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40 Example 13-2. Maine DOT Industrial Rail Access Program Rail is essential to the economic vitality of Maine. Recognizing the need for continued economic develop- ment and employment growth, in the late 1990s, Maine considered potential opportunities in passenger and freight rail and, as a result, created the Industrial Rail Access Program (IRAP) in 1997 to better facilitate rail service and intermodal transportation. IRAP was also designed by Maine DOT to promote economic development and expand opportunities for job employment. IRAP is intended to fund projects that will have the most favorable impact on Maine's economy, the environment, and the transportation system. The main purpose of IRAP is to provide financial assistance, in the form of grants, for the cost of projects that involve rail or rail-related investment in infrastructure. Applications are accepted from private rail- road companies, municipalities, counties, private enterprises interested in freight rail transportation, and non-profit organizations. IRAP procedures allow for financial assistance up to 50 percent of the total eligible project cost. This ensures equal interest and investment by the applicant. Higher ranking is given to projects that emphasize commitment to economic development, promote multimodal initiatives, or show private investment of more than 50 percent of the project. In some cases, Maine DOT may provide an amount of assistance less than applied for, depending on the availability of program funds. The proj- ect applicant also must provide, as part of its application, a commitment letter from all non-state sources from which it anticipates receiving funds for the project. The matching requirement of 50 percent ensures that applicants are willing to invest just as much of their own resources as they are requesting. It also guards against misuse of funds for the same reason. This cost sharing allows the leveraging of public funds while furthering economic development missions critical to both public and private entities. 4.3 Type II Guidelines specific projects but may not be directly responsible for the design and construction of these projects. The Type I guide- Type II guidelines are designed to build on those for Type lines are essential to the success of Type II arrangements, I and provide additional input for Type II arrangements. addressing all the activities required to initiate the institu- Type II arrangements are organizations that seek consensus tional arrangement, establish a specific mission and set of on specific project priorities. They use quantitative methods strategies, and engage stakeholders in the process. Each of to score and rank projects competing for funds. These the Type I guidelines should be reviewed for applicability to groups often have active and focused advocacy programs for Type II institutional arrangements. Table 4-3 summarizes Table 4-3. Summary of Type II guidelines. FSTED FMSIB IRAP Guideline 14 Define specific program elements 15 Develop implementation process 16 Establish protocols for implementation 17 Identify evaluation criteria 18 Define funding allocation process 19 Require on-time completion of projects 20 Require project audits 21 Perform site visits 22 Ensure focus stays on purpose/mission
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41 the Type II guidelines. Following the specific guidelines, the Guideline 17. Identify evaluation criteria. case studies listed in Table 4-3 are presented in Examples 4.3-1 Successful Type II organizations use well-documented pro- through 4.3-3. These cases are particularly focused, clear cedures for scoring and ranking projects. The objectivity and examples of the Type II guidelines. Full, detailed case studies credibility of the selection process are critical to the success of are provided in Appendix C. the organization. These processes measure the degree to which projects address important program objectives by generating Guideline 14. Define specific program project scores that reflect a project's priority compared with elements. other projects. This includes consideration of anticipated out- As institutional arrangements move beyond the general come, project cost, funding match, level of community sup- activities of needs identification, education, stakeholder port, inclusion in regional transportation programs (TIP and involvement, and consensus building, it is important to LRTP), ability to meet defined schedule, and comparison with define a specific set of program elements. These program el- other eligible projects. In addition, equity across modes and ements provide the architecture for implementation activi- geographic regions often comes into play. The process should ties that will be carried out by the institutional arrangement be transparent and built on mutual goals and consensus. members. These activities could include project identifi- cation, evaluation and priority setting, funding alloca- Guideline 18. Define funding allocation tion, and project tracking. As with the development of key process. strategies discussed above, this process sets the stage for the A key activity of Type II institutional arrangements is the functionality that will be implemented by the institutional funding of specific improvement projects. This requires a fund- arrangement. ing source (preferably a dedicated funding source) and a de- fined mechanism for the equitable allocation of the funding. Guideline 15. Develop an implementation The protocols discussed above lay the groundwork for a process process. to guide these decisions; however, it also is important to define Once the program parameters have been defined, specific the specific steps in the allocation process based on the funding attention should be given to developing an implementation cycle, funding availability, funding eligibility, and established process. This should include definition of member respon- priorities. Each funding source will have requirements that sibilities and authority and a step-by-step description of the must be understood and integrated into this process. implementation of the defined objectives, including, but not limited to, a schedule of meetings, application develop- Guideline 19. Require on-time completion ment and submittal requirements, evaluations, and selec- of projects. tion of projects. This process also includes developing nec- essary MOUs to facilitate funding allocations and a process As an "investor" in the project, Type II organizations have for tracking progress. These process elements help establish an interest in seeing the projects succeed. One way in which expectations for the individual participants so that they