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WASHINGTON – The U.S. Department of Transportation today announced its Build America Bureau (the “Bureau”) has provided a Transportation Infrastructure Finance and Innovation Act TIFIA direct loan in the amount of up to $628.93 million to the Orange County Transportation Authority (OCTA) for the I-405 Improvement Project (the Project). The Department provides TIFIA and other surface transportation infrastructure financing through the Bureau.

The loan proceeds will finance part of the construction costs of the Project, which is being built in a 16-mile corridor in northwest Orange County on I-405 between State Route 73 and Interstate 605. The Project will add one new General-Purpose lane and one new toll lane in each direction in the 16-mile corridor. The new tolled express lanes will combine with the existing high occupancy vehicle lane to create two Express Lanes in each direction.

The project aims to improve operations of one of the most congested freeways in the country and is expected to generate about 26,000 jobs. It will also create more reliable and timely access to job centers, schools and to essential services for residents of this region. Its design also incorporates climate resilience elements, especially against flooding and earthquake risks, as well as pedestrian and bike-friendly elements.

The TIFIA loan will replace the current loan that the Bureau provided to OCTA for the Project in July 2017. The new loan, at a lower interest rate, will generate approximately US $258 million in nominal financing costs savings for OCTA over the life of the loan, providing relief from COVID-19 which affected OCTA’s revenues, and helping OCTA continue to deliver its capital improvement plan.  

Project construction is already underway. OCTA expects to open the Project to the public by October 2023. 

The Bureau, which administers the TIFIA credit program, was established as a “one-stop-shop” to streamline credit opportunities while also providing technical assistance and encouraging innovative best practices in project planning, financing, delivery, and operation. The Bureau has the resources and full commitment to provide additional flexibility and financial assistance to transportation projects in regions impacted by the COVID-19 pandemic to minimize the negative effects and help them with quicker recovery from this crisis.  The U.S. Department of Transportation has closed $34.5 billion in TIFIA financings, supporting more than $120 billion in infrastructure investment across the country.

OCTA is the first agency in the nation to reset a partially drawn TIFIA loan, taking advantage of low interest rates to realize significant savings

ORANGE – The Orange County Transportation Authority today reset the interest rate to 1.95 percent on its $629 million federal loan for the I-405 Improvement Project, a first-of-its-kind reset that will help save an additional $158 million over the life of the loan.

OCTA finalized its initial loan in 2017 with a 2.91 percent interest rate through the Transportation Infrastructure Finance and Innovation Act, commonly called TIFIA.

Late last year, OCTA began working with the U.S. Department of Transportation’s Build America Bureau, the agency that runs the TIFIA program, to pay off its existing loan and execute a new one to take advantage of lower interest rates.

OCTA is the first agency to ever reset a partially drawn TIFIA loan, taking advantage of historically low interest rates to realize significant savings of $158 million on a net present value basis.

“I’m proud of OCTA for being proactive in taking advantage of low interest rates to help save millions of dollars for our taxpayers,” said OCTA Chairman Andrew Do, also the county’s First District Supervisor. “Thank you to our partners at the U.S. Department of Transportation for working with us to create a model on how to refinance a drawn TIFIA loan, setting an example for other transportation agencies throughout the country to save public funds that can be reinvested in our infrastructure.”

The TIFIA loan will be repaid solely using the revenue collected from drivers who choose to use the 405 Express Lanes being built as part of the I-405 Improvement Project.

Toll revenue collected beyond what it costs to repay the loan will fund transportation improvements for everyone who travels through the 405 corridor – whether or not they use the Express Lanes. The interest rate savings will allow more money to be available sooner to make those additional improvements along I-405.

“Innovative financing is critical to delivering major infrastructure projects and it’s great to see OCTA lead in this area to maximize available funding and continue making improvements for everyone who lives, works and drives near the 405 Freeway,” said Michael Hennessey, Chairman of OCTA’s Finance and Administration Committee. “This effort will help create greater revenue potential for future projects in the area.”

The original TIFIA loan for the I-405 Improvement Project was estimated to save about $300 million over the life of the loan compared to traditional bond financing, allowing the 405 Express Lanes to remain free to two-person carpools during non-peak hours when the express lanes open, a commitment made by OCTA.

To generate additional savings, OCTA is working on issuing Bond Anticipation Notes, a short-term financing tool used during the construction of projects, to allow OCTA to take advantage of lower short-term interest rates over the next three years instead of drawing on its TIFIA loan. The issuance of these notes is expected to save an additional $20 million.

“Every dollar we can save Orange County taxpayers in interest, is one more dollar we can invest in our infrastructure to enhance our transportation system,” said OCTA CEO Darrell E. Johnson. “I want to thank our federal partners and all those who played a role in helping to realize these tremendous savings.”

