# 2 Public Sector Programs and Tools

This section also describes existing public sector programs and finance
tools that ostensibly support freight and intermodal infrastructure
projects. The programs and tools are divided into the three sections:
This section provides an overview of current funding and financing
practices as identified in the course of this study federal funding,
State funding, and local activities and tools.

## 2.1 Overview Of Freight Infrastructure Funding and Finance

The review of existing funding sources undertaken for this study
indicates certain funding trends by mode. Port data and case studies,
for example, indicate that ports are generally funded through private
resources, port revenues, and the use of revenue bonds.

Similarly, railroads have traditionally depended on private capital to
self-fund the majority of system rehabilitation and new construction
projects. Federal and State support has been on a much smaller scale of
investment, typically where safety issues are a concern e.g, at-grade
highway-rail crossings or where shortline or regional infrastructure are
at risk of abandonment.

Unlike ports and rail, highway funding is derived primarily from Federal
and State highway programs. Under 80/20 Federal program matching
arrangements, Federal program eligibility, to a large degree, dictates
the types of projects that receive funding. In addition to unprecedented
levels of Federal appropriations, new loan programs under TEA-21 are
helping to package large-scale projects that cross multi-jurisdictional
boundaries and benefit freight movement through major metropolitan
areas.

Airport infrastructure mainly is supported by passenger fees and by
jet-fuel taxes, allowing for a partial cross-subsidy of airfreight
shipment infrastructure. The 1986 Tax Reform Act has spurred the trend
for public-private partnerships between airport authorities and
airfreight integrators to issue revenue bonds for the purpose of
developing cargo facilities.

The following sections provide an overview of the current funding
practices within the respective modes: ports, highways, rail, and
airport.

#### Public Port Funding

This section provides an overview of public port funding, based on a
review of the financing approaches used to fund port capital
expenditures throughout the United States from 1992 through 1996.
Findings and reported expenditures are based on the report *United
States Port Development Expenditures*, published by the U.S. Maritime
Administration (MARAD). MARAD's findings are based on the 1996
expenditures survey conducted by the American Association of Port
Authorities (AAPA).

Capital financing methods used by the U.S. public ports are classified
in six categories:

-   Port Revenues

-   Loans

-   General Obligation Bonds (GO bonds)

-   Grants

-   Revenue Bonds

-   Other

Exhibit 2.1 illustrates U.S. public port capital expenditures by type of
financing method for the years 1992 through 1996. Capital expenditures
totaled \$1.2 billion for the port industry in 1996. Whereas this
represents a 9 percent decrease from 1995, total expenditures for 1996
represent a 115 percent increase from 1992 and are part of a larger
trend of increased capital expenditures over the 5-year period. It is
this trend of increased capital investment that has established facility
development and capital financing as the number-one issue facing the
port industry.

Exhibit 2.1

U.S. Port Capital Expenditures by Type of Financing Method: 1992-1996
(Thousands of Dollars)

  --------- ------------- ------- ------------- ------- ----------- ------- ----------- ------- --------- -------
            1996                  1995                  1994                1993                1992      

  METHOD    Amount        \%      Amount        \%      Amount      \%      Amount      \%      Amount    \%

  Port      \$392,408     31.7%   \$ 621,703    45.6%   \$ 309,703  35.3%   \$ 297,925  50.6%   \$        34.0%
  Revenue                                                                                       196,956   

  GO Bonds  116,598       9.4%    115,859       8.5%    90,059      10.3%   67,720      11.5%   73,492    12.7%

  Revenue   529,015       42.6%   366,701       26.9%   130,860     14.9%   134,271     22.8%   156,100   26.9%
  Bonds                                                                                                   

  Loans     13,734        1.1%    12,077        0.9%    140,496     16.0%   4,534       0.8%    21,795    3.8%

  Grants    31,383        2.5%    41,078        3.0%    24,142      2.8%    24,781      4.1%    28,957    5.0%

  Other     157,485       12.7%   205,369       15.1%   181,175     20.7%   59,978      10.2%   102,283   17.6%

  TOTAL     \$1,240,533   100%    \$1,362,787   100%    \$876,435   100%    \$589,209   100%    \$        100%
                                                                                                579,583   
  --------- ------------- ------- ------------- ------- ----------- ------- ----------- ------- --------- -------

As shown in Exhibit 2.1, the two largest sources of financing for port
capital expenditures between 1992 and 1996 were port revenues and
revenue bonds. Together, these two financing methods have been the
source of 50 percent to 75 percent of total capital expenditures over
the 5-year period. Financing through revenue bonds has become
increasingly popular; \$529 million or 42.6 percent of total capital
expenditures in 1996 was financed through revenue bonds. In terms of the
proportionate share of revenue, this represents an increase of 15
percent over any of the previous 4-years. Conversely, port revenues saw
a proportionate decrease in 1996 and served to finance a 5-years low of
31.7 percent of total capital expenditures in the port industry.
Together, port revenues and revenue bonds were the combined funding
source for 74.3 percent of total capital expenditures in 1996.

"Other" funding is defined as State transportation trust funds, State
and local appropriations, taxes (property, sales), and lease revenues
was the third most common financing method and served to finance 12.7
percent of total capital expenditures in 1996. Funding capital projects
from other capital sources is desirable to ports because it entails less
of a draw on their own limited capital resources. While desirable, these
sources have historically been limited in amount and availability.

#### Highway Funding

This section provides an overview of funding mechanisms that support
highway infrastructure development tied to freight shipment. Most
federal-funding mechanisms support freight infrastructure development
with respect to trucks. The majority of Federal highway funding is
provided through various programs. Of the total \$155 billion the
Intermodal Surface and Transportation Efficiency Act (ISTEA) multi-year
authorization, \$103.7 billion was apportioned and of that, 0.3 percent
(\$293 million) was designated to capitalize a Federal highway loan
program, the State Infrastructure Bank pilot program. Additionally, in
1997 Congress appropriated \$150 million from the General Fund to add to
this program. Under the most recent 6-year authorization, the
Transportation Equity Act for the 21^st^ Century (TEA-21) significantly
increased the level of funding for core highway infrastructure programs
37 percent above ISTEA authorization. In addition, TEA-21 established a
floor to guarantee a minimum appropriation level. This floor assures
that TEA-21 will provide more appropriated funding than ISTEA,
proportionate to authorization levels, reducing the disparity between
authorization levels and actual appropriations. TEA-21 also restricted
the use of Federal funds for SIB's to four States. Current highway
obligations from ISTEA and TEA-21 are \$589,000.

The overall Federal Aid Highway Program (FAHP) is divided into various
funding categories and/or programs with eligibility requirements.
Programs that could be used to fund freight transportation projects
include:

Interstate Maintenance (IM)

National Highway System (NHS)

Surface Transportation Program (STP)

Congestion Mitigation Air Quality (CMAQ)

Appalachian Development Highway System (ADHS)

National Corridor Planning and Development and Coordinated Border
Infrastructure (Corridors/Border B 1118/1119)

Transportation Infrastructure Finance and Innovation (TIFIA)

Transportation and Community and System Preservation Pilot Program
(TCSP)

High Priority Projects (HPP) are designated by Congress. These funds are
not available on a competitive basis (competitive with other projects).
The corridors and borders programs were partially designated by Congress
for FY2000 with remaining funds available for a competitive process. The
same is true for TCSP. All Federal-aid funds are distributed through the
applicable State Department of Transportation. State Planning is funded
with 1.5 percent of the IM, NHS, STP, CMAQ, and HBRRP programs. State
planning funds have benefited freight transportation needs in a number
of States and Metropolitan Planning Organizations. Money has been used
to incorporate freight transportation into Long-range Plans (LRP),
conduct studies for freight transportation improvements, identify
critical issues, and support public/private partnerships.

These Federal programs typically require State and/or local participants
to match at least 20 percent of the total project cost. State or local
sponsors are able to leverage their funding resources with Federal funds
and develop larger-scale projects than would be viable with State
resources only, or that otherwise might not get built. The use of
Federal funding is further restricted by Federal project eligibility
requirements, as specified in Title 23 and Title 49, Chapter 53, U.S.
Code eligibility, see Appendix A B Title 23 eligibility. Title 23
supports highway improvements, which include rail grade crossings,
whereas Title 49 supports transit projects. Federal highway funding is
therefore restricted to specific program objectives as well as certain
types of projects.

Each State and MPO is responsible for long-range planning. For the MPO
this is referred to as a Long - Range Plan (LRP). The State refers to
their product as the State Transportation Plan. Both share a 20-year
horizon. The MPO's are responsible for updating their LRP every 3 to 5
years. In addition, the State is responsible for developing a State
Transportation Implementation Plan (STIP) which lists all capital
projects. Each MPO prepares a Transportation Implementation Program
(TIP) listing their capital projects which is incorporated into the
appropriate STIP. The STIP and TIP are updated every 2- to 3-years. No
Federal-aid funds can be spent on a project that is not listed on the
STIP and/or TIP.

The remaining programs are discussed in more detail in subsequent
sections of this report. The long-range planning timeframes can be a
significant hurdle in coordinating freight infrastructure development,
which attempt to meet emerging market demands within a year or less.
STIP and TIP planning, though on shorter timeframes, still require more
time than the private sector would like. As a result of the match
provision and the Federal eligibility and planning requirements, Federal
programs drive the focus as well as the process and timeframe of State
and MPO levels of planning and programming funding.

Interviews confirmed that local and State freight project planning is
affected by a lack of analytical tools for comparing a freight-related
highway improvement project to a project that predominantly benefits
commuter or neighborhood traffic. Following Federal and State program
descriptions, the local activities section includes a discussion of
local tools and innovative approaches to planning/programming for
freight-related highway infrastructure.

In addition to unprecedented funding authorization levels, TEA-21
initiated significant loan programs that support highway infrastructure
improvements and rail improvements. These innovative finance programs in
TEA-21 include the Transportation Infrastructure Finance and Innovation
Act (TIFIA), authorized to loan up to \$10.6 billion (for highway
project credit enhancement); Railroad Rehabilitation and Improvement
Financing Program (RRIF), authorized to loan up to \$3.5 billion. Grant
Anticipation Revenue Vehicle (GARVEE) was enabled with advance
construction in the NHS Act of 1995, and TEA-21 improved the
marketability of GARVEE bonds by increasing authorizations. GARVEE bonds
are not specifically funded through the appropriations process; instead
this is a finance mechanism that allows States to bond against future
Federal appropriations beyond the 6-year cycle.

This study primarily focuses on the innovative uses of Federal funding
and loan programs to support freight-related highway and other modal
improvements. The Case Studies section describes the innovative uses of
SIB loans, TIFIA loans, CMAQ funds, and GARVEE bonds to fund
freight-related projects. It is important to note that these programs
only benefit freight infrastructure insofar as trucks are permitted to
use the facilities B with the exception of CMAQ. Of the four, CMAQ and
SIB have been in use since ISTEA and have longer track records on which
to evaluate utility. Specific case studies demonstrate that SIB loans
have been effective for building port/airport-highway access projects
based on anticipated revenues from transportation improvement districts
(TID) assessments and toll revenue schemes. The Bensenville, Auburn,
Stark, and Waterville project case studies, contained in the Case
Studies section, show innovative uses of CMAQ funding for building
rail-truck intermodal yards, under the auspices of improving air quality
by shifting cargo from truck to rail.

RRIF is dedicated to rail and is discussed under rail funding. The
remaining two, TIFIA and GARVEE have only been in use since the
authorization of TEA-21, in 1998. In this short timeframe, only a few
projects have used these financing tools. The first TIFIA loans were let
this year. However, the most prominent Federal loan to date was
processed under special Federal legislation, prior to the development of
TIFIA, for funding the Alameda Corridor project. The Alameda Corridor in
Los Angeles, California, demonstrates both the process of using Federal
funding for borrowing for large-scale projects and the use of packaging
to assemble a combination of Federal, State, local, and private-sector
funding. A GARVEE project, the Central Artery Project in Boston,
Massachusetts, also demonstrates the complexity of packaging sources, in
addition to the process of leveraging future Federal dollars and the
requirements for backstop financing to protect Federal resources in the
event of default. The Case Studies section further describes both
projects.

#### Rail Freight Funding

This section describes both public and private funding/financing
mechanisms for Class I, regional, and shortline rail projects. Public
funding sources were reviewed, including Federal Rail Administration,
Federal Highway Administration, and State-level programs that support
rail infrastructure development. To identify financing tools, several
individual corporate annual reports were reviewed to contrast Class I
RR's with regional and shortline financing.

Federal and State rail programs have evolved to address periodic funding
shortages, particularly for shortlines. Regulations have been relaxed,
and both emergency stopgap measures and long-term funding mechanisms
were developed to support rail infrastructure needs. Funding has been
available through a variety of mechanisms, including grants, subsidies,
loans, loan guarantees, in-kind benefits, redeemable preference shares,
and various combinations of obligation underwriting. Public funding
programs generally have required the applicant to match funds or provide
in-kind benefits from other sources.

Business trends are driving rail infrastructure demands, including track
improvements to accommodate heavier rolling stock, larger engines, truck
drayage elimination projects, and intermodal yard development. Financing
is further complicated by other business trends including rail car
charges and rebates, Class I mergers and acquisitions, and shortline
rail company spin-offs.

By and large, Class I railroads are mainly financing projects
themselves, generating sufficient revenues to meet their own specific
requirements for capital improvements. The following was documented by
TRB's *Policy Options for Intermodal Freight Transportation* study,
Special Report 252:[^1]

-   Union Pacific has promised to spend more than \$200 million to
    double-track 1,370 km of former Southern Pacific line between Los
    Angeles, California and El Paso, Texas.

-   The Atlanta/Dallas rail corridor paralleling Interstate 20 from
    Meridian, Mississippi, to Dallas, Texas, is getting \$200 million in
    improvements from Kansas City Southern.

-   Burlington Northern Santa Fe (BNSF) and J.B Hunt built a new
    underpass in Chicago In less than one year, with actual construction
    taking less than one month. The new underpass is adjacent to the
    47^th^ Street underpass, which required 5-years for public
    financing.

