Innovative Financing Initiative: Notice of Funding Availability and Request for Information

DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

Innovative Financing Initiative: Notice of Funding Availability

and Request for Information

Agency: Federal Transit Administration, DOT.

ACTION: Notice.

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SUMMARY: This notice solicits project proposals and information from

transit authorities, planning officials, States, the private sector and

the public for the Federal Transit Administration's (FTA) Innovative

Financing initiative. Specifically, the agency seeks identification of

issues and obstacles to innovative financing of transit capital or

operating needs, as well as local project proposals that demonstrate or

test an innovative financing mechanism.

DATES: Proposals shall be received on or before October 30, 1994.

ADDRESSES: Proposals should be sent in triplicate to Janette Sadik-

Khan. Associate Administrator, Office of Budget and Policy, Room 9310,

400 Seventh Street SW, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Paul Marx (202) 366-1675 or Janette

Sadik-Khan (202) 366-4050.

SUPPLEMENTARY INFORMATION:

Background

The Intermodal Surface Transportation Efficiency Act of 1991

(ISTEA) provides various tools for more efficient management and

enhancement of our Nation's public transit infrastructure. Moreover,

the President's guidance on infrastructure investment urges all levels

of government to foster economic growth by supporting integrated

investment in infrastructure; Executive Order 12893, ``Principles for

Federal Infrastructure Investments,'' signed by the President on

January 26, 1994, directs each executive department ``to ensure

efficient management of infrastructure * * * '' and ``to encourage

private sector investment, which is a key objective of our efforts to

promote innovative financing.'' By encouraging private sector

investment in transit infrastructure, FTA hopes to bring market-

oriented and results-driven project analysis and management techniques

to bear on meeting the nation's current and projected transit

infrastructure needs.

Our challenge therefore is to facilitate a program of public and

private transit infrastructure investment that both preserves the

existing base of transit assets and ensures that investment for transit

system expansion can be made as needed. Such a program of

infrastructure preservation and enhancement must take maximum advantage

of existing capital markets and techniques for leveraging the

effectiveness of infrastructure investment by all levels of government.

It must increase private capital participation while maintaining or

expanding public sector investment. Department of Transportation

Secretary Federico Pena, responding to this challenge, requested that

FTA explore innovative ways to finance the transportation needs of our

nation, taking into account a continuing Federal commitment to transit

support as well as a growing private sector interest in transportation

investment.

FTA has identified specific provisions that were added to the

Federal transit laws by ISTEA that make it easier for States and

localities to plan and execute integrated public transit investment

programs, but more is needed.

Issues and Proposals

In preparation for the FY 1996 budget process, FTA is asking for

(1) identification of joint public and private ventures in public

transportation that demonstrate the effectiveness of private capital

investment in transit, (2) identification of projects to remove or

modify rules and policies that inhibit effective transit infrastructure

management, and (3) specific local transit project proposals that would

test or implement innovative financing techniques. We believe the most

effective way to do this is to rely upon those who have led their

industry in developing such techniques and projects for applicable

examples. FTA will use the innovations proposed to support discussions

for the next surface transportation authorization, summarize and

disseminate the results of projects for peer review and, to the extent

possible, provide technical assistance in project advancement.

Innovative Concepts

The types of projects that FTA seeks should use innovative

financing concepts that enhance the effectiveness of public transit

investment by either generating increased investment or by reducing

overall project costs. The following techniques and ISTEA provisions

are illustrative of the types of innovation that we are seeking:

Structured leasing of fixed transit facilities, through

the use of Certificates of Participation (COP's), Grant Anticipation

Notes, or other mechanisms that generate cost reductions or net present

value benefits;

New combinations of funding in support of transit

infrastructure, such as in-kind local contributions, sale of

development rights, realizing or enhancing land-use impact benefits, or

private funding of transit facilities;

Using 49 U.S.C. 5312(a), added by ISTEA to transfer

existing, federally supported assets to more effective use;

Initiating innovative procurements such as multi-year

rolling stock procurements, forming consortia to facilitate

efficiencies of scale in rolling stock procurements, or using design-

build (Turnkey) as a method of infrastructure project delivery; and

Using various securities to attract private capital

investment to transit, refinance existing debt, or otherwise ensure

long-term, stable sources of funding for infrastructure investment.

Establishing or using existing authority to provide direct

loans for transit and other infrastructure projects, possibly through a

revolving loan fund mechanism.

The preceding are examples only. We welcome all ideas and projects

that have the potential to leverage existing or planned infrastructure

investment, or that will help to reduce public transportation costs

over time.

FTA will make full use of its regulatory and statutory flexibility

in fostering innovative financing proposals for transit. However, the

projects proposed under this initiative must comply with all other

statutory and regulatory requirements such as the National

Environmental Policy Act, Civil Rights, Americans with Disabilities

Act, and the Clean Air Act.

Project Proposals

The proposals for candidate projects should describe:

The project specifics--i.e., what is being bought,

constructed, financed;

Project funding--federal aid, by type, as well as other

funding sources. This should include funding realized through capturing

external economic benefits resulting from project financing, as

appropriate;

Construction Financing--What mechanisms are being used to

finance the construction portion of the project;

Intermodal Impacts/Benefits--The degree to which the

transit investment benefits other modes (airports, intercity rail,

etc.) or is enhanced by other modes;

The status of major Federal and State clearances;

The financing innovation, and how its use in this context

could benefit and apply to other projects in the region or the Nation;

The incentive required--i.e., fast-tracking, re-

programming, additional funding, administrative or regulatory

flexibility or relief, etc.;

How the proposed innovation will leverage Federal, State,

local and private investment for public transit; and

A timeline for advancing the project, including

milestones.

Proposals must be for projects eligible under the FT Act. New

construction and reconstruction projects are appropriate, as are

rolling stock projects. Those proposals which meet major Federal

clearance requirements will receive preference in the review process.

Upon acceptance of a grantee's proposal, the project will be advanced

in an expedited manner.

Limited capital funds are available. Therefore, projects proposed

will be judged on the basis of broad applicability of the innovation,

current project status (in planning, final engineering, environmental

clearance, commencement of construction), the likelihood of near-term

(1-2 years) project completion, and level of Federal funding required.

We do not expect to fund all projects received. Projects and

initiatives requiring administrative or regulatory flexibility will not

be limited as to number, but will be judged on the basis of the

innovation, their potential for application to other transit systems or

other modes, and the likelihood of near-term results from the

administrative or regulatory change.

Issued on: September 7, 1994.

Gordon J. Linton,

Administrator.

[FR Doc. 94-22426 Filed 9-9-94; 8:45 am]

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