http://www.transportation-finance.org/funding_financing/financing/credit_assistance/state_infrastructure_banks.

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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

 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 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.

Number of Loan Agreement Disbursements to Date

State
Agreements Amount (thousands) (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
29 $303,920 $286,923
(federal)
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
6 $1,279 $1,279
Carolina
North Dakota 3 $5,796 $5,796
Ohio 96 $286,839 $199,382
(fed. & state)
Oregon 20 $34,773 $33,577
Pennsylvania 104 $61,973 $50,354
Rhode Island 1 $1,311 $1,311
South
13 $3,311,000 $2,430,000
Carolina
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.

Number of Loan Agreement Disbursements to

State
Agreements Amount (thousands) Date (thousands)
Florida (state) 35 $762,445 $493,001
Georgia (STIB) 0 - -
Kansas (TRF) 79 $99,660 $78,008
Ohio
Data included in federal table above
(State GRF)

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 (Section 4.2) of FHWA's Innovative Finance Primer

This comprehensive document was issued by FHWA in 2002 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)