are not bound by the Federal regulations
that govern the particular grant program from which the initial Federal capitalization
is derived. These states' SIB activity is described under Current Projects, and
further information is available under Resources.
Qualified Projects
Projects eligible under Title 23, capital projects as defined in Section 5302 of
Title 49, and any other projects related to surface transportation that the Secretary
determines to be appropriate are eligible for assistance from 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.
Current Projects
Federally Capitalized SIBs
As shown in the table below, as of December 2008, 32 states and one territory had
entered into 579 SIB loan agreements with a total dollar value of $5.56 billion.
|
State
|
Number of Agreements
|
Loan Agreement Amount (thousands)
|
Disbursements to Date (thousands)
|
|
Alaska
|
1
|
$2,737
|
$2,737
|
|
Arizona
|
63
|
$655,000
|
$542,095
|
|
Arkansas
|
1
|
$31
|
$31
|
|
California
|
2
|
$1,120
|
$1,120
|
|
Colorado
|
4
|
$4,400
|
$1,900
|
|
Delaware
|
1
|
$6,000
|
$6,000
|
|
Florida (federal)
|
29
|
$303,920
|
$286,923
|
|
Indiana
|
2
|
$6,000
|
$6,000
|
|
Iowa
|
2
|
$2,879
|
$2,879
|
|
Maine
|
23
|
$1,635
|
$1,635
|
|
Michigan
|
44
|
$33,635
|
$29,307
|
|
Minnesota
|
17
|
$122,476
|
$112,295
|
|
Missouri
|
28
|
$164,399
|
$87,959
|
|
Nebraska
|
2
|
$6,792
|
$6,792
|
|
New Mexico
|
4
|
$25,216
|
$17,815
|
|
New York
|
10
|
$27,700
|
$27,700
|
|
North Carolina
|
6
|
$1,279
|
$1,279
|
|
North Dakota
|
3
|
$5,796
|
$5,796
|
Ohio
(fed. and state)
|
96
|
$286,839
|
$199,382
|
|
Oregon
|
20
|
$34,773
|
$33,577
|
|
Pennsylvania
|
104
|
$61,973
|
$50,354
|
|
Rhode Island
|
1
|
$1,311
|
$1,311
|
|
South Carolina
|
13
|
$3,311,000
|
$2,430,000
|
|
South Dakota
|
3
|
$28,776
|
$28,776
|
|
Tennessee
|
1
|
$1,875
|
$1,875
|
|
Texas
|
68
|
$310,888
|
$290,642
|
|
Utah
|
1
|
$2,888
|
$2,888
|
|
Vermont
|
4
|
$1,805
|
$1,427
|
|
Virginia
|
1
|
$18,000
|
$17,989
|
|
Washington
|
3
|
$2,376
|
$487
|
|
Wisconsin
|
7
|
$3,051
|
$3,051
|
|
Wyoming
|
14
|
$112,332
|
$112,332
|
|
Puerto Rico
|
1
|
$15,000
|
$15,000
|
|
Total
|
579
|
$5,563,902 |
$4,329,354
|
States with SIBs established
through the NHS Act, TEA-21, and since statewide authorization from SAFETEA-LU
are also shown on the Project Finance State by State Map.
While the use of SIBs is widespread across the United States, over 87 percent of
the dollar amount of all SIB loans is concentrated in five states, with nearly 95
percent of activity in eight states. South Carolina leads the nation in the value
of SIB loan agreements, with a total of over $3.3 billion committed in 13 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:
Arizona, Florida, Texas, and Ohio.
State Capitalized SIBs
Three state funded SIBs have been established:
- Kansas established a SIB known as the Transportation Revolving Fund (TRF) in 1999.
- Ohio's SIB funds projects through its Federal, State Motor Fuel, Title 23 ("Washed"),
and General Revenue Fund (GRF) Accounts. Federal/state highway and transit projects
are funded using at least one of the first three of these accounts. Other projects,
including rail, airports, and local roads are funded solely through the state GRF
Account.
- Florida has two accounts within its SIB, a federally-funded account and a state-funded
account capitalized solely with bond proceeds and state funds.
- Georgia passed legislation in 2008 establishing a State Transportation Infrastructure
Bank (STIB), which it capitalized with $34 million in state funds in FY 2009. The
statute allows for future federal capitalization.
The following table shows these state-funded SIBs' activity.
|
State
|
Number of Agreements
|
Loan Agreement Amount (thousands)
|
Disbursements to Date (thousands)
|
|
Florida (state)
|
35
|
$762,445
|
$493,001
|
|
Georgia (STIB)
|
0
|
-
|
-
|
|
Kansas (TRF)
|
79
|
$99,660
|
$78,008
|
Ohio
(State GRF)
|
Data included in federal table above
|
Process
The most recent FHWA guidance on establishing, operating, and providing
assistance from a SIB was issued for the TEA-21 SIB pilot program. This guidance
still pertains equally to the expanded SAFETEA-LU SIB program.
Legislation
State Infrastructure Banks are codified in United States legal code Title 23 Highways,
Chapter 6 Infrastructure Finance, Section 610.1 State Infrastructure Bank Program.
Resources
FHWA's Innovative Finance Website provides extensive information
on SIBs prior to SAFETEA-LU. It includes a 2002 USDOT comprehensive review of the SIB program as a
national financial management improvement project (FMIP), an element of FHWA's quality
initiative. The review addressed a range of SIB operational elements, including
organizational structure, financial policies and outreach efforts.
Chapter 4 of FHWA's Project Finance Primer
This comprehensive document was issued by FHWA in 2010 and provides good coverage
of SIBs.
State Capitalized SIB websites
Kansas
DOT's Transportation Revolving Fund website
Ohio DOT's SIB website
Florida DOT's SIB website
Georgia
Transportation Infrastructure Bank Act (2008)