National Academies Press: OpenBook

Guidebook for Intercity Passenger Rail Service and Development (2016)

Chapter: Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment

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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
×
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
×
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
×
Page 19
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Suggested Citation:"Chapter 2 - Visioning: Intercity Passenger Rail Program Establishment." National Academies of Sciences, Engineering, and Medicine. 2016. Guidebook for Intercity Passenger Rail Service and Development. Washington, DC: The National Academies Press. doi: 10.17226/23535.
×
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12 This chapter describes the state rail planning process and the steps necessary to establish an intercity passenger rail program at the state DOT level. The chapter includes a description of the most current practices in developing state rail plans (SRPs) issued by FRA, a discussion of the decision to establish a state- or regional-level intercity passenger rail program, an introductory description of how to fund or finance an intercity passenger rail program, and an overview of the public involvement processes involved at this stage of program development. The chapter concludes with a discussion of how the decision to establish an intercity passenger rail program can affect overall state transportation goals. Developing State Rail Plans The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) established a national policy and planning framework for intercity passenger rail service and development. Section 303 of PRIIA requires that states develop SRPs to establish a statewide rail policy and address a broad range of issues related to freight and passenger railroad services in the state. PRIIA also requires that FRA agree to an SRP and that any infrastructure projects funded through FRA capital grant programs be included in an adopted SRP through a joint process between the state and FRA. FRA provided further guidance in 2013 on the elements and suggested format for creating SRPs that would comply with FRA requirements to receive future federal funding for intercity passenger rail and other rail infrastructure improvements. This section describes the role of the SRP in the intercity passenger rail service and develop- ment process. PRIIA and subsequent FRA requirements for SRP content are discussed, including strategies for outreach to public and private stakeholders and the role of performance measurement in the SRP process. SRP Development Process Summary The SRP development process can directly support developing intercity passenger rail service in a state given that completion and FRA acceptance of an SRP make the state eligible for future federal grants related to intercity passenger rail. Through the state rail planning process, states can • Formally establish a common vision, informed through robust public outreach and stakeholder input, for developing intercity passenger rail service in the state. • Use performance-based planning to link the vision for intercity passenger rail service with specific goals and objectives for the service and specific metrics to evaluate progress toward the vision, goals, and objectives. • Develop a program of long- and short-term infrastructure investments necessary to achieve the vision for intercity passenger rail service in the state. C h a p t e r 2 Visioning: Intercity Passenger Rail Program Establishment

Visioning: Intercity passenger rail program establishment 13 Purpose of the State Rail Planning Process The state rail planning process enables states to develop a unified vision for intercity passenger rail policy and provides a forum for obtaining feedback from public and private stakeholders on the vision for intercity passenger rail service in the state. The SRP can also be used to develop the state’s vision for intercity passenger rail service and to document the infrastructure, funding needs, and challenges associated with implementing a passenger rail program. SRP elements also document areas necessary for FRA and other agencies to consider in future funding decisions. SRP Requirements Requirements for developing SRPs are described in Section 303 of the PRIIA legislation, which has been codified in 49 U.S.C. §22705. On September 17, 2013, FRA issued its State Rail Plan Guidance document explaining the process to be followed in developing SRPs and the mini- mum content requirements for SRPs to be in compliance with PRIIA (FRA 2013). Highlights of the FRA SRP guidance are presented in this section with specific discussion related to the role of the SRP in intercity passenger rail service and development activities. Many states have been engaging in state rail planning activities, including the development and frequent update of an SRP, for many years. However, the specific PRIIA requirements for SRP content, FRA authority for approval of a state’s SRP, and the connection between project inclusion in an SRP and eli- gibility for FRA capital grant funds are new requirements that need to be addressed by states in SRP updates. FRA SRP guidance also presents the detailed requirements that must be followed for FRA to provide acceptance of the state’s SRP document as complying with the SRP require- ments. FRA’s acceptance indicates compliance and review—not official approval of the projects and plans included there. States and other entities wishing to implement intercity passenger rail service are encouraged to review the FRA guidelines in more detail to ensure full compliance with legal requirements for SRPs. PRIIA requires that states must establish or designate a state rail transportation authority (SRTA) to develop SRPs and set policy for freight and passenger railroads within state boundaries. PRIIA also requires that states establish or designate a state rail plan approval authority (SRPAA) with responsibility to review and approve the SRP. The FRA guidance allows for the SRTA and the SRPAA to be the same entity or official. Many state DOTs have established specific offices or divisions that take on these roles to administer rail-related activities for the DOT. Additional discussion of administrative options and responsibilities for state DOT rail programs can be found in the Administrative and Institutional Options section of this chapter. Typical Rail Plan Content The required standard format for SRPs as described in the FRA final State Rail Plan Guidance (FRA 2013) is as follows: Executive Summary 1. The Role of Rail in Statewide Transportation (Overview) 2. The State’s Existing Rail System 2.1. Description and Inventory 2.2. Trends and Forecasts 2.3. Rail Service Needs and Opportunities 3. Proposed Passenger Rail Improvements and Investments 4. Proposed Freight Rail Improvements and Investments 5. The State’s Rail Service and Investment Program 6. Coordination and Review Technical Appendix

