Alternative Funding and Financing Mechanisms for Passenger and Freight Rail Projects (2015)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

114 A P P E N D I X A U.S. Federal Rail Funding and Financing Programs

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Community Facili es Loans and Grants The US Department of Agriculture offers loans, loan guarantees, and grants under its "Community Facili es Loans and Grants” program to develop essen al facili es in rural communi es, including health, educa on, transporta on, and recrea onal facili es. Municipali es, coun es, and special-purpose districts, non-profit corpora ons, and tribal governments. Loans, loan guarantees, and grants Development, Capital, Improvement, Debt Financing Grants: Up to 75% Conges
on Mi
ga
on and Air Quality Management (CMAQ) The CMAQ program was part of the ISTEA (1991), created to extend funding for transporta
on and infrastructure development projects that would result in improved air quality benefits. The program was reauthorized, most recently, under the Moving Ahead for Progress in the 21st Century Act (MAP-21) in July 2012; revised Interim Guidance on CMAQ Opera
ng Assistance under MAP-21 was announced in July 2014. Federal CMAQ funds are appor
oned annually to each state according to the severity of each state’s ozone and CO2 problem. The fund supports projects aimed at relieving traffic conges
on and mee
ng air quality standards set by the federal Clean Air Act. Passenger and freight rail projects that help in air quality improvement and conges
on reduc
on are eligible to access CMAQ funding. Since incep
on, the program has provided nearly $30 billion to DOTs, metropolitan planning organiza
ons (MPOs), and other sponsors in support of transporta
on and environment projects. The MAP-21 provides over $2.2 billion per year in CMAQ funding for 2013 and 2014. CMAQ funds are eligible for use on various freight and passenger rail projects, including priority control systems; intermodal facili
es; rail infrastructure rehabilita
on; new rail sidings and passenger rail facili
es, vehicles, and equipment; and opera
ng expenses (new or expanded service). State, MPOs and Regional Transporta
on Planning Agencies, PPPs Grant Capital, Opera
ng, Planning and Project Development, Workforce Development, Training and Educa
on Ac
vi
es 80-100%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Economic Development Administra on Investment Programs The Economic Development Administra on of the Department of Commerce administers two project grants programs: Grants to Public Works and Economic Development Facili es and Economic Adjustment Assistance, intended, respec vely, to (1) promote long- term economic development in areas experiencing substan al economic distress and (2) assist states and local communi es in bringing about a posi ve change in the economy, focusing on areas suffering serious economic damage. State and local governments, economic districts, private, public- and state-controlled educa onal ins tu ons, federally recognized na ve American tribal governments, and non-profits Grant Strategic Investments, Job Crea on and Economic Development Support 50–80%, depending on average per capita income or unemployment rate of the region. Fixed- Guideway Capital Investment Grants (New Starts) Also known as New Starts/Small Starts, this program awards grants on a compeve basis for major investments in new and expanded rail, bus rapid transit (BRT), and ferry systems that improve the capacity of the corridor by at least 10% and do “not include project elements designed to maintain a state of good repair.” The program is funded at $1.9 billion for FY 2013 and FY 2014 subject to appropriaons by Congress. State and local government agencies, including transit agencies. Grant Capital (engineering, and construcon), Project Development New Starts: up to $100 million or 50% of the total project cost Small Starts: Up to $75 million or 80% of total project cost HSR Corridor Development Program HSR Corridor Development Program was inially part of the SAFETEA-LU, but since SAFETEA-LU’s cessaon, has been re-created as a state grant program with an appropriaon of $1.5 billion over 5 years, with states required to match 20% of the federal funding. Eligibility for this program is restricted to projects intended to develop federally designated HSR corridors for intercity passenger rail services that may reasonably be expected to reach speeds of at least 110 mph. State, a group of states, an Interstate Compact, a public agency established by one or more states and having responsibility for providing HSR service, or Amtrak. Grant Capital Up to 80%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Projects of Na onal and Regional Significance (PNRS) PNSR was created as part of SAFETEA-LU to provide grant funds for high-cost projects of na onal or regional significance. Projects eligible for funding under this program may include any authorized surface transporta on project, including freight rail projects. Eligible project ac vi es include development phase ac vi es, right-of-way acquisi on, construc on, rehabilita on, environmental mi ga on, and equipment and opera onal improvements. Projects must have a total eligible project cost greater than or equal to $500 million, or 75% of the total federal highway funds appor oned to the state in the most recent fiscal year. Federal share for this program is generally 