RAILROAD ASSISTANCE PROGRAM
RAILROAD REHABILITATION AND IMPROVEMENT FINANCING (RRIF)
The Federal Railroad Administration (FRA)
has published the final regulations to implement the new Railroad Rehabilitation
and Improvement Financing (RRIF) loan program. This program is a component
of the Transportation Equity Act for the 21st Century (TEA-21). The
regulations became effective on September 5th, 2000.
A copy of the RRIF regulations and the application may be obtained from
the FRA web site: www.fra.dot.gov.
The application process and information that must be provided is specified
in detail in the regulations.
The program will provide direct loans and loan guarantees
to state and local governments, government-sponsored authorities and corporations,
railroads, and joint ventures that include at least one railroad. An "infrastructure
partner" can provide the credit risk premium, calculated by FRA to reflect
the estimated risk of default of a loan. Loans can be for a term of up
to twenty-five years at an interest rate (for direct loans) equal to the rate
on Treasury securities of a similar term.
A total of $3.5 billion can be loaned under this program
one billion dollars will be made available for projects benefiting non-Class
I freight railroads. Other than the $3.5 billion total ceiling, there
is no annual limits on the amount of RRIF loans under the new program. The
regulations state that the FRA Administrator will give "priority consideration"
to projects that meet several criteria, including those that "preserve
or enhance rail or intermodal service to small communities or rural areas."
The Federal Railroad Administration (FRA) and American
Short Line and Regional Railroad Association (ASLRRA)
are planning to provide some assistance and support for members in the RRIF
application process. ASLRRA is also sponsoring work to develop a computer-based
model for determination of the overall effect and economics of heavy axle loads
(HAL). This may be useful in development of RRIF loan application for
projects involving upgrade of small railroad infrastructure to handle HAL.