Last week I attended an invitation only round table organized by Karen Hedlund, Deputy Administrator for the Federal Railroad Administration. The round table was held in conjunction with the High Speed Rail Conference held at LA Metro's headquarters in Los Angeles, California. With the House T&I Committee expected to begin marking up a rail bill, Ms. Hedlund sought ideas about how to expand the Railroad Rehabilitation Improvement Financing credit program to be a more useful source of low cost debt capital for commuter rail projects. Around for a number of years, RRIF has been primarily used by short-haul freight rail companies to improve, expand, refinance, and acquire freight rail facilities and equipment. With the success of the TIFIA program for highways, there is an opportunity of transforming RRIF into a source of financing for large commuter rail projects around the country, including several sponsored by LA Metro and Metrolink, the southern California commuter rail agency.
All agreed that RRIF needed to recognize "collateral" not just in the form of hard assets, but a dedicated, creditworthy stream of revenues, such as sales taxes. Also, Congress should consider seeding RRIF with funds to pay the credit risk premium, similar to what it did for the TIFIA program. And for the next round of TIGER grant funding, allow TIGER grants to be used to pay the credit risk premium ala TIGER TIFIA. In order to expedite processing of credit applications, RRIF would need funds to staff up and bring on a bench of financial and legal consultants.
This holiday season we can only wish that Congress will see the benefits to the economy and the country's passenger rail system from an expanded RRIF program, and, as with MAP21, find a bi-partisan approach to fixing RRIF.