[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 963 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 963

To establish a transportation credit assistance pilot program, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 25, 1997

   Mr. Chafee (for himself, Mr. Graham, Mrs. Boxer, Mr. Bennett, Mr. 
Hatch, and Mr. Moynihan) introduced the following bill; which was read 
  twice and referred to the Committee on Environment and Public Works

_______________________________________________________________________

                                 A BILL


 
To establish a transportation credit assistance pilot program, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Transportation Infrastructure 
Finance and Innovation Act of 1997''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) a well-developed system of transportation 
        infrastructure is critical to the economic well-being, health, 
        and welfare of the people of the United States;
            (2) traditional public funding techniques such as grant 
        programs are unable to keep pace with the infrastructure 
        investment needs of the United States because of budgetary 
        constraints at the Federal, State, and local levels of 
        government;
            (3) major transportation infrastructure facilities that 
        address critical national needs, such as intermodal facilities, 
        border crossings, and multistate trade corridors, are of a 
        scale that exceeds the capacity of Federal and State assistance 
        programs in effect on the date of enactment of this Act;
            (4) new investment capital can be attracted to 
        infrastructure projects that are capable of generating their 
        own revenue streams through user charges or other dedicated 
        funding sources; and
            (5) a Federal credit program for projects of national 
        significance can complement existing funding resources by 
        filling market gaps, thereby leveraging substantial private co-
        investment.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Eligible project costs.--The term ``eligible project 
        costs'' means amounts substantially all of which are paid by, 
        or for the account of, an obligor in connection with a project, 
        including the cost of--
                    (A) development phase activities, including 
                planning, feasibility analysis, revenue forecasting, 
                environmental review, permitting, preliminary 
                engineering and design work, and other preconstruction 
                activities;
                    (B) construction, reconstruction, rehabilitation, 
                replacement, and acquisition of real property 
                (including land related to the project and improvements 
                to land), environmental mitigation, construction 
                contingencies, and acquisition of equipment; and
                    (C) interest during construction, reasonably 
                required reserve funds, capital issuance expenses, and 
                other carrying costs during construction.
            (2) Federal credit instrument.--The term ``Federal credit 
        instrument'' means a secured loan, loan guarantee, or line of 
        credit authorized to be made available under this Act with 
        respect to a project.
            (3) Lender.--The term ``lender'' means any non-Federal 
        qualified institutional buyer (as defined in section 
        230.144A(a) of title 17, Code of Federal Regulations (or any 
        successor regulation), known as Rule 144A(a) of the Securities 
        and Exchange Commission and issued under the Securities Act of 
        1933 (15 U.S.C. 77a et seq.)), including--
                    (A) a qualified retirement plan (as defined in 
                section 4974(c) of the Internal Revenue Code of 1986) 
                that is a qualified institutional buyer; and
                    (B) a governmental plan (as defined in section 
                414(d) of the Internal Revenue Code of 1986) that is a 
                qualified institutional buyer.
            (4) Line of credit.--The term ``line of credit'' means an 
        agreement entered into by the Secretary with an obligor under 
        section 6 to provide a direct loan at a future date upon the 
        occurrence of certain events.
            (5) Loan guarantee.--The term ``loan guarantee'' means any 
        guarantee or other pledge by the Secretary to pay all or part 
        of the principal of and interest on a loan or other debt 
        obligation issued by an obligor and funded by a lender.
            (6) Local servicer.--The term ``local servicer'' means--
                    (A) a State infrastructure bank established under 
                title 23, United States Code; or
                    (B) a State or local government or any agency of a 
                State or local government that is responsible for 
                servicing a Federal credit instrument on behalf of the 
                Secretary.
            (7) Obligor.--The term ``obligor'' means a party primarily 
        liable for payment of the principal of or interest on a Federal 
        credit instrument, which party may be a corporation, 
        partnership, joint venture, trust, or governmental entity, 
        agency, or instrumentality.
            (8) Project.--The term ``project'' means any surface 
        transportation facility eligible for Federal assistance under 
        title 23 or chapter 53 of title 49, United States Code.
            (9) Project obligation.--The term ``project obligation'' 
        means any note, bond, debenture, or other debt obligation 
        issued by an obligor in connection with the financing of a 
        project, other than a Federal credit instrument.
            (10) Secured loan.--The term ``secured loan'' means a 
        direct loan or other debt obligation issued by an obligor and 
        funded by the Secretary in connection with the financing of a 
        project under section 5.
            (11) State.--The term ``State'' has the meaning given the 
        term in section 101(a) of title 23, United States Code.
            (12) Substantial completion.--The term ``substantial 
        completion'' means the opening of a project to vehicular or 
        passenger traffic.

