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Yesterday, American Short Line and Regional Railroad Association (ASLRRA) President Richard Timmons spoke to congressional members about proposed improvements to the Railroad Rehabilitation and Improvement Financing (RRIF) program.

The program currently leverages substantial private investment in short-line infrastructure, but has not been fully utilized, he said. ASLRRA proposes that Congress subsidize an interest rate reduction to 1 percent on all RRIF loans and defer payments for up to five years after a project is substantially completed. Last year, the House Transportation & Infrastructure Committee adopted the association's proposal that a loan's term be extended from 25 to 35 years.
 
"Based on comprehensive data surveys ASLRRA has conducted since 2004, short lines invest nearly 30 percent of their annual gross revenues in track rehabilitation and maintenance," Timmons told members of the House committee's Subcommittee on Railroads, Pipelines and Hazardous Materials, according to a press release.
 
The RRIF program can provide more loans to fund key short-line track maintenance and rehabilitation projects, and small railroads have a good track record in paying back the loans, he said.
 
"I am proud to say, in the 10 years the RRIF loan program has been on the books, not a single short-line railroad has missed a single quarterly payment on its debt," said Timmons.

U.S. Rep. Bill Shuster (R-Pa.) agrees that railroads haven't defaulted on any loans and that the program is underutilized. Since 2002, the Federal Railroad Administration (FRA) has executed 23 loan agreements for a total of $778 million dollars, only a little more than 2 percent of the authorized amount of loans, he told the House subcommittee.

"On the one hand, I want to commend the FRA for doing an outstanding job of selecting loan recipients. We have not had a single default on any of the RRIF loans [and] if only our nation's banks had loan portfolios that looked like the FRA's, we wouldn't be in the mess we are in now," said Shuster. "On the other hand, I want to implore the Administration to make this program more accessible to borrowers."
 
Meanwhile, Timmons also recently called on the U.S. Department of Transportation to stress that regionals and short lines are "clearly eligible" for $1.5 billion in discretionary funding made available by the American Recovery and Reinvestment Act (ARRA).

In a letter to U.S. Transportation Secretary Ray LaHood, Timmons stated that ARRA grants could help fund a total of $781 million in "shovel ready" rehabilitation projects already identified as needed by regionals and short lines. The capital spending would result in the creation of 30,000 jobs during the course of the projects, and an "overwhelming majority" of materials and supplies for the projects would be sourced domestically, he wrote.

Timmons also called for improved ARRA funding guidelines, such as enabling freight railroads themselves to be eligible funding applicants; waiving ARRA's $20 million project minimum routinely; enabling states and/or short lines to aggregate short-line projects; and allowing ARRA funds to be used to lower the interest rate and/or defer payments under the RRIF program.