un- this can be accomplished is to provide strict guidelines on derstand the time commitment, decision-making protocols, project completion requirements. Private-sector participants and anticipated outcome. will only remain involved in arrangements that make progress. Funding often is given for specific time periods. Stipulations can be made that require projects to be completed within an Guideline 16. Establish protocols agreed-on timeframe or the funding will be re-allocated to a for implementation. new project. This ensures that projects are shovel-ready at the Within the implementation process, members will time of funding and specific improvements will come on line be asked to participate in discussions and decisions to in a defined time period. These agreements can also set limits guide the institutional arrangement's activities. Clear, well- on escalation (i.e., regardless of how long the project takes, thought-out protocols should be established to guide this only the agreed-on funding allocation will be available). In activity so that the institutional arrangement meets its de- addition, if the project comes in under budget, funding would fined objectives while building consensus and acceptance of be returned to the program for reallocation. priorities throughout all processes (including individual roles in the approval and selection process). The existence Guideline 20. Require project audits. of these protocols will help the institutional arrangement defend its decisions and actions to a full range of stakehold- The use of performance measures helps ensure an institu- ers and ensure that the members remain committed to the tional arrangement's success. When an institutional arrange- program. ment is responsible for selecting and funding improvement
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42 projects, additional accountability is required. This account- annual or semiannual trips to review select bottlenecks and ability should consist of project-specific audits designed to projects. By visiting project sites, members get a first-hand ensure that (1) funding is being spent on agreed-on activities, look at the projects and become more engaged in the process. (2) the contractor is completing the project as designed, and (3) there are no significant discrepancies regarding how the Guideline 22. Ensure focus stays on funds are accounted for. The results of these audits, in con- purpose/mission. junction with other performance measures, should be used to help describe the overall success of a project. Although all of the above guidelines address specific imple- mentation activities, it is critical the stakeholders remain fo- cused on their ultimate mission or purpose. As the group be- Guideline 21. Perform site visits. comes engaged in selecting, funding, and monitoring projects, Institutional arrangement activities can often be character- an operational mentality can take over, particularly as the ized as a group of like-minded stakeholders brought together group navigates the unavoidable politics that accompany fund- as needed to discuss and implement a program. However, ing decisions. Throughout the process, and particularly from often the members are not involved in the actual construction cycle to cycle, the mission of the group should be revisited and of an improvement project. To help members better under- reviewed. This will serve two critical functions. First, as the stand the needs and the resulting improvements, field visits group membership changes, it ensures that all members are in should be scheduled to review bottlenecks and support needs agreement. Second, it allows the group to modify its mission prioritization. Such visits help educate the members and over time to reflect changes or shifts in priorities. This may be build morale by confirming progress. Given that site visits can necessary based on changes in funding, a new or changing set be costly and time consuming, the group should consider or type of needs, or evolution to a Type III arrangement. Example 4.3-1. Freight Mobility Strategic Investment Board The Freight Mobility Strategic Investment Board (FMSIB) is an independent state agency created by the Washington State Legislature with the mandate to implement a strategic investment program exclusively for freight mobility needs by evaluating and scoring project applications every 2 years using rigorous eval- uation criteria that are competitively neutral across jurisdictions and modes. The 12-member board also advocates for funding at the state and Federal levels in addition to advising the State legislature on regional, state, and national freight trends and concerns. FMSIB was created in 1998 by statute to identify and recommend funding for strategic prioritized freight investments that reduce barriers to freight movement, maximize cost-effectiveness, yield a return on the state's investment, require complementary investments by public and private interests, and solve regional freight mobility problems. This statutory guidance provided the board with specific direction, responsi- bilities, and unique objectives. The specific program elements are to identify and select, evaluate and pri- oritize, and recommend and create funding partnerships for strategic freight investments. To implement the defined program objectives, a program implementation process was included in the statu- tory guidance. By statute, FMSIB may only fund the freight-related portion of a given project. Therefore, a qualitative and quantitative selection process and criteria are used to identify projects that are ready to go into construction and that have clearly identified freight benefits. This prioritization process measures the degree to which projects address important program objectives and generates a project score that reflects a project's priority compared with other projects. At the end, projects are prioritized based on their benefits and their ability to provide matching funds or partnerships. A number of protocols or actions are established and fulfilled to guide the program implementation process. First, to maintain a 6-year list of active projects, the board issues a call for projects every other year, or more frequently if warranted. Announcements are sent to every city, county, WSDOT region, and port in the State of Washington. All project proposals received, regardless of mode (i.e., rail, road, and waterway), are evaluated according to 10 weighted qualitative and quantitative evaluation criteria. These broad evaluation criteria include regional, general mobility, and environmental benefits. Each proposed project is submitted to a board selection team and a technical team for review, evaluation, and scoring.
