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G-56 Guidebook for Assessing Rail Freight Solutions to Roadway Congestion Exhibit 4-3. Elements of Leadership and Support for Various Project Elements. Labor distribution may be difficult to realize when parties are not well known to each other, but such distribution reduces the time and complexity associated with partnership planning, needs assessment, and funding of capital projects. In the current environment, rail carriers could be better positioned than public agencies to take the wide view on freight transportation corri- dors that cross dozens of MPOs and states. Railroads conversely have important needs--quite apart from capital funding--that their public partners are better or uniquely able to satisfy. Streamlining of process and acceleration of approvals are one kind of aid; running interference with citizen groups and provision of political assistance are others. These things can have a great effect on the efficiency and diplomacy with which railroads can function in the public sphere, and they especially help to answer the challenge of a handful of Class I carriers interacting with hundreds of distinct public entities. Distribution of labor bears with it the seeds of real partner- ship, because as relationships mature and parties come to rely on one another, they acquire roles and perform like the members of a team. Freight shippers and receivers, third-party logistics firms, and motor carriers also have an important stake in the success of freight planning and should likewise be engaged in the public process. Their input could be coordinated through a FAC, as earlier described. Leadership roles under a shared agenda are illustrated in the Exhibit 4-3. Individual positions should be modified for local circumstances and are not hard and fast; the primary purpose of this exhibit is to suggest how responsibilities can be distributed and show the inter-reliance of parties. Developing relationships means finding the right personalities and leadership to address issues in a broad fashion and forge a partnership based on needs, shared resource burdens, and emerg- ing trust. An initial consensus limited to projects and supported by the methods of collaborative dispute resolution can mature into long-term relationships with efficient, inter-reliant roles. The broad perspective also is necessary to cultivate the stakeholder groups required to cement a political coalition favoring local and state contributions to rail projects. 4.4 Institutional Development A successful project solves an immediate problem. An institutionalized system solves many problems through common channels and transforms cooperating parties into continuing part- nerships. A well-designed and easily understood institutional framework for rail projects also makes the public-private interaction more efficient--organizing priorities for the two sides, nor- malizing and speeding up the identification and funding of beneficial improvements, and form- ing rules for the interaction that encourage the commitment of both parties.

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Guidelines for Public-Private Dialogue G-57 Six steps can be taken by or alongside the public sector to foster stronger institutions: intro- ducing stable funding, use of organizational strategies, provision for professional development, adoption of standards, cooperation across jurisdictions, and land use actions. Some are steps that few users of this guide will have direct power to take, unless they stand in a position of author- ity or influence. However, development is something many members of an institution partici- pate in, and each can call for appropriate actions from time to time, support their introduction, and capitalize on them once in place. Institutional Development 1. Stable Funding 2. Organizational Strategies 3. Professional Development 4. Standards 5. Multi-jurisdictional Techniques 6. Land Use Actions Stable Funding Dedicated, predictable sources of funds add credibility to rail planning efforts and are strong motivations for private-sector participants to engage fully in planning discussions. Railroads are used to a very long asset replacement cycle for major investments. A concern for carriers, then, is the reliability of public-sector funding as part of any long-term partnership. Many DOTs, if they can use state money directly for rail projects at all, must rely on bonds, appro- priations, and their general funds, which are improvised and variable. In several states with well-established rail programs, however, there are standing budgets that are modest by high- way standards, but are continuous and can supply a program through time. New Jersey has been able to support rail from its Transportation Trust Fund, and Virginia has created a Rail Enhancement Fund within its Transportation Trust. Where trusts are off limits to rail (as is often the case), there are other approaches. Indiana devotes some of its state sales tax to rail; in Oregon, a portion of lottery proceeds are set aside for non-highway transport, of which freight rail receives a segment and is eligible for more. These designated streams of revenue have the virtue of being sequestered, and this protects them, even if they are not transportation derived. The key point is that states have found various ways to create dependable annual funding for rail, which strengthens the standing of their rail divisions, enlarges their range for action, and cements their partnership with carriers. Larger ambitions demand larger budgets. Rail projects with network-level benefits have cost from tens of millions to billions of dollars. Apart from infrequent federal earmarks, the bigger proj- ects require funding packages assembled from a combination of federal programs, state and pos- sibly local money, private contributions, and ad hoc sources such as project bonds. Qualification under multiple federal programs (and federal flexibility in administering them) is a practical tac- tic that has led to successful completion of capital packages, even for efforts of moderate size. Project-driven financing is inevitable for the biggest initiatives, but to move rail investment toward systematic highway relief calls for a steady and growing program at the base. For most users of this guide, fostering a commitment to effectual and sustained funding by states is the right focus, and some form of sequestered revenue is a desirable way to produce this. Two fur- ther elements can be very helpful for building up funding amounts: If state money can be safely banked from year to year, then unused or purposefully deferred program money can be accumulated toward the provision for major projects.

