AASHTO Journal - USDOT Roundtable Examines Financing Models, Policies

The U.S. Department of Transportation held a roundtable at its Washington, D.C., headquarters on August 26 to discuss the effectiveness of various infrastructure financing models and policies.

[Above photo by AASHTO]

The roundtable is part of the agency’s ongoing surface transportation funding reauthorization process as it seeks to identify innovative financing tools, models, and practices that will enhance infrastructure project planning, development, and delivery; improve process efficiencies; and ensure the greatest impact for infrastructure funding dollars.

Tim Gatz, executive director of the Oklahoma Department of Transportation, represented the American Association of State Highway and Transportation Officials at the USDOT’s roundtable.

Gatz – who serves as the chair of AASHTO’s Committee on Funding and Finance – highlighted AASHTO’s vision statement and three core policy principles regarding surface transportation reauthorization at the roundtable, as well as the six reauthorization policy resolutions approved unanimously by AASHTO’s board of directors at its 2025 Spring Meeting in Hartford, CT, in May.

He specifically talked about why it is important for state departments of transportation – especially ones serving more rural parts of the country – to have access to different kinds of financing tools for infrastructure projects.

“While not a substitute for adequate federal funding, state DOT access to innovative finance tools help leverage and maximize the value of existing funding resources,” he explained.

“For decades, state DOTs have leveraged federal program financing tools including the TIFIA [Transportation Infrastructure Finance and Innovation Act] program, State Infrastructure Banks, GARVEEs [Grant Anticipation Revenue Vehicles or bonds], Private Activity Bonds, and Public-Private Partnerships,” Gatz said. “In addition to these financing tools, state DOTs have also employed innovative federal-aid financial management applications like advance construction and matching strategies. [That] allows a state to undertake a greater number of concurrent projects and maintain flexibility in its transportation funding program.”

He noted that state DOTs cheered USDOT’s recent update to the TIFIA program that allows eligible projects to access TIFIA loans covering up to 49 percent of total eligible project costs, an increase from the previous cap of 33 percent. “This change will accelerate project timelines, encourage broader participation, and support a wider range of projects, including those in rural areas,” Gatz said.

Yet more can be done at the federal level to provide more rural-focused financing options, he stressed.

Among AASHTO’s ideas include establishing a TIFIA Rural Project Initiative or RPI with a threshold to $250 million based on loan size; increase the current 10 percent limit of TIFIA funding on RPI or set up a separate RPI funding bucket; and allow RPI funding if the project is determined to serve primarily rural interests, or if more than 50 percent of the project falls into a rural area.

Gatz also said USDOT should remove the investment grade rating requirement within the TIFIA program under a new pilot program for riskier projects that advance certain policy priorities, such as safety.

“The TIFIA portfolio has become extremely conservative over time,” he pointed out. “Instead of just being a rate play, this pilot program can help TIFIA reorient itself to fill in true financing gaps that the market cannot address, if the project advances important policy priorities of federal interest.”