Short line and regional railroads recently received good news, when the United States Department of Transportation (DOT) said it will expand key components of the Railroad Rehabilitation and Improvement Financing (RRIF) Express.
The RRIF Express’s objective is to reduce the time and costs related to securing loans to modernize aging freight and commuter rail infrastructure, according to DOT. And it added that it will expand eligibility and provide more flexibility for a pilot program to expedite long-term, low-cost loans for America’s short line and regional railroads.
The key components of RRIF Express cited by DOT include:
- increasing loan amounts from $50 million to $150 million;
- more types of projects are now eligible;
- increasing option to finance loan amount from 40 percent to 75 percent;
- increased flexibility in considering different categories of environmental review; and
- raising Credit Risk Premium assistance from the previous five percent up to 10 percent of the loan value, capped at $5 million per application
“Expanding this financing program will strengthen the short line and regional railroad system, promote economic growth in rural communities, and boost America’s economic competitiveness,” said U.S. Transportation Secretary Elaine L. Chao in a statement.
Chuck Baker, president of the American Short Line and Regional Railroad Association (ASLRRA) said in a statement that ASLRRA and the short line freight railroads it represents are excited about these improvements being rolled out as RRIF Express 2.0.
“The modifications combine to form a robust and significant improvement to the program and should allow for more short line projects to be presented and selected for funding,” said Baker, “These projects will in turn allow short lines to better serve their thousands of shippers and the largely rural and small town communities that they serve with safe, efficient, reliable and environmentally sustainable freight rail service. The Build America Bureau should be commended for their ongoing attempts to improve this program to allow it to fulfil its important mission – reducing the time and costs associated with securing loans to modernize aging freight rail infrastructure.”
ASLRRA said that it has worked closely with the administrator of the program, the Build America Bureau, to continually improve the accessibility of the RRIF program for small business railroads. And it added that the collaboration resulted in the launch of RRIF Express in December of 2019, which took measures to reduce the time and cost of applying for funding.
The RRIF Express program has already generated significant interest among some ASLRRA member railroads, and the expectation is that these changes will further increase interest, according to ASLRRA, while also noting that railroads that have submitted applications under the RRIF Express program already this year will be able to utilize the provisions by DOT.
DOT said that its Build America Bureau will administer this program to support economic activity and improve the safety, capacity, and reliability of this crucial freight transportation sector.
DOT said that for qualified applicants, the RRIF Express program will significantly cut credit risk premium costs and advisor fees, costs that borrowers would otherwise have to pay in the traditional RRIF program, adding that the RRIF Express program will help in expediting loan requests from short line and regional railroads.
Letters of Interest will be accepted until all available financing is exhausted. The Notice of Funding Opportunity can be found on the Bureau’s website.
The Bureau 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. During Secretary Chao’s tenure at Department, the Bureau has closed over $1.1 billion…