PRIA, Government Policy, Made Personal

Summary

The Secretary can agree to provide a line of credit—meaning money set aside as a future direct loan—for projects chosen for the program. That money can only be used to pay project debt, big repairs or replacements, operation and maintenance, and costs from unexpected federal or state environmental rules. Before making an agreement, the Secretary must work with the Office of Management and Budget and rating agencies to set a capital reserve subsidy amount. The project’s senior obligations must get an investment‑grade rating from two rating agencies before the line is funded. Each line of credit is set up with terms the Secretary finds appropriate. The line cannot be larger than 33 percent of the project’s expected eligible costs. Any draw becomes a direct loan and can be used only if the project’s net revenues (including capitalized interest but not financing reserves) can’t cover the needed costs. The interest rate must be at least the yield on 30‑year U.S. Treasury securities on the agreement date, unless specific exceptions apply. The loan is to be paid from tolls, user fees, public‑private partnership payments, or other dedicated revenues that also back the main project debts, and it must include a rate or coverage promise to support payments. The full undrawn amount is available for 10 years after the project’s substantial completion. Credit draws do not give third parties any claim against the Federal Government. The borrower may assign the line to lenders or a trustee. Generally, the federal loan won’t be put behind other creditors in bankruptcy, but the Secretary can waive that rule for certain public agencies if strict conditions are met; if waived, federal subsidy is limited to 10 percent of the loan principal and the borrower must pay the rest. The Secretary may charge fees to cover costs. A project cannot get a secured loan or guarantee that, together with this line, exceeds 49 percent of eligible costs. Repayment terms are based on projected cash flow and the asset’s useful life, must start no later than 5 years after the 10‑year availability period ends, and must be fully repaid by 25 years after that period ends.

Title 23, §604

Highways, Source: USLM XML via OLRC

(a)In General.—

(1)Agreements.—

Subject to paragraphs (2) through (4), the Secretary may enter into agreements to make available to 1 or more obligors lines of credit in the form of direct loans to be made by the Secretary at future dates on the occurrence of certain events for any project selected under section 602.

(2)Use of proceeds.—

The proceeds of a line of credit made available under this section shall be available to pay debt service on project obligations issued to finance eligible project costs, extraordinary repair and replacement costs, operation and maintenance expenses, and costs associated with unexpected Federal or State environmental restrictions.

(3)Risk assessment.—

Before entering into an agreement under this subsection, the Secretary, in consultation with the Director of the Office of Management and Budget and each rating agency providing a preliminary rating opinion letter under section 602(b)(3), shall determine an appropriate capital reserve subsidy amount for each line of credit, taking into account the rating opinion letter.

(4)Investment-grade rating requirement.—

The funding of a line of credit under this section shall be contingent on the senior obligations of the project receiving an investment-grade rating from 2 rating agencies.

(b)Terms and Limitations.—

(1)In general.—

A line of credit 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)Maximum amounts.—

The total amount of a line of credit under this section shall not exceed 33 percent of the reasonably anticipated eligible project costs.

(3)Draws.—

Any draw on a line of credit under this section shall—

(A)represent a direct loan; and

(B)be made only if net revenues from the project (including capitalized interest, but not including reasonably required financing reserves) are insufficient to pay the costs specified in subsection (a)(2).

(4)Interest rate.—

Except as provided in subparagraphs (B) and (C) of section 603(b)(4), the interest rate on a direct loan resulting from a draw on the line of credit shall be not less than the yield on 30-year United States Treasury securities, as of the date of execution of the line of credit agreement.

(5)Security.—

A line of credit issued under this section— (A)

(B)may have a lien on revenues described in subparagraph (A), subject to any lien securing project obligations.

(6)Period of availability.—

The full amount of a line of credit under this section, to the extent not drawn upon, shall be available during the 10-year period beginning on the date of substantial completion of the project.

(7)Rights of third-party creditors.—

(A)Against federal government.—

A third-party creditor of the obligor shall not have any right against the Federal Government with respect to any draw on a line of credit under this section.

(B)Assignment.—

An obligor may assign a line of credit under this section to—

(i)1 or more lenders; or

(ii)a trustee on the behalf of such a lender.

(8)Nonsubordination.—

(A)In general.—

Except as provided in subparagraph (B), a direct loan under this section 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)Pre-existing indenture.—

(i)In general.—

The Secretary shall waive the requirement of 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 line of credit is rated in the A category or higher;

(II)the TIFIA program loan resulting from a draw on the line of credit is 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)Limitation.—

If the Secretary waives the nonsubordination requirement under this subparagraph— (I)

(II)the obligor shall be responsible for paying the remainder of the subsidy cost.

(9)Fees.—

The Secretary may establish fees at a level sufficient to cover all or a portion of the costs to the Federal Government of providing a line of credit under this section.

(10)Relationship to other credit instruments.—

A project that receives a line of credit under this section also shall not receive a secured loan or loan guarantee under section 603 in an amount that, combined with the amount of the line of credit, exceeds 49 percent of eligible project costs.

(c)Repayment.—

(1)Terms and conditions.—

The Secretary shall establish repayment terms and conditions for each direct 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 asset being financed.

(2)Timing.—

All repayments of principal or interest on a direct loan under this section shall be scheduled—

(A)to commence not later than 5 years after the end of the period of availability specified in subsection (b)(6); and

(B)to conclude, with full repayment of principal and interest, by the date that is 25 years after the end of the period of availability specified in subsection (b)(6).

Notes & Related Subsidiaries

Editorial Notes

Amendments

2012—Pub. L. 112–141 amended section generally. Prior to amendment, section related to lines of credit. 2005—Pub. L. 109–59, § 1602(d), renumbered section 184 of this title as this section. Subsec. (a)(1). Pub. L. 109–59, § 1602(b)(4)(A), substituted “602” for “182”. Subsec. (a)(3). Pub. L. 109–59, § 1602(b)(4)(B), substituted “602(b)(2)(B)” for “182(b)(2)(B)”. Subsec. (b)(2). Pub. L. 109–59, § 1601(e)(1)(A), added par. (2) and struck out heading and text of former par. (2). Text read as follows: “(A) Total amount.—The total amount of the line of credit shall not exceed 33 percent of the reasonably anticipated eligible project costs. “(B) 1-year draws.—The amount drawn in any 1 year shall not exceed 20 percent of the total amount of the line of credit.” Subsec. (b)(3). Pub. L. 109–59, § 1601(e)(1)(B), substituted “but not including reasonably required financing reserves” for “, any debt service reserve fund, and any other available reserve”. Subsec. (b)(4). Pub. L. 109–59, § 1601(e)(1)(C), struck out “marketable” before “United States Treasury securities” and substituted “date of execution of the line of credit agreement” for “date on which the line of credit is obligated”. Subsec. (b)(5)(A)(i). Pub. L. 109–59, § 1601(e)(1)(D), inserted “that also secure the senior project obligations” after “sources”. Subsec. (b)(6). Pub. L. 109–59, § 1601(e)(1)(E), substituted “The full amount of the line of credit, to the extent not drawn upon,” for “The line of credit”. Subsec. (b)(10). Pub. L. 109–59, § 1602(b)(4)(C), substituted “603” for “183”. Subsec. (c)(2). Pub. L. 109–59, § 1601(e)(2)(A), struck out “scheduled” before “repayments”, inserted “be scheduled to” after “shall”, and substituted “to conclude, with full repayment of principal and interest,” for “be fully repaid, with interest,”. Subsec. (c)(3). Pub. L. 109–59, § 1601(e)(2)(B), struck out heading and text of 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 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.

§604 Lines of Credit