Class I railroads generate capital through debt financing from cash
generated from operations. According to a sampling of railroad
corporation financial statements obtained through *Moody's
Transportation Manual*, finance instruments include commercial paper,
capital leases, and in one case, tax-exempt financing. Exhibit 2.2 shows
the financial status of three Class I railroads.

Exhibit 2.2

Class I Financing Instruments

  ---------------- ---------------- ------------------ -------------------
  **Instrument**   **Conrail**      **CSX**            **Union Pacific**

  ---------------- ---------------- ------------------ -------------------

<table style="width:100%;">
<colgroup>
<col style="width: 23%" />
<col style="width: 0%" />
<col style="width: 14%" />
<col style="width: 0%" />
<col style="width: 7%" />
<col style="width: 12%" />
<col style="width: 12%" />
<col style="width: 15%" />
<col style="width: 0%" />
<col style="width: 12%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td colspan="2">1996</td>
<td colspan="2">1995</td>
<td>1997</td>
<td>1996</td>
<td>1997</td>
<td colspan="2">1996</td>
</tr>
<tr class="even">
<td colspan="2"><strong>Revenue</strong></td>
<td colspan="2">$ 3,714</td>
<td>$ 3,686</td>
<td>$ 10,621</td>
<td>$ 10,536</td>
<td colspan="2">$ 11,079</td>
<td>$ 8,786</td>
</tr>
<tr class="odd">
<td><strong>Operating Income</strong></td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td>1,583</td>
<td>1,522</td>
<td>1,253</td>
<td colspan="2">1,533</td>
</tr>
<tr class="even">
<td><strong>Total Assets</strong></td>
<td colspan="2">8,402</td>
<td colspan="2">8,424</td>
<td>19,957</td>
<td>16,965</td>
<td>28,764</td>
<td colspan="2">27,927</td>
</tr>
<tr class="odd">
<td><strong>Current Liabilities</strong></td>
<td colspan="2">1,092</td>
<td colspan="2">1,170</td>
<td>2,707</td>
<td>2,757</td>
<td>3,247</td>
<td colspan="2">3,056</td>
</tr>
<tr class="even">
<td><strong>Long Term Debt</strong></td>
<td colspan="2">2,006</td>
<td colspan="2">2,092</td>
<td>6,645</td>
<td>4,432</td>
<td>8,518</td>
<td colspan="2">8,027</td>
</tr>
<tr class="odd">
<td>- Commercial Paper</td>
<td colspan="2">100</td>
<td colspan="2"></td>
<td>2,000</td>
<td></td>
<td>1,743</td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>- Notes Payable</td>
<td colspan="2">359</td>
<td colspan="2"></td>
<td>479</td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>- Debentures</td>
<td colspan="2">794</td>
<td colspan="2">794</td>
<td>3,145</td>
<td>650</td>
<td>3,929*</td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><p>- Equipment</p>
<p>Obligations</p></td>
<td colspan="2">262</td>
<td colspan="2">251</td>
<td>784</td>
<td>739</td>
<td>910</td>
<td colspan="2">1,048</td>
</tr>
<tr class="odd">
<td>- Mortgage Bonds</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td>75</td>
<td>76</td>
<td>176</td>
<td colspan="2">176</td>
</tr>
<tr class="even">
<td>- Term Floating Rate</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td>392</td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td><p>- Tax Exempt</p>
<p>Financing</p></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td>168</td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>- Capital Leases</td>
<td colspan="2">492</td>
<td colspan="2">489</td>
<td></td>
<td></td>
<td></td>
<td colspan="2">1,137</td>
</tr>
<tr class="odd">
<td>- Other</td>
<td colspan="2"></td>
<td colspan="2">558</td>
<td>162</td>
<td>2,967</td>
<td>(51)</td>
<td colspan="2">5,666</td>
</tr>
<tr class="even">
<td>- Common Stock</td>
<td colspan="2">88</td>
<td colspan="2">85</td>
<td>218</td>
<td>217</td>
<td>686</td>
<td colspan="2">581</td>
</tr>
<tr class="odd">
<td><strong>Capital Stock</strong></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>- Authorized</td>
<td colspan="2">260 mill</td>
<td colspan="2">n/a</td>
<td>300 mill</td>
<td>n/a</td>
<td>500 mill</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>- Outstanding</td>
<td colspan="2">89,548,893</td>
<td colspan="2">n/a</td>
<td>218,310</td>
<td>n/a</td>
<td>247,001,648</td>
<td colspan="2">n/a</td>
</tr>
</tbody>
</table>

> \* includes both notes payable and debentures

The most urgent finance needs historically and currently involve Classes
II and III, regional and shortlines, which have fairly substantial needs
for capital but are at a disadvantage for accessing capital. Regional
and shortline railroads experience certain types of problems in securing
capital. According to a 1993 Report to Congress, small railroads appear
to face some unique problems and difficulties securing financing.
According to the report findings, the problems include banking industry
claims that it takes an inordinate amount of work to prepare a
small-railroad loan package, compared to a similar-sized loan for other
capital investments (such as a warehouse or an office building). In
addition, unlike many similar-sized businesses that need short-term
loans for inventory or working capital, small railroads need long-term
financing for long-lived assets, such as track materials and
equipment.[^2] Last, as evidenced by the State programs identified in
this study, shortlines often cannot repay loans due to marginal
financial strength, indicating the need for grants in order to keep a
strategic system link viable.

According to the survey efforts undertaken for the 1993 Report to
Congress, even when private financing could be obtained, these railroads
felt that the terms offered were unsatisfactory. In particular, loans
were usually offered for not more than 8-years, which is too short a
term for railroad investments that have much longer productive life
spans. The few banks that specialize in railroad financing generally
restrict their loans to fairly large loansC\$5 million or more. However,
local banks, which might be expected to offer smaller loans, have little
or no railroad lending experience, and many of these railroads need
small loans. There also are certain legal restrictions that may make it
more difficult to recover the proceeds of a railroad loan after
bankruptcy or default than a debt owed by a non-railroad borrower; these
restrictions also tend to heighten a bank's reluctance to deal with the
industry.[^3]

#### Airport Funding

This section provides an overview of common mechanisms for funding
airport infrastructure. Air freight shipment represents the fastest
growing freight shipment mode. According to DRI/McGraw Hill data and
forecasts, air freight revenues grew an average of 8.8 percent from 1994
to 1999, and from 1999 to 2004 are projected to grow an average of 6.7
percent per year.[^4] In contrast, the next fastest mode, intermodal, is
only projected to grow as much as 4.3 percent per year. In accommodating
this growth, airports must expand facilities used for handling and
moving cargo. At a minimum, this can include building cargo handling
complexes, improving safety, and improving or expanding highway access
to airport cargo areas.

The Federal Aviation Administration manages a large-scale grant program
supported by passenger revenues and jet-fuel taxes. The Airport
Improvement Program (AIP) disburses grant funding on a formula basis to
the largest passenger and cargo airports. This enables passenger
activity to cross-subsidize air freight operations, mainly for safety
and runway expansion projects.

Airport-highway access projects are more difficult to address due to the
institutional parameters currently in place that affect how local
planners program freight projects versus commuter or transit projects.
The Federal Highway Administration (FHWA) funds airport access roads
only when an MPO identifies sufficient need, over other neighborhood or
commuter projects, or when an earmark is approved under ISTEA
demonstrations or TEA-21 high-priority designations. For cases of single
users, air freight integrators are required to build private roads for
direct access to cargo areas.

The funding that drives air cargo handling, equipment, and warehousing
typically is split between private investment by air freight integrator
companies, such as Federal Express or United Parcel Service, and airport
resources through tax-exempt or taxable-debt issuance. If financed as a
public-private partnership, the cost of development is reduced with the
use of tax-exempt bond rates, as permitted under the 1986 Federal Tax
Reform Act. For large-scale infrastructure projects, the cost savings
can be substantial. The Denver International Airport case study,
discussed in Section 3CCase Studies, demonstrates this type of
large-scale, public-private partnership.

## 2.2 Federal Funding Programs For Freight Infrastructure

Federal programs provide considerable and significant levels of funding
for transportation infrastructure. Funding mechanisms supported by the
U.S. Department of Defense (DOD), U.S. Department of Commerce and U.S.
Department of Transportation (U.S. DOT) were identified.

**Maritime**

There are few financial resources at the Federal level available to
ports. The Economic Development Administration (EDA), U.S. Department of
Commerce, has provided grant assistance for port capital improvements,
but contribution levels are limited. Under its Title XI program, the
Maritime Administration, U.S. DOT, offers funding for ship building
enterprises that is only applicable for port infrastructure improvements
under special circumstances involving the financing of ship equipment.
For example, the FastShip project is likely to use Title XI funding for
financing the equipment and installation of its special loading
equipment.

The U.S. Army Corps of Engineers DOD is charged with supporting the
dredging of the nation's marine channels on behalf of commercial users
of U.S. channels and harbors, and the nation's defense mobility. The
Harbor Maintenance Trust Fund was established so that costs incurred by
the U.S. Army Corps of Engineers could be reimbursed.

Since 1986 there has been a decline in the level of Federal
participation for port-related infrastructure financing. While the
Federal government had historically funded 100 percent of navigation
channel improvements as well as maintenance, since 1986 the Federal role
of the partnership has been limited to cost-sharing capital improvements
to Federal navigation channels. In the Water Resources Development Act
of 1986 (WRDA =86), Congress created a cost-sharing formula for
navigation improvement projects. Specifically, a cost-sharing transition
was set at 45 feet, above which (i.e., shallower) local sponsors (i.e.,
ports) would pay a 35 percent (25 percent plus 10 percent over 30 years)
cost-share and below which (i.e., deeper) would be cost shared at 60
percent (50 percent plus 10 percent over 30 years) local.

In WRDA '86, Congress also created the harbor maintenance tax (HMT), an
ad valorem fee on cargo, to fund maintenance dredging. Because of
concerns about the impact of a fee on the competitiveness of U.S. ports
and U.S. exports, the HMT was originally set at a level to recover only
40 percent of the cost of maintenance dredging in Federal deep-draft
navigation channels.

In 1998, the collection of the tax on exports was found by the Supreme
Court to be unconstitutional. In addition, the continued collection on
imports has been challenged before the World Trade Organization. As a
result, the Clinton Administration has proposed legislation would
replace the HMT with a new fee on tonnage of vessels and use the funds
to pay for both maintenance dredging as well as the Federal share of
channel improvements. Under the proposal, the government would no longer
have any financial responsibility for financing dredging of Federal
navigation channels.

**Department of Defense**

Except for marine channel dredging, DOD has no other dedicated funding
mechanism or program for providing for freight shipment. However, DOD
works with U.S. DOT to focus transportation spending on projects of
strategic importance to military mobilization. DOD's Strategic Highway
Network (STRAHNET) and Strategic Rail Corridor Network (STRACNET) were
established to coordinate DOT-sponsored infrastructure development with
defense needs. STRAHNET coordinates with two Title 23 programs: *Section
210, Defense access roads* and *Section 311, Highway improvements
strategically important to the national defense*. Depending on
ownership, STRACNET coordinates with private rail companies or State
Highway Agencies to keep strategic rail lines viable for mobilization.

**Highway**

Current Federal highway programs provide funding under 80/20 matching
(with some exceptions) arrangements with State and local government in
addition to several new financing programs including loans, credit
guarantee/credit enhancements, and bond issuance.

**Rail**

Federal funding for rail to date has primarily targeted two types of
applications: 1) stop-gap funding and loan guarantees to provide
infrastructure capital in order to keep critical rail infrastructure
from abandonment; and 2) and funding for safety-related improvements.
The most recent TEA-21 program, RRIF, has authorized a new loan program
to address the near-term crisis for urgently needed capital to renovate
dilapidated infrastructure resulting from long-term deficiencies in
capital for rehabilitation.

**Limitations**

ISTEA and TEA-21 limit the types of projects that are eligible to
receive Federal-aid funding. In general, a non-highway project serving
intermodal freight (for example, a rail line to a port) is ineligible
unless the project could be shown to reduce pollutant emissions in a
region that is not in compliance with air quality standards. In this
case, the project might be eligible for *Congestion Mitigation and Air
Quality Improvement Program* (CMAQ) funds. Exhibit 2.4 summarizes
Federal programs by mode eligibility. Brief descriptions of the
programs, including funding levels and program utilization, follow the
exhibit.