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G-58 Guidebook for Assessing Rail Freight Solutions to Roadway Congestion If neighboring states each have underwritten substantial rail program budgets, their ability to jointly fund network initiatives that cross jurisdictional borders will rise. Ultimately, for states and other public agencies, a public commitment to shared-investment rail capacity should be supported with a public funding structure that is robust and stable, in order to gain the full measure of private-sector participation. Organizational Strategies Many states have statutes or even constitutional prohibitions against use of certain revenue sources for rail improvements. In still other states, a blanket prohibition on investment of pub- lic money in private businesses effectively precludes consideration of public investment in rail. Some obstacles can be dealt with by using the general fund or accessing particular and non- restricted state income, like the lottery revenue mentioned earlier. Beyond this, joint powers authorities, due to their special taxing and bonding capabilities, have proven to be a pragmatic instrument for bypassing some statutory limitations. Constituted as government corporations or as similar enterprises outside of the normal state structure, the authorities are controlled by two or more public agencies but enjoy independent status. They are endowed with powers like fund raising and tax abatement that enable them to secure, assign, and manage public money in venues that might otherwise be prohibited. Usually they are associated with a single project and not with management of a portfolio, yet at a minimum their organization, systems, and perhaps personnel could be duplicated for successive applications. An entity of this type may be the most sensible way to govern multi-state initiatives, although working instances of this are not fully in evidence and could require legal crafting. Joint powers authorities offer a way around statutory obstacles to public rail investment. They also may fit into the wider role of a dedicated institution assigned to the management and imple- mentation of a major rail proposal. Large projects that take years to bring to fruition can consume staff and resources to a degree that is either disruptive to the typical public agency or falls short of the needs of the project. Ded- icated institutions provide a way to obtain personnel and functions and devote them to a major initiative. This can be a mark of commitment to partners--it gives them a single point of contact and is a practical way to get work done. As fairly independent repositories of professional expert- ise, authorities also can act as interested intermediaries in collaborative dispute resolution, as discussed earlier in this chapter. Dedicated institutions, therefore, become effective mechanisms to access funds, assess needs and priorities for funds application, treat conflicts, ensure project activation, and monitor and manage results. An organizational approach that is less sharply delineated, but more suited to rail coordina- tion on an ordinary scale, is for the state DOT to assume formal or informal leadership for all public rail planning, analysis, and funding in its region. States with dedicated rail groups of any size aim to do this now, and this approach responds to the freight carriers' manpower limitation for dealing with multiple and overlapping public agencies. Individual cities, counties, or MPOs all have specific rail needs or interests, but these can be coordinated through the state group or through a sharing of professional staff and costs--and MPOs seldom can specialize on their own. State leadership also ensures that any rail project, even if sponsored by an MPO or city, is devel- oped through an analytical framework with which carriers are familiar. The quality of the relationship between State DOTs and their MPOs will contribute to the ease or difficulty of reaching agreement on the structure of rail planning efforts. At a minimum, the states and MPOs should, with the encouragement of carriers, agree on common definitions and mea- surement tools for evaluating rail investment proposals. Still, this does not mean that the weighting

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Guidelines for Public-Private Dialogue G-59 of factors used to evaluate a project must be the same for all locations in a state. Highway conges- tion and air quality, for example, normally play a more prominent role in the selection process for urban rail corridors than for those that traverse rural areas. Specific timetables and products should be insisted on as well, even if the early products are just policy statements or standards. Carriers are leery of an open-ended time commitment, without some schedule for deliverables. At least some of the state rail section personnel should be knowledgeable about the commer- cial, operational, and engineering practices that govern rail functions--ideally some should have private rail experience. The eventual goal should be to develop specialized in-house planners, able to provide continuity in the evaluation of rail proposals and competence in the eyes of prospective partners. To this end, a program of professional development is a necessary step. Professional Development The rail section of the typical DOT is not prepared to handle a growing public role for rail invest- ment, and MPOs are even less so. DOTs and MPOs can enhance their capabilities by using con- tractors, but training and development programs are the best way to equip public officials to deal with the issues. Carriers cannot carry out staff education each time a public-sector rail initiative is put forward for discussion. Carriers might, however, be willing to participate in a more broadly based rail education effort, and their own staff may learn from the process. Professional develop- ment also makes it easier for public agencies to attract appropriate rail representatives to the table: Carriers will come to see public rail staff as knowledgeable and influential allies in raising awareness of rail sector benefits and building sympathy for rail-friendly policies. Carrier time will be spent more efficiently because