SEC. 4. DETERMINATION OF ELIGIBILITY AND PROJECT SELECTION.

    (a) Eligibility.--To be eligible to receive financial assistance 
under this Act, a project shall meet the following criteria:
            (1) Inclusion in transportation plans and programs.--The 
        project--
                    (A) shall be included in the State transportation 
                plan required under section 135 of title 23, United 
                States Code; and
                    (B) at such time as an agreement to make available 
                a Federal credit instrument is entered into under this 
                Act, shall be included in the approved State 
                transportation improvement program required under 
                section 134 of that title.
            (2) Application.--A State, a local servicer identified 
        under section 7(a), or the entity undertaking the project shall 
        submit a project application to the Secretary.
            (3) Eligible project costs.--
                    (A) In general.--Except as provided in subparagraph 
                (B), to be eligible for assistance under this Act, a 
                project shall have eligible project costs that are 
                reasonably anticipated to equal or exceed the lesser 
                of--
                            (i) $100,000,000; or
                            (ii) 50 percent of the amount of Federal-
                        aid highway funds apportioned for the most 
                        recently-completed fiscal year under title 23, 
                        United States Code, to the State in which the 
                        project is located.
                    (B) Intelligent transportation system projects.--In 
                the case of a project involving the installation of an 
                intelligent transportation system, eligible project 
                costs shall be reasonably anticipated to equal or 
                exceed $30,000,000.
            (4) Dedicated revenue sources.--Project financing shall be 
        repayable in whole or in part by user charges or other 
        dedicated revenue sources.
            (5) Public sponsorship of private entities.--In the case of 
        a project that is undertaken by an entity that is not a State 
        or local government or an agency or instrumentality of a State 
        or local government, the project that the entity is undertaking 
        shall be publicly sponsored as provided in paragraphs (1) and 
        (2).
    (b) Selection Among Eligible Projects.--
            (1) Establishment.--The Secretary shall establish criteria 
        for selecting among projects that meet the eligibility criteria 
        specified in subsection (a).
            (2) Included criteria.--The selection criteria shall 
        include the following:
                    (A) The extent to which the project is nationally 
                or regionally significant, in terms of generating 
                economic benefits, supporting international commerce, 
                or otherwise enhancing the national transportation 
                system. Specific factors determining national 
                significance shall include the extent to which the 
                project--
                            (i) is part of the National Highway System 
                        and related connectors as specified in section 
                        103(b) of title 23, United States Code;
                            (ii) promotes regional, interstate, or 
                        international commerce;
                            (iii) enables United States manufacturers 
                        to deliver their goods to domestic and foreign 
                        markets in a more timely, cost-effective 
                        manner;
                            (iv) stimulates new economic activity and 
                        job creation;
                            (v) reduces traffic congestion, thereby 
                        increasing workforce productivity; and
                            (vi) protects and enhances the environment, 
                        including by enhancing air quality through the 
                        reduction of congestion and decreased fuel and 
                        oil consumption.
                    (B) The creditworthiness of the project, including 
                a determination by the Secretary that any financing for 
                the project has appropriate security features, such as 
                a rate covenant, to ensure repayment. The Secretary 
                shall require each project applicant to provide a 
                preliminary rating opinion letter from a nationally 
                recognized bond rating agency.
                    (C) The extent to which assistance under this Act 
                would foster innovative public-private partnerships and 
                attract private debt or equity investment.
                    (D) The likelihood that assistance under this Act 
                would enable the project to proceed at an earlier date 
                than the project would otherwise be able to proceed.
                    (E) The extent to which the project uses new 
                technologies, including intelligent transportation 
                systems, that enhance the efficiency of the project.
                    (F) The amount of budget authority required to fund 
                the Federal credit instrument made available under this 
                Act.
    (c) Federal Requirements.--The following provisions of law shall 
apply to funds made available under this Act and projects assisted with 
the funds:
            (1) Section 113 of title 23, United States Code.
            (2) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
        2000d et seq.).
            (3) The National Environmental Policy Act of 1969 (42 
        U.S.C. 4321 et seq.).
            (4) The Uniform Relocation Assistance and Real Property 
        Acquisition Policies Act of 1970 (42 U.S.C. 4601 et seq.).
            (5) Section 5333 of title 49, United States Code.

