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Silver Line Funding: Fairfax Board Urged to Move on TIFIA Loan

The federal loan program could save Fairfax County and Dulles Toll Road users millions, but the tight timeline is giving some supervisors pause.

Fairfax County transportation officials have asked the Fairfax County Board of Supervisors to move on federal loans that could help pay for $1.9 billion of the total cost of the Silver Line.

FCDOT representatives presented the Board with a series of recommendations Tuesday afternoon in order to file an application for a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan from the federal government.

Joe LaHait, the county’s debt coordinator, said if the funding partners secured such a loan, approximately $1.3 billion would be allocated to the Dulles Toll Road. Toll Road users are currently on the hook for 75 percent of the $5.9 billion rail project and toll prices are expected to increase dramatically in the coming years.

But the quick turnaround — officials would have to finish the application in a week's time — is giving some supervisors pause.

TIFIA would allocate $475 million to Fairfax County’s total $1.06 billion obligation to both phases I and II. The loan program features lower interest rates and a significantly lower total cost over the life of the loan than if the county were get an open market loan, LaHait said. The county would begin to pay off the loan in 2023, five years after the projected 2018 completion date for Phase II to Dulles International Airport and Loudoun County.

In order to achieve the AA rating expected by the U.S. Department of Transportation and the best interest rate, FCDOT director Tom Biesiadny asked the board to pledge money from the county’s Phase II Tax District and commercial and industrial real estate (C&I) tax revenues.

The Silver Line's funding partners - Fairfax and Loudoun Counties, the Metropolitan Washington Airports Authority and the Dulles Toll Road - would also have to give the feds $100,000 each as a downpayment for the TIFIA review process.

And the DOT is on a tight schedule – the board would have to approve the loan application at its May 14 meeting.

“Loudoun and the Airports Authority have already taken their action, so we wanted to put you in a position to be able to move the project forward,” Biesiadny told supervisors.

Supervisor Michael Frey (R-Sully) took issue with the quick turnaround.

“We’re borrowing hundreds of millions of dollars,” Frey said. “We’re doing this in a week.”

County staff said the USDOT was slow in getting back to them with the precise details of the loan, which forced a tight timeline.

But regardless of the timing, County Debt Manager Len Wales said the county wouldn’t get similar interest rates on the open market and should seize the chance.

“TIFIA really represents an opportunity for us,” Wales said. “I think we would all prefer to have a few more months to look at this, but even so, I don’t think the answer would change.”

Do you think the county should act on the TIFIA loan? Tell us in the comments.

Keep up with all Silver Line news on our Silver Line topic page.