80% of total project cost. Funds are allocated to projects through a compe ve evalua on process based on the ability of projects to generate na onal economic benefits, reduce conges on, improve transporta on safety, and produce other benefits. As of October 2012, 26 projects designated in the SAFETEA-LU legisla on have a total authorized funding of $1.779 billion. Of the $1.612 billion in funds allocated for projects in the program, $1.315 billion has been obligated (approximately 82%) and only $903 million has been spent (approximately 56%) as of October 2012. Sec on 1120 of MAP-21 amends Sec on 1301 of SAFETEA-LU by authorizing an amount of $500 million for Fiscal Year (FY) 2013 to carry out this program and to remain available un l expended. At the me of a 2013 Report to Congress on PNRS, required by MAP-21, no funds authorized under MAP-21 had been appropriated. Single state DOT or a group of state DOTs Grant Development, Capital, Rehabilita on, Acquisi on, Improvement Up to 80%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Rail Line Reloca on & Improvement Capital Grant Program (RLR) The congress authorized the RLR in 2005 as part of SAFETEA-LU to assist state and local governments in mi ga ng the adverse effects created by the presence of rail infrastructure. Only states, poli cal subdivisions of states (such as a city or county), and the District of Columbia are eligible for grants under the program. Grants may only be awarded for construc on projects that improve the route or structure of a rail line, mi ga ng the adverse effects of rail traffic on safety, motor vehicle traffic flow, community quality of life or economic development or involve a lateral or vercal relocaon of any poron of the rail line. Congress appropriated a total of $90,104,200 for the program from FY 2008–FY 2011. There will be no subsequent fund outlays because all funds have been awarded. States, polical subdivisions of States (e.g., municipalies, counes), District of Columbia Grant Capital Up to 90% Railroad Rehabilitaon & Repair (Disaster Assistance)a The Consolidated Security, Disaster Assistance, and Connuing Appropriaons Act, 2009, provides the Secretary of Transportaon with $20 million for necessary expenses to make grants to repair and rehabilitate Class II and Class III railroad infrastructure damaged by hurricanes, floods, and other natural disasters in areas for which the President declared a major disaster under Title IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1974. These funds are to remain available unl expended and are to be awarded to states on a compeve, case-by-case basis. Under this program, a state may apply for a grant from the DOT’s FRA to cover up to 80% of the cost of a project. The grantees must exhaust all other federal and state resources prior to seeking assistance under this program. State DOTs Grant Repair, Rehabilitaon Up to 80% a Special importance for Class II and Class III railroads.

b Originally designed specifically to cater to smaller freight railroads (Class II and Class III). Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Railroad Rehabilita on and Improvement Financing (RRIF)b The RRIF Program extends direct federal loans and loan guarantees to finance development of railroad infrastructure with repayment periods of up to 35 years and interest rates the same as U.S. treasury rates or comparable. Eligible applicants could include railroads, state or local governments, government-sponsored authori es or corpora ons, and joint ventures with a railroad being at least one of the pares. The range of projects could include acquiring, improving, or rehabilitang intermodal or rail equipment or facilies, refinancing outstanding debt incurred for the purposes listed above, and developing or establishing new intermodal or railroad facilies. The program authorizes the FRA Administrator to provide direct loans and loan guarantees of up to $35 billion, of which, about $7 billion is reserved for projects benefing freight railroads other than Class I carriers. Since 2009, loan acvity has taken place in 26 states for over $1.7 billion, with 72% of loans extended to Class II and Class III railroads. Railroad companies, state and local governments, government-sponsored authories and corporaons, joint ventures that include at least one railroad, and limited-opon freight shippers that intend to construct a new rail connecon. Loan / loan guarantees (at US treasury rate) Capital, Rehabilitaon, Improvement, Refinancing Up to 100% Railroad Safety Technology Grants PRIIA 2008 authorizes appropriaon of $1.65 billion for the naon’s rail safety program for FY 2009 through FY 2013. Secon 105 of the bill requires the implementaon of “interoperable” posive train control systems for Class I freight and passenger rail carriers by December 31, 2015, and authorizes $250 million in Railroad Safety Technology Grants to help operators implement the technology. The grants provide up to 80% of total project costs, with priority given to projects that benefit both freight and passenger rail or advance posive train control technology. On November 7, 2013, FRA issued a Noce of Funding Availability of $550,000 for Railroad Safety Technology Grants, with grant applicaons to be accepted unl February 5, 2014. Passenger and freight railroad carriers, railroad suppliers, and state and local governments. Grant Capital 80%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Railroad