SEC. 5. SECURED LOANS.

    (a) In General.--
            (1) Agreements.--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; or
                    (B) to refinance interim construction financing of 
                eligible project costs;
        of any project selected under section 4.
            (2) Limitation on refinancing of interim construction 
        financing.--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.
            (3) Authorization period.--The Secretary may enter into a 
        loan agreement during any of fiscal years 1998 through 2003.
    (b) Terms and Limitations.--
            (1) In general.--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 appropriate.
            (2) Maximum amount.--The amount of the secured loan shall 
        not exceed 33 percent of the reasonably anticipated eligible 
        project costs.
            (3) Payment.--The secured loan--
                    (A) shall be payable, in whole or in part, from 
                revenues generated by any rate covenant, coverage 
                requirement, or similar security feature supporting the 
                project obligations or from a dedicated revenue stream; 
                and
                    (B) may have a lien on revenues described in 
                subparagraph (A) subject to any lien securing project 
                obligations.
            (4) Interest rate.--The interest rate on the secured loan 
        shall be equal to the yield on marketable United States 
        Treasury securities of a similar maturity to the maturity of 
        the secured loan on the date of execution of the loan 
        agreement.
            (5) Maturity date.--The final maturity date of the secured 
        loan shall be not later than 35 years after the date of 
        substantial completion of the project.
            (6) Nonsubordination.--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.
            (7) Fees.--The Secretary may establish fees at a level 
        sufficient to cover the costs to the Federal Government of 
        making a secured loan under this section.
    (c) Repayment.--
            (1) Schedule.--The Secretary shall establish a repayment 
        schedule for each secured loan under this section based on the 
        projected cash flow from project revenues and other repayment 
        sources.
            (2) Commencement.--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) Sources of repayment funds.--The sources of funds for 
        scheduled loan repayments under this section shall include 
        tolls, user fees, or other dedicated revenue sources.
            (4) Deferred payments.--
                    (A) Authorization.--If, at any time during the 10 
                years after the date of substantial completion of the 
                project, the project is unable to generate sufficient 
                revenues to pay scheduled principal and interest on the 
                secured loan, the Secretary may, pursuant to 
                established criteria for the project agreed to by the 
                entity undertaking the project and the Secretary, allow 
                the obligor to add unpaid principal and interest to the 
                outstanding balance of the secured loan.
                    (B) Interest.--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 beginning not later 
                        than 10 years after the date of substantial 
                        completion of the project in accordance with 
                        paragraph (1).
            (5) Prepayment.--
                    (A) Use of excess revenues.--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.
                    (B) Use of proceeds of refinancing.--The secured 
                loan may be prepaid at any time without penalty from 
                the proceeds of refinancing from non-Federal funding 
                sources.
    (d) Sale of Secured Loans.--As soon as practicable after 
substantial completion of a project, the Secretary shall 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.
    (e) Loan Guarantees.--
            (1) In general.--The Secretary may provide a loan guarantee 
        to a lender in lieu of making a secured loan if the Secretary 
        determines that the budgetary cost of the loan guarantee is 
        substantially the same as that of a secured loan.
            (2) Terms.--The terms of a guaranteed loan shall be 
        consistent with the terms set forth in 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.

