The Honorable Pete Buttigieg
Secretary of Transportation
U.S. Department of Transportation
1200 New Jersey Ave, SE
Washington, DC 20590
Subject: Addressing Barriers to TIFIA Financing for Affordable Transit-Oriented Development Projects
Dear Secretary Buttigieg,
I write to you with a profound sense of urgency regarding the barriers preventing transformative, mixed-use, mixed-income transit-oriented development (TOD) projects from accessing TIFIA 49 financing. These barriers not only undermine the promise of the TIFIA program but also jeopardize our nation’s ability to deliver affordable, climate-friendly housing in the places that need it most. At a time when elections have reminded us of the critical importance of addressing housing affordability, equity, and climate resilience, I urge you to issue guidance to resolve these issues and unlock the program's full potential.
The Problem
1. Investment Grade Credit Rating Requirements
The TIFIA program requires an investment grade credit rating for loans or associated project debt. This standard often forces municipalities to guarantee loans—a burden on local governments and a practice that discourages much-needed investment in affordable housing.
A workable solution exists: pairing TIFIA loans with HUD's 221(d)(4) program, which inherently carries an investment grade credit rating. Unfortunately, TIFIA staff have expressed reluctance, citing concerns about interagency collaboration. This apprehension, likely unfounded, is costing the affordable housing sector access to financing at the 10-year Treasury rate, withholding as much as $80 billion in urgently needed funds.
2. Restrictive Definition of Intermodal Facilities
The Department’s narrow interpretation of “intermodal facilities” excludes projects near park-and-rides, despite their clear intermodal functionality. By limiting eligibility to fixed-rail or BRT-adjacent projects, this interpretation ignores the needs of millions of Americans who rely on intermodal transit options every day, particularly in suburban and rural areas.
The Stakes
Housing affordability is at a crisis point, disproportionately impacting low- and moderate-income families. Combined with the urgent need to reduce emissions, TOD projects provide a critical opportunity to address both challenges simultaneously. TIFIA 49 is a proven tool that could catalyze this change, yet outdated policies are blocking its effectiveness.
Consider the human impact: families unable to find affordable housing near reliable transit are forced into lengthy commutes, exacerbating economic inequality, health disparities, and environmental degradation. Addressing these barriers would empower developers to build vibrant, affordable communities that reduce car dependency, support public transit, and align with the administration’s climate and equity goals.
Proposed Solutions
1. Guidance for Intermodal Facilities
Issue guidance affirming that park-and-rides and similar facilities qualify as intermodal facilities under TIFIA 49. This change would make a wider range of TOD projects eligible, particularly in areas underserved by fixed-rail or BRT systems.
2. Interagency Collaboration
Encourage collaboration between TIFIA and HUD’s 221(d)(4) program (or similar federal lending programs like Fannie Mae or Freddie Mac) to satisfy the investment grade credit rating requirement. This pragmatic solution aligns with the government’s broader objectives and allows both agencies to amplify their impact without duplicating efforts.
The argument that OMB would oppose such collaboration is speculative and short-sighted. Coordinating between DOT and HUD would demonstrate federal efficiency, enhance public confidence, and provide a lifeline to countless projects nationwide.
Why Now?
With the election results underscoring the urgency of addressing economic and social inequities, this is a pivotal moment to act. Ensuring that TIFIA 49 fulfills its potential would provide a meaningful response to public demand for affordable housing and sustainable development. By issuing this guidance, you would send a clear message: the Department of Transportation is committed to innovation, equity, and meeting the needs of the American people.
The Opportunity
The changes we propose are not only achievable but transformative. By modernizing TIFIA 49, your leadership can unlock billions in financing for projects that provide affordable housing, reduce emissions, and strengthen communities across the nation. These changes would directly support the administration’s climate goals, the Justice40 initiative, and its commitment to equity.
I urge you to act swiftly to remove these barriers. Let’s ensure that TIFIA financing becomes a catalyst for the kind of development our country so desperately needs.
Thank you for your leadership and commitment to building a more equitable and sustainable future. I would welcome the opportunity to discuss this further or provide additional details about the impact of these changes.
Sincerely,
Jonathan Arnold
Principal
Arnold Development Group
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