An Evaluation of Innovative Transportation Financing Techniques for Indiana

Innovative financing techniques can complement current methods of financing highway projects in Indiana. Annual federal apportionments and Indiana state revenues are not sufficient to maintain and improve state highways, so innovative approaches in transportation project financing should be sought. There are several available innovative financing techniques associated with the use of federal funds. Although, they do not provide new sources of revenue and cannot create enough funds for all identified projects, they provide flexibility in the use of available funds that can expedite the implementation of individual projects. The main objective of this study was to evaluate the major innovative financing techniques associated with federal funds, and their applicability for transportation projects in Indiana. The legal, financial, and operational issues of various alternatives were examined, and the economic impacts were investigated in terms of user benefits and debt service of the transportation agency. Possible revenue sources for debt service payment also were identified, and from a legal perspective, factors such as eligibility, authorization parties, and administration of financing assistance were addressed. Innovative financing techniques considered in the study include: the Test and Evaluation Project 045 (TE-045 program), Grant Anticipation Revenue Vehicle Bonds (GARVEE), the Transportation Infrastructure Finance and Innovation Act (TIFIA), and the State Infrastructure Bank (SIB). Four actual INDOT projects were used as case studies in the analysis. The study provides a framework for the evaluation of the use of innovative financing techniques described in this report. With detailed project specific data project-by-project analysis can be done to find the optimal solution for individual project financing.