SEC. 6. LINES OF CREDIT.

    (a) In General.--
            (1) Agreements.--The Secretary may enter into agreements to 
        make available lines of credit to 1 or more obligors 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 4.
            (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.
    (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 appropriate.
            (2) Maximum amounts.--
                    (A) Total amount.--The total amount of the line of 
                credit shall not exceed 33 percent of the reasonably 
                anticipated eligible project costs.
                    (B) One-year draws.--The amount drawn in any 1 year 
                shall not exceed 20 percent of the total amount of the 
                line of credit.
            (3) Draws.--Any draw on the line of credit shall represent 
        a direct loan and shall be made only if net revenues from the 
        project (including capitalized interest, any debt service 
        reserve fund, and any other available reserve) are insufficient 
        to pay debt service on project obligations.
            (4) Interest rate.--The interest rate on a direct loan 
        resulting from a draw on the line of credit shall be equal to 
        the yield on 30-year marketable United States Treasury 
        securities as of the date on which the line of credit is 
        obligated.
            (5) Security.--The line of credit--
                    (A) shall be made available only in connection with 
                a project obligation secured, in whole or in part, by a 
                rate covenant, coverage requirement, or similar 
                security feature or from a dedicated revenue stream; 
                and
                    (B) may have a lien on revenues described in 
                subparagraph (A) subject to any lien securing project 
                obligations.
            (6) Period of availability.--The line of credit shall be 
        available during the period beginning on the date of 
        substantial completion of the project and ending not later than 
        10 years after that date.
            (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 the line of credit.
                    (B) Assignment.--An obligor may assign the line of 
                credit to 1 or more lenders or to a trustee on the 
                lenders' behalf.
            (8) Nonsubordination.--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.
            (9) Fees.--The Secretary may establish fees at a level 
        sufficient to cover the costs to the Federal Government of 
        providing a line of credit under this section.
            (10) Relationship to other credit instruments.--A line of 
        credit under this section shall not be issued for a project 
        with respect to which another Federal credit instrument under 
        this Act is made available.
    (c) Repayment.--
            (1) Schedule.--The Secretary shall establish a repayment 
        schedule for each direct loan under this section based on the 
        projected cash flow from project revenues and other repayment 
        sources.
            (2) Timing.--All scheduled repayments of principal or 
        interest on a direct loan under this section shall commence not 
        later than 5 years after substantial completion of the project 
        and be fully repaid, with interest, by the date that is 20 
        years after the end of the period of availability specified in 
        subsection (b)(6).
            (3) Sources of repayment funds.--The sources of funds for 
        scheduled loan repayments under this section shall include 
        tolls, user fees, or other dedicated revenue sources.

SEC. 7. PROJECT SERVICING.

    (a) Requirement.--The State in which a project that receives 
financial assistance under this Act is located may identify a local 
servicer to assist the Secretary in servicing the Federal credit 
instrument made available under this Act.
    (b) Agency; Fees.--If a State identifies a local servicer under 
subsection (a), the local servicer--
            (1) shall act as the agent for the Secretary; and
            (2) may receive a servicing fee, subject to approval by the 
        Secretary.
    (c) Liability.--A local servicer identified under subsection (a) 
shall not be liable for the obligations of the obligor to the Secretary 
or any lender.
    (d) Assistance From Expert Firms.--The Secretary may retain the 
services of expert firms in the field of municipal and project finance 
to assist in the underwriting and servicing of Federal credit 
instruments.

SEC. 8. OFFICE OF INFRASTRUCTURE FINANCE.