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43 Example 4.3-1. (Continued) The selection teams discuss whether the project should advance for final consideration and be added to the FMSIB list based on the project's numerical score, fact verification, and determination of benefits. The funding allocation process provides recommendations to the full board about the percentage contri- bution or level of state participation determined based on the freight share of the project benefits. First, the full board reviews all submitted applications during a public meeting, and each recommended project is discussed. Both the recommendation to adopt the project and the specific recommendation of the appropriate state freight share of the financial partnership are considered. The board votes on the recom- mendations, adopts the prioritized list of projects, and establishes the appropriate dollar and percentage amount awarded to each project. The prioritized recommendations are then submitted to the legislature for funding consideration. FMSIB funding may not exceed the state freight share identified by the board when the project is added to the FMSIB list. The remaining cost of the project must be funded by the local sponsor and other public and private financial partners in compliance with FMSIB's charge to use the great- est amount of non-program funds possible. Although a minimum 20-percent match is required, the board has not approved a match amount below 50 percent in the last three calls for projects. Once adopted, proj- ects cannot apply again or have the amount awarded increased, even if costs go up. If project costs go up, the dollar value assigned is used to determine the level of project funding and if project costs go down, the percentage assigned is used, thus protecting the state from unanticipated cost increases. In the end, proj- ects are prioritized based on their benefits and their ability to provide matching funds or partnerships. Once projects are funded, they are monitored to ensure on-time and on-budget completion. FMSIB works with all partners to develop workable cash flow plans that enable a project to move forward without hindrance. Funded projects are required to enter the construction phase within 12 months of receiving notification that they have received funding approval. This 12-month rule is enforced to ensure the proj- ect advances and to provide accountability to the legislature. If a project is not ready within 12 months of receiving funding, or if it has not made significant progress toward its construction schedule, FMSIB can remove the project from its funded list. To keep projects advancing, FMSIB holds regular site visits and works with project sponsors to develop phasing of certain projects, when appropriate, to keep the project on schedule. A project starts with a groundbreaking and ribbon-cutting ceremony. Once the project is under construction, it must display sig- nage at the construction site indicating the partnership funding of the project. The legislature is kept current on the status of all projects. The board performs a complete project audit on the status of all of its projects twice a year and reviews the progress and any changes for each project quarterly. When a project cannot fulfill its commitment as communicated to the legislature and Office of Financial Manage- ment (OFM), the board either moves the project to a later biennium or to the deferred projects list. Avail- able funds are then redirected, after approval from OFM and the legislature, to projects that can advance and can fulfill their commitment. Because of this accountability, the OFM and the Senate and House trans- portation committees have become freight advocates at the regional, state, and national level and continue to seek alternatives to provide funding for freight investments in the state. Since its inception, FMSIB has been committed to its legislative mandate and goals by staying focused on its purpose and its mission. FMSIB has had a successful record of delivering strategic freight investment projects with most projects completed on time or early and on or under budget. FMSIB has also success- fully used state money and forged partnerships while attracting other funds from public and private part- ners and sources, including Federal, county, city, port districts, and private capital. In 10 years of existence, FMSIB has funded and completed 31 projects and stand-alone phases of projects across the state of Washington totaling more than $247 million, of which FMSIB contributed $76 million. It is currently lever- aging $5 for every dollar it invests. In conclusion, FMSIB has developed a comprehensive and coordinated state program to strategically invest in projects that facilitate freight movement within the state and enhance trade opportunities among local, national, and international markets.
