Bill would alter short-line loan program

U.S. Sens. John Thune (R-S.D.) and Maggie Hassan (D-N.H.) yesterday introduced the Railroad Rehabilitation and Financing Innovation Act, legislation aimed at improving the Railroad Rehabilitation and Improvement Financing (RRIF) loan program.

The legislation would provide dedicated funding for RRIF financing costs, streamline the application process and extend loan terms for certain assets.

"RRIF was created to provide stable financing to small railroads for infrastructure investment, however, short lines are often unable to afford the time and expense associated with the current RRIF application process, discouraging them from using the program," said Thune in a press release. "This legislation makes necessary changes to RRIF, so that short lines are better able to sue the program as originally intended."

Thune is a member of the Senate Committee on Commerce, Science and Transportation.

Specifically, the bill would:

• establish an expedited credit review process for loans meeting certain financial and operational criteria. The bill also requires the U.S. Department of Transportation (USDOT) to provide applicants with regular updates on their application's status;
• improve program flexibility by providing longer loan terms for certain rail infrastructure projects and increase flexibility for USDOT to evaluate collateral and creditworthiness; and
• authorize funding to cover financing costs associated with providing RRIF loans. Half of the funding is dedicated to short lines, while the remainder is reserved for passenger-rail projects.

"As communities consider steps to promote economic recovery from the COVID-19 pandemic, this bipartisan legislation looks ahead to strengthen funding opportunities for passenger rail," said Hassan.

American Short Line and Regional Railroad Association President Chuck Baker said short lines welcome the senators' proposed changes to the RRIF program, which he described as "frequently frustrating."

Although the program was created to help provide long-term, low-cost financing to help short lines make critical infrastructure improvements, "in reality the time, uncertainty and expense of applying has made it largely unusable for short-line railroads," Baker said.

"In fact, only one short line loan has been approved since 2012," he added.