public staff will be working from a solid understanding of the freight rail environment. The levels and positions of carrier representatives who attend meetings may be elevated, so that officers with decision-making authority become involved. Development and implementation of a training program should be organized by state DOTs, or more efficiently by a coalition of interested states and like-minded MPOs. Impetus could start from a source like the rail committee of AASHTO (known as SCORT) and proceed with the collaboration of such industry groups as the Association of American Railroads (AAR) or the American Short Line and Regional Railroads Association (ASLRRA). Alternately, the freight pro- fessional development program of the FHWA could be adapted to the purpose. Its rail content should be reviewed by a competent body of users (SCORT again is a reasonable choice), and rec- ommended for acceptance or modification. Key considerations for the design of the program are its breadth and duration. There are practical bounds to the time available from course providers and recipients, but prepared professionals will not emerge from a 2-day intensive program. A solution would be basic instruction managed nationally, then supplemented by a longer regional course, backed by states and perhaps run through universities. The program curriculum should feature a general orientation on essential issues that influ- ence freight railroad services, including operational, economic, and market factors. This guide- book and its supporting report can serve as a survey of content or could function as texts. The course should be targeted to state and MPO planners, but should have features or versions to attract railroad personnel. Certainly railroad officials can benefit from a richer and balanced comprehension of public planning, and the opportunity for mixed public-private participation in course work would be an understated way to cultivate partnerships. Standards Public funding of rail projects can best proceed from a transparent, well-reasoned, and vis- ibly fair accounting of public costs and benefits. Carriers and states alike have an interest in

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G-60 Guidebook for Assessing Rail Freight Solutions to Roadway Congestion acquiring standards that organize the assessment process. Carriers in particular have no appetite for learning new evaluation methods for every public partner in the many states of their networks. The procedures presented in this guidebook are intended to form such a core system of standards. By adopting common rules, participants can concentrate on participa- tion instead of adjustments. Participants can combine efforts across jurisdictions because of shared principles and can expect generally equal treatment around the country. Moving from a guide to an active system, of course, requires the acceptance of major railroads and public associations, promulgation through professional development programs, and successful use in the field. Multi-Jurisdictional Techniques Many proposals simply are not local. Rail networks cross jurisdictions, freight markets ignore boundaries, and trucks move everywhere. A project undertaken in one place frequently has influ- ence in another, even if it can be completed in a single spot. The public sector's institutional dif- ficulty in responding to this is a built-in problem affecting freight initiatives of all sorts, and not just in rail; the difficulty derives from barriers based in the system of government and the ways federal money is distributed. A related predicament is benefit-cost imbalance, which arises when the costs of a project fall in one jurisdiction, and the preponderance of its benefits fall elsewhere. Railroads seeking to work with the public sector wrestle with these things and sometimes prefer locally contained projects for their lack of jurisdictional complexity, even when the strategic needs are larger. This section has discussed steps and devices to make multi-jurisdictional programs more fea- sible. None of them remove the root problem of political and fiscal structure, yet taken together they may reduce the degree of difficulty. Common rules for evaluating proposals make it easier for public agencies to collaborate and may end up fostering common goals. Railroads, with their interstate perspective, can act as intermediaries to bring these goals into focus. The spread of professional development programs in freight rail will support these same purposes by creating more responsive officials with comparable viewpoints in multiple agencies. Standing budgets committed to rail, especially those with reliable revenue sources, make rail programs more practical. Budgets committed in adjoining states give neighbors a basis for coordination over an extended time. Joint powers authorities offer a formal way to manage cross-jurisdictional projects, provided they can be fashioned to conform to the laws of participating states. They may be able to sup- port cost sharing to offset imbalanced benefits, and they have the additional virtue of dedicating resources to the complicated process of interstate cooperation. Corridor coalitions are a variant on this approach and are seeing use in freight applications for highway and rail. Finally, there is the designation of sequential projects in line with an overall strategy. The con- cept is that multiple improvements in different districts all can be pointed at a general increase in service for a corridor or region. The affected agencies agree to the program, yet the compo- nents are executed according to individual budgets and time frames. This is not an ideal approach, because program elements can be interdependent, and strategies with a culminating purpose (like the inauguration of new corridor trains) are made to wait until the necessary pieces are in place. Nevertheless, in the absence of consolidated financing, it is a pragmatic way to cre- ate incremental improvements, and for projects particularly with stand-alone components, it is a sensible way to proceed. The maxim "plan regionally, act locally" is a phrase that comes from practitioners in multi-jurisdictional program management, and it expresses the same kind of realism.