Title 23 — HighwaysRelease 119-73
§603 Secured loans
Title 23 › Chapter CHAPTER 6— - INFRASTRUCTURE FINANCE › § 603
Summary
The Secretary can make secured loans to pay for or refinance costs of approved projects. Loans can cover building costs, short-term construction loans, existing federal credit for rural projects, or long-term debts if the change gives more money to finish, improve, or expand a project. Before making a loan, the Secretary and the Office of Management and Budget must pick a capital reserve subsidy amount and look at any rating letters. A loan usually cannot refinance short-term construction debt if that debt matures more than 1 year after the project is substantially finished. The loan amount is normally no more than 49 percent of expected eligible costs, unless the loan has a different rule for rural project funds. Loans must be paid from things like tolls, user fees, public-private payments, or other dedicated revenues and must include protections such as coverage or rate covenants. Interest is generally at least the yield on similar-maturity U.S. Treasury securities, except rural projects may get a rate equal to one-half the Treasury rate if the subsidy comes from rural set-aside funds. The interest rate cannot be cut by more than the smaller of 1.5 percentage points or the amount rates have risen. Repayment schedules are set by the Secretary based on project cash flow and useful life. Payments must start no later than 5 years after substantial completion. If revenues fall short, unpaid amounts can be added to the loan balance, keep accruing interest, and be repaid over the remaining term if the project meets repayment standards. The loan’s final maturity is usually the lesser of 35 years after substantial completion or the asset’s useful life (special longer limits apply for very long-lived assets). Loans are generally not subordinated to other project debts, though a waiver is allowed for certain public borrowers with A-rated loans, pledged non-project revenues, and a TIFIA share of 33 percent or less; if waived, Federal subsidy paid must be no more than 10 percent of the loan unless the borrower pays more. The Secretary may charge fees, sell or reoffer loans without changing terms unless the borrower agrees, or provide a loan guarantee instead of a direct loan if budget costs are about the same. The total Federal help for a project cannot exceed 80 percent of project cost. The Secretary must offer an expedited application option with conventional terms for loans up to $100,000,000 and must give a decision under certain fast-track criteria within 180 days after a credit review starts, with some implementation deadlines at 120 and 180 days after enactment.
Full Legal Text
Title 23, §603
Highways — Source: USLM XML via OLRC
(a)(1)Subject to paragraphs (2) and (3), the Secretary may enter into agreements with 1 or more obligors to make secured loans, the proceeds of which shall be used—
(A)to finance eligible project costs of any project selected under section 602;
(B)to refinance interim construction financing of eligible project costs of any project selected under section 602;
(C)to refinance existing Federal credit instruments for rural infrastructure projects; or
(D)to refinance long-term project obligations or Federal credit instruments, if the refinancing provides additional funding capacity for the completion, enhancement, or expansion of any project that—
(i)is selected under section 602; or
(ii)otherwise meets the requirements of section 602.
(2)A loan under paragraph (1) shall not refinance interim construction financing under paragraph (1)(B)—
(A)if the maturity of such interim construction financing is later than 1 year after the substantial completion of the project; and
(B)later than 1 year after the date of substantial completion of the project.
(3)Before entering into an agreement under this subsection, the Secretary, in consultation with the Director of the Office of Management and Budget, shall determine an appropriate capital reserve subsidy amount for each secured loan, taking into account each rating letter provided by an agency under section 602(b)(3)(B).
(b)(1)A secured loan under this section with respect to a project shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements (including requirements for audits) as the Secretary determines to be appropriate.
(2)(A)Except as provided in subparagraph (B), the amount of a secured loan under this section shall not exceed the lesser of 49 percent of the reasonably anticipated eligible project costs or if the secured loan does not receive an investment grade rating, the amount of the senior project obligations.
(B)In the case of a project capitalizing a rural projects fund, the maximum amount of a secured loan made to a State infrastructure bank shall be determined in accordance with section 602(a)(5)(B)(iii).
(3)A secured loan under this section—
(A)shall—
(i)be payable, in whole or in part, from—
(I)tolls;
(II)user fees;
(III)payments owing to the obligor under a public-private partnership;
(IV)other dedicated revenue sources that also secure the senior project obligations; or
(V)in the case of a secured loan for a project capitalizing a rural projects fund, any other dedicated revenue sources available to a State infrastructure bank, including repayments from loans made by the bank for rural infrastructure projects; and
(ii)include a rate covenant, coverage requirement, or similar security feature supporting the project obligations; and
(B)may have a lien on revenues described in subparagraph (A), subject to any lien securing project obligations.