    (a) Duties of the Secretary.--Section 301 of title 49, United 
States Code, is amended--
            (1) in paragraph (7), by striking ``and'' at the end;
            (2) in paragraph (8), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(9) develop and coordinate Federal policy on financing 
        transportation infrastructure, including the provision of 
        direct Federal credit assistance and other techniques used to 
        leverage Federal transportation funds.''.
    (b) Office of Infrastructure Finance.--
            (1) In general.--Chapter 1 of title 49, United States Code, 
        is amended by adding at the end the following:
``Sec. 113. Office of Infrastructure Finance
    ``(a) Establishment.--The Secretary of Transportation shall 
establish within the Office of the Secretary an Office of 
Infrastructure Finance.
    ``(b) Director.--The Office shall be headed by a Director who shall 
be appointed by the Secretary not later than 180 days after the date of 
enactment of this section.
    ``(c) Functions.--The Director shall be responsible for--
            ``(1) carrying out the responsibilities of the Secretary 
        described in section 301(9);
            ``(2) carrying out research on financing transportation 
        infrastructure, including educational programs and other 
        initiatives to support Federal, State, and local government 
        efforts; and
            ``(3) providing technical assistance to Federal, State, and 
        local government agencies and officials to facilitate the 
        development and use of alternative techniques for financing 
        transportation infrastructure.''.
            (2) Conforming amendment.--The analysis for chapter 1 of 
        title 49, United States Code, is amended by adding at the end 
        the following:

``113. Office of Infrastructure Finance.''.

SEC. 9. STATE AND LOCAL PERMITS.

    The provision of financial assistance under this Act with respect 
to a project shall not--
            (1) relieve any recipient of the assistance of any 
        obligation to obtain any required State or local permit or 
        approval with respect to the project;
            (2) limit the right of any unit of State or local 
        government to approve or regulate any rate of return on private 
        equity invested in the project; or
            (3) otherwise supersede any State or local law (including 
        any regulation) applicable to the construction or operation of 
        the project.

SEC. 10. REGULATIONS.

    The Secretary may issue such regulations as the Secretary 
determines appropriate to carry out this Act and the amendments made by 
this Act.

SEC. 11. FUNDING.

    (a) Authorization of Appropriations.--
            (1) In general.--There shall be available from the Highway 
        Trust Fund (other than the Mass Transit Account) to carry out 
        this Act--
                    (A) $40,000,000 for fiscal year 1998;
                    (B) $60,000,000 for fiscal year 1999;
                    (C) $100,000,000 for fiscal year 2000;
                    (D) $150,000,000 for fiscal year 2001;
                    (E) $200,000,000 for fiscal year 2002; and
                    (F) $250,000,000 for fiscal year 2003.
            (2) Availability.--Amounts made available under paragraph 
        (1) shall remain available until expended.
    (b) Contract Authority.--Notwithstanding any other provision of 
law, approval by the Secretary of a Federal credit instrument that uses 
funds made available under this Act shall be deemed to be acceptance by 
the United States of a contractual obligation to fund the Federal 
credit instrument.
    (c) Limitations on Credit Amounts.--For each of fiscal years 1998 
through 2003, principal amounts of Federal credit instruments made 
available under this Act shall be limited to the amounts specified in 
the following table:

  
                                                         Maximum amount
Fiscal year:
                                                             of credit:
  1998...............................................     $800,000,000 
  1999...............................................   $1,200,000,000 
  2000...............................................   $2,000,000,000 
  2001...............................................   $3,000,000,000 
  2002...............................................   $4,000,000,000 
  2003...............................................   $5,000,000,000.

SEC. 12. REPORT TO CONGRESS.

    Not later than 4 years after the date of enactment of this Act, the 
Secretary shall submit to Congress a report summarizing the financial 
performance of the projects that are receiving, or have received, 
assistance under this Act, including a recommendation as to whether the 
objectives of this Act are best served--
            (1) by continuing the program under the authority of the 
        Secretary;
            (2) by establishing a Government corporation or Government-
        sponsored enterprise to administer the program; or
            (3) by phasing out the program and relying on the capital 
        markets to fund the types of infrastructure investments 
        assisted by this Act without Federal participation.
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