14 Guidebook for Intercity passenger rail Service and Development The FRA guidance provides specific requirements for developing SRP content in compliance with the regulatory framework of the PRIIA legislation. Key highlights of SRP content requirements pertaining to the intercity passenger rail service and development activities are discussed in the following sections of this chapter. Public Involvement in SRP Development Public involvement is essential in developing all transportation plans, including SRPs. A comprehensive process involves the general public, affected organizations, public agencies at all levels of government, and other stakeholders. Such involvement allows the SRP to be informed by the viewpoints of all relevant parties and supports a proactive approach to identifying issues in developing the state’s railroad system. Throughout this guidebook, discussion of specific public involvement at each stage of development is included. Public and Stakeholder Involvement PRIIA requires states to involve public and private stakeholders in developing and reviewing SRPs. As defined by PRIIA, stakeholders must include all freight and passenger rail (intercity and commuter rail) carriers and transit authorities operating in, or affected by, rail operations within the state, as well as all units of local government, and metropolitan areas. Stakeholders should also include major shippers, freight and passenger rail organizations, rail labor organizations, intercity bus operators, airlines, airport authorities, port authorities, chambers of commerce, tourism organizations, and other public or private entities interested in improving rail services and multimodal integration within the state. Involvement of freight railroad carriers is particularly relevant to developing intercity passenger rail services in locations where services are expected to use infrastructure or other facilities owned by freight railroad companies. FRA requires that stakeholders must be notified and given the opportunity to provide input on the SRP as it is being prepared and on the draft plans produced. After notification, the public and stakeholders must have a reasonable time for review and comment on the draft materials. Some states have adopted formal plans for public involvement in developing transportation planning documents; these state-level practices should be followed in developing the SRP where applicable. Local and regional stakeholders (e.g., MPOs) also have established public outreach and feedback mechanisms that may be beneficial to obtaining public input for the SRP. Some innovative practices for involving the public and affected stakeholders in SRP development include an expert advisory panel or committee, an Internet-based survey of key stakeholders, or a web-based virtual public meeting. Interagency Coordination Planning activities for intercity passenger rail service and development should include out- reach to all affected public agencies at the state, regional, and local levels. FRA notes that SRPs are an important part of a comprehensive and coordinated approach to identifying and addressing the mobility needs of passengers and freight in a state (FRA 2013). PRIIA requirements for SRPs direct states to coordinate developing the SRP with other statewide and nonmetropolitan planning activities. The goals and objectives for the state’s railroad system should support the broader goals and objectives for developing the transportation system in the state. Furthermore, SRPs should coordinate with metropolitan transportation planning activities to the extent that components of the SRP affect transportation developments within urbanized area boundaries. Finally, when intercity passenger rail corridors cross state boundaries, states should coordinate SRP development activities with adjacent states. (See NCRRP Report 5 for more information on the process and institutional structures for multistate corridor development.)

