Metrorail system funded by low-interest, federal-backed loans

Dulles Corridor Metrorail

The Dulles Corridor Metrorail Project is a 37km, two-phase extension of the current Metrorail system delivered via a design-build-finance- operate-maintain (DBFOM) PPP concession
The extension was intended to ease transport into employment centres by adding 11 stations, a new rail yard and 128 cars to the rail network across Virginia, Maryland and the District of Columbia

Construction across the two phases was estimated to be USD 5.6B with sub-national entities committing to finance 25% of the overall cost, implying a high proportion of debt was required at high market rates
Sub-national entities in Virginia and DC faced difficulty in accessing funding to fulfil the government’s obligations to the project due to uncertain revenue streams associated with the Dulles Metrorail project

The Transportation Infrastructure Finance and Innovation Act (TIFIA) is a Federal-backed program that provides credit assistance in the form of direct loans, loan guarantees and standby lines of credit to regionally or nationally important transport infrastructure projects
The Department of Transport through the TIFIA, financed direct loans to expedite the construction timeline of the Dulles Corridor extension and reduced the cost of financing the project by USD 2.3B

TIFIA support reduced financing costs by USD 2.3B and decreased the extent of planned ticket price increases, which would have been necessary to recoup construction costs, ensuring affordability for passengers
The Dulles Corridor is estimated to provide transportation and mobility benefits including the elimination of c. 402M vehicle miles travelled per year and c. 300 tons of harmful emissions annually
The project included multiple spill-over effects including the planned creation of 200k new jobs in surrounding areas by 2050, reduced average travel times in the area by 53 minutes per trip creating a projected total of c. USD 1.2B in economic impact

The Federal government’s provision of financial support enabled the alignment of sub-national entities (i.e., Fairfax county, Loudon county and Washington Airport Authority) across multiple counties who, on their own, may not have had clear incentives to create a rail connection between the capital and the airport
National government’s use of credit assistance programs such as TIFIA can catalyse infrastructure project development by providing “the last dollars” necessary to create a viable and affordable project, particularly for sub-national entities with limited means of generating additional funds
Governments should ensure the economic feasibility studies for transit infrastructure projects adequately account for the upside of transit-oriented development to measure secondary and tertiary effects i.e., spill- over effects