Federal Summary Matrix by Mode Eligibility

+---+--------------+--------+-------+-------+----+---------+---------+
|   | Federal      | Agency | Use   | Port  | Ra | Highway | Airport |
|   | Program      |        |       |       | il |         |         |
+===+==============+========+=======+=======+====+=========+=========+
| * | Harbor       | Army   | Grant | X     |    |         |         |
| * | Maintenance  | Corps  |       |       |    |         |         |
| 1 | Trust Fund   |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Public Works | EDA    | Grant | X     |    |         |         |
| * | &            |        |       |       |    |         |         |
| 2 | Development  |        |       |       |    |         |         |
| * | Facilities   |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Community    | USDA   | G     | E     | e  | X       | X       |
| * | Facility     |        | rant/ |       |    |         |         |
| 3 | Programs     |        |       |       |    |         |         |
| * |              |        | Loan  |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Railroad     | FRA    | Loan  |       | X  |         |         |
| * | Re           |        |       |       |    |         |         |
| 4 | habilitation |        |       |       |    |         |         |
| * | Improvement  |        |       |       |    |         |         |
| * | Financing    |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Tr           | FHWA   | Loan  |       | e  | X       |         |
| * | ansportation |        |       |       |    |         |         |
| 5 | In           |        |       |       |    |         |         |
| * | frastructure |        |       |       |    |         |         |
| * | Finance and  |        |       |       |    |         |         |
|   | Innovation   |        |       |       |    |         |         |
|   | Act          |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Borde        | FHWA   | F     |       |    | X       |         |
| * | rs/Corridors |        | unded |       |    |         |         |
| 6 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Congestion   | FHWA   | F     | E     | e  | X       |         |
| * | Mitigation   |        | unded |       |    |         |         |
| 7 | and Air      |        |       |       |    |         |         |
| * | Quality      |        |       |       |    |         |         |
| * | Improvement  |        |       |       |    |         |         |
|   | Program      |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Surface      | FHWA   | F     |       | e  | X       |         |
| * | Tr           |        | unded |       |    |         |         |
| 8 | ansportation |        |       |       |    |         |         |
| * | Program      |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | State        | FHWA   | Loan  |       |    | X       |         |
| * | In           |        |       |       |    |         |         |
| 9 | frastructure |        |       |       |    |         |         |
| * | Banks        |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Tr           | FHWA   | F     |       |    | X       |         |
| * | ansportation |        | unded |       |    |         |         |
| 1 | & Community  |        |       |       |    |         |         |
| 0 | & System     |        |       |       |    |         |         |
| * | Preservation |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | National     | FHWA   | F     |       |    | X       |         |
| * | Highway      |        | unded |       |    |         |         |
| 1 | System       |        |       |       |    |         |         |
| 1 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Demons       | USDOT  | F     |       | X  | X       | X       |
| * | tration/High |        | unded |       |    |         |         |
| 1 | Priority     |        |       |       |    |         |         |
| 2 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | GARVEE bonds | FHWA   | Bonds |       |    | X       |         |
| * |              |        |       |       |    |         |         |
| 1 |              |        |       |       |    |         |         |
| 3 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Hazardous    |        | User  | X     | X  | X       | X       |
| * | Materials    |        | fee   |       |    |         |         |
| 1 |              |        |       |       |    |         |         |
| 4 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Section 130  | FHWA   | F     |       | X  | X       |         |
| * | B Grade      |        | unded |       |    |         |         |
| 1 | Crossing     |        |       |       |    |         |         |
| 5 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Local Rail   | FRA    | Grant |       | X  |         |         |
| * | Freight      |        |       |       |    |         |         |
| 1 | Assistance   |        |       |       |    |         |         |
| 6 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Airport &    | FAA    | Grant |       |    | e       | X       |
| * | Airway       |        |       |       |    |         |         |
| 1 | Improvement  |        |       |       |    |         |         |
| 7 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Ferry        | FHWA   | Grant | E     |    | e       |         |
| * | D            |        |       |       |    |         |         |
| 1 | iscretionary |        |       |       |    |         |         |
| 8 | Program      |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | Appalachian  | FHWA   | F     |       |    | X       |         |
| * |              |        | unded |       |    |         |         |
| 1 |              |        |       |       |    |         |         |
| 9 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | State        | FHWA   | F     | X     | X  | X       | X       |
| * | Planning     |        | unded |       |    |         |         |
| 2 |              |        |       |       |    |         |         |
| 0 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+
| * | MPO Planning | FHWA   | F     | X     | X  | X       | X       |
| * |              |        | unded |       |    |         |         |
| 2 |              |        |       |       |    |         |         |
| 1 |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
| * |              |        |       |       |    |         |         |
+---+--------------+--------+-------+-------+----+---------+---------+

> X - denotes eligibility , e - denotes the precedent for exceptions to
> include this mode.
>
> \* also used for equipment lease and line of credit

Army Corps = Army Corps of Engineers, Department of Defense

> EDA= Economic Development Administration, Department of Commerce

FHWA = Federal Highway Administration, Department of Transportation

> FRA = Federal Rail Administration, Department of Transportation
>
> FAA= Federal Aviation Administration, Department of Transportation

### 1. (ACOE) The Harbor Maintenance Trust Fund (HMTF)

**Type of Funding/Financing:** Federal matching grant program, Army
Corps of Engineers (ACOE)

**Eligibility:** ports located along Federal navigation channels.

**Application:** Ports

**Funding:** \$1.1 billion in 1997

HMTF was created by the Water Resources Development Act of 1986. Through
this act, Congress established the Harbor Maintenance Tax (HMT), the
funding mechanism of the HMTF, which was set at the rate of 0.04 percent
of the value of commercial cargo imported and exported through U.S.
ports. In 1991, the HMT was increased to 0.125 percent of the cargo
value. Fees from the HMT were collected by the U.S. Customs Service and
passed through the U.S. Treasury Department to the HMTF. Funds in the
HMTF pay for the maintenance and operations (i.e. dredging costs) of
U.S. harbors and channels by the U.S. Army Corps of Engineers. The Fund
balance at the end of fiscal year 1997 was \$1.1 billion.

After ongoing litigation, the Supreme Court in [United States,
Petitioner v. United States Shoe Corporation, No. 97-372]{.underline}
declared the harbor maintenance tax unconstitutional as applied to
exports. Consequently, as of April 1998, the U.S. Customs Service
announced that they would no longer be collecting the Harbor Maintenance
Fees for cargo loaded on board a vessel for export at a port subject to
the HMT.

### 2. (Dept. of Commerce) Economic Development Administration (EDA) Funds

**Type of Funding/Financing:** Federal 50/50 matching grant program,
U.S. Department of Commerce

**Eligibility:** economically distressed industrial sites, per specific
income and job generation requirements

**Application:** Ports, as industrial development projects in depressed
areas to spur economic development

**Funding:** \$178 million for FY1998

The U.S. Department of Commerce, Economic Development Administration
offers grant funds for public works projects that promote or retain
employment. Under EDA's Public Works and Development Facilities Program,
grants are provided to help distressed communities attract new industry,
encourage business expansion, diversify local economies, and generate
long-term, private sector jobs.

Proposed projects must be located within an EDA-designated Redevelopment
Area or Economic Development Center. An applicant may be a State,
political subdivision of a State, special purpose unit of State and
local government, or a public or private nonprofit organization or
association representing the Redevelopment Area. Port improvement
projects are eligible for funding under this program.

Priority consideration is given to those projects that:

-   Improve opportunities for the successful establishment or expansion
    of industrial or commercial facilities

-   Assist in creating or retaining private sector jobs in the near
    term, as well as providing additional long-term employment
    opportunities, provided the jobs are not transferred from other
    labor market areas

-   Alleviate the long-term unemployment within low-income families
    residing in the area served by the project

-   Fulfill a pressing need of the area and can be started and completed
    in a timely manner

-   Demonstrate adequate local funding, with evidence that such support
    is committed

According to EDA, distress may exist in a variety of forms, including:

-   high levels of unemployment, low income levels,

-   large concentrations of low income families,

-   significant declines in per capita income,

-   substantial loss of population because of the lack of employment
    opportunities,

-   large numbers (or high rates) of business failures,

-   sudden major layoffs or plant closures, and/or reduced tax bases.

Potential applicants are responsible for demonstrating to EDA, through
statistics and other appropriate information, the nature and level of
the economic distress their project efforts are intended to alleviate.
In the absence of evidence of high levels of distress, EDA funding is
unlikely. Typically, funding from this source is difficult for ports to
obtain due to the employment requirements. Most port projects do not
generate high levels of direct employment; instead, these projects are
likely to have measurable impacts on indirect or induced employment
levels, neither of which meets EDA eligibility requirements.

The following statistics are published by EDA and provide some benchmark
for determining the level of economic distress for a given area. EDA
investments have targeted distressed communities with the following
characteristics:

-   Unemployment of 9.6 percent (median 24-month average) or more

-   Per capita income of \$7,666 (median) or less

-   Residents 18 percent below poverty level (median) or more

-   Residents 11 percent minority or more

Funds in the amount of \$178,000,000 have been appropriated for this
program for FY 1998. The average funding level for a grant is \$886,000,
which demonstrates that this is not a large source of funding for ports.
For detailed descriptions of EDA uses, see the Case Study section, Port
of Toledo, Ohio and the Port of Seattle, Washington, projects.

### 3. USDA Community Facility Programs

**Type of Funding/ Financing**: Grants, loans, and loan guarantees.

**Eligibility:** Communities with populations of 20,000 or less.

**Application:** Construction of community facilities such as buildings,
airports, and roads.

**Funding:** \$6 million, \$163 million and \$210 million, respectively,
in 1999

### The U.S. Department of Agriculture (USDA) provides three funding mechanisms under its Community Facilities Programs, Rural Housing Service Program. The Community Facilities Program funds construction, enlargement, extension or improvement of community facilities, providing essential services in rural areas and towns with a population of 20,000 or less. The three programs are 1) Direct Community Facilities loans; 2) Community facility Loan Guarantees; and 3) Community Facility Grant Program. Eligible community facilities include roads and airports. The funding sources are relatively small. Grants are not to exceed \$100,000, with an average grant size of \$15,000. The Loan guarantee and loan programs have larger federal budgets; in 1999, the average loan size was \$400,000 and the average loan guarantee was \$800,000. 

### 4. FRA Railroad Rehabilitation and Improvement Financing Program (RRIF)

**Type of Funding/ Financing**: Direct loans and loan guarantees

**Eligibility:** Railroads, trustees of bankrupt carriers, government
and other entities.

**Application:** Rail projects include acquisition or maintenance of
facilities or equipment, rehabilitation or improvement of facilities or
equipment, and new construction of facilities.

**Funding:** \$3.5 billion, w/ \$1 B directed to Regional & Shortline
RR's

The Railroad Rehabilitation and The Railroad Rehabilitation and
Improvement Program was established by the Railroad Revitalization and
Regulatory Reform Act of 1976. The authorization for the purchase of
preference shares (Section 505) terminated on September 30, 1988.
Section 511, under which loan guarantees were available, was amended by
Section 7203 of TEA-21. Section 7203 establishes a new program entitled
Railroad Rehabilitation and Improvement Financing (RRIF). Under the RRIF
Program, direct loans and loan guarantees are available for terms up to
25 years. Eligible applicants include State and local governments;
government sponsored authorities and corporations; railroad, and joint
ventures that include at least one railroad. RRIF funding may be used:

-   To acquire, improve, or rehabilitate intermodal or rail equipment or
    facilities, including track, components of track, bridges, yards,
    buildings, and shops;

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-   To refinance existing debt incurred for the above purposes; and

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-   To develop and establish new intermodal or railroad facilities.

The unique feature of the RRIF Program is the payment of a Credit Risk
Premium in lieu of an appropriation of funds. The Credit Risk Premium is
a cash payment provided by a non-Federal entity. It must cover the
estimated long-term cost to the Federal Government of a loan or loan
guarantee.

### 5. FHWA Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) 

**Type of Funding/Financing**: Federal secured (direct) and guaranteed
loans and lines of credit for projects generally at least \$100 million

**Eligibility:** Highway, transit, passenger-rail, and intermodal
projects may receive credit assistance under TIFIA. Highway projects
include Interstates, State highways, bridges, toll roads, and any other
type of project that is eligible for Federal aid highway assistance
under title 23 (Highways) of the U.S. Code (23 U.S.C.). Transit projects
encompass the design and construction of facilities, purchase of transit
vehicles, and any other type of project that is eligible for grant
assistance under chapter 53 of 49 U.S.C. Additionally, inter-city bus
vehicles and facilities are eligible to receive TIFIA assistance. As for
rail projects, the design and construction of inter-city passenger-rail
facilities and procurement of inter-city passenger-rail vehicles are
both eligible for TIFIA assistance. Publicly-owned intermodal facilities
on or adjacent to the National Highway System are also eligible for
TIFIA assistance, as are projects that provide ground access to airports
or seaports, though airport and seaport projects are ineligible.

**Application:** Freight applications of Title 23 include highway
construction or reconstruction projects, including bond costs, and grade
crossing improvements.

**Funding:** \$10.6 billion over 6 years

Title I, subtitle E (Finance), chapter 1 (section 1501) of TEA-21
introduces Transportation Infrastructure Finance and Innovation Act of
1998 (TIFIA).@ TIFIA establishes a \$10.6 billion Federal credit program
for projects of national significance such as intermodal facilities,
border crossings and multi-state trade corridors that are of a scale
that exceeds the capacity of existing Federal and State assistance
programs. TIFIA is intended to complement existing funding resources by
filling market gaps and leveraging substantial private co-investment.
The TIFIA credit program provides for the following three types of
financial assistance:

-   Secured loans

-   Loan guarantees

-   Lines of credit.

Eligible projects include highway and capital transit projects, as
defined by Title 23 and Title 49, Chapter 53, U.S.C. This includes all
highway projects, rail capital projects, international bridges and
tunnels, publicly-owned freight transfer facilities on or adjacent to
the National Highway System (NHS), and grade crossing improvements.
Additionally, the following criteria are listed under TIFIA in TEA-21. A
project must:

-   Be included in the State transportation plan

-   Be included in approved State Transportation Improvement Program
    (STIP)/Transportation Improvement Program (TIP) at time of agreement

-   Project costs must be equal to or exceed the lesser of:

(a) \$100,000,000 ***[or]{.underline}*** 50 percent of the amount of
    Federal highway assistance apportionment funds to the State for the
    most recent fiscal year (except ITS projects); or

(b) \$30,000,000 for Intelligent transportation system projects B In the
    case of a project principally involving the installation of an
    intelligent transportation system, eligible project costs shall be
    reasonably anticipated to equal or exceed \$30,000,000.

-   Project financing must be repayable, in whole or in part, from
    tolls, user fees, or other dedicated revenue sources.

Under the TIFIA credit program, publicly owned intermodal freight
facilities on the NHS are considered eligible projects. However, the
enabling legislation does specify that seaports and airports do not
qualify as intermodal freight facilities. The Secretary of the U.S. DOT
evaluates and selects projects based on a variety of factors including
national significance, credit-worthiness, and private participation.

TIFIA is certainly a viable tool for funding major highway projects, and
access to intermodal rail yards, ports, and airports; however, there is
no particular emphasis given to projects that improve freight shipment
systems. In addition, any given highway project application must be for
a project scale of \$100 million or more.

To date, there are no specific examples of TIFIA projects that directly
benefit freight. However, there are other Federal credit projects
financed in recent years (before TIFIA was enacted) that support
freight. These include the Alameda Corridor and San Joaquin toll road
projects. See the Section 3, Case Studies.

### 6. Borders/Corridors 

**Type of Funding/Financing:** Federal 80/20 matching program

**Eligibility:** Title 23 highway projects at designated borders and
corridors, U.S. Custom's equipment

**Application:** highway improvements, U.S. Custom's equipment, planning
studies

**Funding:** \$700 million over 5-years (the program was not funded in
1998)

The Borders/Corridors program established funding packages to support
planning studies and infrastructure development at the national border
crossings and along major freight corridors. Funds are eligible for
Title 23 purposes (highway improvements) including feasibility studies,
corridor planning and design activities, location and routing studies,
multi-state and intrastate coordination of corridors, and any management
plan for the corridor that includes environmental review or
construction. All projects applying for Section 1118 or 1119 funding
must be included in their respective State Transportation Plan and the
State Transportation Improvement Program and where sponsored by an MPO,
be included in the TIP and MPO long range plan. Many of the high
priority corridors that are eligible for funding were previously
identified through ISTEA and have been included in State transportation
plans.