Visioning: Intercity passenger rail program establishment 15 Performance Measurement in State Rail Planning PRIIA requirements for SRPs direct that states should complete a performance evaluation of passenger rail services operating in the state, including a description of possible improvements to those services and strategies to achieve those improvements. To comply with this requirement, FRA’s State Rail Plan Guidance indicates that this performance evaluation should be found in Chapter 2 of the SRP (FRA 2013). The performance evaluation should include all passenger rail services operating in the state, including interstate and intrastate services. At a minimum, the evalu- ation should report the performance of passenger rail services in the state with respect to the perfor- mance metrics established by FRA and Amtrak under the requirements of PRIIA Section 207. The final metrics developed under PRIIA Section 207 were published in May 2010; quarterly reports on the performance and service quality of intercity passenger train operations can be accessed via the FRA website. Some states may have additional specific requirements for performance evaluation in the SRP. For example, the California State Rail Plan notes that the California State Government Code requires a performance evaluation of state-supported passenger rail routes and lists specific financial and operational metrics that are to be evaluated (AECOM 2013). Appendix 1 of FRA’s State Rail Plan Guidance provides a list of data requirements corresponding to each major element of the SRP format described earlier. One of the key benefits of completing an SRP is that the process permits all stakeholders to provide input on the vision, goals, and objectives for the state’s railroad system, including intercity passenger rail services operating in the state. The performance evaluation requirement for SRPs enables states to undertake a comprehensive and detailed evaluation of passenger rail services in the state and to link the performance of the state’s passenger rail system to the established goals and objectives. This performance-based process for planning and decision making for transportation has been established for other modes since the early 1990s and reinforced with numerous provisions for performance-based planning found in the most recent long-term sur- face transportation bill, Moving Ahead for Progress in the 21st Century (MAP-21), which was approved in 2012 (FRA 2013). Linking a passenger rail development strategy with performance targets established in an SRP can benefit a state rail program by supporting improved decision making and more efficient allocation of resources. Performance evaluation can be used by states to establish performance targets for intercity passenger rail services operating in the state or track progress toward already- established performance targets. Additionally, the evaluation can assess the contribution of passenger rail toward meeting statewide performance objectives. Additional details on the perfor- mance metrics established by PRIIA Section 207 and other innovative practices in performance measurement in developing SRPs is provided in Appendix D. Role of SRPs in Intercity Passenger Rail Service Development Under FRA’s required standard format for SRPs, Chapter 5 of an SRP is the state’s rail service and investment program (RSIP). The RSIP is a key component of the SRP, describing the state’s long-term vision for rail service and its role in the statewide multimodal transportation system. The RSIP lays out the state’s long-range vision for the passenger rail system in the state with a 20-year time frame and identifies the highest priority needs for funding in the immediate short- range (4-year) program period (FRA 2013). The RSIP enables states to outline the vision for intercity passenger rail service in the state. The vision should include a map depicting the pro- posed long-term vision for the state’s passenger rail network, including intercity, commuter cor- ridors, and potential communities where stations could be located. The RSIP should also include a list of infrastructure projects that would be required to achieve the vision and a description of

16 Guidebook for Intercity passenger rail Service and Development the potential effects of the proposed rail program on the state’s transportation system. The RSIP should include an economic analysis of the program, including capital and operating expendi- tures and the potential public and private economic benefits that may accrue from the invest- ment program. Deciding to Establish a State-Level Intercity Passenger Rail Program A decision by a state to develop a formal intercity rail program generally occurs only after consensus among state executive branch officials and legislators that a specific corridor project or system of such corridors should be pursued. Unlike many highway expansions, extensions, or additions to the state network, the decision to pursue intercity passenger rail investment is often controversial in the United States and is considered supplemental to the traditional or regular programs for highway network enhancements. Few state DOTs have invested the staff resources to manage a major rail development program. States that elect to move forward with such a program are faced with a choice of recruiting staff with rail experience or relying heavily on outsourced consultant services for the biggest share of the technical work associated with developing a new rail service corridor. Minimum staffing requirements for the rail department or division of a DOT are established under PRIIA for those jurisdictions seeking a share of federal funds for their project. Administrative and Institutional Options Key initial decisions for intercity rail sponsors as they select their administrative management structure for governing intercity passenger rail programs are • The degree of autonomy the rail program should enjoy from other, more routine DOT functions. • The breadth of Amtrak’s role in operating and managing the service. Since the passage of PRIIA in 2008, state rail sponsors have been given broad latitude (through PRIIA Section 209) to outsource various elements of rail service rather than to rely on Amtrak for all rolling stock, onboard services, fare policy, marketing, and so forth. As the costs for various program elements become more transparent, it becomes easier for train sponsors to shop and compare while also more directly shaping the attractiveness of the service product through these decisions. During the course of NCRRP Project 03-01, the long-term scope and depth of this outsourcing trend has continued to evolve. Although the process is now more transparent to states as purchasers of Amtrak services, the overall costs of Amtrak service on state-sponsored corridors has generally increased—especially in some states with long histories of partnering with Amtrak. Two observations may be made about the choices for rail program structures based on operations: • Several of the most successful regional train services already operate with a high level of regional management and control by the service sponsors (e.g., the Boston–Brunswick, Maine Downeaster ; Oregon and Washington State’s Cascades trains between Vancouver, British Columbia, and Eugene, Oregon; and the highly patronized, high-frequency Capitol Corridor operation in northern California). Management staffing, service monitoring, and direct inter- face with host corridor owners is more robust in each of these examples than is typical for many Amtrak-operated trains elsewhere. • A decision to directly manage most service elements for a rail corridor operation moves the rail program management role by the state DOT or other public oversight agency ever further away from that typically assigned to DOT functions and would appear to be an argument for at least some level of autonomy from daily, engineering-focused DOT activities.