(4)(A)Except as provided in subparagraphs (B) and (C), the interest rate on a secured loan under this section shall be not less than the yield on United States Treasury securities of a similar maturity to the maturity of the secured loan on the date of execution of the loan agreement.
(B)(i)The interest rate of a loan offered to a rural infrastructure project or a rural projects fund under the TIFIA program shall be at ½ of the Treasury Rate in effect on the date of execution of the loan agreement.
(ii)The rate described in clause (i) shall only apply to any portion of a loan the subsidy cost of which is funded by amounts set aside for rural infrastructure projects and rural project funds under section 608(a)(3)(A).
(C)The interest rate of a secured loan under this section may not be lowered by more than the lower of—
(i)1½ percentage points (150 basis points); or
(ii)the amount of the increase in the interest rate.
(5)(A)Except as provided in subparagraphs (B) and (C), the final maturity date of the secured loan shall be the lesser of—
(i)35 years after the date of substantial completion of the project; and
(ii)if the useful life of the capital asset being financed is of a lesser period, the useful life of the asset.
(B)In the case of a project capitalizing a rural projects fund, the final maturity date of the secured loan shall not exceed 35 years after the date on which the secured loan is obligated.
(C)In the case of a capital asset with an estimated life of more than 50 years, the final maturity date of the secured loan shall be the lesser of—
(i)75 years after the date of substantial completion of the project; or
(ii)75 percent of the estimated useful life of the capital asset.
(6)(A)Except as provided in subparagraph (B), the secured loan shall not be subordinated to the claims of any holder of project obligations in the event of bankruptcy, insolvency, or liquidation of the obligor.
(B)(i)The Secretary shall waive the requirement under subparagraph (A) for a public agency borrower that is financing ongoing capital programs and has outstanding senior bonds under a preexisting indenture, if—
(I)the secured loan is rated in the A category or higher;
(II)the secured loan is secured and payable from pledged revenues not affected by project performance, such as a tax-backed revenue pledge or a system-backed pledge of project revenues; and
(III)the TIFIA program share of eligible project costs is 33 percent or less.
(ii)If the Secretary waives the nonsubordination requirement under this subparagraph—
(I)the maximum credit subsidy to be paid by the Federal Government shall be not more than 10 percent of the principal amount of the secured loan; and
(II)the obligor shall be responsible for paying the remainder of the subsidy cost, if any.
(7)The Secretary may establish fees at a level sufficient to cover all or a portion of the costs to the Federal Government of making a secured loan under this section.
(8)The proceeds of a secured loan under the TIFIA program may be used for any non-Federal share of project costs required under this title or chapter 53 of title 49, if the loan is repayable from non-Federal funds.
(9)(A)The total Federal assistance provided for a project receiving a loan under the TIFIA program shall not exceed 80 percent of the total project cost.
(B)A project capitalizing a rural projects fund shall satisfy subparagraph (A) through compliance with the Federal share requirement described in section 610(e)(3)(B).
(c)(1)The Secretary shall establish a repayment schedule for each secured loan under this section based on—
(A)the projected cash flow from project revenues and other repayment sources; and
(B)the useful life of the project.
(2)Scheduled loan repayments of principal or interest on a secured loan under this section shall commence not later than 5 years after the date of substantial completion of the project.
(3)(A)If, at any time after the date of substantial completion of the project, the project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the secured loan, the Secretary may, subject to subparagraph (C), allow the obligor to add unpaid principal and interest to the outstanding balance of the secured loan.
(B)Any payment deferred under subparagraph (A) shall—
(i)continue to accrue interest in accordance with subsection (b)(4) until fully repaid; and
(ii)be scheduled to be amortized over the remaining term of the loan.
(C)(i)Any payment deferral under subparagraph (A) shall be contingent on the project meeting criteria established by the Secretary.
(ii)The criteria established pursuant to clause (i) shall include standards for reasonable assurance of repayment.
(4)(A)(i)Except as provided in clause (ii), any excess revenues that remain after satisfying scheduled debt service requirements on the project obligations and secured loan and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing project obligations may be applied annually to prepay the secured loan without penalty.
(ii)In the case of a secured loan or other secured Federal credit instrument provided after the date of enactment of the Surface Transportation Reauthorization Act of 2021, if the obligor is a governmental entity, agency, or instrumentality, the obligor shall not be required to prepay the secured loan or other secured Federal credit instrument with any excess revenues described in clause (i) if the obligor enters into an agreement to use those excess revenues only for purposes authorized under this title or title 49.