Track Maintenance Tax Credit (45G Tax Credit)c The American Jobs Crea on Act of 2004 provides for tax credit amounts to 50% of qualified railroad track maintenance expenditures (e.g., the cost to improve track, bridges, and signals, paid or incurred by Class II or Class III railroad during the taxable year, in order to help regional and short-line railroads fund their infrastructure projects). Legisla on was enacted in December 2010 to extend the tax credit program for an addi onal 2-year period and maintains the credit limita on at $3,500 per mile. The credit expired on December 31, 2013. Representaves and Senators have introduced legislaon to extend the Secon 45G short-line railroad tax credit. Class II or Class III railroads, or any person who transports property using the rail facilies of a Class II or Class III railroad or who furnishes railroad- related property or services to a Class II or Class III railroad Tax credit Maintenance, Rehabilitaon and Improvements 50% or $3,500 per mile Secon 130 Railway- Highway Grade Crossings Program The Secon 130 Highway Railroad Grade Safety Crossing program is jointly administered by FHWA and FRA and provides grants for safety enhancements that improve highway-railroad grade crossings and reduce the number of fatalies, injuries, and crashes. At least half of the Secon 130 funds must be used for installaon of protecve devices at grade crossings (e.g., installaon of warning mechanisms, safety signaling equipment, track circuit improvements and interconnecons with highway traffic signals). The remainder of the funding can be used for construcon projects (e.g., grade separaons, sight-distance improvements, geometric improvements, and closing of grade crossings). Funding for FY 2013 and 2014 is $220 million each. Federal funding is available for up to 90% of project costs. All previous eligibilies under 23 USC 130 connue. State DOTs Grant Capital, Training, Educaon 90–100% c Specifically targeted to Class II and III railroads.

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share State of Good Repair Grants MAP-21 establishes a new grant program to maintain public transporta on systems in a state of good repair. This program replaces the fixed-guideway moderniza on program. Funding is limited to fixed-guideway systems (including rail, BRT and passenger ferries) and high intensity bus (high intensity bus refers to buses opera ng in high occupancy vehicle [HOV] lanes). Projects are limited to replacement and rehabilita on, or capital projects required to maintain public transporta on systems in a state of good repair. Projects must be included in a transit-asset management plan to receive funding. The alloca on of funds is formula based and comprises: (1) the former fixed guideway moderniza on formula; (2) a new service-based formula; and (3) a new formula for buses on HOV lanes. Authorized funding for this program is $2.1 billion in FY 2013 and $2.2 billion in FY 2014. State and local government authori es in urbanized areas with Fixed Guideway public transporta on facili es opera ng for at least seven years Grant Capital, Rehabilita on, Improvement, Repair 80% Surface Transporta on Program (STP) STP funds may be used for highway improvements to accommodate rail line opera ons (e.g., clearances and grade separa ons) as well as for railroad reloca ons and consolida ons, intermodal terminals, and the acquisi on of abandoned railroad right of ways. STP funds are oœen used by states to supplement the Sec on 130 grade crossing funds. The federal matching share for these funds is 80%. Es mated amounts of STP are $10 billion in FY 2013 and 10.1 billion in FY 2014. Metropolitan planning organiza ons, county lead agencies Grant Capital, Planning, Development 80%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share TIGER Grants The Transporta on Investment Genera ng Economic Recovery (TIGER) Discre onary Grant program provides investment funds to facilitate road, rail, transit, and port projects that have a significant impact on the na on, a region, or a metropolitan area. Congress dedicated $1.5 billion for TIGER I, $600 million for TIGER II, $526.944 million for FY 2011, $500 million for the FY 2012 and III, $500 million for TIGER 2012, and $475 million for the 2013 round of TIGER grants. TIGER's a highly compe ve process, with 40% of TIGER projects having a rail component and cons tu ng 29% of TIGER funds. Each project is mul modal, mul -jurisdic onal, or otherwise challenging to fund through exis ng programs. The TIGER program has a rigorous selec on process that priori zes projects with excep onal benefits, exploring ways to deliver projects faster and save on construc on costs. So far $161.3 million has been commi•ed to freight rail projects and $166.8 million to passenger rail projects. The FY 2014 Consolidated Act appropriated $600 million, available through September 30, 2016, for Na onal Infrastructure Investments. This appropria on is similar, but not iden cal, to the appropria on for the “TIGER” program authorized under the American Recovery and Reinvestment Act of 2009; because of the similarity in program structure, DOT will con nue to refer to the program as ‘‘TIGER Discre onary Grants.’’ As with previous rounds of TIGER, funds for the FY 2014 TIGER program were awarded on a compe ve basis for projects that will have a significant impact on the na on, a metropolitan area, or a region. For this latest funding round (applica ons were due in April 2014), $9.5 billion was requested and there were 797 eligible applica ons. State, local, and tribal governments, including U.S. territories, transit agencies, port authori es, MPOs, other poli cal subdivisions of State or local governments, and mul -State or mul - jurisdic onal groups applying through a single lead applicant (for mul - jurisdic onal groups, each member of the group, including the lead applicant, must be an otherwise eligible applicant). Grant (for planning grants, no minimum, but a maximum of $ 3million; for capital grants for an urbanized area, a $10 million minimum and for a rural area $ 1million; maximum for any grant is $200 million) Planning, Capital 80% for urban areas, 100% for rural areas