Visioning: Intercity passenger rail program establishment 17 A discussion of the desire for more specific granularity in costs associated with Amtrak’s services following PRIIA Section 209 implementation is provided in Appendix B. Funding Intercity Passenger Rail Programs Given that the critical issues of funding needs and potential resources are the focus of other NCRRP studies and reports, this guidebook summarizes these topics. NCRRP Report 1: Alternative Funding and Financing Mechanisms for Passenger and Freight Rail Projects offers an in-depth discussion of funding and financing of rail projects. Useful information on dedicated state fund- ing programs for intercity passenger rail will be provided in the soon-to-be-published report from NCRRP Project 07-03, “Inventory of State Passenger and Freight Rail Programs.” Other NCHRP, TCRP, and ACRP projects related to funding and financing of major infrastructure projects may have examples that could be adapted for use in intercity passenger rail project development. The annex to Appendix F lists available documents by project delivery phase and type of project. Typical Intercity Passenger Rail Program Funding Needs This section describes the four general types of funding required to develop an intercity passenger rail program. Given that the scope of funding requirements depends on the types and scope of the projects being considered in each case, this section addresses broad areas/types of funding rather than attempting to quantify potential dollar amounts. The four broad types of funding required to establish an intercity passenger rail program are as follows: • Planning/Design. This category includes funding needs related to the planning, design, and approvals phase of planning studies for new or significantly improved intercity passenger rail service. Some states or designated service-sponsoring agencies have identified and sometimes pre-budgeted the resources necessary for planning and design. Other states must specifically seek this funding on an as-needed project basis from either agency funds or through special appropriations at the state level. • Capital Investment. Capital requirements exist for construction of fixed infrastructure facilities (e.g., ROW purchases, track, signaling, stations, and maintenance facilities) and, in some cases, for rail rolling stock. This type of capital expenditure is generally the largest initial cost and will vary from state to state and project to project by scope and type of service planned, frequency of service desired, and type of vehicles chosen to perform the service. Infrastructure costs for additional capacity on existing corridors can be an added cost. Construction costs and operational testing prior to service commencing would also be included. Investment in recently mandated rail operational safety systems (e.g., PTC) also may be necessary, depending on the project location. • Operations and Maintenance. In state-supported systems, most states partner with Amtrak to provide desired corridor service (for corridors < 750 miles in length) based on a fee sched- ule that was somewhat standardized following passage of PRIIA Section 209 in 2008 and subsequent negotiations/discussions between Amtrak and states. Final, specific procedures to implement PRIIA Section 209 provisions remain under negotiation and development between states and Amtrak. In almost all cases, an ongoing operating subsidy to cover potential difference between operating revenues and costs will be required, as experienced in other modes. In contrast, on a few marginally self-sufficient HSR systems overseas, operating revenues are reported to exceed operating costs. Use of non-Amtrak, private rail operations companies is being explored under PRIIA provisions; however, until final cost structures are fully negotiated and documented, it is unclear if this option would provide appreciable cost savings without