There are geographic limitations on Borders funding within a 100-mile
radius of the U.S. borders. This constrains freight project development
for goods processed outside the border areas. The Mid-America Regional
Council just completed a feasibility study of building an International
Trade Processing Center (IPTC) in Kansas City, to relieve congestion in
Laredo and at the Kansas City International Airport Customs operations.
However, due to the 100-mile clause, the IPTC would not be eligible for
Borders funding for construction and equipment.

### 7. FHWA Congestion Mitigation and Air Quality (CMAQ) Improvement Program

**Type of Funding/Financing:** Federal 80/20 matching program, (90/10 if
used on the Interstate system). CMAQ has been used for State loans,
equipment leases, and construction at and of intermodal facilities.

**Eligibility:** Title 23 highway projects, other infrastructure
improvements to benefit air quality, public-private initiatives, or
private initiatives demonstrating significant public benefit.

**Application:** Rail-truck yards, rail spurs, highway improvements,
equipment leases, port improvements if overall impact is to reduce truck
trips.

**Funding:** \$8.1 billion for the 6-year period

Projects eligible for CMAQ funding must reduce carbon monoxide, volatile
organic compounds, oxides of nitrogen (NOx) and particulate matter in a
Clean Air Act non-attainment and maintenance areas. Intermodal freight
projects are eligible for CMAQ grant funding if they demonstrate reduced
traffic emissions.

CMAQ has been used in more innovative freight projects than most other
Federal funding programs. A key feature to note includes the eligibility
of rail track rehabilitation and corresponding infrastructure that lead
to a reduction of truck traffic. CMAQ funds have been used for
rail-intermodal projects whenever emission reductions can reasonably be
expected.[^5] Freight projects compete against highway and transit
projects that also alleviate air pollution.

Congress apportions obligation authority to each State based on
population and the severity of the area's air quality problems. The
State is then responsible for programming the money for various projects
throughout the year. States work with Metropolitan Planning
Organizations (MPO) to decide which transportation activities in the
approved State Implementation Plan get funding from CMAQ. Programs may
vary from congestion relief strategies to transit projects to
alternative fuel projects to public education and outreach activities.

CMAQ case studies indicate project approvals have included rail and
barge freight facilities as a substitute for truck movements. CMAQ funds
have also been used to support a private intermodal terminal under a
lease agreement, typically a hurdle for public funding expenditures.
Funds were also used under a State loan agreement to create a revolving
CMAQ account in Ohio. Other CMAQ funds either fully funded a project or
provided gap funding (seed money to match private funding). Of the five
CMAQ intermodal case studies reviewed for this report, CATS= Kedzie
Stoplight, Stark County Intermodal facility, Maine DOT's two rail
intermodal yards, and Blythe, California's rail-truck transfer facility,
four were successful and one has under-performed. According to the TRB
Policy Options for Intermodal Freight Report, the Kedzie project is the
AISTEA Poster Child, and demonstrates that it is very difficult to
undertake small projects in isolation, however simple or
cost-beneficial, because they become part of a more complex traffic and
transportation system.[^6]

The Stark County Intermodal facility B connecting the Wheeling and Lake
Erie Regional rail system to several Class I railroads B was developed
under special circumstances, including a State loan based on CMAQ
funding. Not only did the project meet Ohio DOT's objective for building
an intermodal facility in North Eastern Ohio, but also the project was
funded to take advantage of land opportunities and private sector
support from a major grocery company. The project's viability was
assured by NS and CSX marketing the project as their own.[^7] However,
just after the project was committed, Conrail divested its assets to NS
and CSX. The resulting change in rail traffic patterns reduced the
viability of the Stark County Intermodal facility. Lengthy NS delays,
brought on by the changes in rail traffic, were exacerbated to
unmanageable levels by additional wait time needed to connect with Stark
County Intermodal facility. To date, this facility is underutilized.
Additional CMAQ uses are described in Section 3CCase Studies, including
the Stark County Project, Gilford Intermodal and Auburn Intermodal
projects.

### 8. FHWA Surface Transportation Program (STP)

**Type of Funding/Financing:** Federal 80/20 matching program

**Eligibility:** Highway construction, rehabilitation, safety
improvements (grade crossing), and preservation of rail corridors

**Application:** Road improvements to accommodate intermodal yard/port
access

**Funding:** \$33.3 billion

STP is available for almost any roadway improvements on any Federal-aid
highway, including NHS. Improvements to accommodate other modes,
including rail freight, are also eligible. STP was introduced in 1991
under the Intermodal Surface Transportation Efficiency Act (ISTEA). The
program was set up to fund roadway projects other than those classified
as local or rural minor collectors, bridge projects, or transit capital
projects. Roadway projects could involve construction, reconstruction,
rehabilitation, resurfacing, restoration, or operational improvements of
the road.

Improvements to rail that are allowable include accommodating double
stack freight trains. The provision for accommodating double stack
trains was added under ISTEA \[23 U.S.C. 133 (b)(1)\] allowing STP funds
to be used for "... construction or reconstruction \[highway and
bridges\] necessary to accommodate other transportation modes...". This
is also extended to NHS, CMAQ and IM funding through 23 U.S.C. 142(c).
Work allowed includes: "...lengthening or increasing vertical clearances
of bridges, adjusting drainage facilities, lighting, signage, utilities,
or making minor adjustments to highway alignment ..." . In addition "...
where an existing highway facility directly constrains operations of an
existing rail line ...adjustments to the rail line including relocation
of the rail line and purchase of right-of-way would be an allowable use
of federal funds where it can be shown to be more cost effective then
eligible adjustments to the existing highway..." . The references made
are found in the Information Memo entitled [Use of Federal-Aid Highway
Funds for Improvements to Rail Facilities,]{.underline} dated February
9, 1993 and signed by Anthony R. Kane (Appendix B).

The Transportation Enhancement Program (TEA) has 10-percent set-aside
under STP and has a specified list of eligible project types (including
historic facility) that must relate to surface transportation. Among the
specified categories, key opportunities for freight project include the
preservation of abandoned rail corridors

Another 10 percent of STP obligation authority is set aside for
safety-related projects in accordance with two programs: Hazard
Elimination (Section 152) and Railway/Highway Crossings Program (Section
130), discussed below).

A good example of coordinated use of STP for rail includes the Port of
Anchorage grade crossing project. Alaska DOT applied for a discretionary
grant to conduct a statewide study of intermodal access. The outcome of
the study was to develop a list of candidate projects to support freight
movement, including the Port of Anchorage port access-grade crossing
project.[^8] See the Case Study for a more detailed description of the
Port of Anchorage access road project.

### 9. FHWA Section 130 (Highway-Railroad Grade Crossings Program)

**Type of Funding/Finance:** Federal 80/20 matching program

**Eligibility:** grade crossing projects identified by State DOT and/or
local communities

**Application:** Rail-highway grade crossing improvements

**Funding:** 10 percent set-aside from STP, approximately \$134 million
in 1999

The Rail-Highway Crossings Program was established in 1913 through the
Highway Safety Act, later codified as Section 130 in Title 23 of the
United States Code. This program provides Federal money to States in
order to fund projects aimed at reducing the incidence of accidents,
injuries, and fatalities at railroad crossings. To accomplish these
safety objectives, the funds can be used to install or improve signs and
pavement markings, flashing light signals, automatic gates, crossing
surfaces, and crossing illumination.

This program is administered by FHWA. In Fiscal Year 1999, \$134 million
was reserved for Section 130 highway-railroad grade crossing
improvements, out of the total \$554 million 10 percent-set-aside for
Rail Crossing and Hazard Elimination.[^9]

The Ohio Rail Development Commission (ORDC) provided an overmatch to its
STP, Section 130 allocation of \$6.2 million, for a combined total 1999
rail-grade crossing budget of \$15 million. Even with the STP overmatch,
project applicants significantly exceed program resources.[^10]

### 10. FHWA Transportation and Community and System Preservation Pilot (TCSP)

**Type of Funding/Financing:** Federal 80/20 matching program

**Eligibility:** Highway and transit systems planning

**Application:** Highway and transit

**Funding:** \$120 million to the end of the authorization, 2003

The TCSP program is a comprehensive initiative of research and grants to
investigate the relationships between transportation and community and
system preservation and private sector-based initiatives. States, local
governments, and metropolitan planning organizations are eligible for
discretionary funds to plan and implement strategies that:

-   improve the efficiency of the transportation system;

-   reduce environmental impacts of transportation;

-   reduce the need for costly future public infrastructure investments;

-   ensure efficient access to jobs, services, and centers of trade; and

-   examine private sector development patterns and investments that
    support these goals.

A total of \$120 million is authorized for this program for FY
1999-2003.

The North Jersey Transportation Authority won a TCSP grant to identify
infrastructure needs for the trucking community using the Port of
Elizabeth facilities

### 11. FHWA National Highway System (NHS)

**Type of Funding/Finance:** Federal 80/20 matching program, 90/10 for
Interstate projects.

**Eligibility:** Federal highway system improvements

**Application:** Highway construction, rehabilitation, safety
improvements (grade crossing) for segments of the NHS, operational
improvements, transportation planning, highway research, wetlands
mitigation, ITS, as well as transit projects.

**Funding:** \$28.5 billion over 6 years

The National Highway System (NHS) is composed of 163,000 miles of rural
and urban interstate system roads, international border crossings, major
intermodal transportation facilities, the defense strategic highway
network, and strategic highway network connectors. The purpose of the
NHS is provide an interconnected system of principal arterial routes
which serve major population centers, international border crossings,
ports, airports, public transportation facilities, and other intermodal
transportation facilities and other major travel destinations; meet
national defense requirements; and serve interstate and interregional
travel. NHS funding supports highway construction, safety and
operational improvements, transportation planning, technology transfer
activities and ITS, traffic control, and bicycle and vanpool projects on
the NHS facilities. See the Case Study section, Loredo, Texas
International Bridge project for an example of the NHS use.

Under ISTEA and furthered in TEA-21, NHS connections to intermodal
freight facilities which fall within designated patterns of truck
volumes are eligible for NHS funds. Many of these connections are on
local roads and city streets that might otherwise not be eligible for
funding.

### 12. FHWA State Infrastructure Banks (SIB) 

**Type of Funding/Financing:** Federal 80/20 matching loans and credit
enhancement

**Eligibility:** Public agencies, private sponsors, TIP/STIP
requirement, and Titles 23 and 49 uses

**Applications:** Transportation Improvement District (TID)-based
highway improvements, toll roads

**Funding:** TEA-21 authorized SIBs for four States (CA, FL, MO, RI) to
flex Federal-aid funding to capitalize the SIB.

The SIB pilot program was established under the 1995 NHS Designation Act
(Section 350) and appropriated \$150 million to participating States.
Federal pilot program disbursements to individual State SIBs varied from
\$1.5 million to \$12 million; the most common State allocation was
\$1.5 million. Approximately 40 States participated in the ISTEA pilot
program with varying levels of success. TEA-21 authorized four States to
capitalize their SIB programs with Federal-aid funding, and removed the
10 percent cap required under ISTEA

Program eligibility is limited to Title 23 and Title 49, Chapter 53,
U.S.C.; however, some States (Ohio and Missouri) took the initiative to
establish state-funded infrastructure bank accounts to address other
modes. Missouri, though, is constrained from capitalizing its
non-highway SIB accounts by its State Highway Trust Fund restrictions
against non-highway uses. Consequently, Missouri used General Fund
appropriations to fund the transit account, which was then used to
support a transit project in St. Louis.

As established under the NHS Designation Act, State Infrastructure Banks
had two main implementation hurdles: 1) low capitalization funding and
2) developing a loan program within a framework traditionally oriented
to grant disbursement. TEA-21 only re-authorized four States to
capitalize the bank from TEA-21 Federal appropriations, which compounded
the capitalization hurdle. To date, the remaining 36 States still
maintain active SIBs, although the majority are significantly
undercapitalized with \$1 million or less in these accounts. Of the
non-authorized states, some have been able to fund projects.

Despite these hurdles, there are some noteworthy case studies of SIB
lending for freight-related highway development. Pennsylvania, for
example, used its SIB to fund a highway connector project to connect a
State highway to the Pittsburgh International Airport freight warehouse
area, repaying the loan from a Transportation Improvement District
(TID). However, it is important to note that Pennsylvania was not
re-authorized to draw down funding under TEA-21 to re-capitalize its
SIB. Therefore, Pennsylvania SIB can only be re-capitalized by loan
repayments and State appropriations. Laredo, Texas, was also successful
at using its SIB to finance the construction of a freight-related
highway toll bridge project. Similar to Pennsylvania's airport road,
Ohio used its SIB to fund a highway project, repaid by a TID assessment.
See the Case Study Section, the Butler County highway and Pittsburgh
Airport Access road projects for a more detailed description of the
funding process.

### 13. Demonstration Projects/High Priority Projects 

**Type of Funding/Financing:** Federal 80/20 matching appropriations
from congressional earmarks

**Eligibility:** Subject to congressional earmarking

**Application:** Highway, rail, intermodal projects

**Funding:** \$9.4 billion over 6 years

TEA-21 authorized \$9.4 billion in funding to target 1,850 High Priority
projects. The Federal Highway Administration and the Office of
Intermodalism compiled surveys into the *Compendium of Intermodal
Freight Projects*. The *Compendium* survey results indicated that 20
percent of the projects identified in the survey were funded under ISTEA
demonstration and priority intermodal project earmarks. Review of State
and MPO data for this study were similar to the findings from the
*Compendium*. In effect, demonstration funding and/or TEA-21 High
Priority projects substitute for dedicated State intermodal programs.
These types of projects come from a process that bypasses any
coordinated short or long range planning efforts. High Priority funding
designations are included in the two Port Hueneme case studies in the
Case Study section.

