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4/19/2002



Rail News: Rail Industry Trends

A&M snares second federal loan aimed at small roads' infrastructure needs


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It took nearly a year, but U.S. Department of Transportation and Federal Railroad Administration recently approved the second small-road loan — $12 million — administered under the Railroad Rehabilitation and Improvement Financing (RRIF) program to Arkansas and Missouri Railroad Co. (A&M).
RRIF, which was authorized by Transportation Equity Act for the 21st Century (TEA-21), provides railroads $3.5 billion in loans (including $1 billion benefiting regionals and short lines) to improve infrastructure.
The loan program was delayed for several years — after former President Bill Clinton signed TEA-21 into law June 1998 — by what various small-road officials believed was a variety of administrative obstacles, including a laborious application process.
USDOT and FRA in June 2001 approved a $100 million loan for I&M Rail Link (which in February was acquired by Dakota, Minnesota & Eastern Railroad Corp.), enabling the 1,385-mile regional to recapitalize and invest some funds in infrastructure improvements.
A&M two years ago applied for its own RRIF loan. The 139-mile short line now is determining how to structure the loan with its attorneys — a process that might take several months, says A&M President and Chief Executive Officer Larry Bouchet.
A&M originally planned to use $6 million to pay off promissory notes, and $6 million to upgrade bridges for 286k and replace 90-pound rail with 115-pound ribbon rail on a mountain line south of Springdale, Ark.
But since its application, the short line has paid off $3 million of the notes and invested $1 million in the mountain-line upgrade, which might take two or three years to complete, says Bouchet.
Meaning the short line might not have a pressing need for one-third of the $12 million loan: "We'll take a look and see if we have other areas that could use the money, but if we don't need it, we won't use it," says Bouchet.
Jeff Stagl


Contact Progressive Railroading editorial staff.

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