Loan Program Policies and Guidelines
I. Eligible Borrowers
Qualified borrowers include any public entity, such as political
subdivisions, other state agencies, boards, or commissions, regional transit boards, and
port authorities.
II. Eligible Projects
Any highway or transit project eligible under the Federal Title
XXIII Highway Act is eligible for SIB funding. Other transportation projects, including
rail, aviation, and other intermodal facilities will also be considered for SIB funding.
These projects, if not eligible for federal funds under Title XXIII, may be funded from
other sources such as State appropriations or other available funds.
III. Interest Rate
The average interest rate for the loan program is set at three
quarters (3/4) of the stated prime rate. Factors that will be considered when determining
a final interest rate include loan term, loan amounts, strength of cash flow coverage,
economic distress factors, and strength of security.
IV. Terms
The term of the financing will be based upon the useful life of the
assets being financed. The maximum term for a loan will be 10 years.
V. Collateral/Security for Loan
The state may request any of the following as collateral or
security for funded transportation projects:
- Pledge of identified tax revenues, non-tax revenues, fees, tolls
or other revenues available to support the project.
- Guarantees from borrowers or related entities.
- First mortgage or lien position on the assets financed with State
funds.
- Second mortgages or lien positions will be considered on a limited
basis. Under this scenario, the SIB may ask for equity participation in the project or
additional repayment based upon excess cash flow.
- Financial covenants on the operation of the project or business,
if appropriate.
- Other credit enhancements as deemed necessary.
VI. Safeguards During Construction
Drawdown of SIB loan proceeds will be made only upon
receipt of appropriate SIB disbursement requests.
When construction of a project is involved, routine inspections of drawdown requests by a
qualified inspector selected by ODOT will be required. In addition, guaranteed fixed price
construction contracts will be required for each construction project.
Parties that will guarantee project construction shortfalls, if any, must be identified
prior to closing.
VII. Loan Repayments
Most loans will be structured as level
payments over the specified term of the loan. Depending on the certain
circumstances of the project, loan repayments may: be deferred, increased or ramped up over time,
allow interest payments during construction (maximum of twelve
months) to be deferred or forgiven, provide balloon payments.
VIII. Prevailing Wage
All projects receiving assistance from a SIB loans are required to
utilize the Ohio Prevailing Wage or Davis Bacon Wage for construction,
renovation, and machinery installation.
IX. Criteria for Application Evaluation
The following will be evaluated by the Office of Finance & Forecasting staff
and an independent financial advisor to determine the eligibility of each project:
- Ability to Repay
- Management of Project
- Working Capital/Operating Funds
- Need/Public Benefit
- Collateral
- Status of Project in Relation to Actual Construction Startup
X. Loan Approval Process
All projects must be approved by the Director of the Ohio
Department of Transportation. Title XXIII projects must be listed in the State
Transportation Improvement Plan (STIP).
XI. Other Project Requirements
To assure the lowest risk to the State Infrastructure Bank, the
following elements will be considered prior to a funding commitment:
- The Environmental Assessment and subsequent clearance process must
be complete to the extent required to meet the funding source requirements;
- The preliminary engineering including any required studies such
as, but not limited to, the Major Investment Study, Interchange Justification Analysis,
Wetlands Analysis and Mitigation Plan, as well as any other funding source requirement
must be completed prior to loan closing;
- The project must have an identifiable revenue stream or source
that will likely amortize the debt.
Such revenue sources may include:
- local government pledges
- toll proceeds
- tax increment financing (TIFs)
- property assessments
- license plate and registration fees
- Issue 2 local government funds
- other user payments and/or fees, such as parking revenues,
docking and landing fees, passenger facility charges, etc.
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