Innovative Financing Overview
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| Vintage streetcar on Market Street in San Francisco, California |
Overview
Innovative financing is an effort to apply newly emerging or established financing techniques from other sectors of the economy to transit. Reducing the cost of capital, or accessing new sources of capital, reduces the costs of transit infrastructure and thus reduces the overall costs of providing transit service and improving the level of transit service provided for each dollar invested. The Federal Transit Administration (FTA) will provide technical assistance and document results of innovative financing pilot projects and produce best practice manuals, evaluation reports, workshops, and conferences. The subject of studies will include:
Transit Finance Corporation
This is a centralized entity that purchases rolling stock in quantity and provides the vehicles to multiple transit providers;
Lease/Leaseback Transactions
This is where an investor leases rolling stock or a facility from the owner then leases them back to the transit agency, potentially accruing certain tax advantages;
Joint Development
This explores the easing of obstacles to partnerships between transit systems and private developers and helping to establish benefit assessment districts, tax increment financing districts, and similar mechanisms;
State Infrastructure Banks
This is when banks that receive grant funds from the Federal highway and transit programs and use the money to make loans and credit enhancements in support of highway and transit projects. Demonstration projects will be documented and training will be offered.
Other areas for research include categorizing interest expense and preventive maintenance as capital costs, which could allow for more transit grant funding, and promotion of cross-border leases. Innovative financing methods present new risks and new opportunities for transit systems and private-sector firms wishing to forge new partnerships for infrastructure investment. FTA studies will provide a central information bank for such practice. In addition, the Transportation Infrastructure Financing Innovation Act under the Transportation Efficiency Act for the 21st Century (TEA-21) provides an opportunity to demonstrate a number of innovative public-private financing methods.
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Legend
[FTA] - Document and/or program with FTA sponsorship and/or participation
[PDF] - To view a file in Portable Document Format (PDF), use Acrobat Reader.
Order a copy - To order a hard copy, audio cassette or video tape, click on the link after the document title.
Related Resources
American Public Transportation Association (APTA)
Community Transportation Association of America (CTAA)
Transportation Efficiency Act for the 21st Century (TEA-21) [FTA]
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Related Documents
Federal Transit Administration [FTA]
• FTA Strategic Plan 1998-2002
U.S. Department of Transportation Strategic Plan 1997-2002 [FTA]
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Contacts
Please submit questions or comments regarding Transit Research and Technology Programs to:mailto:research@fta.dot.gov.
Barbara A. Sisson
Associate Administrator
Office of Research, Demonstration and Innovation, TRI-1
Federal Transit Administration
400 7th Street, SW
Washington, DC 20590
202-366-4052
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