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It took nearly a year, but U.S. Department of Transportation and Federal Railroad Administration recently approved the second small-road loan — $12 million — administered under the Railroad Rehabilitation and Improvement Financing (RRIF) program to Arkansas and Missouri Railroad Co. (A&M).
RRIF, which was authorized by Transportation Equity Act for the 21st Century (TEA-21), provides railroads $3.5 billion in loans (including $1 billion benefiting regionals and short lines) to improve infrastructure.
The loan program was delayed for several years — after former President Bill Clinton signed TEA-21 into law June 1998 — by what various small-road officials believed was a variety of administrative obstacles, including a laborious application process.
USDOT and FRA in June 2001 approved a $100 million loan for I&M Rail Link (which in February was acquired by Dakota, Minnesota & Eastern Railroad Corp.), enabling the 1,385-mile regional to recapitalize and invest some funds in infrastructure improvements.
A&M two years ago applied for its own RRIF loan. The 139-mile short line now is determining how to structure the loan with its attorneys — a process that might take several months, says A&M President and Chief Executive Officer Larry Bouchet.
A&M originally planned to use $6 million to pay off promissory notes, and $6 million to upgrade bridges for 286k and replace 90-pound rail with 115-pound ribbon rail on a mountain line south of Springdale, Ark.
But since its application, the short line has paid off $3 million of the notes and invested $1 million in the mountain-line upgrade, which might take two or three years to complete, says Bouchet.
Meaning the short line might not have a pressing need for one-third of the $12 million loan: "We'll take a look and see if we have other areas that could use the money, but if we don't need it, we won't use it," says Bouchet.
— Jeff Stagl