### 14. FHWA GARVEE Bonds 

**Type of Funding/Financing:** Bond issuance (80/20) based on future
Federal appropriations

**Eligibility:** Title 23 **Application:** Title 23 highway uses
restricted to Treasury bill rates

**Funding:** Funding is tied to future Federal appropriations, however
default protections are budgeted into TEA-21

The Grant Anticipation Revenue Vehicle (GARVEE) bond is a financing
instrument with principal and/or interest repaid with future Federal-aid
highway funds. GARVEE bonds can be used one of two ways: 1) direct
GARVEE bonds in which Federal assistance directly reimburses debt
service paid to investors; and 2) an indirect reimbursement in which
Federal funds reimburse expenditures on other Federal-aid projects and
the State department of transportation subsequently uses a portion of
those funds to pay debt service on the debt-financed project. In second
type, the debt-financed project does not need to be a Federal-aid
project. Two projects have used GARVEE bond financing under this new
program: Ohio's Spring-Sandusky Interchange, and New Mexico's Corridor
44. Two other projects, California and Mississippi, originally described
as GARVEE-type mechanisms for funding, are no longer defined that way.
See the Case Study section for more detailed explanation of GARVEE
financing.

### 15. Hazardous Materials (HazMat) 

**Type of Funding/Finance:** Federal funding based on permitting
revenues

**Eligibility:** All public-facility modes of shipping

**Application:** Enforcement costs

**Funding:** Fee-based

HazMat regulations apply to interstate, intrastate and foreign commerce;
and to transportation in commerce by aircraft, railcars, vessels, and by
motor vehicles operated by interstate carriers. HazMat regulations are
maintained by the Research and Special Programs Administration (RSPA),
which issues rules and regulations governing the safe transportation of
hazardous materials.

Under the Federal HazMat law, RSPA shares enforcement authority with
four modal administrations:

-   Federal Motor Carrier Safety Administration

-   USCG (United States Coast Guard)

-   FRA (Federal Railroad Administration)

-   FAA (Federal Aviation Administration)

RSPA has primary enforcement jurisdiction over container manufacturers,
re-conditioners, and re-testers, and a shared authority over shippers of
hazardous materials. Compliance testing is done on-site, with inspectors
visiting shippers and manufacturers who fall within their jurisdiction.
All RPSA costs are covered through the processing and licensing fees
associated with HazMat registration.[^11] FHWA regulatory functions for
hazardous materials include highway routing of hazardous materials and
issuing highway safety permits. Compliance is carried out using
road-side inspections at current breaks in truck routes (such as weigh
stations), coupled with strike force abilities (teams of inspectors
capable of carrying out surprise inspections). Since inspections take
place on the shipper sites, or on road networks, FHWA maintains no
infrastructure of its own. Safe Havens are maintained for vehicles
carrying explosive goods, but these designated areas are maintained at
the expense of shipping companies.

FHWA incurs cost for ongoing training and activities of emergency
response personnel and inspectors, as well as administration costs,
recovering the costs from HazMat registration. USCG costs are primarily
restricted to inspections and training and inspections are carried out
at loading and unloading facilities. According to a Funds Transfer
Query, Coast Guard stations carry out inspections, which are funded by
the District's Operations Division.[^12] Funding comes primarily from
registration fees paid by the individual HazMat carriers. The FRA acts
as a quality control on the quality control.[^13] Only 0.5 percent of
railroad activity is monitored, and it is usually the railroads that
monitor activity. In either case, no HazMat-specific facilities are
maintained, and instead HazMat inspections depend on using modal and
HazMat transport company facilities so that loading and unloading may be
monitored (which is where the highest risk of hazard exists). FAA
follows similar procedures and primarily enforces non-compliance.[^14]
Both air carriers and cargo carriers are inspected, as well as indirect
air carriers and shippers. FAA inspectors go to facilities and carry out
checks on site. The main costs for the FAA are the salaries of the
inspectors, which comes out of the FAA budget.

Most of the money from Federal appropriations covers planning and
training programs carried out by the USDOT (which are maintained by
RSPA, FHWA, USCG, FRA and FAA). Additionally, the DOE, EPA, and FEMA all
receive grants in order to cover monitoring and technical assistance.

State DOTs, although responsible for the routing of HazMat vehicles and
the accompanying signage, maintain no dedicated HazMat infrastructure,
and have not constructed any dedicated HazMat routes.[^15] Shippers have
built the majority of all facilities used for HazMat purposes.

A grants program is maintained by RSPA to enhance existing state and
local hazardous materials emergency response programs. This program is
funded through registration fees collected from certain transporters and
shippers of hazardous materials in commerce. The registration fee is set
by the Secretary of Transportation, and ranges from \$250 to \$5,000 for
each filing. This fee is based on at least one of the following:[^16]

-   Gross revenue from transporting hazardous material

-   Type of hazardous material transported or caused to be transported

-   Amount of hazardous material transported or caused to be transported

-   Number of activities that the shipper carries out for which filing a
    registration statement is required under this section

-   Threat to property, individuals, and the environment from an
    accident or incident involving the hazardous material transported or
    caused to be transported

-   Percentage of gross revenue derived from transporting hazardous
    material

-   Amount to be made available to carry out registration and training
    programs contained within the Hazardous Materials Transportation Law

-   Other factors that the Secretary considers appropriate.

### 16. FRA Local Rail Freight Assistance Program 

**Type of Funding/Financing**: Federal grants to states. For track
rehabilitation projects, States had the option of providing the funding
to the railroads that did the work on a grant or loan basis. During the
course of the program, 10 States loaned LRFA funding.

**Eligibility:** A State agency designated by the Governor. For most
states, the designated agency was the State Department of
Transportation. Each State was entitled to a set amount that could be
used for rail planning or project purposes. The amount varied from
\$100,000 to \$36,000 depending on the year. Most States used their
entitlement funding for rail freight planning.

**Application:** Projects included track rehabilitation and rail
facility construction with respect to rail lines that carried less than
5 million gross ton miles during the prior year. A line was eligible to
be acquired if it had been authorized to be abandoned by the Interstate
Commerce Commission. Each project had to have a benefit-cost ratio
greater than 1.

**Funding:** \$0 in 1999

The Local Rail Freight Assistance Program was established by the
Regional Rail Reorganization Act of 1973 as a temporary program of
financial assistance designed to ease the disruption of the loss of rail
service due to the bankruptcy of the Penn Central and five other smaller
carriers. The Program was limited to the 18 States in the Northwest and
Midwest Region. With the bankruptcies of the Milwaukee and the Rock
Island Railroads, the LRFA Program was expanded by the Railroad
Revitalization and Regulatory Reform Act of 1976 to include all of the
States, except Hawaii. Each of the eligible States received some LRFA
funding.

The authorization for the LRFA Program expired on September 30, 1994.
Funding was appropriated through September 30, 1995.

### 17. FAA AIP Program 

**Type of Funding/Financing**: Federal grants to airports and State
airport programs from passenger revenues

**Eligibility:** Construction for airports included in the National Plan
of Integrated Airport Systems with that receive more than 100 million
pounds of cargo or enplane 10,000 passengers annually and for other
discretionary projects

**Application:** Planning and development

**Funding:** \$2.4 billion authorized in 1999, \$1.95 billion was
obligated in 1999 for entitlements and discretionary spending

The US Airport and Airway Improvement Act of 1982 (amended in 1983 and
1987) authorized the Airport Improvement Program (AIP) to assist in the
development of a nationwide system of public-use airports adequate to
meet the projected growth of aviation. The Act provides funding (in the
form of Federal- and state-administered grants) for airport planning and
development projects at airports included in the *National Plan of
Integrated Airport Systems*.[^17] AIP funding is available for
construction (maintenance is generally prohibited) and is limited to
airports included in the National Plan of Integrated Airport Systems,
within the following classifications:

-   Cargo service airports receiving cargo in excess of 100 million
    pounds annually.

-   Primary commercial airports that enplane more than 10,000 passengers
    annually

Specific advantages of the FAA AIP Grant program include:

-   A large budget (\$555 million): \$300,000 to \$16,000,000 per year
    for Primary Airports based upon the number of passengers enplaning
    annually

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-   Eight percent (maximum) of the annual cargo service apportionment: A
    favorable funding ratio (in most cases) for State and local
    governments (90 percent Federal, 5 percent state, 5 percent local)

AIP also provides State block grants to nine participating states,
including Illinois, Michigan, Missouri, New Jersey, North Carolina,
Pennsylvania, Tennessee, Texas, and Wisconsin. The matching provisions
are the same for both the AIP airport grant and the FAA State Block
grant programs: Federal share is 90 percent; the remaining 10 percent is
divided between State and local government or authority, on a
discretionary basis. A recent Federal provision, first tested under a
pilot program and now proposed for codification in the 1982 Act, would
allow for a flexible non Federal match. This would permit the project
sponsor to offer an overmatch to better compete for Federal resources.

### 18. FHWA Ferry Boat Discretionary Program

**Type of Funding/Finance:** Federal 80/20 matching program

**Eligibility:** marine highway systems, i.e., for a ferry facility that
provides a direct link on the NHS or an approved NHS connector. Set
asides for Alaska, New Jersey, and Washington

**Application:** construction of ferryboats or ferry boat terminals

**Funding:** approximately \$14 million/year for openly competitive,
candidate projects. Total program authorization, including NHS set-aside
for Washington, New Jersey and Alaska, is \$220 million over 6 years

The Ferry Boat Discretionary Program (FBD) was created by Section 1064
of the ISTEA to support the construction of ferryboat systems connecting
to the National Highway System. This marine highway program supports the
construction of boats and ferry terminals.

The set asides for Alaska, New Jersey and Washington are for the
construction or refurbishing of ferry boats and ferry terminals and
their approaches that are part of the NHS. Due to the large number of
requests, \$2 million or less are typically awarded, in order to
disburse funding to as many States as possible.

### 19. FHWA Appalachian Development Highway Program 

**Type of Funding/Finance:** Federal 80/20 matching program

**Eligibility:** 3,025-mile Appalachian Development Highway System

**Application:** construction, reconstruction, or improvement of
highways.

**Funding:** \$450 million for 1999-2003

The Appalachian Development Highway System (ADHS) was created to provide
a system of highways and access roads to foster economic development in
the Appalachian regions of 13 States: Alabama, Georgia, Kentucky,
Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Virginia, and West Virginia. Funding from
this program may be used for the construction, reconstruction, or
improvement of highways on the 3,025-mile ADHS.

### 20. FHWA Metropolitan Planning Funds (PL)

**Type of Funding/Finance:** Federal 80/20 matching program

**Eligibility:** Metropolitan Planning Organizations

**Application:** transportation planning activities, including freight
infrastructure planning

**Funding:** 1% of Title 23 program funding, based on a ratio of a
state's urban population to nationwide urban population

States must make all Metropolitan Planning (PL) funds authorized by
23.U.S.C. 104 (f) available to the MPOs in accordance with a formula
developed by each State, in consultation with the MPOs, and approved by
FHWA. Under 23.U.S.C. 134, MPOs are responsible for developing, in
cooperation with the State and affected transit operators, a long-range
transportation plan and transportation improvement program (TIP).

### 21. FHWA State Planning and Research (SPR)

**Type of Funding/Finance:** Federal 80/20 matching program

**Eligibility:** State Highway Agencies

**Application:** transportation planning, development, research, and
implementation of management systems.

**Funding:** 2 percent set-aside from certain Federal-aid funds (NHS,
STP, CMAQ, etc.) apportioned to a state. 25 percent of the amount is
designated for research

SPR funds may be used for engineering and economic surveys, planning,
development and implementation of management systems, research, and
development and technology transfer activities necessary in connection
with the planning, design, construction, and maintenance of highways,
public transportation, and intermodal transportation systems.

## 2.3 State Funding Sources 

Aside from traditional grant subsidies, a few States have developed
innovative programs for financing port and rail development. The
examples cited in this section - maritime infrastructure bank, a port
revolving fund, an economic development grant program, and short line
loan/grant programs - are institutional financial solutions to a
region's infrastructure needs, intended to be an ongoing capital
resource to capital financing rather than a one-time subsidy for a
specific project. These institutional solutions vary in that some
provide matching grants while others provide low-interest loans or serve
as a credit enhancement tool.

These institutional approaches provide specific advantages to
infrastructure financing. First, they supply a greatly needed source of
capital funds that ports and railroads, particularly shortlines, can
turn to and incorporate into their long-term planning process. Also,
there are generally fewer restrictions attached to funds obtained
through an infrastructure bank or a revolving fund. For instance,
businesses usually cannot qualify for a loan in the private market to
build facilities on leased land. An infrastructure bank or a revolving
fund could allow a port or rail company to receive money for building
this type of project. Additionally, an infrastructure bank, as a legal
joint powers authority, can provide for conduit financing and allow a
port, or rail corporation, to issue bonds more easily (e.g., without
voter approval) than if the port were to undertake this endeavor on its
own.

The major drawback of these types of institutional solutions is in
obtaining the monies, either from Congress or the state, to capitalize
the bank or seed the fund. Additionally, even when the bank or fund has
been capitalized, the grant is often a one-time appropriation and is
inadequate to provide sufficient capital resources to fund larger
capital projects and related expenditures faced by ports today. Exhibit
2.5 list examples of these types of institutional financing mechanisms
in a matrix of State programs. Brief summaries of the programs,
including funding levels and program utilization, follow the matrix.

