Proposal would provide loans and loan guarantees for railroad infrastructure
Jun 02 2015
WASHINGTON – Today, Sen. Tom Carper (D-Del.) announced his cosponsor of the Railroad Infrastructure Financing Improvement Act (RIFIA), a bill introduced by Sen. Cory Booker (D-N.J.) and cosponsored by Sen. Mark Kirk (R-Ill.) that aims to offer a new and badly needed source of capital for investment in passenger rail projects across the country.
“As a near-daily rider of Amtrak, a former Amtrak Board Member, and a long-time supporter of passenger rail in America, I am confident that the Railroad Infrastructure Financing Improvement Act, or RIFIA, is the right legislation at the right time for passenger rail in this country,” Sen. Carper said. “Americans are choosing passenger rail at record levels, yet our investment in rail has been steadily shrinking. I want to thank Sen. Booker for inviting me to join him in his push to change that.
“The RIFIA proposal would offer rail operators like Amtrak new and improved access to low-cost capital for investment in passenger rail projects in Delaware and across the country,” Sen. Carper said. “These are badly needed projects that will help to achieve a state-of-good-repair, improve safety and on-time-performance, enhance service quality, and further grow and expand Americans’ access to rail travel options.”
The RIFIA bill would accomplish this by reforming and improving the Railroad Rehabilitation and Improvement Financing program (RRIF). The RRIF program is a self-replenishing loan fund that offers railroad owners access to low-interest direct loans and loan guarantees to support and develop railroad infrastructure. RRIF was established in 1976, but has long been underutilized due to a variety of programmatic, statutory, and commercial limitations on its lending ability. As a result, less than 5 percent of RRIF’s authorized loan capacity has been used over the past 17 years.
“Congress must find a dedicated source of federal funding for passenger rail – a financing program is not a replacement,” Sen. Carper said. “But with $35 billion in total lending authority, RRIF presents a tremendous opportunity to provide badly-needed investment that will advance major passenger rail capital projects, regardless of whether or not Congress is able to agree on a dedicated funding stream.”
The improvements and reforms proposed in RIFIA are modeled after the popular and highly successful Transportation Infrastructure Finance and Innovation Act (TIFIA) program, run by the U.S. Department of Transportation. TIFIA is a similar loan and loan guarantee program that has largely financed highway and transit projects. In just the past five years, TIFIA has processed 34 loans totaling nearly $15 billion and leveraging a total transportation capital investment of nearly $50 billion. By contrast, in the 17 years since the RRIF program was created, it has only processed 33 loans at a total value of $1.7 billion.
“When we look at the success of other federal programs in providing low-cost financing for a variety of critical transportation projects around the country, it is clear that our program for passenger rail could be made far more effective,” Sen. Carper said. “I always say we should find what works and do more of it, and that's exactly what the Booker-Kirk proposal does. It uses lessons learned from successful highway and transit financing programs to improve the railroad financing program in a way that will grow and improve rail service in this country at very low cost to the taxpayer.”
The RIFIA proposal builds on the success of the Passenger Rail Improvement and Investment Act of 2007 (PRIIA), which Sen. Carper worked on as a former member of the Senate Commerce Committee. PRIIA expired last year and is due for reauthorization.
“The legislation we drafted in the Commerce Committee in 2007 has been largely responsible for Amtrak’s success on the Northeast Corridor and in other areas of the country over the last seven years,” Sen. Carper said. “In fact, it’s exceeded all of our expectations. Rail ridership is at a record high, Amtrak’s debt and operating support are near all-time lows, and new projects are underway across the country, from California to the Midwest to the Northeast Corridor. The reforms proposed in the RIFIA legislation will build on the success of PRIIA to help support the continued growth of Amtrak and other passenger rail operators in coming years.”
About the Railroad Infrastructure Financing Improvement Act (S. 797)
The Railroad Infrastructure Financing Improvement Act (RIFIA) proposes a series of changes to the Railroad Rehabilitation and Improvement Financing (RRIF) program to unlock new financing potential. The provisions will enable the Federal Railroad Administration to be a more flexible lender, make the financing process less cumbersome and costly for borrowers, and present new opportunities for private partners to invest in passenger rail service and stations.
Specifically, RIFIA would:
Leverage Private Financing along with Public Sector Loans: RIFIA would facilitate financing arrangements that include both RRIF and private-sector loans.
Allow for Larger and More Impactful Loans: RIFIA would establish new creditworthiness criteria focused on the merits of the project, and authorize master credit agreements to cover a large program of projects like Amtrak’s Gateway Program in New Jersey and New York, or the many projects along the NEC needed to increase speeds and reduce trip times.
Lower Costs for Borrowers: RIFIA would authorize appropriations to assist applicants in paying the federal costs of loans.
Increase Flexibility for Amtrak and other Railroad Borrowers: RIFIA would extend the maximum period for loan repayment from 35 to 50 years, and permit payment deferrals until projects ramp up and become operational, when passenger revenues become available for repayment.
Enhance Efficiency: RIFIA would streamline the application process and improve transparency.
Promote Economic Development: RIFIA would unlock the potential for financing rail improvements through real estate development near stations, such as the 30th Street Station master plan project in Philadelphia, Union Station in small towns like Meridian, Miss., or much of the Japanese Shinkansen high speed rail system.