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TCRP J-06, Task 29 [Completed]
Options For Financing Public Transportation Capital Projects
| Project Data |
| Funds: |
$100,000 |
| Research Agency: |
Hagler Bailly Services, Inc. |
| Principal Investigator: |
Tamar Henkin |
| Effective Date: |
10/28/1999 |
| Completion Date: |
10/15/2002 |
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Enactment of the Transportation Equity Act for the 21st Century (TEA-21) in June 1998 created important opportunities for improving public transportation services and infrastructure throughout the United States during the next 5 years. This legislation guarantees higher levels of funding than ever. In addition, new provisions included in the legislation broaden the financing options for transportation programs, including public transportation. The legislation was timely, because many public transportation assets are in need of replacement, and many communities are planning improvements to relieve congestion and to meet their increased transportation needs.
Historically, most public transportation managers and board members have been reluctant to consider funding alternatives beyond their current revenues and grants. This reluctance often reflects the culture of transit systems, which typically have an operating and construction orientation rather than a financial strategy orientation. In addition, local officials are often risk averse and oppose public financial transactions.
Public finance is complex. Because state and local laws and policies vary and because communities have different funding bases and outlooks, not all financing options are appropriate in every circumstance. Many transit system managers and policy board members are simply unaware of some financing options. They could benefit from a greater understanding of how to finance transit capital assets. For example, there is a tendency to believe that "one size fits all," while, in fact, different assets (such as a garage vs. rolling stock) can and should be financed differently. There is a lack of knowledge, and, there are many misconceptions about federal regulations related to financing that often result in foregone opportunities.
The results of this study will: (1) inform public transportation managers and public officials about the range of available financing options that will enable them to meet their local public transportation capital needs; and (2) help transit managers and local decision makers to decide whether to finance and which techniques to use.
The objective of this project is to prepare a primer for use by public transportation systems and state and local public officials to identify and evaluate options for financing public transportation capital projects from current and future revenues. This study is not intended to describe, in detail, the complex nature of transactions among the many participants in innovative financial transactions (e.g., certificates of participation and cross border leases). Instead, the product of this study should compare the relative advantages and disadvantages of financing options, from the perspective of the public agency taking on the debt, with respect to interest rates, term, principal and interest payments, net cost of the transaction, restrictions, and other considerations.
Status: The report has been published as TCRP Report 89. This report is also available in portable document format (PDF). Click on the link below to access the report. (A free copy of Adobe Acrobat Reader is available at https://www.adobe.com.)
TCRP Report 89
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