Exhibit 2.5

> State Summary Matrix by Mode Eligibility

+---+------------------+----------+--------+----+----+-------+------+
|   |                  | *        | *      | ** | ** | *     | **A  |
|   |                  | *Funding | *Use** | Po | Ra | *High | irpo |
|   |                  | Source** |        | rt | il | way** | rt** |
|   |                  |          |        | ** | ** |       |      |
+===+==================+==========+========+====+====+=======+======+
| 1 | CA Maritime      |          | Bonds  | X  |    |       |      |
|   | Infrastructure   |          |        |    |    |       |      |
|   | Bank             |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 2 | CA               | General  | Loan   | X  |    | X     |      |
|   | Infrastructure & | fund     |        |    |    |       |      |
|   | Economic         |          |        |    |    |       |      |
|   | Development Bank |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 3 | FL Seaport       | General  | 50/50  | X  | X  | X     |      |
|   | Transportation & | fund     | Grant  |    |    |       |      |
|   | Economic         |          |        |    |    |       |      |
|   | Development      |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 4 | FL Freight Task  | General  | Grant  | X  | X  | X     | X    |
|   | Force            | fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 5 | MN Port          | General  | Loan   | X  |    |       |      |
|   | Development      | fund     | /Grant |    |    |       |      |
|   | Assistance       |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 6 | OR Port          | Lottery/ | Loan   | X  |    |       |      |
|   | Revolving Fund   |          |        |    |    |       |      |
|   |                  | General  |        |    |    |       |      |
|   |                  | fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 7 | WI Harbor        | Transp   | Grant  | X  |    |       |      |
|   | Assistance       | ortation |        |    |    |       |      |
|   |                  | Fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 8 | PA PennPlus      | General  | Loan   | X  | X  | X     | X    |
|   |                  | fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 9 | PA Rail Freight  | General  | 50/50  |    | X  |       |      |
|   | Assistance       | fund     | Grant  |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | WA Freight       | General  | Grant  | X  | X  | X     |      |
| 0 | Mobility         | fund     |        |    |    |       |      |
|   | Strategic        |          |        |    |    |       |      |
|   | Investment Board |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | IN Rail Service  | General  | Loan   |    | X  |       |      |
| 1 | Fund             | fund     | /grant |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | OH Rail          | General  | Loan   |    | X  |       |      |
| 2 | Development      | fund     | /grant |    |    |       |      |
|   | Commission       |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | IL Rail Freight  | General  | Loan   |    | X  |       |      |
| 3 | Assistance       | fund     | /grant |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | MI Rail Loan     | General  | 90/10  |    | X  |       |      |
| 4 | Assistance       |          | Loan   |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | MN Rail Freight  | General  |        |    |    |       |      |
| 5 | Program          | fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | MO               | Private  | Tax-   | X  | X  | X     | X    |
| 6 | Transportation   | market   | exempt |    |    |       |      |
|   | Corporation      |          | bonds  |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | VA Rail          | General  | 50     |    | X  |       |      |
| 7 | Industrial       | fund     | /50Gra |    |    |       |      |
|   | Access Program   |          | nt\*\* |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | VA Rail          | General  | Gran   |    | X  |       |      |
| 8 | Preservation     | fund     | t/loan |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 1 | WI Freight Rail  | General  | Loans  |    | X  |       |      |
| 9 | Infrastruct      | fund     | at 0%  |    |    |       |      |
|   | ure/Preservation |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 2 | PA Airport       | General  | Grants |    |    |       | X    |
| 0 | Assistance       | fund     |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+
| 2 | TN Airport       | Fuel tax | Grants |    |    |       | X    |
| 1 | Program          |          |        |    |    |       |      |
+---+------------------+----------+--------+----+----+-------+------+

> \*\* Match required after first \$100k.

### 1. California Maritime Infrastructure Bank (CMIB) 

**Type of Funding/Financing:** Credit Enhancement, Joint Powers
Authority (JPA) used as conduit for bond issuance

**Eligibility:** California ports, port infrastructure projects
including dredging and land acquisition

Application: Ports

**Funding:** \$0 for loans. As a JPA, CMIB can issue bonds

In 1994, California State legislation established the CMIB as the first
statewide, maritime-specific public investment bank in the United
States. The CMIB was developed to service the financing needs of
projects not funded by the State of California or the private sector.
The idea behind the CMIB is that the bank would request a one-time grant
from Federal or State sources for initial capitalization. Once
capitalized, the CMIB's potential tools for financing would include
long-term, low-interest loans, and taxable and tax-exempt bonds. Funds
provided through the CMIB would be less restrictive than other State
funding sources such as the State Harbors and Watercraft Revolving Fund
(HWRF). For instance, while HWRF funds cannot be used on a project for a
private tenant on public land, funds coming from the CMIB could be used
for that purpose.

While the CMIB has been heralded as an innovative financing mechanism in
the maritime industry, it has yet to gain the financial support needed
to capitalize the bank and begin loaning to projects. A one-time grant
request from the U.S. Congress was rejected as was a bill in California
seeking funding from the State diesel fuel tax. As of August 1999, the
CMIB was still not capitalized. While lacking in funding capacity, the
CMIB has been able to provide conduit financing using its status as a
public agency with Joint Powers Authority. As a JPA, CMIB has been able
to issue bonds to finance several port projects. Thus far, three
projects have been financed under the JPA bond issuance process. See the
Case Study section, Port of Humboldt and Port of San Diego projects for
more detail regarding CMIB use.

### 2. California Infrastructure and Economic Development Bank 

**Type of Funding/Financing:** Loan program, credit enhancement

**Eligibility:** Local roads and port facilities for public agencies and
non-profit corporations to support community economic development

**Application:** Local roads, port facilities

**Funding:** \$475 million in 1999

The California Infrastructure and Economic Development Bank was created
in 1994 to assist in developing the infrastructure and public
improvements necessary to implement economic development throughout the
State. A 1998/99 State budget allocation capitalized the Bank with a
\$50 million appropriation in order to develop the loan program.

This program is designed to support projects that enhance economic
development in California and meet the needs of as many jurisdictions as
possible. Emphasis is given to projects that result in job
creation/retention, improve communities in distress, leverage funding,
and are ready to be implemented. Eligible applicants are limited to
public agencies and non-profit corporations. Eligible projects include:

  -------------- ------------------------------- --- ------------------------------ ---
                  City streets                       Communications facilities    

                  County highways                    Defense conversion           

                  Drainage and flood control         Educational facilities       

                  Environmental mitigation           Parks and recreational       
                 facilities                          facilities                     

                  Port facilities                    Public safety facilities     

                  Public transit                     Sewage collection and        
                                                     treatment                      

                  Solid waste collection and         State highways               
                 disposal                                                           

   Water                                                                           
  treatment and                                                                     
  distribution                                                                      
  -------------- ------------------------------- --- ------------------------------ ---

Eligible costs include construction, renovation, acquisition, of all
lands, structures, real or personal property rights; rights-of-way;
franchises; licenses; easements; cost of demolishing or removing
buildings; equipment; financing charges; and architectural, engineering,
financial, or legal services.

The Bank plans to issue direct loans to communities in amounts between
\$250,000 and \$5,000,000. The loans will be made at the fixed rate
basis of 70 percent of current market rates. The loan term will not
exceed the project's useful life or a 30 year period (whichever is
less). The Bank will target a 3:1 leveraging ratio for the program.

There are two parts to the Bank: 1) a revolving loan fund for
infrastructure improvements; and 2) conduit revenue bonds for industrial
development. The Bank has the broad authority to issue bonds, make
loans, provide guarantees, and leverage State, Federal, local, and
private funds to target public investment for the economic improvement
of California communities. Over a 20-year period, the program will be
able to fund approximately five times its initial capitalization, or
\$252 million in projects (assuming an original bond issue of \$150
million at 5 percent interest rate with a 30-year maturity).

The Bank will use a two-step application process to select projects for
financing. A relatively short pre-application is submitted first,
followed by a longer application if the project qualifies as a possible
candidate for Bank funding. The criteria established by the Bank
include:

-   Project promotes economic development

-   Project is consistent with applicant's General Plan and Economic
    Development Plan

-   Applicant has a demonstrated need for the Bank's financing

-   Project financing includes a minimum of 10 percent of funding from
    sources other than the Bank

-   Borrower can begin construction within 18 months following the date
    of the Bank's approval

-   Applicant demonstrates ability to repay loan

Applications that are complete and meet all eligibility criteria will
then be ranked based on the following prioritization criteria:

-   Project impact, including job creation and retention, types of jobs
    created or retained, and other economic impacts.

-   Community economic need, including unemployment rate, poverty rate,
    and other indicators of need.

-   The extent to which the Bank's financing leverages funds from other
    sources.

-   Ability of the applicant to initiate project construction in a
    timely manner.

Recently, the State of California capitalized the Bank with an
additional \$425 million from a surplus in the State's budget to use for
infrastructure improvements. This additional money changed the amount of
funding the Bank can issue to each project and the criteria for eligible
projects may expand. The bank is still finalizing its eligibility
criteria and administrative procedures.

### 3. Florida Seaport Transportation and Economic Development Funding (FSTED)

**Type of Funding/Financing**: State 50/50 matching grant program

**Eligibility:** All public ports for transportation, dredging,
construction, equipment, and land acquisition

**Application:** Ports

**Funding:** \$363 million, from bond issuance

In 1990 the State of Florida created the FSTED Program. The program's
goal is to finance port transportation or port facilities projects that
will improve the movement and intermodal transportation of cargo or
passengers in commerce and trade within Florida.

Originally, the FSTED program received \$8 million per year from the
State's transportation trust fund. This money came primarily from motor
vehicle registration fees and fuel tax revenues. During the 1996
legislative session, an additional \$15 million per year was allocated
to ports for capital improvements. The 1996 legislative session also
allowed the FSTED program to finance costly capital projects by allowing
the annual allocation to be used for debt service on bonds.
Consequently, FSTED and the Florida Ports Financing Commission (FPFC),
the entity created to administer the bond program, leveraged the State's
\$15 million annual investment into more than \$220 million of bond
proceeds. With a 50 percent federal match, total project investment will
reach \$450 million. The 1999 Legislative session moved the bond
issuance forward by 2 years, permitting bond issuance in 1999 instead of
2001. An additional \$10 million was allocated for intermodal projects,
to leverage another \$153 million of bonds.

The FSTED program is located within the Florida Department of
Transportation (FDOT). To implement the FSTED program, a 17-member FSTED
Council has been created comprising the port directors of the 14
publicly owned deepwater ports as voting members. The secretary of FDOT,
the secretary of the Florida Department of Community Affairs, and the
director of the Governor's office of Tourism, Trade and Economic
Development also serve on the council as nonvoting members.

All public ports are eligible for FSTED program funding. Detailed
funding applications are submitted annually and the FSTED council
reviews and approves/disapproves each project eligible to be funded
pursuant to the program's guidelines. Port projects are funded through
grants from FSTED funds on a matching basis, 50 percent state/50 percent
local port authority. Intermodal, off port (rail and highway access,)
and dredging projects are funded on a 75 percent state/25 percent local
port authority matching basis.

There are many unique and beneficial aspects to Florida's FSTED program.
First, the program is part of the state's larger mandate requiring all
cities and counties to prepare comprehensive development plans which
must be consistent with the state's own comprehensive plan. In this
respect, the FSTED Council and funding process provides a coordinated
effort towards meeting common goals that are in line with State
objectives. Second, it is one of the few State programs that provides a
dedicated funding source for port development in the U.S.. Additionally,
unlike Oregon (discussed below) and California, the FSTED program
provides grants and not loans. This strong financial commitment to port
development in Florida signifies, as in Oregon, a view that asserts the
importance of ports to the state's overall economy. An example of one of
FSTED's larger-scale projects, the Palm Beach Skyway, is profiled in
Section 3, Case Studies.

### 4. Florida Freight Task Force

**Type of Funding/Finance:** Grants

**Eligibility:** Florida freight transportation projects located on the
Strategic Freight Network, b/c ratio greater than 1

**Application:** primarily construction

**Funding:** \$10 million (possibly one-time appropriation)

The Florida Freight Stakeholders Task Force was formed as a result of
the Governor's Intermodal Transportation Summit held on June 8, 1998.
The Task Force was designed to be a private/public partnership that
would address the needs of Florida's intermodal freight transportation.
Task Force objectives include the following:

-   Identify, prioritize and recommend freight transportation projects
    for fast-tracking funding.

-   Develop recommendations for the 2020 Florida Statewide Intermodal
    Systems Plan that will address Florida's freight transportation
    interests.

Using the assistance of the Center for Urban Transportation, CUTR, the
Task Force was able to identify projects for fast-track funding. In
conjunction with the Freight Task Force project identification analysis,
the Florida Legislature made a one-time, \$10 million Legislative
appropriation to fund projects recommended by the Task Force. This
appropriation enabled the Task Force to establish a pilot fast-track
program, with the \$10 million funding capability as an integral part of
this objective. The initial Task Force solicitation (sent out to Task
Force members, MPO's, ports and airports) was for projects.

Project selection criteria is based on several factors: location on
Florida's Strategic Freight Network; reducing barriers to freight
shipment; benefit/cost ratio greater than 1 (developed from a Center for
Urban Transportation Research \[CUTR\] model); stage of development;
time to complete project; capacity; safety; and neighborhood impact.

### 5. Minnesota Port Development Assistance Program (PDAP)

**Type of Funding/Finance:** Grants and loans, or combination

**Eligibility:** Ports for construction, dredging, equipment, and
disposal facilities

**Application:** Commercial port improvements

**Funding:** \$3 million over 2 years

In 1991, the Minnesota Legislature established the Minnesota Port
Development Assistance Program (PDAP) to expedite, retain or generally
improve the movement of commodities and passengers on the commercial
navigation system and enhance the commercial vessel construction and
repair industry in Minnesota. The State legislature provides funds in a
revolving account that may be used by eligible applicants for port
development assistance. The program is under the administration of the
Minnesota DOT Office of Freight, Railroads and Waterways. Eligible
projects are those that benefit shippers and receivers by improving or
developing a commercial navigation facility or its components.
Specifically, these projects include dock and terminal repair, capital
improvement to a commercial navigation facility, vessel loading and
off-loading support equipment, disposal facility construction, disposal
facility repair, and dredging to open a new commercial navigation
facility. The program has a \$3 million budget for fiscal years 1997 B
99.[^18]

### 6. Oregon Port Revolving Fund (OPRF) 

**Type of Funding/Finance:** Revolving loan fund

**Eligibility:** Projects for economic development and maintenance of
port infrastructure; only refinancing projects are ineligible

**Application:** Small and medium-sized loans for port infrastructure
and industrial development

**Funding:** \$12 million in 1999

The OPRF was established in 1977 and is designed to provide long term
loans at below-market interest rates to the state's 23 ports for
purposes of economic development and maintenance of port infrastructure.
It is primarily focused towards small- or medium-sized projects that are
difficult to finance through a large bond program.