18 Guidebook for Intercity passenger rail Service and Development drop in quality of service—especially in regard to shared track operations with freight rail companies. • Long-Term Maintenance/Capital Spending. Additional capital or capitalized maintenance expenditures for ensuring a state of good repair (SOGR) of all the dedicated equipment and facilities will also be required. Even on the few routes where operational revenues may exceed operational costs, the difference is not sufficient to cover required long-term maintenance, replacement, and upgrade costs. Therefore, the need for routine capital investment in main- tenance and desired capital asset improvements should be considered as a required funding element when considering development of an intercity passenger rail program. Typical Sources of Funding and Financing There are a range of potential grant capital and operating funding sources at multiple levels of government, but in the United States there is a small number of true government financing opportunities. NCRRP Report 1: Alternative Funding and Financing Mechanisms for Passenger and Freight Rail Projects provides an in-depth discussion of funding and financing programs for rail projects, including intercity passenger rail projects and programs. The summary description that follows gives a broad overview of issues and priorities that should be considered in developing financial planning and resources for an intercity passenger rail program. The terms funding and financing are often confused by the public and many in government positions, but these terms represent different aspects of a given infrastructure project. Funding refers to the potential revenue streams/sources that can be used to pay for a specified project. As explained in NCRRP Report 1, sources of passenger rail funding are likely to include but may not be limited to • Net operating revenue streams • Ancillary revenues from operation • Non-repayable capital grants or ongoing operating subsidies specifically funded from various taxes, fees, or other (transportation or general) user charges For most U.S. intercity passenger rail projects, an independent ongoing operating funding stream will be required because the sum of farebox and other ancillary revenues (e.g., lease of station facilities) usually is insufficient to cover the direct operating cost of the service and results in a net external funding requirement to fill the ongoing net operating financial gap. Financing for intercity rail projects typically includes mechanisms or tools to pay for the construction of a project before the project produces revenues. Financing in simple terms is a means of spreading out initial capital investment if full outright capital funding sources are unavailable up front. Financing mechanisms can be used to spread either a portion or the entirety of the upfront capital requirement over time. As explained in NCRRP Report 1, financing mechanisms typically include various forms of debt, equity, and capital leases. Financing creates a future financial obligation and does not replace funding availability. In practice, financing—even creative financing—cannot solve an underlying funding problem. Many large infrastructure projects frequently rely on a creative combination of public and private financing sources, but highways, at least in the United States, primarily rely on traditional public sources such as long-term bonds and fuel tax revenues. A more complete discussion of these issues is provided in NCRRP Report 1. Funding Sources Many states that have been supporting intercity passenger rail for several years have relied on their state legislatures to annually appropriate funding to meet their needs for Amtrak

Visioning: Intercity passenger rail program establishment 19 state-sponsored matching operating funds as well as for larger state-funded capital investment projects. These operating appropriations have become generally well understood, anticipated, and recognized—particularly for the long-standing programs. With the implementation of PRIIA Section 209, and the new requirement for all states to pay the full operating subsidy (as opposed to a portion of the total in the past), continued state appropriations at the higher level have become a major issue of contention, particularly in times of tight state budgets. These pro- visions are discussed in more detail in Appendix B. Several of the newer entries into state-sponsored intercity service have had to make com- pelling cases to justify their initial (and now increasing) capital grant and/or operating subsidy requirements. Some have found alternative or supplemental sourcing for their operating funding, including local/regional taxes (typically from a percentage of gas or sales tax already approved but currently dedicated to other forms of public transportation), contributions from served communities (from general tax revenues, likely real estate based), and similar sources. To meet capital requirements of new service or service upgrade investments, many states have been able to justify the full amount (or a state match for partially federally funded projects) through special or earmarked appropriations by their state legislatures, especially for projects that provide visible and measurable local job creation or locally valued service benefits. (This is difficult for some states, however, given that state legislatures may only meet periodically and the window for requesting such an appropriation may not coincide with the cycles of funding avail- ability for federal or other funding programs.) There also are examples of cities/municipalities providing capital funding for a new or refurbished passenger rail station and of private entities (e.g., a major retailer, university, or housing developer) funding a new station in anticipation of increased value through improved rail access to their business/trade facility. To identify potential funding sources for portions of intercity passenger rail needs, several states have explored or considered some of the creative financing approaches more commonly used for funding urban or regional rail transit systems, but with relatively limited actual application up to this point. Among these are local tax increment financing (TIF) districts where an incremental additional property tax levy is applied to specifically defined areas closely surrounding stations that generate an increase in the value of the properties above their previous values. Other techniques may include sales of naming rights of stations, other buildings, or even the entire passenger service; sales of advertising space in stations or onboard trains; or rail car wrap advertising featuring sponsor logos and graphics on the outside of rail cars. Over the years, the available federal-level capital grant funding for intercity passenger rail programs has fluctuated and there has never been a consistent and predictable annual source of federal dollars. Against this long-standing history of limited federal capital support for intercity passenger rail, the 2009/2010 High-Speed Intercity Passenger Rail (HSIPR) Program, as part of the overall ARRA financial stimulus package, along with its substantial federal capital commit- ment availability, helped to jumpstart a wide range of intercity passenger rail projects at typical conventional speeds (up to 79 mph) and higher speed (up to 150 mph), and one true HSR project (150+ mph). Due to political contingencies, the actual appropriated annual capital funding for this program dropped dramatically in subsequent years and has been effectively zeroed out in appropriation legislation, leaving these projects delayed or in question. Financing Mechanisms As detailed in NCRRP Report 1, the potential for return-based financing of intercity passenger rail capital cost is limited because conventional and even some high-speed passenger rail services that may cover their own operating costs do not typically generate an operating surplus large enough to address these infrastructure costs. That said, in recent years several financing plans