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44 Example 4.3-2. Florida Seaport Transportation and Economic Development Council The Florida Seaport Transportation and Economic Development (FSTED) Council was created by the Florida Legislature in 1990 to finance seaport transportation and seaport facility projects to further the state's eco- nomic development mission. This program evolved because of the need for flexibility to invest in Florida's seaport capacity so the seaports could better respond to the global marketplace and compete for interna- tional trade, which is vital to the state's economy. The program is administered through the FSTED Council which consists of 17 voting members: the port director, or the port director's designee, of each of the ports; the secretary of the Florida Department of Transportation (FDOT) or a designee; the director of the Office of Tourism, Trade, and Economic Development (OTTED) or a designee; and the secretary of the Florida Department of Community Affairs (FDCA) or a designee. Florida statutes charged the FSTED Council with improving the "movement and intermodal transportation of cargo or passengers in commerce and trade and . . . support[ing] the interests, purposes, and require- ments of ports located in the state." Program elements were defined in statute to create a program that fosters the economic growth as well as the future potential of the seaports. Specific program elements include the FSTED Council to oversee the program, a project identification process, rigorous evaluation criteria, funding allocation from a dedicated source, and project review. The FSTED Council's main task is to review and approve project applications in order to distribute the state funds for seaport infrastructure improvements and intermodal access projects. To implement the program, the FSTED Council meets at least twice a year to review these project applications and decide on approved projects. To be eligible for funding, a proposed project must be consistent with a seaport's comprehensive master plan as required by law. In addition, to further the economic development goal of this program, each seaport requesting funds from this program must develop a procedure to ensure that jobs created as a result of the state funding are subject to equal opportunity hiring practices as required by law. After thorough review, the FSTED Council determines a list of eligible projects. Once a list of eligible projects has been final- ized, the FSTED Council submits the list to the FDCA, FDOT, and OTTED for their statutorily required review. All FSTED Council meetings are public and allow for transparency in the selection process. In anticipation of these meetings, the individual seaports prepare an application for the seaport improvement projects for which they plan to request funding. Applications must be submitted by August 1 of every year. The application requires a detailed description of the project and each project is then evaluated on a set of specific criteria. This rigorous evaluation process allows for each project to be thoroughly vetted, ensur- ing accountability and transparency. The FSTED Council considers all projects for their statewide economic benefit and selects projects based on what is good for all and not necessarily an individual seaport. State law provides specific guidelines on what types of projects are eligible for funding under this program and specifies they must be funded on a 50-50 matching basis. Protocols were set in statute to guide the actions of the FSTED Council. As required by state statute, the FSTED Council consists of the 14 seaport directors and a representative from FDOT, FDCA, and OTTED, with mem- bers representing these agencies having independent veto power over any project. The FSTED Council elects a chairperson from the group of seaport directors along with a vice-chairperson, a secretary, a treasurer, and a ways-and-means position each serving 2-year terms. Under the direction of the FSTED Council, a project review committee, an environmental management committee, and a security committee provide more spe- cific review and understanding of projects being considered. Each committee has a chairperson appointed by the FSTED Council chair. The Council is required to meet at the call of the chairperson, at the request of the majority of the members, or as prescribed by the bylaws; however, they must meet at least twice a year. The FSTED Council began with a dedicated funding source as identified in state law for all eligible deep- water seaports. The funding allocation process requires a minimum of $8 million a year to be allocated to FSTED from FDOT for seaport capital improvement projects. All of these program funds are to be used to match, on a 50-50 basis, funds from any deepwater seaport as defined in law. In addition, the funds can be
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45 Example 4.3-2. (Continued) used to develop trade data as necessary to assist Florida's seaports with issues of global trade. An individual seaport's distribution of funds after their matching commitment is made cannot be more than $7 million in 1 calendar year and not more than $30 million over 5 calendar years. The Legislature authorized the FSTED Council to issue revenue bonds to be used for funding FSTED projects at a 50-50 match. When intermodal projects became more significant in the late 1990s, the FSTED Council was granted additional bonding authority, for these intermodal projects, which provides $10 million at a 75-25 match. All seaport capital improvement projects completed with funds from the FSTED program are subject to a final audit by FDOT. The structure of the FSTED Council reaches out to multiple seaports and across modes. The vetting process each project must go through ensures that all projects are considered collectively. The cooperative nature of all seaport directors considering what is best for the state instead of their own port promotes the ability to see the bigger picture. This is also the case as the intermodal projects reach out to other modes to encourage a seamless transportation system. The ability to see the bigger picture across modes helps the FSTED Council stay focused on its mission. The seaport directors that meet as part of the FSTED Council are business persons first. Their knowledge of the industry gives the FSTED Council first-hand insight and expertise to allow for greater flexibility. As the market changes, the FSTED Council can respond quickly because the seaports are keenly aware of the global market and the necessary financial moves needed to keep pace with other domestic and international seaports. Example 4.3-3. Maine DOT Industrial Rail Access Program The Industrial Rail Access Program (IRAP) was designed by the Maine Department