Federal loans to increase rural projects
U.S. Secretary of Transportation Elaine L. Chao unveils initiative to expand access to a federal loan program that could increase rural infrastructure projects.
LEXINGTON, KY – At the 44 th Annual Conference and Exposition of the Kentucky Association of Counties, U.S. Secretary of Transportation Elaine L. Chao announced that the U.S. Department of Transportation has launched an initiative to expand access to a federal loan program for rural infrastructure projects. This initiative is welcome news for rural project sponsors in the Commonwealth and across America.
The administration has often emphasized a renewed focus on rural infrastructure after years of neglect. The U.S. Department of Transportation has worked hard to encourage rural communities and project sponsors to access federal sources of infrastructure financing, such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) Loan Program.
“Rural America has a disproportionally high rate of traffic accidents and fatalities. This new initiative will provide yet another resource from the department to address the long-neglected needs of rural America; it’s a matter of fairness and equity,” said Secretary Chao.
“Rural counties need infrastructure funding now more than ever before, and the information Secretary Chao shared today regarding how to access funds like the TIFIA program will certainly be beneficial to rural projects in counties like mine in Western, Kentucky,” said Elbert Bennett, KACo President and Caldwell County Magistrate.
“It is exciting to learn more about the additional federal resources that are available to both rural and urban counties across the nation,” said NACo 2nd Vice President and Boone County Judge-executive Gary Moore.
Secretary Chao highlighted existing benefits that are available under the TIFIA statute to rural project sponsors:
- Lower project cost threshold: rural projects can be eligible at $10 million, as opposed to $50 million for non-rural projects.
- Subsidized interest rate: reduced interest rate equal to half the 30-year treasury rate, half the rate normally charged for TIFIA loans.
- Coverage of fees: utilize an authorized set-aside of appropriated funds to cover the costs of the bureau’s independent financial and legal advisors.
- Loans at a higher percent of project cost: permit rural projects to receive TIFIA loans up to the full 49 percent of project costs, as statute allows, instead of the current 33 percent threshold enacted by policy.
The TIFIA credit program has historically been under-subscribed by rural borrowers, according to the department’s Build America Bureau. Rural communities and states face unique barriers to obtaining TIFIA credit assistance, including ability to repay loans and covering the costs of financing.
USDOT’s renewed emphasis on expanding program access will benefit smaller rural infrastructure projects that may have trouble accessing private financing.
More information on the department’s TIFIA rural project initiative can be found at https://www.transportation.gov/programs-and-services/tifia/tifia-rural-project-initiative-rpi .