[Federal Register Volume 59, Number 175 (Monday, September 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22426]

[[Page Unknown]]

[Federal Register: September 12, 1994]


Federal Transit Administration


Innovative Financing Initiative: Notice of Funding Availability 
and Request for Information

Agency: Federal Transit Administration, DOT.

ACTION: Notice.


SUMMARY: This notice solicits project proposals and information from 
transit authorities, planning officials, States, the private sector and 
the public for the Federal Transit Administration's (FTA) Innovative 
Financing initiative. Specifically, the agency seeks identification of 
issues and obstacles to innovative financing of transit capital or 
operating needs, as well as local project proposals that demonstrate or 
test an innovative financing mechanism.

DATES: Proposals shall be received on or before October 30, 1994.

ADDRESSES: Proposals should be sent in triplicate to Janette Sadik-
Khan. Associate Administrator, Office of Budget and Policy, Room 9310, 
400 Seventh Street SW, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Paul Marx (202) 366-1675 or Janette 
Sadik-Khan (202) 366-4050.



    The Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) provides various tools for more efficient management and 
enhancement of our Nation's public transit infrastructure. Moreover, 
the President's guidance on infrastructure investment urges all levels 
of government to foster economic growth by supporting integrated 
investment in infrastructure; Executive Order 12893, ``Principles for 
Federal Infrastructure Investments,'' signed by the President on 
January 26, 1994, directs each executive department ``to ensure 
efficient management of infrastructure * * * '' and ``to encourage 
private sector investment, which is a key objective of our efforts to 
promote innovative financing.'' By encouraging private sector 
investment in transit infrastructure, FTA hopes to bring market-
oriented and results-driven project analysis and management techniques 
to bear on meeting the nation's current and projected transit 
infrastructure needs.
    Our challenge therefore is to facilitate a program of public and 
private transit infrastructure investment that both preserves the 
existing base of transit assets and ensures that investment for transit 
system expansion can be made as needed. Such a program of 
infrastructure preservation and enhancement must take maximum advantage 
of existing capital markets and techniques for leveraging the 
effectiveness of infrastructure investment by all levels of government. 
It must increase private capital participation while maintaining or 
expanding public sector investment. Department of Transportation 
Secretary Federico Pena, responding to this challenge, requested that 
FTA explore innovative ways to finance the transportation needs of our 
nation, taking into account a continuing Federal commitment to transit 
support as well as a growing private sector interest in transportation 
    FTA has identified specific provisions that were added to the 
Federal transit laws by ISTEA that make it easier for States and 
localities to plan and execute integrated public transit investment 
programs, but more is needed.

Issues and Proposals

    In preparation for the FY 1996 budget process, FTA is asking for 
(1) identification of joint public and private ventures in public 
transportation that demonstrate the effectiveness of private capital 
investment in transit, (2) identification of projects to remove or 
modify rules and policies that inhibit effective transit infrastructure 
management, and (3) specific local transit project proposals that would 
test or implement innovative financing techniques. We believe the most 
effective way to do this is to rely upon those who have led their 
industry in developing such techniques and projects for applicable 
examples. FTA will use the innovations proposed to support discussions 
for the next surface transportation authorization, summarize and 
disseminate the results of projects for peer review and, to the extent 
possible, provide technical assistance in project advancement.

Innovative Concepts

    The types of projects that FTA seeks should use innovative 
financing concepts that enhance the effectiveness of public transit 
investment by either generating increased investment or by reducing 
overall project costs. The following techniques and ISTEA provisions 
are illustrative of the types of innovation that we are seeking:
     Structured leasing of fixed transit facilities, through 
the use of Certificates of Participation (COP's), Grant Anticipation 
Notes, or other mechanisms that generate cost reductions or net present 
value benefits;
     New combinations of funding in support of transit 
infrastructure, such as in-kind local contributions, sale of 
development rights, realizing or enhancing land-use impact benefits, or 
private funding of transit facilities;
     Using 49 U.S.C. 5312(a), added by ISTEA to transfer 
existing, federally supported assets to more effective use;
     Initiating innovative procurements such as multi-year 
rolling stock procurements, forming consortia to facilitate 
efficiencies of scale in rolling stock procurements, or using design-
build (Turnkey) as a method of infrastructure project delivery; and
     Using various securities to attract private capital 
investment to transit, refinance existing debt, or otherwise ensure 
long-term, stable sources of funding for infrastructure investment.
     Establishing or using existing authority to provide direct 
loans for transit and other infrastructure projects, possibly through a 
revolving loan fund mechanism.
    The preceding are examples only. We welcome all ideas and projects 
that have the potential to leverage existing or planned infrastructure 
investment, or that will help to reduce public transportation costs 
over time.
    FTA will make full use of its regulatory and statutory flexibility 
in fostering innovative financing proposals for transit. However, the 
projects proposed under this initiative must comply with all other 
statutory and regulatory requirements such as the National 
Environmental Policy Act, Civil Rights, Americans with Disabilities 
Act, and the Clean Air Act.

Project Proposals

    The proposals for candidate projects should describe:
     The project specifics--i.e., what is being bought, 
constructed, financed;
     Project funding--federal aid, by type, as well as other 
funding sources. This should include funding realized through capturing 
external economic benefits resulting from project financing, as 
     Construction Financing--What mechanisms are being used to 
finance the construction portion of the project;
     Intermodal Impacts/Benefits--The degree to which the 
transit investment benefits other modes (airports, intercity rail, 
etc.) or is enhanced by other modes;
     The status of major Federal and State clearances;
     The financing innovation, and how its use in this context 
could benefit and apply to other projects in the region or the Nation;
     The incentive required--i.e., fast-tracking, re-
programming, additional funding, administrative or regulatory 
flexibility or relief, etc.;
     How the proposed innovation will leverage Federal, State, 
local and private investment for public transit; and
     A timeline for advancing the project, including 
    Proposals must be for projects eligible under the FT Act. New 
construction and reconstruction projects are appropriate, as are 
rolling stock projects. Those proposals which meet major Federal 
clearance requirements will receive preference in the review process. 
Upon acceptance of a grantee's proposal, the project will be advanced 
in an expedited manner.
    Limited capital funds are available. Therefore, projects proposed 
will be judged on the basis of broad applicability of the innovation, 
current project status (in planning, final engineering, environmental 
clearance, commencement of construction), the likelihood of near-term 
(1-2 years) project completion, and level of Federal funding required. 
We do not expect to fund all projects received. Projects and 
initiatives requiring administrative or regulatory flexibility will not 
be limited as to number, but will be judged on the basis of the 
innovation, their potential for application to other transit systems or 
other modes, and the likelihood of near-term results from the 
administrative or regulatory change.

    Issued on: September 7, 1994.
Gordon J. Linton,
[FR Doc. 94-22426 Filed 9-9-94; 8:45 am]