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KCS seeks $100 million RRIF loan to help fund Texas trackwork

Although Class Is are eligible for them, they typically haven’t pursued Railroad Rehabilitation and Improvement Financing (RRIF) loans to help fund infrastructure upgrades. However, Kansas City Southern recently applied for its second RRIF loan.

The Class I is seeking a $100 million loan from the Federal Railroad Administration (FRA) to help finance the rehabilitation of a line between Victoria and Rosenberg, Texas, which has been out of service a long time, but never abandoned.

The railroad recently completed track salvage and preliminary grading work along the line’s northern end. KCS plans to begin other work immediately and, separate from the RRIF-related project, build a rail bypass around Victoria.

The rehabilitation project will enable KCS to shorten its route to Mexico by about 70 miles and reduce trackage rights expenses by no longer operating trains over a 160-mile portion of Union Pacific Railroad’s heavily used Rosenberg-to-Victoria line via Flatonia, Texas.

“Upon completion, [the project] will … facilitate the development of a superior service route for intermodal shippers to and from Mexico, add badly needed rail capacity to south Texas and return vital rail service to communities along the line,” said KCS Chairman and Chief Executive Officer Mike Haverty in a prepared statement.

In 2004, KCS subsidiary the Texas Mexican Railway Co. obtained a RRIF loan to help fund a mainline rehabilitation project in south Texas.

Under the RRIF program, the FRA is authorized to provide railroads, state and local governments, and government-sponsored authorities direct loans and loan guarantees up to $35 billion (including $7 billion reserved for regionals and short lines) to acquire, improve, or rehabilitate intermodal or rail equipment or facilities; refinance outstanding debt; or establish new intermodal or railroad facilities.

Earlier this year, the FRA approved a $59 million RRIF loan for R.J. Corman Railroad Co. and a $48 million loan for the Dakota, Minnesota & Eastern Railroad Corp. Since 2002, the agency has issued 17 RRIF loans.

Contact Progressive Railroading editorial staff.

More News from 6/6/2007