(B)The secured loan may be prepaid at any time without penalty from the proceeds of refinancing from non-Federal funding sources.
(d)(1)Subject to paragraph (2), as soon as practicable after substantial completion of a project and after notifying the obligor, the Secretary may sell to another entity or reoffer into the capital markets a secured loan for the project if the Secretary determines that the sale or reoffering can be made on favorable terms.
(2)In making a sale or reoffering under paragraph (1), the Secretary may not change the original terms and conditions of the secured loan without the written consent of the obligor.
(e)(1)The Secretary may provide a loan guarantee to a lender in lieu of making a secured loan under this section if the Secretary determines that the budgetary cost of the loan guarantee is substantially the same as that of a secured loan.
(2)The terms of a loan guarantee under paragraph (1) shall be consistent with the terms required under this section for a secured loan, except that the rate on the guaranteed loan and any prepayment features shall be negotiated between the obligor and the lender, with the consent of the Secretary.
(f)(1)Not later than 180 days after the date of enactment of the FAST Act, the Secretary shall make available an expedited application process or processes available at the request of entities seeking secured loans under the TIFIA program that use a set or sets of conventional terms established pursuant to this section.
(2)In establishing the streamlined application process required by this subsection, the Secretary may include terms commonly included in prior credit agreements and allow for an expedited application period, including—
(A)the secured loan is in an amount of not greater than $100,000,000;
(B)the secured loan is secured and payable from pledged revenues not affected by project performance, such as a tax-backed revenue pledge, tax increment financing, or a system-backed pledge of project revenues; and
(C)repayment of the loan commences not later than 5 years after disbursement.
(3)(A)Not later than 120 days after the date of enactment of this paragraph, the Secretary shall implement an expedited decision timeline for public agency borrowers seeking secured loans that meet—
(i)the terms under paragraph (2); and
(ii)the additional criteria described in subparagraph (B).
(B)The additional criteria referred to in subparagraph (A)(ii) are the following:
(i)The secured loan is made on terms and conditions that substantially conform to the conventional terms and conditions established by the National Surface Transportation Innovative Finance Bureau.
(ii)The secured loan is rated in the A category or higher.
(iii)The TIFIA program share of eligible project costs is 33 percent or less.
(iv)The applicant demonstrates a reasonable expectation that the contracting process for the project can commence by not later than 90 days after the date on which a Federal credit instrument is obligated for the project under the TIFIA program.
(v)The project has received a categorical exclusion, a finding of no significant impact, or a record of decision under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
(C)The Secretary shall provide to an applicant seeking a secured loan under the expedited decision process under this paragraph a written notice informing the applicant whether the Secretary has approved or disapproved the application by not later than 180 days after the date on which the Secretary submits to the applicant a letter indicating that the National Surface Transportation Innovative Finance Bureau has commenced the creditworthiness review of the project.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The date of enactment of the Surface Transportation Reauthorization Act of 2021 and the date of enactment of this paragraph, referred to in subsecs. (c)(4)(A)(ii) and (f)(3)(A), are the date of enactment of div. A of Pub. L. 117–58, which was approved Nov. 15, 2021. The date of enactment of the FAST Act, referred to in subsec. (f)(1), is the date of enactment of Pub. L. 114–94, which was approved Dec. 4, 2015. The National Environmental Policy Act of 1969, referred to in subsec. (f)(3)(B)(v), is Pub. L. 91–190, Jan. 1, 1970, 83 Stat. 852, which is classified generally to chapter 55 (§ 4321 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see
Short Title
note set out under section 4321 of Title 42 and Tables.
