From Tech Transfer Newsletter, Summer 2006 » printer-friendly

Think Creatively About Funding For Your Next Project

Can't come up with enough money for your project? Explore your options. Some less-traditional diversified funding sources that are available in California may help you leverage available dollars more effectively.

A Word About the State Transportation Improvement Program

To be eligible for any of the following funding sources, projects must first be eligible for funding through the State Transportation Improvement Program (STIP). The STIP, a multi-year capital improvement program of transportation projects on and off the state highway system, is primarily funded from the State Highway Account. Two broad programs make up the STIP: the regional program, (75% of new STIP funding) and the interregional program (25% of new STIP funding). Projects that are funded by the regional program are further broken down into county shares and must be included in a regional agency's regional transportation improvement program (RTIP). Projects that are funded by the interregional program must be included in Caltrans' interregional transportation improvement program (ITIP).

State Highway Account (SHA) Loan Program

When the cash balance in the State Highway Account exceeds $400 million, this program offers short-term construction loans to expedite projects. An eligible project must be included in an RTIP, be under construction within six months of loan transmittal, comply with California Environmental Quality Act requirements, pass an independent fiscal assessment, and be repaid within four years. To be eligible for funds from the SHA Loan Program, total project costs must generally be greater than $10 million. Eligible borrowers include transportation planning agencies, county transportation commissions, transit districts, cities, counties, and local transportation authorities. Eligible projects include improvements to state highways, local roads, public transit, intercity rail, pedestrian and bicycle facilities, rail grade separation, transportation system management, transportation demand management, soundwall projects, and intermodal facilities.

California Federal Highway Grant Anticipation Bonds or "GARVEE" Bonds

California's GARVEE funding offers local entities the means to accelerate construction of "critical" transportation projects to provide congestion relief benefits much sooner than would traditional funding mechanisms. Debt service on the GARVEE bonds is repaid through future county or interregional share allocations. The interest rate is based on the current market conditions when the bonds are sold; bonds are issued with a 30-year maximum term. The California Transportation Commission's GARVEE bonding policy states that projects eligible for GARVEE bonds must be "major improvements to corridors and gateways for interregional travel and goods movement. Major improvements include projects that increase capacity, reduce travel times, or provide long-life rehabilitation of key bridges or roadways."

Transportation Finance Bank (TFB)

California's State Infrastructure Bank, the TFB, offers flexible, short-term loans (maximum six-year) to public entities and public-private partnerships for any stage of an eligible highway construction or transit capital project. The program provides flexible project financing through loans, debt service guarantees, lines of credit and other capital financing support to an approving authority for a county's STIP submission, the recipient of fuel tax monies, or a group that applies jointly with one of the above. Caltrans considers the public need and benefit of the project, financial feasibility, and availability of funds when distributing TFB funds.

Transportation Infrastructure Finance and Innovation Act (TIFIA)

The federal TIFIA program offers credit assistance on flexible terms for major transportation projects of "critical national importance." Credit assistance, in the form of direct loans, loan guarantees, and lines of credit, is available to public and private entities for up to 33 percent of the cost of the project. Projects, however, must cost $100 million or more, be supported by project revenues or non-federal dedicated funding sources, and receive an investment grade rating on senior debt obligations. When selecting projects for funding under TIFIA, the Federal Department of Transportation considers the project's economic benefits, ability to leverage private capital, and whether it promotes innovative technologies. Eligible projects include intermodal facilities, border crossing infrastructure, highway trade corridors, and some transit and passenger rail facilities.

The Caltrans Division of Innovative Finance

To find out if your project is eligible for funding through an innovative finance program, visit www.dot.ca.gov/hq/innovfinance.

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