The Role of Innovative Finance in Intercity Passenger Rail
Shuster and Denham Opening Statements
Hearing on “Role of Innovative Finance in Intercity Passenger Rail”
July 9, 2013
(Remarks as Prepared)
Chairman Bill Shuster (R-PA)
Committee on Transportation and Infrastructure
As I’ve noted previously, a rail reauthorization bill is one of the Committee’s top priorities this year.
Intercity passenger rail plays an important role in our Nation’s transportation network, connecting major metropolitan areas and cities. I am pleased with the significant number of hearings and events, both here and across the Nation, that Chairman Denham has undertaken to hear from various stakeholders with respect to reauthorization. As you know, I want to strengthen passenger rail, and with limited resources we must target our funds efficiently.
I also strongly believe that the only way we will be able to tackle the large capital needs for passenger rail is to partner with the private sector.
Other countries have shown us that this is possible and investors right here in the United States are eager to invest in the transportation system. Programs like the Railroad Rehabilitation and Improvement Financing (RRIF) program and the Transportation Infrastructure Finance and Innovation Act (TIFIA) program allow the Federal government to leverage scare resources and share risk with the private sector. We’ve seen such a model work for highway and transit projects, and I believe we can utilize similar models for intercity passenger rail.
We also need to leverage railroad assets like stations and right-of-way to develop new revenue streams.
Again, I commend Chairman Denham for holding this important hearing and thank our witnesses for their testimony.
Chairman Jeff Denham (R-CA)
Subcommittee on Railroads, Pipelines and Hazardous Materials
As I have said at every hearing we’ve held, I am committed to Rail Reauthorization this year. One area the next rail bill will likely need to address is the role innovative financing tools can play to advance intercity passenger rail projects.
We all need to be creative in ways to stretch federal dollars and work with our partners in the states, with communities, and with the private sector.
I have consistently advocated for the need to leverage private sector financing in my home state for the construction of high speed rail. Without private sector engagement and financing, the California project is doomed to repeat the mistakes of the past and will require endless subsidies from federal taxpayers.
Innovative finance has been increasingly used in the United States for highway and mass transit projects, and one of my goals for the upcoming reauthorization is extend that trend to passenger rail.
The Railroad Rehabilitation and Improvement Financing loan program is an example of a program I’d like to leverage more. Currently RRIF is authorized to lend up to $35 billion in loans and loan guarantees for the development of railroad infrastructure. The program was created principally for short line and class I freight railroads, though recently commuter and intercity passenger rail operators have expressed interest in the program.
RRIF and other Federal credit programs can accelerate large infrastructure projects, if stakeholders come together to identify repayment sources. For example, Denver is utilizing RRIF and TIFIA to complete a major expansion of Denver Union Station, which will improve intercity rail, commuter rail, and bus connections. The loans are being repaid with a combination of local revenue sources.
This is an excellent example of states, the private sector and the federal government partnering to build more infrastructure in new and creative ways. We need to encourage more of this type of innovative thinking at the state and local levels so entities like Altamont Commuter Express in my home state can make the infrastructure upgrades they need for the future.
Station development is another tool that can be leveraged to support expanded and improved passenger rail services. Rail stations are often located in desirable, downtown locations, and can become the focus around which significant residential, commercial, and retail development can occur.
Value capture methods such as tax increment financing can be a means to leverage that private sector development to spur transportation improvements.
Finally, railroads themselves can proactively use their own property to create additional funding sources. For instance, railroad rights-of-way can be used to place telecommunication and other non-transportation infrastructure. In 2012 Amtrak generated $94 million in real estate-related revenue, and I would like to work with them to grow that number.
Again, I thank the witnesses for being here today.
# # #
The Honorable John Porcari, Deputy Secretary, United States Department of Transportation | Written Testimony
Ms. Beverley K. Swaim-Staley, President and CEO, Union Station Redevelopment Corporation | Written Testimony
Mr. Frank Chechile, Chief Executive Officer, Parallel Infrastructure | Written Testimony
Mr. John Robert Smith, Former Mayor of Meridian, Mississippi, President and CEO, Reconnecting America | Written Testimony