railroad rehabilitation & improvement financing program federal railroad administration u.s....
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Railroad Rehabil itati on & Improvement Financing Program
FEDERAL RAILROAD ADMINISTRATION
U.S. DEPARTMENT OF TRANSPORTATION
RRIF Overview
• The Railroad Rehabilitation & Improvement Financing (RRIF) Program provides direct federal loans and loan guarantees to finance development of railroad infrastructure.
• Direct loans can fund up to 100% of a railroad project with repayment periods of up to 35 years and interest rates equal to the cost of borrowing to the government.
• Borrowers can request to defer repayment for up to 6 years.
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Borrower Eligibility
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ELIGIBLE BORROWERS
Railroads
State and local governments
Government-sponsored authorities and corporations
Joint ventures that include at least one railroad
Limited option freight shippers who intend to construct a new rail connection
Project Eligibility
RRIF funding may be used to:
Acquire, improve, or rehabilitate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops;
Refinance outstanding debt incurred for the purposes listed above; and
Develop or establish new intermodal or railroad facilities
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Public Benefits: 45 U.S.C. § 822(c)Priority Projects
(1) enhance public safety;
(2) enhance the environment;
(3) promote economic development;
(4) enable United States companies to be more competi ti ve in internati onal markets;
(5) are endorsed by the plans prepared under secti on 135 of ti tle 23 by the State or States in which they are located;
(6) preserve or enhance rail or intermodal service to small communiti es or rural areas;
(7) enhance service and capacity in the nati onal rail system; or
(8) would materially alleviate rail capacity problems which degrade the provision of service to shippers and would fulfi ll a need in the nati onal transportati on system.
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RRIF Notice
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In September 2010, FRA published the Notice Regarding Consideration and Processing of Applications for Financial Assistance Under the Railroad Rehabilitation and Improvement Financing (RRIF) Program at 75 FR 60165.
Public Benefits: Notice helps potential applicants understand what we would be looking for in applications
Refinancing: Notice explains favorable versus unfavorable refinancing purposes
RRIF Loan Volume: Notice explains that DOT will review volume of RRIF transactions (prevent inflationary pressure leading to curtailment of transportation investment)
Application Process
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Preapplication Meeting
Submit Application
Environmental & Engineering Review
Independent Financial Advisor Hired
Application Deemed Complete & 90-Day Clock Started
IFA completes work & FRA presents to DOT Credit Council
FRA Administrator Approves Loan & Package sent to Office of Management & Budget
Term Sheet & Closing Documents Signed
National Environmental Policy Act (NEPA)
The FRA must fulfi ll its obligations under the National Environmental Policy Act (NEPA) and related laws, regulations and orders.
In many cases, the FRA will need simply to approve a short environmental form (Categorical Exclusion worksheet) submitted with the application.
However, in some cases, compliance with NEPA may require preparation of detailed environmental assessments, consultation with Federal and State authorities, publication of documents, and public review and comment on these documents.
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Borrower’s Costs
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• Can range from 0-100% of loan amount• CRP is reduced by offering collateral (though collateral is NOT required)
Credit Risk Premium (CRP)
• 1. FINANCIAL ADVISOR FEE
• Paid regardless of whether loan is approved• May not exceed one half of 1% of the requested loan amount, but it is often
substantially less
• 2. OUTSIDE COUNSEL (if necessary)
• Needed in complex transactions• Not typically necessary for most loans
Investigation Fee
Timing: The 90-Day Clock
The Federal Railroad Administration (FRA) will approve or disapprove a request for a loan within 90 days after receipt of a complete application.
Applications will be deemed complete after the following:
• The FRA has fulfilled its obligations under the National Environmental Policy Act (NEPA) and related laws, regulations and orders.
• FRA has completed its Engineering Review.
• The Independent Financial Advisor states that they have all the materials from the applicant needed to complete their required analysis.
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Preapplication MeetingFRA encourages any interested entity to participate in a preapplication meeting, which has two functions:
1. RRIF analysts provide potenti al applicants with a detailed descripti on of the RRIF applicati on process and answer any initi al questi ons.
2. As potenti al applicants describe their proposed project, RRIF analysts can quickly assess whether there are specifi c aspects of the applicati on process that the applicant should focus on, such as the environmental evaluati on.
Please visit the FRA RRIF website for details on the RRIF applicati on process:
http://www.fra.dot.gov/rpd/freight/1770.shtml
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Contact InformationIf you have questions about the program, or if you wish to discuss the possibility
of funding your project with a loan or a loan guarantee under the RRIF Program,
please contact :
Barbara Amani
Chief, Credit Programs Division
Federal Railroad Administration
U.S. Department of Transportation
(202) 493-6051
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