The $2.1 billion I-405 Improvement Project, now more than halfway complete, will add one regular lane in each direction of I-405 between Euclid Street and I-605, and a second lane in each direction in the center of the freeway from SR-73 to I-605 that will combine with the existing carpool lanes to form the 405 Express Lanes.

This 16-mile segment of I-405 is one of the most heavily traveled stretches of highway in the nation, and drivers routinely face severe congestion in both the regular lanes and carpool lanes. The project, anticipated to be completed in 2023, is critical to accommodate expected employment, population and housing growth throughout the region.

For more information about the I-405 Improvement Project, visit octa.net/405improvement.

Since 1991, OCTA’s services and investments in transportation have provided Orange County with the balanced, comprehensive transportation network it has today.

ORANGE – The Orange County Transportation Authority is marking its 30th anniversary this month – three decades of improving the region’s transit, streets and freeways and ongoing work toward a balanced and sustainable transportation system.

In June 1991, OCTA was formed through the consolidation of seven different agencies that focused on various aspects of transportation across the county.

The move to streamline efforts into a single agency allowed for coordination of transportation planning for the county’s growing population, greatly increasing efficiency and saving millions of dollars in taxpayer money by eliminating duplication of efforts.

Since then, Orange County residents have gotten to know OCTA, not only by the familiar blue, orange and white logo on OC Buses, but also through the agency’s many efforts to connect them to employment, education, medical needs, and entertainment.

“When you look back at the 30 years OCTA has been in existence, we can take pride in so many accomplishments to improve Orange County’s freeways and streets, provide reliable transit, protect the environment, and so much more,” said OCTA Chairman Andrew Do, also the county’s First District Supervisor. “With the strong support of the public, who overwhelmingly voted to approve Measure M to fund many of those improvements, we will continue to have a bright future with a balanced and sustainable transportation network.”

Back in 1991, Orange County had about 2.4 million residents. Since then, the population has grown by more than 700,000 residents – or approximately 30 percent – and the county has increasingly become an important employment center and tourist destination, making the goal of keeping Orange County moving even more important.

OCTA’s successes would not be possible without the vision and support of local voters, who passed the Measure M half-cent sales tax for transportation improvements in 1990 and then renewed it with 70 percent of the vote in 2006.

Since then, funds from Measure M, also known as OC Go, have led to a wide range of transportation improvements, with funding help from OCTA’s state and federal partners. Those improvements included:

• Major expansions of Orange County freeways, improving traffic flow on Interstate 5, widened from six to 10 lanes, and improvements to State Routes 55, 22 and 91, among others.
• Metrolink commuter rail was added to Orange County. Prior to 1991, Amtrak was the only passenger rail service, operating one train daily between Los Angeles and San Juan Capistrano. Now OCTA works with Metrolink to fund 54 weekday and 16 weekend trains serving the county.
• Bus transit was expanded and tailored to fit the county’s needs, including nearly 60 routes and 5,400 stops, as well as paratransit. OCTA also piloted microtransit with the OC Flex service and works with cities to provide shuttle services.
• In 2003, OCTA purchased and began operating the 91 Express Lanes, 10 miles of tolled express lanes between Anaheim and Riverside County that give commuters a reliable time-saving transportation option and have led to improvements throughout the 91 freeway corridor.
• More than $1 billion in OC Go funds have gone back to cities and the county for street improvements and local transportation needs.
• More than 3,000 traffic signals have been synchronized, leading to more green lights and more efficient travel.

Just as importantly, OCTA has worked to preserve what makes Orange County such a special place to live by protecting the environment.

OCTA has purchased more than 1,300 acres of open space from willing land owners to protect valuable plant and animal life forever. And more than $55 million has been awarded in competitive grants to fund projects that trap and clean up transportation-related pollution before it reaches local waterways, leading to cleaner waterways and oceans.

While taking time to mark the accomplishments of the past 30 years, OCTA, led by its 18-member Board of Directors, continues to look toward a bright transportation future. That includes work on a 16-mile, $2 billion improvement to the I-405 between Costa Mesa and the county’s border with Long Beach, scheduled to be completed in 2023.

That same year, OC Streetcar, the county’s first modern, electric streetcar along a 4.1-mile route in Santa Ana and Garden Grove, is also set to open.

“We’ve come a long way in these first three decades,” said OCTA CEO Darrell E. Johnson. “While we take a moment to reflect, there’s plenty to be excited about as we look ahead at expanding on OCTA’s accomplishments and keeping our residents, workers and visitors moving safely and efficiently.”

To see more about OCTA’s first 30 years, visit octa.net/30years.