DALLAS – Two West Coast transportation agencies will use low-interest federal loans to lower their overall borrowing costs as they embark on regional mobility projects.
Orange County, Calif., will close this month on a $627 million low-interest Transportation Infrastructure Finance and Innovation Act loan to help fund a $1.9 billion project to add additional free and express toll lanes along a heavily congested 16-mile section of Interstate 405 in southern California.
Directors of the Orange County Transportation Authority (OCTA) voted unanimously late last week to authorize executives to sign acceptance documents for the loan.
The Transportation Department is expected to sign off on the OCTA loan by the end of July. The long-term, low-interest TIFIA loans are available for qualifying projects with an identifiable repayment stream.
OTCA treasurer Kirk Avila called the 35-year loan “a financing milestone” that will reduce the authority’s borrowing costs by $300 million compared to the toll revenue bonds that it would otherwise have to issue for the effort.
“OCTA has been attempting to secure this TIFIA loan for over a year and a half,” he, said.
The $300 million of avoided borrowing costs will allow the authority to keep the express lanes free for the first three-and-a-half years during off-peak hours for vehicles with two or more occupants, Avila said. Work is expected to get underway by the end of the year.
“It’s still the best deal in town,” said OCTA chairman Michael Hennessey.
The project, which is being built in cooperation with the California Department of Transportation, will add one free general-purpose lane in each direction on the highway known by Californians as “the 405.” A second lane will be added and combined with an existing carpool lane to create tolled express lanes between I-605 and State Route 73.
OCTA said the TIFIA loan would be repaid from toll revenues generated by the new lanes. Federal law prohibits tolling on existing interstates except for new lanes added to reduce traffic congestion.
Funding for the 405 project will include $1.1 billion from an 0.5% sales tax dedicated to transportation needs that was approved by county voters in 2006, $89.7 million from the state, and $45.6 million from the Federal Highway Administration.
The Senate Committee on the Environment and Public Works has scheduled a full committee hearing on Wednesday to consider the role of the TIFIA program and other innovative financing methods in improving transportation infrastructure.
A fact sheet on infrastructure issued earlier this year by the Trump administration said an increase in TIFIA to $1 billion per year for 10 years could leverage up to $140 billion in credit assistance and approximately $424 billion of total investment. However, the administration’s budget blueprint for fiscal 2018 didn't include additional TIFIA funding.
TIFIA was funded at $1 billion in fiscal 2015 but the five-year Fixing America’s Surface Transportation (FAST) Act enacted in December 2015 authorized the loan program at $275 million per year in fiscal 2016 and 2017, $285 million in 2018, and $300 million per year in 2019 and 2020.
Seattle’s Central Puget Sound Regional Transit Authority expects to reduce its borrowing costs with a recently executed TIFIA loan of $87.7 million. The loan carries an interest rate of 2.73%.
The TIFIA loan will fund a new maintenance complex to support a region-wide expansions of Sound Transit’s light rail system.
The system will grow from the current 22 miles to 62 miles by 2024, and the existing light rail fleet will more than triple in size from 62 vehicles to 214. The new facility will be able to maintain, store, and deploy an additional 96 vehicles.
The agency signed a $1.99 billion master credit agreement with the Transportation Department in December that is expected to reduce overall borrowing costs by $200 million to $300 million. The agreement supports four separate Sound Transit projects.