The OPRF was originally financed with \$4 million from the state's
general fund, but subsequently has received funds at regular intervals
from the state's Lottery Fund, which is partially dedicated to the
state's economic development. Since the fund's establishment in 1977,
the program has taken in approximately \$9 million dollars from the
state, while disbursing more than \$20 million in loans for nearly 150
projects. The revolving nature of the fund allows interest earned from
previous loans to provide a constant inflow of capital back into the
OPRF fund. In 1999, the OPRF fund had approximately \$12 million in
assets. Approximately \$5 million is currently available for lending.
OPRF may lend up to 20 years. Statutes tie loan interest rates to
Treasury bill rates. OPRF loans are capped up to \$0.7 million to any
one project or \$2 million to any one port. OPRF eligibility is
relatively broad with only refinancing being considered ineligible.

The loan fund makes projects possible that otherwise would not be
undertaken due to lack of funding. For instance, many ports are
developing commercial waterfront property and would prefer to lease the
land rather than sell it. Because businesses usually cannot qualify for
a loan to build facilities on leased land, the OPRF allows a port to
receive money for building in the form of a loan from the state. The
port can then build and lease the facility to an interested tenant,
while maintaining ownership of the land and retaining the new facility
as an asset.

The Port's Division of the Oregon Economic Development Department
administers the OPRF loan program. This administrative feature
highlights the fact that Oregon sees its ports as being an integral
feature of the state's economic growth. Indeed, State officials justify
the appropriation of State monies to the OPRF fund on these larger State
economic development grounds.

###  

### 7. Wisconsin Harbor Assistance Program (HAP)

**Type of Funding/Financing:** State grant program

**Eligibility:** Harbor communities for port construction, repair, and
rehabilitation

**Application:** Ports

**Funding:** Approximately \$4 million over 2 years

HAP was created in 1979 to provide financial assistance to communities
on both the Great Lakes and the Mississippi River for projects that
improve or maintain the state's waterborne commerce. The program is
administered by the Harbors and Waterways Section of the Bureau of
Railroads and Harbors of the Wisconsin DOT. Projects eligible for the
program include dock wall construction and repair, and improvements
related to the physical needs of the port, provided they maintain or
increase commodity movement capability. HAP provides up to 80 percent of
the funding for projects, with the remaining 20 percent to be supplied
by the local governmental entity. If the U.S. Army Corps of Engineers is
funding part of the project, the maximum HAP contribution is 50 percent.
The program's operating budget for FY 1998 is \$30,800, and for FY 1999
is \$153,900. Three million dollars in new general-purpose revenue
bonding authorization was approved for the FY 1998-99 biennium, with an
additional award of \$1 million from the Transportation Fund. These
funding levels have been consistent for the last several years.[^19]

### 8. Missouri Transportation Corporation Statute 

**Type of Funding/Financing:** State incorporation program

**Eligibility:** Missouri Highway Commission review for highway or rail
transportation and public project benefits, as well as applicant's
ability to repay bond issuance

**Application:** Rail, highway, port, airport

**Funding:** \$0

Missouri statute permits the formation of transportation corporations
for the purposes for issuing tax-exempt debt. This program was critical
in supporting the development of the Kansas City Fly-over project, a
major project sponsored by several Class I railroads which incorporated
for the purpose of issuing debt. The corporation funded the construction
of a rail grade crossing project that separated east-west traffic from
north south.

There were some obstacles. Initially, the project attempted to use
Federal funding as collateral for reducing debt issuance costs. The
Federal funding was deemed ineligible for rail construction projects,
despite the fact that the project helped alleviate highway congestion
associated with grade crossing conflicts. The fly-over project was
deemed ineligible to receive grant funding from U.S. DOT and from the
Missouri Trust Fund, which prohibits the use of gas taxes for
non-highway uses.

The Kansas City fly-over project, described in Section 3CCase Studies,
is innovative in the manner that bonds are repaid. This is essentially a
toll road project in that revenue from the project is remitted every 6
months to repay principal, interest, and operations costs. However, the
fee is charged every time a railroad either uses the fly-over or passes
beneath. Usage is tracked over the course of the month, and the
participating railroads are charged accordingly, but not in excess of
the set bond payment schedule.

### 9. Pennsylvania Intermodal Funding (PennPlus and General Funds) 

**Type of Funding/Financing:** PennPlus multi-modal infrastructure
loan/grant program

**Eligibility:** To be determined

**Application:** Airport, rail, highway, and port projects that support
freight

**Funding:** \$4 million

Pennsylvania has taken some active measures to fund non-highway
infrastructure, including establishing a Rail Freight Assistance grant
program (RFAP), an airport grant program, the Pennsylvania State
Infrastructure Bank (which funded the highway-airport connector
project), and applying large general fund appropriations over the years
to fund port infrastructure.

Depending on need, Pennsylvania also makes funds available to rail
freight projects through the Capital Budget. To receive funds,
applicants must work through their legislator to make a request to the
General Assembly. Total capital expenditures for the 14-year period from
FY 1981-82 to FY 1994-95 were \$79,443,867, or an average of \$5.7
million per year. When compared to average annual RFAP expenditures of
\$3.6 million during that same time-frame, capital budget grant
expenditures averaged about 50 percent higher.[^20] Recently, general
funds supported Pennsylvania doublestack clearance project through a
public-private partnership with Conrail. This project is described in
Section 3, Case Studies.

Until last year, all of Pennsylvania's funding mechanisms functioned
within modal constraints (e.g., airport projects were funded under the
airport program and rail projects were funded under the State railroad
program). In 1999, the Pennsylvania legislature appropriated \$4 million
to capitalize PennPlus, a new multimodal loan program. The program
sponsors approached US DOT to match capital funding, but the PennPlus
project eligibility was too broad to match US DOT program eligibility,
prohibiting Federal capitalization. PennPlus is still in the final phase
of development, and is finalizing guidelines and operating procedures.

### 10. Pennsylvania Rail Freight Assistance Program (RFAP)

**Type of Funding/Financing**: State 50/50 matching grant program

**Eligibility:** Rail and shipping corporations for new rail
construction, rehabilitation

**Application:** New construction and rehabilitation of rail and
intermodal facilities (maximum grant size is \$300,000 for
rehabilitation)

**Funding:** \$8 million in 1998

The 1984 Rail Freight Preservation and Improvement Act was enacted to
preserve and improve rail freight service in Pennsylvania by making
grants, loans, or other assistance available to qualified applicants.
The catalyst for this act was Pennsylvania's deteriorating and abandoned
tracks left from the reorganization of rail carriers. In the past,
funding had also been available through the Federal Local Rail Freight
Assistance program, but Federal Local Rail Freight Assistance (LRFA)
funds have been dropped from of the Federal budget. Today RFAP is one of
the largest State rail grant programs in the U.S.

RFAP was established to provide financial assistance for investment in
rail freight infrastructure. The purpose of the program is to preserve
essential rail freight service where economically feasible, and to
preserve or stimulate economic growth through the generation of new or
expanded rail freight service.[^21] To participate in this program,
applicants must submit their application in one of two application
cycles, ending April 15 and September 30 of each year. RFAP applicants'
projects must fall into at least one of these three categories:

-   Maintenance/Rehabilitation - Projects to replace ties, rails,
    plates, turnouts and other track materials, structural materials and
    additional ballast to restore, improve, or maintain an existing
    railroad line to the level necessary for safe operation and use; and
    have an estimated useful life of at least 5 years, but do not
    include land, buildings, or building materials to construct a new
    building.

-   Construction -The acquisition cost of ties, rails, ballast, other
    track material, and structural materials in sufficient quantity to
    construct a railroad line where none exists or improve a facility to
    a level necessary for the operation or use with an estimated useful
    life in excess of 5 years, but not including land acquisition,
    buildings, or building materials to construct a new building.

-   Combination - All of the categories defined for construction and
    maintenance/rehabilitation.

Of the two RFAP categories, an emphasis is generally placed on
maintenance. Maintenance projects account for approximately 80 percent
of all grants, whereas construction projects comprise 20 percent. In
1997-1998, 70 percent of applicants requested funding for maintenance,
24 percent for construction, and 4 percent for both.

The principles guiding the RFAP, as outlined in Pennsylvania's A1996
Comprehensive Rail Freight Study, provide for the RFAP to:

-   Assist in upgrading and maintaining railroad infrastructure in cases
    where the railroad company lacked the financial resources or where
    such a company became the operator after the rail lines were
    proposed for abandonment by larger companies or service was
    discontinued for lack of financial viability

-   Renovate, upgrade, and provide operating assistance to state-owned
    lines

-   Supplement the economic development packages needed to attract new
    industrial installations or needed to retain existing jobs at a
    specific location.

Railroads that are eligible for RFAP money must own or use rail freight
infrastructure. Eligible shippers must have a spur. RFAP grants are
capped at \$300,000 for maintenance/rehabilitation, requiring a 25
percent up-front match, and \$100,000 for construction, requiring a 50
percent up-front match.

RFAP is funded through General Fund appropriations. PennDOT has expanded
the scope of this program by accepting applications not only from
railroads, but also from shippers and local development agencies.
Between 1983 and 1997, annual appropriations for RFAP have ranged from
\$2.5 to \$4.5 million; however the last two RFAP appropriations
averaged

\$8 million.

### 11. Indiana Rail Service Fund (IRSF) and Grade Crossing Improvement Fund (GCIF)

**Type of Funding/Financing:** State low interest loan program, grants

**Eligibility:** Class III rail and local governments for
rehabilitation, acquisition, and grade crossing

**Application:** Class III rail acquisition and rehabilitation

**Funding:** \$2 million in 1998 for IRSF, \$0.5 million for grade
crossing

Indiana administers two railroad subsidization programs. The first,
entitled the Industrial Rail Service Fund (IRSF), was enacted in 1982,
and is designed to provide access to capital funds for qualified Class
III railroads. The program issues low interest loans (approximately 5.0
percent) to rail carriers for the acquisition of railroad right-of-way
or track rehabilitation. Loans are capped at \$800,000 for
rehabilitation projects and at \$1 million for rail acquisition. Since
the program's inception, a total of 20 loans have been issued to a
variety of rail carriers, local governments, and municipal port
authorities. Beginning in 1997, grants were provided for railroad
relocation projects, high-speed rail planning, and municipal port
authorities operating as railroads. Typical port authority railroad
projects include track rehabilitation, bridge maintenance and repair,
and purchasing of buildings and track. There is a \$250,000 cap on
individual grants. In 1998, \$2 million in grants were issued for
approved projects. Projects eligible for funding are evaluated by
certain criteria, including economic impact, employment stimulation, and
the overall viability of the project. The IRSF loan and grant program is
funded by a designated portion of the State sales tax (0.04 percent of
1.0 percent); in 1998, the IRSF accrued \$1.3 million in revenue from
sales tax.

Indiana's second program, the State Grade Crossing Improvement Fund
(GCIF), started in 1998 generated and provides \$500,000 per year in
grants. Eligible recipients, including rail carriers and local
governments, can only use the funds for passive rail crossing
improvements such as signage, vegetation removal, pavement markings, and
illumination. This program is independent of the Federal Section 130
grade crossing funds. Funding for this has been appropriated by the
State legislature from the State's general fund.

### 12. Ohio Rail Development Commission (ORDC)

**Type of Funding/Financing**: State low interest loans and grants

**Eligibility:** Rail carriers, local governments, and port authorities
for acquisition, construction, rehabilitation, and grade crossing

**Application:** Rail grade crossing and rail rehabilitation and
development

**Funding:** \$15 million (including Federal STP), \$11 million is
earmarked for safety

ORDC was created in 1994 to plan, promote and implement the improved
movement of goods and people faster and safer on a rail transportation
network connecting Ohio to the nation and the world. The ORDC pursues
this objective by issuing grants and loans to rail carriers, local
governments, and port authorities. The funds are primarily designated
for rail grade crossing safety improvements, as well as rail
rehabilitation, development, and acquisition. For fiscal year 1999, the
ORDC had a budget of \$15 million, of which a minimum of \$6.2 million
Federal Section 130 funding was combined with flexed STP funding for
rail safety projects. A State general fund appropriation for 1999
allocated \$4 million for the three other ORDC programs: 1) economic
development; 2) branch line development; 3) and passenger rail program.
There is no minimum or maximum value for the issued grants or loans. The
economic development program supports rail spur projects. The Branch
Line program preserves corridors in small communities, by helping
shortlines, community corporations, or port authorities acquire track.
An ORDC project, Riemier Lumber is discussed in Section 3CCase Studies

### 13. Illinois Rail Freight Program (IRFP)

**Type of Funding/Financing**: State loan and grant program

**Eligibility:** Municipalities, port authorities, and rail corporations
for light density rail rehabilitation and rail spur construction

**Application:** Light density rail rehabilitation, and rail spur
construction

**Funding:** \$5 million

The Illinois DOT began offering loans and grants to small railroads in
1976 under LRFA. The Illinois Rail Freight Program (IRFP) was initiated
in 1983 to provide grants and low interest loans to finance rail
improvements that will preserve freight service critical to keeping and
expanding industry and employment. This program was designed to support
two types of projects: 1) rehabilitation projects for light density
railroads (carrying less than 5 million gross-tons per year) and 2) rail
spur construction for new companies locating to an area.

Loans issued to municipalities, port authorities, and rail corporations
carry an interest rate of 3 to 4 percent and have a 15-year maturity.
Funds are used primarily for facility construction and rehabilitation;
land acquisition is not a permitted use. Potential projects are
evaluated by criteria including job growth potential, transportation
cost savings, and general cost benefit analysis. Unlike the other State
programs, the IRFP does not fund improvements in railroad grade crossing
facilities. Grade-crossing protection funds are administered by the
Illinois Commerce Commission. Annual appropriations for IRFP are
approximately \$5 million and come from the State general fund.

IRFP was intended to support rehabilitation of light density lines
(shortlines) and new commercial activities. However, Illinois is a major
rail state because of Chicago, a major intermodal freight transportation
hub for the U.S. Some 18-20 rail facilities load, unload, and transfer
intermodal trailers and containers, and require a steady stream of
steel-wheeled and rubber-tired interchange movements to create a
transcontinental and interregional service.[^22] Chicago does not
typically have projects that qualify for IRFP objectives, and only 14 of
the last 120 IRFP projects were located in Chicago. Section 3CCase
Studies includes a typical IRFP project in the Chicago area.

