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4/14/2003



Rail News: Rail Industry Trends

FRA approves $11 million RRIF loan for Arkansas & Missouri


On April 11, Federal Railroad Administration announced it approved an $11 million Railroad Rehabilitation and Improvement Financing (RRIF) loan for Arkansas & Missouri Railroad Co. (A&M).


The 139-mile short line plans to use the 25-year loan to pay for 141 track miles A&M purchased from Burlington Northern Santa Fe in 2001. The track enables A&M to interchange with BNSF, Union Pacific Railroad and Kansas City Southern.


"As a BNSF lease, most traffic had to route via BNSF," says A&M Chairman Reilly McCarren, adding that the line enables A&M to deal equally with all three Class Is for line-haul moves.


The short line also expects to use loan funds to improve existing track. A&M is replacing 38.5 miles of 90-pound and 100-pound jointed rail with continous welded rail.


"Owning the infrastruture facilitates the substantial investment we're making in rail renewal," says McCarren. "That, in turn, will help get the southern half of the railroad up to 286k capacity."


Arkansas State Highway and Transportation Department supported A&M's loan application.


In April 2002, FRA initially approved A&M's RRIF loan — at the time just the second the agency approved for regionals or short lines. After months of negotiations, FRA formally approved the loan in January.


Part of the Transportation Equity Act for the 21st Century (TEA-21), RRIF authorizes FRA to provide direct loans or loan guarantees to eligible railroads, state and local governments, and government-sponsored authorities to acquire, develop, improve or rehabilitate existing or new intermodal or rail facilities.


In two years, FRA has approved RRIF loans for only five regionals and short lines, but the agency in February contracted Volpe Transportation Center to review FRA's application process and recommend ways the agency can simplify and speed loan applications.


"Given that it's a government process, it's unlikely [RRIF] will ever be as simple as a commercial lending process," says McCarren. "However, it's well worth the effort considering the terms available — I liken it more to a bond financing than a bank loan."


Jeff Stagl


Contact Progressive Railroading editorial staff.

More News from 4/14/2003