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Transit- Oriented Development Planning Pilot MAP-21 allocates new discre onary grant funding for this pilot. Eligible ac vi es include comprehensive planning in corridors with new rail, BRT, or core capacity projects. The comprehensive plans should seek to enhance economic development, ridership and other goals; facilitate mul modal connec vity and accessibility; increase access to transit hubs for pedestrian and bicycle traffic; enable mixed-use development (residen al, commercial, ins tu onal, or industrial); iden fy infrastructure needs associated with the project; and include private-sector par cipa on. MAP-21 authorizes $10 million for FY 2013 and $10 million for FY 2014. State and local government agencies Grant Capital 80% Transportaon Alternaves Program (TAP) MAP-21 establishes a new program, the Transportaon Alternaves Program (TAP) which replaces the funding from pre-MAP-21 programs, including Transportaon Enhancements and others and several other discreonary programs, wrapping them into a single funding source. TAP provides funding assistance for projects/acvies related to surface transportaon and falling under the definion of “Transportaon Alternaves.” The fund can be used for the historic preservaon and rehabilitaon of historic transportaon facilies as well as for preservaon of railway corridors no longer in use. The funding authorizaon is $809 million for FY 21013 and $820 million for FY 2014. Each State's TAP funding is determined by dividing the naonal total among the States based on each State's proporonate share of FY 2009 Transportaon Enhancements funding. In general, State DOTs administer TAP funds. Enes eligible to receive TAP funds include local governments; regional transportaon authories; transit agencies; natural resource or public land agencies; tribal governments; and any other local or regional governmental enty with responsibility for oversight of transportaon or recreaonal trails (other than a metropolitan planning organizaon or a State agency) that the State determines to be eligible, consistent with specified statutory goals. Grant Rehabilitaon, Preservaon, Operaon Up to 80%

Funding Program Name Descrip on Eligible Recipients Type of support Eligible Costs Covered Federal Share Transporta on Infrastructure Finance and Innova on Act (TIFIA) TIFIA is a federal credit assistance program that (1) aids surface transporta on projects of na onal or regional significance to access direct loans, loan guarantees, and standby lines of credit through improved access to capital markets and (2) offers be„er interest rates than are available in the private capital market. TIFIA was created to reduce state and local government’s dependence on user-backed revenue streams to finance large-scale transporta on projects due to the uncertain es involved. The amount of federal credit assistance may not exceed 49% of total reasonably an cipated eligible project costs. The exact terms for each loan are nego ated between the US DOT and the borrower, based on the project-specific cost and revenue profile of the project and any other relevant factors. Eligible surface transporta on projects may include highways, transit, railroads, intermodal freight, and port access projects. While MAP-21 authorizes $750 million in FY 2013 and $1 billion in FY 2014 in TIFIA budget authority from the Highway Trust Fund to pay the subsidy cost of TIFIA credit assistance, aœer reduc ons for administra ve expenses and applica on of the annual obliga on limita on, the program will have approximately $690 million available in FY 2013 and $920 million in FY 2014 to provide credit subsidy support to projects. As of June 2014, the total amount approved for the program, including ac ve and re red credit agreements, was $63,742 million for project costs and $17,081.287 million for the credit amount. The TIFIA Interest Rate was 3.24% for a 35-year loan as of August 12, 2014. Public or private en es such as state DOTs, local governments, transit agencies, special authori es, special districts, railroad companies, and private firms or consor a that may include companies specializing in engineering, construc on, materials, and/or the opera on of transporta on facili es. Secured loans, loan guarantees and standby lines of credit (3.55% interest rate for 35 years) Capital, Design, Opera ng 33-49% Sources: FHWA https://www.fhwa.dot.gov/ipd/finance/tools_programs/federal_credit_assistance/index.htm FRA http://www.fra.dot.gov/Page/P0021 FTA http://www.fta.dot.gov/grants.html Grants.gov http://www.grants.gov Economic Development http://www.eda.gov/funding-opportunities/ Administration