U.S. Sens. John Thune (R-S.D.), a member of the Senate Committee on Commerce, Science, and Transportation, and Maggie Hassan (D-N.H.) today reintroduced the Railroad Rehabilitation and Financing Innovation Act, legislation to improve the Railroad Rehabilitation and Improvement Financing (RRIF) loan program by providing dedicated funding for RRIF financing costs, streamlining the application process, and extending loan terms for certain assets.
“States like South Dakota rely on shortline railroads to transport agricultural products and other goods to market, and the RRIF program was originally designed to provide stable financing to small railroads for infrastructure investment,” said Thune. Unfortunately, shortlines are often unable to afford the time and expense associated with the current RRIF application process, discouraging them from using the program. This legislation makes necessary updates to RRIF so shortlines are better able to use the program as originally intended.”
“Infrastructure investments will be a critical part of our economic recovery from the COVID-19 pandemic,” said Hassan. “Passenger rail has significant potential in New Hampshire, expanding options for commuters and helping our towns to thrive, and short line and smaller rail lines play a key role in our state’s economy. This bipartisan bill will improve financing options for both, and I look forward to continuing to work across the aisle to invest in infrastructure, create jobs, and grow our economy.”
“This legislation would improve the RRIF program and make it more viable for short lines,” said Chuck Baker, president of American Short Line & Regional Railroad Association. “It addresses several important issues that have been hurdles to participation in the RRIF program for our short line members, including some solutions that are being piloted in the RRIF Express program. Short lines will especially appreciate the streamlining of the application process, including the mandating of regular updates which will improve visibility, the extension of loan terms out to 50 years which will lower annual costs and better match asset lives, increased flexibility regarding collateral requirements which is important when working with small businesses, and perhaps most importantly the authorization of funds to reduce both the direct cost of applying and also the credit risk premium charges that have frequently been a hurdle to completing successful loans. This last change would bring the RRIF program more in line with the comparatively more successful TIFIA program.”
The Railroad Rehabilitation and Financing Innovation Act would:
Streamline the application process: Building on the work done by the Department of Transportation (DOT) in creating the RRIF Express pilot program, the bill establishes an expedited credit review process for loans that meet certain financial and operational criteria. The bill also reduces applicant uncertainty by requiring DOT to provide applicants with regular updates on the status of their application.
Improve program flexibility: The bill makes several changes to improve program flexibility, including longer loan terms for certain rail infrastructure projects and increased flexibility for DOT to evaluate collateral and creditworthiness.
Provide dedicated funding for RRIF financing costs: Similar to the Transportation Infrastructure Finance and Innovation Act loan program, the legislation authorizes funding to cover financing costs associated with providing RRIF loans. Half of the funding is dedicated solely to shortline railroads, while the remainder is reserved for passenger rail projects.