Innovative Financing; Test and Evaluation Project TE-045; Information

DEPARTMENT OF TRANSPORTATION

Innovative Financing; Test and Evaluation Project TE-045;

Information

AGENCY: Federal Highway Administration (FHWA), (DOT).

ACTION: Notice.

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SUMMARY: The purpose of this notice is to assure wide dissemination of

information about the FHWA Innovative Financing-Test and Evaluation

Project TE-045. The FHWA, which established this project by a March 14,

1994, memorandum to its regional and division offices, is publishing

the memorandum. The FHWA's authority to advance this project is

contained in 23 U.S.C. 307(a) and is part of the FHWA implementation of

the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)

(Pub. L. 102-240, 105 Stat. 1914).

FOR FURTHER INFORMATION CONTACT: Specific questions on FHWA innovative

financing; Test and Evaluation Project TE-045 should be directed to the

contact persons named in the memorandum or to FHWA Regional Office or

FHWA Division Office in your State.

Issued on: April 4, 1994.

Rodney E. Slater,

Federal Highway Administrator.

Memorandum

U.S. Department of Transportation, Federal Highway

Administration, Date: March 14, 1994. Innovative Financing--Test and

Evaluation Project, TE-045, From: Administrator.

Foreword

The President's vision for long-term prosperity for the Nation

means investing in America. That investment includes transportation.

Our network of highways sustains our economy and ties our country

together by ensuring the safe and rapid transport of people and

products. Executive Order 12893, ``Principles for Federal

Infrastructure Investments,'' signed by the President on January 26,

1994, signals the Administration's belief that investment in

transportation will lay the foundation for economic growth in the next

century.

The challenge is to encourage prudent investment, to tap into the

potential of global competitiveness, and to boldly create a dynamic

period of construction within the budgetary constraints facing all

levels of government. Secretary Pena, responding to that challenge, has

asked us to explore innovative ways to meet the transportation needs of

the Nation. In support of the Secretary's initiative, FHWA has formed

an Innovative Financing Task Force.

The Task Force recognizes that the Intermodal Surface

Transportation Efficiency Act (ISTEA) provides the States with new

flexibility for funding their surface transportation capital programs.

While the States have been strong supporters of the flexibility

provided by ISTEA and have demonstrated an increasing use of this

flexibility, the complexity and newness of some financing issues have

challenged their ability to use the innovative financing provisions.

The goal for FHWA is to identify additional actions, including

establishing incentives and the removal of existing barriers, to

encourage States, private investors, and the financial community to

increase investment in transportation.

The FHWA can provide national leadership on innovative financing

with the States by creating a record of achievement. We believe the

best approach to this challenge is to identify specific projects,

develop a plan of finance, and offer those projects as examples of

creative financing solutions. Developing good examples is a key element

of this proactive effort. To stimulate and advance such projects, I

have, by this memorandum, established FHWA Test and Evaluation Project

TE-045 ``Innovative Financing.''

Test and Evaluation Projects

These Test and Evaluation Projects should develop innovative

financing concepts which hold the most potential to increase investment

or reduce public agency costs. For example, areas suggested for

consideration include:

1. Broader interpretation of ISTEA section 1012 (ISTEA Toll

Provisions) to permit more flexible definition of certain section 1012

terms, loan provisions, and increased local discretion, and investment

opportunities;

2. More flexible interpretation of current title 23 State matching

share requirements to allow ``adjustable'' matching, section 1044

``soft-match'' credits, other changes in State matching funds, or other

cash flow management modifications;

3. Increased ability to generate and use for highway purposes

highway-related income from leases, lease options, air rights, license

fees, easements, rights-of-way and concessions, or a combination

thereof to increase the marketability of transportation investment

opportunities;

4. Expanded interpretation of highway bond regulations to allow for

innovative debt or credit enhancement instruments or other investment

banking arrangements;

5. Use of Federal aid to promote public-private partnerships in

investment, and permit more innovative contracting; and

6. Increased incentives to encourage that revenues from taxes,

tolls, fees, or other sources be pledged to capital highway bonds, and/

or create transportation revolving funds.

These concepts are offered as illustrations only. Other ideas with

the potential to leverage investment or reduce public agency costs are

encouraged and will be considered.

The FHWA has general discretion to conduct financing, research and

development under 23 U.S.C. 307(a). Under Test and Evaluation Projects,

FHWA will make full use of ISTEA and other FHWA regulatory and

statutory flexibility. TE-045 projects must comply with non-title 23

statutory and regulatory requirements such as the National

Environmental Policy Act, Civil Rights, relocation assistance, and the

Clean Air Act as well as with title 23 statutory and regulatory

environmental requirements (e.g., section 4(f)(23 U.S.C. 138)).

Proposals

The proposals for candidate projects should describe:

1. The project specifics;

2. Project funding--regular Federal aid as well as other funding

sources;

3. Status of major Federal clearances and design;

4. Financing innovation, and how its use on a test and evaluation

basis could benefit other projects;

5. Incentives required (i.e., financial, administrative, design,

project fast-tracking);

6. How the proposed project will leverage public investment in

highways; and

7. The timeline for advancing the project including key milestones.

Proposals must be for ISTEA-eligible projects; new construction and

reconstruction projects are appropriate. Those proposals which meet

major Federal clearance requirements will receive preference in the

review process. Upon acceptance of a State's proposal, the project will

be advanced by the FHWA offices in a normal but expedited manner.

States' proposals should be submitted to the Office of the FHWA

Deputy Administrator (HOA-2) through the regional and division offices

with an initial submission by April 29. Questions may be directed to

either Mr. Jerry Poston--HNG-12 (202) 366-0450 or Mr. Bruce Cannon--

HPP-20 (202) 366-9208.

[FR Doc. 94-8501 Filed 4-7-94; 8:45 am]

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