RAILROAD ASSISTANCE PROGRAM



RAILROAD REHABILITATION AND IMPROVEMENT FINANCING (RRIF)

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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.