John Lovaas May 08, 2013 at 11:13 AM
The TIFIA guarantee has been under discussion and in the media for several years. Loudoun County and MWAA have long since action to participate. Why has Fairfax taken so long to even present the prospect for BOS discussion?? Who has been asleep at the switch in Fairfax County?
Bob Bruhns May 08, 2013 at 03:09 PM
What IS it with this Dulles Rail / Silver Line project? We were told - by the US Secretary of Transportation - that the chances for the TIFIA loan assistance looked really good. But how could the chances look good, if the applicants did not respond to an invitation to apply for months, until the Inspector General gave them a wake-up call? And suddenly, our so-called 'leaders' woke up and started playing a frantic $1.3 Billion game of catch-up? Check this report: DOT Has Opportunities To Address Key Risk Areas For Phase 2 of the Dulles Corridor Metrorail Project Upon Approval of Federal Financing US DOT Inspector General, March 25, 2013 (signed March 20, 2013) Project ID: MH-2013-054 Full Document: http://www.oig.dot.gov/sites/dot/files/DULLES%20PHASE%20II%20%20FINAL_0.pdf On Page 6 (Page 7 in the pdf), this March 25, 2013 report notes that each applicant must acknowledge in writing that it agrees to the proposed financing, in each TIFIA application submitted - and as of September 2012, MWAA, Fairfax County and Loudoun County had not agreed to each others' proposed financing structures. Excuse me.. but... HAS THIS TIFIA INVITATION BEEN SITTING AROUND SINCE SEPTEMBER 2012??? And the Loudoun County BOS was in La-La Land too! Another fine example of our so-called 'leaders' at work! Silver Line Update: Partners Await Fed Loan Decision Ashburn Patch, May 2, 2013 http://ashburn.patch.com/articles/silver-line-update-partners-await-fed-loan-decision
Bob Bruhns May 08, 2013 at 03:44 PM
And by the way, MWAA and Fairfax and Loudoun Counties were notified to get their ducks in a row and be ready to move quickly, back in December 2012. Check this, from Loudoun County: Loudoun County BOS Date of Meeting: February 6, 2013 BOARD OF SUPERVISORS INFORMATION ITEM #6 SUBJECT: Dulles Metrorail Silver Line Extension Project Update on the TIFIA Process http://www.loudoun.gov/documents/11/1336/11058/11200/Item%2006-TIFIA%20Process%20Update_complete_201302010950244580.pdf On the frst page of this pdf, you'll find this: "During the September 5, 2012 Business Meeting, the [Loudoun County] Board of Supervisors directed the County Administrator to begin the process of an application for TIFIA (Transportation Infrastructure Finance and Innovative Act) financing (including contracting for technical support) to the United States Department of Transportation." Pages 3 and 4 of the pdf are a December 21, 2012 letter from the Tifia office to MWAA (and forwarded to the Counties), reporting that the maximum Tifia loan assistance would be 33% or less, and telling MWAA and Loudoun and Fairfax Counties to organize their plans, and to be ready to move quickly. Gee, what a surprise - who would have thought that the plans should be organized, or to make preparations on a highly competitive loan? This 'Big Surprise' is just another fine example of the lies, and the abject stupidity, that abound in this rail project. People really need to wake up.
Bob Bruhns May 08, 2013 at 03:52 PM
That said - yes, the BOS should send in the application for the Tifia Loan Assistance, because Phase 1 is almost finished already, and they signed off on Phase 2 already too (a year ago!), and the Tifia loan rate is very low. Yes, the Tifia loan assistance is only for about 23% of the cost, so Fairfax County and Loudoun County will have to float Great Big Bonds as well. Did they not know that the Tifia loan would be limited to no more than 33% of the project cost? Did they think money would fall out of the sky? Who has been advising them, anyway?
Rob Whitfield May 08, 2013 at 04:31 PM
Bill, thanks for notice of yesterday's Fairfax County Transportation Committee and for your articles. I did not hear mention of: "federal loans that could shave $1.9 billion off of the total cost of the Silver Line." County officials discussed the pending application to US Department of Transportation jointly by MWAA, Fairfax and Loudoun counties for TIFIA credit assistance in an amount up to $1.9 billion. Please ask Supervisor McKay to post an online link to the presentation ASAP ahead of next Tuesday's BOS meeting. Staff raced through a complex financial information presentation as if it were a done deal or certain to be approved. In fact, many risks and unknowns exist. The Federal Highway Administration TIFIA program has been expanded to apply to transit projects. http://www.fhwa.dot.gov/ipd/tifia/ "The TIFIA Program Guide, application form and related materials are all currently under review and being revised to reflect MAP-21 changes... The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides Federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance.
Rob Whitfield May 08, 2013 at 04:32 PM
Continued TIFIA credit assistance provides improved access to capital markets, flexible repayment terms, and potentially more favorable interest rates than can be found in private capital markets for similar instruments. TIFIA can help advance qualified, large-scale projects that otherwise might be delayed or deferred because of size, complexity, or uncertainty over the timing of revenues. Many surface transportation projects - highway, transit, railroad, intermodal freight, and port access - are eligible for assistance. Each dollar of Federal funds can provide up to $10 in TIFIA credit assistance - and leverage $30 in transportation infrastructure investment." Today's TIFIA Interest Rate 3.01% for a 35-year loan as of Wednesday, May 8, 2013. While TIFIA financial assistance to a maximum of 33% of project capital cost is available under updated MAP 21 program provisions, given the large number of other project applicants, no assurance is offered by USDOT that even funding assistance of 20% to 25% of costs will be provided. As to the 75% Dulles Toll Road funding provision for Dulles Rail capital costs, that financing plan was proposed by MWAA for Phase 2 without public hearing process.
Burt Rosenberg May 08, 2013 at 06:19 PM
Apply for TIFIA?, yes, of course. But, we were told at several community 'dog and pony shows' on the DTR toll increases, that applying for TIFIA was definitely planned to do. Now we find that it hasn't been done, and time is just about up for doing so. Why are the powers that be so woefully inept on this? Please get on the stick and get it done.
Bob Bruhns May 10, 2013 at 06:51 PM
Surprisingly, one source reports that Fairfax County staff hopes to get interest as low as 2% on its Tifia loan for the Dulles Rail / Silver Line project. Fairfax County preps to pay rest of rail bill Fairfax Times, May 08, 2013 http://www.fairfaxtimes.com/article/20130508/NEWS/130508899/1117/fairfax-county-preps-to-pay-rest-of-rail-bill&template=fairfaxTimes Looking at the US DOT / FTA TIFIA page, getting a 2% rate on a Tifia loan would require that the US Treasury securities of similar maturity would have to be 2%. http://www.fta.dot.gov/grants/12861.html (Scroll down to "Benefits of TIFIA", it's the second to last paragraph) It turns out that ten-year maturity Treasury bonds have a 2% yield - so the only way I can see Fairfax County getting 2% interest on a Tifia loan is by going to 10 year maturity (where 2% is typical). http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2013 I suppose this is possible, if Fairfax County can pay back that quickly, and if the Tifia office will provide a 10 year loan - but can MWAA and Loudoun County do that too? If not, will the Tifia office provide different maturities for different partners? I hope Fairfax County can accomplish this. The ground will be broken soon for Phase 2, and we certainly have to borrow a lot of money to pay for our share of this remarkably expensive rail project, so higher finance charges would be bad news.

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