20 Guidebook for Intercity passenger rail Service and Development have been successfully implemented. These have involved rolling stock acquisition with the debt repayment covered by a portion of clearly available operating revenue, effectively converting the capital cost to an operating expense for the debt service. Another similar mechanism is the use of financing for fixed-facility new investment or upgrade, with the debt repaid from committed tax revenue streams, effectively spreading the (still ultimately publicly funded) capital cost over a longer time and replacing the need for a one-time grant to meet the entire project capital costs. Role of Private Financing Scarcity of public funds for infrastructure construction and renewal in the United States has driven interest in using private capital sources to finance projects in every transportation mode. Passenger rail advocates and sponsors are encouraged to explore the possible use of private capi- tal sources, but they should exercise caution in managing public expectations as to what private financing can achieve. Specific items to be aware of include • The fundamental economic value of a project does not change as a result of a shift in sources of capital from the public to private sphere. Money borrowed to build a new system must be repaid. In cases where the benefit stream from the new operation is sufficient to amortize the initial capital financing over a reasonable period of time, private financing is relatively straightforward. • Conventional passenger rail systems do not typically generate sufficient farebox revenue from riders to cover operating costs or to amortize the initial investment in rolling stock and infrastructure. • Many highly capitalized, modern HSR systems in Europe are reported by their sponsors to be farebox adequate (i.e., generating sufficient passenger revenue to cover all direct operating expenses including capital asset depreciation). Initial infrastructure investment is still, however, reliant on public finance and support. • Although passenger rail opponents often point to this funding shortfall, highway and airport infrastructure also receive substantial public investment, both initially and over time, and those investments are not fully recovered from the users of those facilities. • In limited, exceptional cases, some intercity rail programs may justify a substantial share of initial private investment by using the real estate value created at station locations and proper- ties served by the rail service. For example, the currently planned All Aboard Florida private intercity passenger rail project relies heavily on such development by a private rail company that already owns the corridor with substantial rail assets already in place, effectively reducing the overall initial infrastructure investment required. • Value-capture financing mechanisms vary widely by political jurisdiction. As an example, some states prohibit, via statute, TIF vehicles that are a common feature of public support for major projects in other locations. NCRRP Report 1 provides a full discussion of funding and finance options available to rail systems developers as discovered from projects worldwide.

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TRB’s National Cooperative Rail Research Program (NCRRP) Report 6: Guidebook for Intercity Passenger Rail Service and Development presents the resources, strategies, analytical tools, and techniques to support all phases of planning and decision making in the development of intercity passenger rail service at state, regional, or multistate levels. Components of this guide address three major phases required to build and operate passenger rail: planning, design and construction, and operations. The guide details each primary phase into major required subtasks.

The Contractor’s Final Report, included as Appendix F, presents additional background information gathered during preparation of the guide: a comprehensive resource matrix listing documents related to intercity passenger rail service and development; generalized results extracted from interviews with public-sector representatives, Amtrak, and freight rail stakeholders; and results of an online survey used to help build components of the guide.

This guide serves as a companion report to other NCRRP series reports: NCRRP Report 1: Alternative Funding and Financing Mechanisms for Passenger and Freight Rail Projects and NCRRP Report 5: Developing Multi-State Institutions to Implement Intercity Passenger Rail Programs.

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