Financing

The American High Speed Rail Alliance supports ensuring sustainable funding sources adequate to build and operate a high speed and regional passenger rail network in the United States, including, but not limited to, a combination of federal, state and local funding, public/private partnerships, government-backed bonds, tax credits, tax incentives, and private sector investments. 

The American High Speed Rail Alliance advocates for robust federal investment in building a high speed rail network in the United States.  The Alliance defines high speed rail consistently with federal statute and the Federal Railroad Administration’s strategic plan for high speed rail.

FRA Vision for High Speed Rail

(49 USC §26106(b)(4)) and Federal Railroad Administration, Vision for High-Speed Rail in America, April 2009, p.2)


Specifically, the Alliance will leverage its resources and relationships to:


Support a Major Investment in High Speed Rail in Surface Transportation Authorization

The American High Speed Rail Alliance will work with the leadership in the U.S. House of Representatives and the U.S. Senate to improve the High Speed Intercity Passenger Rail grant program in the next surface transportation authorization legislation to encourage high speed rail development in the United States. Modify Existing Funding & Financing Programs to Facilitate High Speed Rail

Modify Existing Funding & Financing Programs to Facilitate High Speed Rail

Rail Line Relocation.  The Rail Line Relocation program, authorized at $350 million annually through fiscal year 2009, provides financial assistance to States (or political subdivision of a State) 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. In addition, the capital grants program for Class II and Class III railroads, authorized at $50 million annually, provides financing for rehabilitating, preserving or improving railroad track (including roadbed, bridges, and related track structures) used primarily for freight transportation.

Railroad Rehabilitation and Improvement Financing (RRIF) Loans. The RRIF program, authorized to provide up $35 billion in federal loans, allows freight and passenger railroads and rail shippers to receive 35 year loans at federal interest rates. The RRIF program does not require an applicant for a direct loan or loan guarantee to provide collateral and does not require that an applicant seek financial assistance from another source before applying for a RRIF loan. 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 direct loan or loan guarantee.

Build America Bonds. The Build America Bonds program is a financing tool 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, construction of schools and hospitals, and water and sewer upgrades.  Build America Bonds, which are taxable bonds, are designed to appeal to a broader set of investors than traditional 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.  Potential new 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.


Support Enactment of Freight Rail Tax Credits

Recognizing the important public interest served by private freight railroads, Congress has enacted tax credits to incentivize short line freight railroad infrastructure investment, and is also considering similar legislation that would establish a new credit for Class 1 railroads and shippers.  Unlike trucks, barges and airlines, U.S. freight railroads operate almost exclusively over infrastructure that they build, maintain and pay for themselves.  Public benefits from freight rail expansion are similar to passenger rail, such as:

The Alliance will advance freight and passenger railroad partnerships, recognizing the challenge in developing the “infrastructure that permits emerging high speed rail and freight rail to not only co-exist but to find the synergy to keep both world class, ” as articulated by FRA Administrator Joe Szabo.  

Specifically, the Alliance will lend its support to freight rail tax credit legislation, provided that the tax credit may be used to incentivize freight railroads to invest in capacity which can be shared by high speed passenger trains.