Amendments
2021—Subsec. (b)(5)(A). Pub. L. 117–58, § 12001(e)(1), substituted “subparagraphs (B) and (C)” for “subparagraph (B)” in introductory provisions. Subsec. (b)(5)(C). Pub. L. 117–58, § 12001(e)(2), added subpar. (C). Subsec. (c)(4)(A). Pub. L. 117–58, § 12001(f), designated existing provisions as cl. (i), inserted heading, substituted “Except as provided in clause (ii), any excess” for “Any excess”, and added cl. (ii). Subsec. (f)(3). Pub. L. 117–58, § 12001(h), added par. (3). 2015—Subsec. (a)(2). Pub. L. 114–94, § 2001(c)(1), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: “A loan under paragraph (1) shall not refinance interim
Construction
financing under paragraph (1)(B) later than 1 year after the date of substantial completion of the project.” Subsec. (b)(2). Pub. L. 114–94, § 2001(c)(2)(A), designated existing provisions as subpar. (A), inserted subpar. (A) heading, substituted “Except as provided in subparagraph (B), the amount of” for “The amount of”, and added subpar. (B). Subsec. (b)(3)(A)(i)(V). Pub. L. 114–94, § 2001(c)(2)(B), added subcl. (V). Subsec. (b)(4)(B)(i). Pub. L. 114–94, § 2001(c)(2)(C)(i), substituted “or a rural projects fund under the TIFIA program” for “under this chapter”. Subsec. (b)(4)(B)(ii). Pub. L. 114–94, § 2001(c)(2)(C)(ii), inserted “and rural project funds” after “rural infrastructure projects”. Subsec. (b)(5). Pub. L. 114–94, § 2001(c)(2)(D), designated existing provisions as subpar. (A) and inserted heading, substituted “Except as provided in subparagraph (B), the final” for “The final”, redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), and added subpar. (B). Subsec. (b)(8). Pub. L. 114–94, § 2001(c)(2)(E), substituted “the TIFIA program” for “this chapter”. Subsec. (b)(9). Pub. L. 114–94, § 2001(c)(2)(F), designated existing provisions as subpar. (A) and inserted heading, substituted “The total Federal assistance provided for a project receiving a loan under the TIFIA program” for “The total Federal assistance provided on a project receiving a loan under this chapter”, and added subpar. (B). Subsec. (f). Pub. L. 114–94, § 2001(c)(3), added subsec. (f). 2012—Pub. L. 112–141 amended section generally. Prior to amendment, section related to secured loans. 2005—Pub. L. 109–59, § 1602(d), renumbered section 183 of this title as this section. Subsec. (a)(1). Pub. L. 109–59, § 1601(d)(1), in subpars. (A) and (B) inserted “of any project selected under section 602” after “costs”, added subpar. (C), and struck out concluding provisions which read as follows: “of any project selected under section 182.” Subsec. (a)(3). Pub. L. 109–59, § 1602(b)(3), substituted “602(b)(2)(B)” for “182(b)(2)(B)”. Subsec. (a)(4). Pub. L. 109–59, § 1601(d)(2), substituted “The execution” for “The funding” and struck out before period at end “, except that— “(A) the Secretary may fund an amount of the secured loan not to exceed the capital reserve subsidy amount determined under paragraph (3) prior to the obligations receiving an investment-grade rating; and “(B) the Secretary may fund the remaining portion of the secured loan only after the obligations have received an investment-grade rating by at least 1 rating agency”. Subsec. (b)(2). Pub. L. 109–59, § 1601(d)(3)(A), inserted “the lesser of” before “33 percent” and “or, if the secured loan does not receive an investment grade rating, the amount of the senior project obligations” before period at end. Subsec. (b)(3)(A)(i). Pub. L. 109–59, § 1601(d)(3)(B), inserted “that also secure the senior project obligations” after “sources”. Subsec. (b)(4). Pub. L. 109–59, § 1601(d)(3)(C), struck out “marketable” before “United States Treasury securities”. Subsec. (b)(8). Pub. L. 109–59, § 1602(b)(5), substituted “this chapter” for “this subchapter”. Subsec. (c)(3) to (5). Pub. L. 109–59, § 1601(d)(4), redesignated pars. (4) and (5) as (3) and (4), respectively, in par. (3)(A), struck out “during the 10 years” after “at any time”, in par. (3)(B)(ii), substituted “loan” for “loan beginning not later than 10 years after the date of substantial completion of the project in accordance with paragraph (1)”, and struck out heading and text of former par. (3). Text read as follows: “The sources of funds for scheduled loan repayments under this section shall include tolls, user fees, or other dedicated revenue sources.”
Statutory Notes and Related Subsidiaries
Effective Date
of 2021 AmendmentAmendment by Pub. L. 117–58 effective Oct. 1, 2021, see section 10003 of Pub. L. 117–58, set out as a note under section 101 of this title.
Effective Date
of 2015 AmendmentAmendment by Pub. L. 114–94 effective Oct. 1, 2015, see section 1003 of Pub. L. 114–94, set out as a note under section 5313 of Title 5, Government Organization and Employees.
Effective Date
of 2012 AmendmentAmendment by Pub. L. 112–141 effective Oct. 1, 2012, see section 3(a) of Pub. L. 112–141, set out as an Effective and Termination Dates of 2012 Amendment note under section 101 of this title.
Reference
Citations & Metadata
Citation
23 U.S.C. § 603
Title 23 — Highways
Last Updated
Apr 6, 2026
Release point: 119-73