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From page 14... ... 17 Background Financial innovation is defined by Investopedia as "Advances over time in the financial instruments and payment systems used in the lending and borrowing of funds. These changes, which include innovations in technology, risk transfer and credit and equity generation, have increased available credit for borrowers and given banks new and less costly ways to raise equity capital" The typical goal of state and federal funding programs is to incentivize investment and development of projects which meet public needs. Private financing programs are typically less flexible, and must meet loan eligibility and risk profiles. Public agencies, in general, can assume greater risk if the project objectives have public interests in mind. Rail funding innovation is the art of bringing public and private sector partners together to develop projects which benefit both parties. State and local governments are assuming a larger role in funding transportation because federal revenue is no longer sufficient or stable to meet current transportation funding needs. A growing number of governors and state legislatures are engaged in fiscal innovation aimed at generating more transportation funds. In 2013, 26 states undertook significant transportation‐related revenue initiatives; some raised gas taxes, and some shifted to a tax on fuel at the wholesale level, and others enacted dedicated sales taxes for transportation or floated revenue bonds dedicated to transportation. In 2013, voters approved over 70 percent of the state ballot measures to increase or extend funding for surface transportation. These included four bond initiatives and 12 measures to increase, extend or renew transportation sales taxes. In California, 80 percent of the state's population already lives in counties that tax themselves to support local transportation investments. In 2014, six states introduced bills to raise gas taxes or index them for inflation. American Road & Transportation Builders Association (ARTBA) identified 14 state legislatures working on bills to increase funding for state transportation programs. In 2015, 185 transportation funding bills were introduced at the state level, 89 failed with 36 bills still pending. As of February 2016, 44 transportation funding bills have been introduced in 23 states according to the Transportation Investment Advocacy Center. The map in Figure 2 illustrates state funding initiatives aimed at increasing the funding pool. Funding programs for rail, at the state level, have been constrained and difficult to implement due to the cost and complexity of most rail projects. Both passenger and freight rail projects include expensive long‐term assets that often exceed the program funding limits at the state and federal level. This requires rail projects to assemble multiple funding sources, and artfully attract private investment to augment the limited state and federal funding programs. PROGRAM INNOVATION Read the entire page →
From page 15... ... Figure 3 201 Figure 3 i transport October. T represent Case St To illustra project ob spectrum achieve re 5 State Transpo llustrates stat ation measur hese fundin measures to udy Selec te rail fundin jectives, pro of projects w sults. The ov rtation Fundin e transporta es are noted g initiatives w support freig tion Pro g innovation ject budgets, hich demons ersight com g Initiatives So tion funding in Appendix ere commen ht or passen cess , nine case st geography a trate how di mittee review urce: Transport initiatives un 4. No activiti ced to suppo ger rail prog udy summari nd funding p fferent objec ed and rank ation Investme dertaken in 2 es were repo rt transporta rams. es were prep rograms. The tives and pro ed the projec nt Advocacy Ce 015. A summ rted in the m tion and do ared to capt goal was to grams can be ts for case st 18 nter ary of these onths of Jun not necessar ure a variety showcase a b interwoven udy e and ily of road to Read the entire page →
From page 16... ... 19 consideration. Based on the committee's ranking, three case studies were selected for a further structured analysis. A fourth case study was added by special request after the initial case studies were completed. The summary of all projects can be found in the Appendix 3. Case Studies Selected 1. Short Line Case Study – Appalachian Regional Short Line Rail Project (WV, KY, TN)  Criteria: Multi‐state, Short Line, TIGER I, Public Private  Lead: State of Kentucky, Kentucky Transportation Cabinet 2. Commuter Rail Case Study ‐ Colorado RTD Eagle P3  Criteria: Transit, Public Private  Lead: Denver Regional Transportation District (RTD) Read the entire page →

From page 14...

... 17 Background Financial innovation is defined by Investopedia as "Advances over time in the financial instruments and payment systems used in the lending and borrowing of funds. These changes, which include innovations in technology, risk transfer and credit and equity generation, have increased available credit for borrowers and given banks new and less costly ways to raise equity capital" The typical goal of state and federal funding programs is to incentivize investment and development of projects which meet public needs. Private financing programs are typically less flexible, and must meet loan eligibility and risk profiles. Public agencies, in general, can assume greater risk if the project objectives have public interests in mind. Rail funding innovation is the art of bringing public and private sector partners together to develop projects which benefit both parties. State and local governments are assuming a larger role in funding transportation because federal revenue is no longer sufficient or stable to meet current transportation funding needs. A growing number of governors and state legislatures are engaged in fiscal innovation aimed at generating more transportation funds. In 2013, 26 states undertook significant transportation‐related revenue initiatives; some raised gas taxes, and some shifted to a tax on fuel at the wholesale level, and others enacted dedicated sales taxes for transportation or floated revenue bonds dedicated to transportation. In 2013, voters approved over 70 percent of the state ballot measures to increase or extend funding for surface transportation. These included four bond initiatives and 12 measures to increase, extend or renew transportation sales taxes. In California, 80 percent of the state's population already lives in counties that tax themselves to support local transportation investments. In 2014, six states introduced bills to raise gas taxes or index them for inflation. American Road & Transportation Builders Association (ARTBA) identified 14 state legislatures working on bills to increase funding for state transportation programs. In 2015, 185 transportation funding bills were introduced at the state level, 89 failed with 36 bills still pending. As of February 2016, 44 transportation funding bills have been introduced in 23 states according to the Transportation Investment Advocacy Center. The map in Figure 2 illustrates state funding initiatives aimed at increasing the funding pool. Funding programs for rail, at the state level, have been constrained and difficult to implement due to the cost and complexity of most rail projects. Both passenger and freight rail projects include expensive long‐term assets that often exceed the program funding limits at the state and federal level. This requires rail projects to assemble multiple funding sources, and artfully attract private investment to augment the limited state and federal funding programs. PROGRAM INNOVATION

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From page 15...

... Figure 3 201 Figure 3 i transport October. T represent Case St To illustra project ob spectrum achieve re 5 State Transpo llustrates stat ation measur hese fundin measures to udy Selec te rail fundin jectives, pro of projects w sults. The ov rtation Fundin e transporta es are noted g initiatives w support freig tion Pro g innovation ject budgets, hich demons ersight com g Initiatives So tion funding in Appendix ere commen ht or passen cess , nine case st geography a trate how di mittee review urce: Transport initiatives un 4. No activiti ced to suppo ger rail prog udy summari nd funding p fferent objec ed and rank ation Investme dertaken in 2 es were repo rt transporta rams. es were prep rograms. The tives and pro ed the projec nt Advocacy Ce 015. A summ rted in the m tion and do ared to capt goal was to grams can be ts for case st 18 nter ary of these onths of Jun not necessar ure a variety showcase a b interwoven udy e and ily of road to

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From page 16...

... 19 consideration. Based on the committee's ranking, three case studies were selected for a further structured analysis. A fourth case study was added by special request after the initial case studies were completed. The summary of all projects can be found in the Appendix 3. Case Studies Selected 1. Short Line Case Study – Appalachian Regional Short Line Rail Project (WV, KY, TN)  Criteria: Multi‐state, Short Line, TIGER I, Public Private  Lead: State of Kentucky, Kentucky Transportation Cabinet 2. Commuter Rail Case Study ‐ Colorado RTD Eagle P3  Criteria: Transit, Public Private  Lead: Denver Regional Transportation District (RTD)

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