PUBLIC PRIVATE INVESTMENT & PROJECT FINANCING

AHSRA supports ensuring sustainable funding sources adequate to build and operate HSIPR corridors in the United States, including a combination of federal, state and local funding, public private partnerships, government-backed bonds, tax credits, tax incentives, and private sector investments.

 

Modify Existing Funding and Financing Programs to Facilitate HSIPR
  • Railroad Rehabilitation and Improvement Financing (RRIF)
  • The RRIF program, authorized to provide up $35 billion in federal loans, allows freight and passenger railroads to receive 35 year loans at federal interest rates. Under the RRIF program, USDOT may defer payments on a loan for up to six years and there is no limit on the amount that can be used for one project.
  • The Alliance has testified before the House Transportation & Infrastructure Committee and has proposed language to make this program more favorable to HSIPR corridor development through clarifying eligibility for development phase costs, reducing the interest rate, enhancing the deferral period, modifying the collateral requirements, and adjusting the accepted repayability requirements. Click here for AHSRA’s proposed legislation.
  • o   Transportation Infrastructure Finance and Innovation Act (TIFIA)
    • §  The TIFIA program provides federal credit assistance to nationally or regionally significant surface transportation projects.  The program is designed to fill in market gaps and leverage private co-investment by providing projects with supplemental or subordinate debt.  The credit assistance must be repaid within 35 years after substantial completion of the funded project.
    • §  The Alliance supports expanding the use of TIFIA to develop HSIPR corridors and an increase in the annual funding for this program. 
    • o   Rail Line Relocation
      • §  The Rail Line Relocation program provides financial assistance to States or political subdivisions for local rail line relocation and improvement projects for the purpose of mitigating the adverse effects of rail traffic on safety, motor vehicle traffic flow, community quality of life and economic development.
      • The Alliance proposes to make HSIPR corridors eligible for this program.
      • Increased research and development funding for the Federal Railroad Administration
        • FRA receives $25-$35 million each year to conduct allof its research and development activities, including in the advanced technology field of high speed rail.  The Administration and Congress both recognize that a revival in U.S. manufacturing is a crucial goal and the current Administration is in the process of developing new regulations that will ensure that HSIPR is developed safely and efficiently in this country.  However, without increased research and development funding for HSIPR, it will be difficult to achieve these objectives.  In addition, the Transportation Test Center (TTCI) in Pueblo, Colorado requires a test track and facilities to test and demonstrate new high speed rail technologies.
        • The Alliance proposes additional research and development funding for HSIPR to meet the Administration’s objectives.  The Alliance also supports funding for a high speed rail test track at the TTCI facility in Pueblo, Colorado in order to test US-manufactured train sets and the technologies required to implement new safety standards.

 

Encouraging Private Investment through a Ridership Shortfall Guarantee

The federal government subsidizes all forms of transportation in the United States, just as transportation is subsidized by all developed countries throughout the world.  Similarly, developing a passenger rail network in the United States will require some level of public investment. With the assistance of global infrastructure financing leader Macquarie, ASHRA has proposed a plan to increase private participation in PPPs through a sharing of ridership risk, which would bring more private capital into HSIPR corridor development.  Up to this point, HSIPR development has been funded solely through government grants and projects have been developed using a traditional design-bid-build model.

A PPP model would allow the public to shift the responsibility for delivering a project on-time and on-budget to the private sector, which would result in project delivery and cost efficiencies. The private sector would also be able to take responsibility for operating and maintaining the system, as long as the public sector was a partner in accepting some of the ridership risk.

Click here for ASHRA’s paper explaining the Ridership Shortfall Guarantee mechanism. AHSRA proposes that the federal government adopt this or a similar model, which would allow a limited public investment to leverage significant private investment.

 

Support Investment in HSIPR through the Surface Transportation Reauthorization Legislation

The Alliance is working with the appropriate Committees in the House of Representatives and the Senate to develop innovative ways in which to fund and finance high speed corridor development.

The Alliance has been solicited by Chairman Mica and key staff of the House Transportation and Infrastructure Committee for legislative language proposals for consideration in the surface transportation authorization bill.  The Alliance has also briefed Senate Commerce, Science and Transportation staff on its legislative proposals.  A new surface transportation bill or an extension of current law must be passed by September 30, 2011.

 

Build America Bonds

The Alliance supports the renewal of the Build America Bonds program that was created by the American Recovery and Reinvestment Act to allow state and local governments to obtain funding at lower borrowing costs for new capital projects, such as development of transportation infrastructure.  Build America Bonds, which are taxable bonds, are designed to appeal to a broader set of investors than traditional municipal tax-exempt bonds. Under the Build America Bonds program, the Treasury Department makes a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds.  Investors include pension funds that typically do not hold tax exempt bonds and foreign investors.  These investors have been important additions to the market for municipal debt and Build America Bonds are a useful financing tool

 

ASHRA is working to develop a Congressional coalition that supports extending the recently expired Build America Bonds program.

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