The Fairfax County Board of Supervisors moved towards submitting an application for a federal transportation loan Tuesday that could help the county and its partners pay for $1.9 billion of the Silver Line Metro project.
If approved, a Transportation Infrastructure and Finance Innovation Act (TIFIA) loan from the U.S. Department of Transportation would provide the county with up to $475 million of its expected $1.06 billion obligation. The loan would feature low interest rates and the county would be able to defer paying it back by 2023, five years after Phase II construction to Dulles is expected to be complete in 2018.
Per the recommendation of county transportation officials, supervisors agreed Tuesday to back the loan with money from the county’s Phase II tax district and its commercial and industrial (C&I) real estate taxes.
The bulk of the loan – $1.3 billion – would go to the Metropolitan Washington Airports Authority to help keep tolls on the Dulles Toll Road from getting out of control. Loudoun County would receive the remaining allocation.
“There are tremendous advantages to us having access to this kind of financing,” Chairman Sharon Bulova said.
A TIFIA loan must be backed by funds that receive a AA credit rating, according to USDOT guidelines, but officials aren’t sure if the Phase II tax district will achieve it.
If it doesn’t, the county might have to pledge more C&I tax revenues as back-up.
This didn’t sit well with some supervisors, although they ultimately approved the motion to proceed.
“It’s a financial no-brainer to apply for TIFIA funding,” Supervisor Jeff McKay (D-Lee) said, but he noted that the use of C&I funds was the feature of the deal he “liked the least.”
He was also confident staff would continue to look for other sources of revenue that could help mitigate costs.
The county collects C&I taxes from commercial and industrial property owners and allocates the money to transportation projects, and McKay wanted his colleagues to remember there were projects throughout the county.
“It’s no easier for a small business owner in one part of the county struggling to make ends meet to pay their C&I tax bill than it is for a large behemoth in Tysons Corner,” he said. “We need to be conscious of the fact that this a county-wide fund and that there are needs county-wide.”
Supervisor Pat Herrity (R-Springfield) wanted supervisors to keep examining long-term solutions to tolls on the Dulles Toll Road, such as selling air rights above the stations in order to keep tolls down.
“Tolls in the corridor are a big concern,” he said.
Supervisor Linda Smyth (D-Providence) said the rail project would ultimately benefit the entire county, and therefore justified further C&I allocations if need be.
“Dulles Rail is a regional project,” she said. “It’s not just a Tysons project.”
Debt officials have maintained the tax district will be able to pay back its full obligation of the loan.
A bond agency review to determine the credit ratings of the tax district and the C&I fund will cost $90,000. Filing the application with the USDOT will cost another $100,000.
A final closing on the loan is expected at the end of 2013, according to staff.