of Transportation (Maine DOT) to promote economic development and expand opportunities for job employment. It is im- plemented through the Office of Freight and Business Services (OFBS) and is intended to fund projects that will have the most favorable effect on Maine's economy, the environment, and the transportation system. In recent years, Maine DOT has consistently developed and funded projects that have benefited rail projects within established regional transportation corridors. These investments in rail infrastructure and operations were considered to potentially increase commerce and create employment opportuni- ties. In 1997, to better facilitate rail service and intermodal transportation, IRAP began. After creation of the program and securing initial funding, the first list of approved projects came in 2000. IRAP is not a statutorily required program but rather a program offered through and administered by OFBS within Maine DOT. The purpose of IRAP is to provide financial assistance, in the form of grants, for up to 50 percent of the cost of projects that involve rail or rail-related investment in infrastructure for private, public, and non-profit organizations. Specific elements of the program include stimulating eco- nomic and employment growth through generation of new or expanded rail service, preserving essential rail service where economically viable, enhancing intermodal transportation, and preserving rail corridors for future transportation uses. To implement the program, the OFBS provides specific descriptions of the projects eligible for this program. Eligible projects are defined in four categories: rehabilitation, new siding improvement (capital project), right-of-way acquisition, and intermodal facility construction. Projects that enhance rail trans- portation without capital-intensive investment, such as rail track, are eligible to apply for consideration and have been considered in the past. Applications are accepted from private railroad companies, municipalities, counties, private enterprises interested in freight rail transportation, and non-profit organizations. To apply, interested organizations must submit a completed application before the annual deadline, generally in early spring. An original (continued)
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46 Example 4.3-3. (Continued) application and three copies are to be submitted to the OFBS, containing a summary application page, a project description, and cost estimates with site plan, track chart, or valuation map; a rail carrier survey; rail freight shipper and receiver surveys; and a benefit-cost analysis. Incomplete applications are not reviewed; however, if an applicant wishes to supply additional information to explain or clarify the pro- posed project, this information will be accepted and considered. If the OFBS determines it needs clarifi- cation from the applicant, OFBS will request such information. The OFBS has established procedures to evaluate and select projects using criteria that reflect the pur- pose and intent of the program as well as the top priorities and initiatives of the state while keeping in mind the limitations of available funding. In order to be considered during the evaluation process, applicants must demonstrate the public benefit of their proposed projects. The OFBS assesses each proj- ect proposal to determine if it meets minimum requirements by using an objective process that evaluates projects on the merits of IRAP's goals, department needs, consistency with the Integrated Freight Plan, and support of public interest. Due to budget constraints, not all projects receive funding. Upon receipt, each application is rated in ten categories: (1) job creation or retention; (2) new investment; (3) inter- modal efficiencies; (4) private share of project cost--the greater the share the higher the rank; (5) antici- pated decrease in air emissions; (6) anticipated decrease in highway maintenance costs; (7) anticipated decrease in highway congestion; (8) transportation and logistics cost savings; (9) improvements in rail service; and (10) benefit-cost ratio. Higher ranking is given to projects that emphasize commitment to economic development, promote multimodal initiatives, or show private investment of more than 50 per- cent of the project. The OFBS also gives consideration to project proposals that demonstrate financial need, feasibility of project implementation, and operability of the rail carrier. Implementation protocols for this program include providing a timely evaluation and response to each applicant for the IRAP funding. The OFBS staff reviews the application and ranks each project. An objective evaluation process is used that follows established criteria and ensures that each project selected for funding is in line with the intent of the program, meets the needs of the Maine DOT, is con- sistent with the State Integrated Freight Plan, and shows public benefit. The OFBS has the authority to grant projects financing pending final approval by Maine DOT. The amount of funding allocated to IRAP determines the size of the program distribution each year. In some years the program has not received funding and has not been able to award any projects. If the program does not receive funding in any particular year, the OFBS does not solicit applications. However, since the inception of the program there have only been 2 years that the program did not receive funding. IRAP pro- cedures allow for financial assistance up to 50 percent of the total eligible project cost. This ensures equal interest and investment by the applicant. The project applicant also must provide, as part of its application, a commitment letter from all non-state sources from which it anticipates receiving funds for the project. After the OFBS has approved the project proposal, the applicant undergoes a required project inspec- tion before the contract can be executed. The final inspection must pass State approval, site inspec- tion, and an environmental evaluation before work can begin. A follow-up evaluation is conducted by Maine DOT to monitor the performance and investment strategy of the IRAP for all projects that receive funding. The State has recognized the need for capital investment in railroads for the overall productivity of the transportation system. Staying focused on its mission has allowed the program to contribute to the economic development and growth of many businesses in Maine by increasing accessibility to rail. A key success factor has been the program's ability to connect public interests with rail operations and investment. Funding this program encourages new job opportunities, allows businesses to be more competitive, may reduce greenhouse gases, and maintains state-owned track and connections to national Class I carriers.