### 14. Michigan Rail Loan Assistance Program (MiRLAP)

**Type of Funding/Financing**: State 90/10 matching loan program

**Eligibility:** railroad corporations in good standing for railroad
lines generating more than 50 carloads per mile of track

**Application:** Rail track rehabilitation and new construction

**Funding:** \$3.3 million in 1999

MiRLAP began in 1997 to help finance capital improvements on Michigan's
rail infrastructure. The program is designed to help preserve and
improve rail freight service by loaning funds to local governments,
railroad, and current or potential users of freight railroads services.
Eligible applicants must be on a line that generates more than 50
carloads per mile of track, be in good financial standing, and
demonstrate the ability to repay the loan.

Eligible projects include track rehabilitation, bridge and culvert
repair, new construction, transload facilities, and rail consolidation.
Right-of-way acquisition is not an eligible expense. For FY1999, \$3.3
million was allocated to this program. In FY 2000, the program fund will
be \$7 million. Loans are limited to \$1 million per project. The loans
provided by the program can fund up to 90 percent of the project's cost.
Loan recipients are required to provide a funding match of 10 percent.
Loans are interest free and the loan repayment period cannot exceed 10
years. The State Transportation Commission must approve all loans.

### 15. Virginia Rail Preservation Program (RPP) and Rail Industrial Access Program (RIAP) 

**Type of Funding/Financing**: State 70/30 matching grant and loan
programs

**Eligibility:** Class I loans, Class II and III grants, to upgrade and
preserve track and for rail spur construction

**Application:** Rail improvement projects, rail spur construction

**Funding:** \$3 million for RRP, \$3.5 million RIAP

Virginia has two rail freight programs in place. RPP was set up in 1991
to provide funding assistance to all rail carriers. The funds can be
used to upgrade current facilities. Class I railroads are issued loans
while Class II and III railroad companies are issued grants. The project
applicant must demonstrate a benefit-cost ratio greater than 1 and
provide a 30 percent match. The Rail Preservation Program has total
funding of \$3 million per year. In FY 1998-99, all the funds were
disbursed through eight loans and grants to rail carriers.

Virginia's other program, RIAP began in 1987. This program provides
funds for new or improved access to a business for freight delivery.
Businesses wishing to acquire funds from this program are required to
complete an application, which is reviewed by the Economic Development
Group of Virginia. The first \$100,000 granted to any one project
requires no match from the business. Any funds above \$100,000 require a
one-to-one match. In FY 1998-99, the program had funds totaling \$3.5
million. Fifteen grants were issued in FY 1998-99 totaling \$3 million.
The funds that are not used do not carry over into the next year;
instead, they are used for highway industrial access projects.

### 16. Wisconsin Rail Freight Programs 

**Type of Funding/Financing**: State rail loan program at 0 percent
interest

**Eligibility:** Rail rehabilitation, improvement projects, and
abandoned line preservation.

**Application:** Rail track rehabilitation, intermodal facilities, and
rail spurs

**Funding:** \$1.7 million in 1999

The Wisconsin Department of Transportation (WisDOT) has been providing
freight rail assistance since 1979. Early efforts focused on preserving
freight rail service to communities that would otherwise suffer if
service was abandoned. In 1992, Wisconsin voters approved an amendment
to the State constitution allowing the State to become directly involved
in rail acquisition, rehabilitation, and development projects. WisDOT
now provides up to 100 percent loans at zero to low interest for
projects that will enhance the state's rail system. Currently, two
programs operate under this authority: the Freight Rail Infrastructure
Improvement Program and the Freight Rail Preservation Program.

Eligible projects for the Freight Rail infrastructure Improvement
Program include track rehabilitation, track consolidation, intermodal
facilities, and industrial spurs. Eligible projects for the Freight Rail
Preservation Program include preserving freight service on abandoned and
publicly owned lines and preserving abandoned rail corridors when
service is not immediately continued. Over the course of the two
programs, Wisconsin has spent \$70.6 million on 134 projects involving
more than 900 track-miles. The program's budget for FY 1998 is \$1.0
million and for FY 1999 it is \$1.7 million.[^23]

### 17. Pennsylvania Airport Assistance Program 

**Type Funding/Financing:** State 75/25 matching grants

**Eligibility:** Airport cargo and/or passenger volume and reasonable
project cash flow statement

**Application:** Development projects for smaller airports

**Funding:** \$6.5 million

Commercial airports in Pennsylvania are funded through Federal and State
programs. With the FAA's direct AIP grants and state-administered
block-grant program, the Federal government provides approximately \$29
million to Pennsylvania for airport development needs. Similarly,
Pennsylvania contributes about \$12 million through its State/Local
Airport Development, Real Estate Reimbursement, and Capital Budget
grants. However, none of these aviation grant programs are available to
freight-shipping companies to make capital improvements to an airport
facility.

Three major programs are administered under PennDOT's Bureau of
Aviation: 1) Airport Development grants (including the FAA Block
grants), 2) Real Estate Tax Reimbursement grants, and 3) Capital Budget
grants. While the FAA has traditionally provided AIP funds directly to
airports, it is now offering States block grants for non-primary
airports. Act 1964 of 1984 authorized the Bureau of Aviation to provide
assistance to all public airports, including those privately owned.[^24]
It also provided for expanded airport development and real estate tax
relief to public airports. As a result of Act 164, Pennsylvania's
Airport Development grant program has grown from a \$1 million
appropriation in the early 1980s to the current \$6.5 million level.
These funds, in combination with the FAA block grants and the state's
capital budget allocations, provide Pennsylvania with approximately \$20
million for airport development, not including FAA AIP grants directly
given to airports that enplane more than 10,000 passengers or land cargo
in excess of 100,000,000 pounds annually.

Pennsylvania's Airport Development grant program is comprised of two
parts: 1) Federal sponsorship in the form of a FAA Block Grant and 2)
State sponsorship in the form of State and local grants. To participate
in either of these programs, participants must submit a pre-application
by June 30 of each year that provides information on their project's
cash flow and schedule. If selected, these applicants will then be
eligible for either:

-   [FAA Block Grant]{.underline}. The FAA Block Grant, which is
    administered by the state, is issued to a sponsor for 90 percent of
    the Federally eligible amount. A grant for State matching funds can
    be issued for 50 percent of the remaining unfunded amount.
    Therefore, a single grant will be issued to the sponsor for 90
    percent Block Grant funds and 5 percent State and local matching
    funds.

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-   [State/Local Grant]{.underline}. The State grant issued to a sponsor
    provides for 75 percent of the eligible amount of the project, with
    local sponsors being responsible for the remaining 25 percent.

Airports eligible for FAA Block Grants must:

-   Enplane less than 10,000 passengers annually (for publicly owned or
    designated reliever airports)

-   Be included in the National Plan of Integrated Airports Systems.

Pennsylvania's Real Estate Tax Reimbursement grant provides real estate
tax relief to owners of public-use airports. To participate in this
program, owners who have paid local real estate taxes must submit an
application to the Bureau of Aviation before February 1 of each year.

Pennsylvania also makes funds available to publicly owned, public
airports from its Capital Budget. (Privately owned airports are not
eligible for funds from the Capital Budget). To receive these funds,
airports must work with their legislator to make a request to the
General Assembly. In FY 1997-98, Pennsylvania allocated approximately
\$5 million towards these various requests. However, there is no
designated annual fund/appropriation for these projects or formalized
criteria for approval.

### 18. Tennessee Aeronautics Transportation Equity Fund 

**Type Funding/Financing:** State 90/10 matching grant program

**Eligibility:** Airport safety, landside, airside, and improvements
consistent with State and local plans

**Application:** Development projects for airports

**Funding:** \$11.4 million

The State of Tennessee has been providing financial aid to its airports
since 1930. In 1986, the Tennessee General Assembly adopted legislation
that created the State Transportation Equity Fund. This fund allocates
receipts from taxes collected from transportation fuels for distribution
to airports, rail, and waterways based upon their contribution to the
fund. Aviation funding is managed by TN DOT with the advice and
assistance of the Tennessee Aeronautics Commission. These funds are used
for statewide grants to Tennessee air carrier and general aviation
airports, and can cover up to 90 percent of the total cost of airport
projects depending on the type of project. The types of projects that
are eligible for State funding are safety projects, and airside and
improvements and enhancements. Examples include security fencing, runway
repair, drainage, fuel facilities, and access roads. Each request for
funding is evaluated on the basis of demonstrated need, consistency with
State and local plans, compliance with State standards, availability of
funds, and any unique circumstances. For FY 99-00, the Aeronautics
Transportation Equity Fund amounts to \$11.4 million.

## 2.4 State and Local Finance Tools

The various State and local approaches to capital financing and grant
programming are described below.[^25] Examples of the use of some
financing tools are provided after the descriptions. The financing tools
may be categorized as funding sources, financing mechanisms, and
public/private partnerships. Funding sources provide a stream of
revenue. Financing mechanisms are structured to provide access to
capital, and must have funding sources as an underpinning.
Public/private partnerships consist of institutional arrangements that
are created to share costs and revenues, and provide a stronger
structure for accessing capital markets. These financing tools may be
used in combination (e.g., tax-exempt revenue bonds issued with credit
enhancement features). For freight related investments, these tools are
typically employed in conjunction with user fees.

#### General and Selective Taxes

The traditional source of funds for the public sector is the general tax
levy. At the local level, this has manifested into a reliance on the
property tax, and to a lesser extent, the local sales (or gross
receipts) tax.[^26] At the State level, the most common taxes are the
sales tax and the income tax. Notable selective taxes include Oregon's
lottery funds and Ohio's tourism taxes (levied on hotel bills and mixed
drinks). As described under the Oregon Port Revolving Fund, Oregon uses
lottery funds to fund highway as well as port infrastructure.

#### Special Taxing and Assessment Districts

The concept of special taxing or assessment district is to capture the
benefits of particular improvements and make the district
self-supporting. More commonly used for supporting transit systems,
special districts have also been used for general highway or port
improvements. A transportation improvement district (TID) is typically a
special district assessment on property taxes. Two of the three SIB
loans profiled in the case study, Pittsburgh, Pennsylvania and Butler
County, Ohio, used TID funding to repay SIB loans. Union County, New
Jersey is considering the use of a TID to support a package of
improvements to highways and rail lines connecting to the Port Elizabeth
area. A variation bases levies on traffic generated by specific land
uses. In the Northwest, the port districts have the power to levy
property taxes. Even if this power is not used, it can work to secure
debt. The device of having a standby taxing source is common for many
types of self-supporting debt. The idea is that the first security
(source of debt service payment) is the project revenues. However, if
the revenues are not sufficient, the investor can depend on the tax levy
as a secondary source of income. Where the facility proves to be
self-supporting, the contingency debt is not counted against debt
limits.

#### Types of Debt

Fundamental to the concept of credit is the source of funds used to
repay the debt. In the case of bonds issued by public entities there are
two broad classifications of debt: 1) tax-supported bonds and 2) revenue
bonds. General obligation bonds are backed by the full faith and credit
of a State or local government and are usually the highest-rated debt of
a State or locality. Revenue bonds are backed by a specific revenue
source, such as a dedicated tax. Lease revenue bonds or certificates of
participation (COP) are backed by a State or locality's general credit
but with no specific tax pledge, and debt service payments are subject
to annual appropriation (they carry a lower rating than general
obligation debt). They are often used to avoid debt limits and voter
approval requirements. Use of COPS by the Port of San Diego and some of
the railroads is described in Section 3 B Case Studies.

Special tax district bonds are paid from special charges added to
property tax bills, and only beneficiaries pay the special assessment.
An important sub-class is tax increment bonds, which are paid from
*increases* in property tax revenues in specified areas. Tax increment
financing is most valuable for projects in redevelopment areas and
requires long-term development perspective to realize significant
funding levels.

Sales tax bonds (also called excise tax bonds) are paid from sales tax
receipts.

#### Tax-exempt Revenue Bonds/Exempt Facility Bonds 

The primary means for financing port and airport capital projects is
through the issuance of exempt facility bonds. Exempt facility bonds,
otherwise known as private activity bonds, are qualified and thus their
interest is excluded for Federal income tax purposes in the gross income
of recipients. However, interest on such bonds is taken into
consideration for certain Federal tax purposes, such as the alternative
minimum tax (AMT) for individuals and corporations. With this qualified
status and the accompanied tax benefit to investors, exempt facility
bonds can be offered at a lower interest rate, thus providing the issuer
with considerable financing cost savings.

When included as part of a port project, wharves, docks and related
storage and training facilities qualify as exempt facilities. Included
in the definition of dock or wharf is property that is functionally
related or subordinated to exempt docks and wharves such as the
structure alongside which a vessel docks, on-loading and off-loading
equipment for cargo and passengers (cranes and conveyors) and related
storage, handling, office and passenger areas. If issued by an airport
or port authority, airport projects such as cargo handling facilities,
equipment, and access roads qualify as tax-exempt facilities. All of
these facilities are eligible to be financed through exempt facility
bonds.

Tax-exempt bond financing regulations are subject to both Federal and
individual State provisions. There are specific State requirements
outlined in a municipality's codes regarding the nature, term, purpose
and structure of a bond, which, if adhered to, qualifies it under that
state's classification of tax-exempt debt.[^27]

Tax-exempt bond finance has become a key Federal issue. According to a
recent TRB study, proposals have been made for altering IRS rules for
tax-exempt bond finance to make it easier for public-private
transportation projects to qualify.

The American Association of Port Authorities recommended four changes to
"...materially enhance the ability of public port authorities to finance
additional facilities..."[^28] These four recommendations include the
following:

-   Establish a list of public activities (to include port financing)
    that could be financed with public activity bonds, a new category of
    bonds treated as governmental, not private activity bonds

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-   Expand the definition of functionally related facilities to include
    rail and other transportation-related facilities necessary for the
    movement of cargo and/or passengers (cruise/ferry operations)

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-   Increase the annual issuance limit for arbitrage rebate exemption
    from \$5 million to \$10 million and increase the annual issuance
    limit for bank qualified tax exempt bonds from \$10 million to \$25
    million

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-   Restore the 90 percent rule regarding the use of net proceeds

Relaxing restrictions would encourage development of new funding sources
for freight infrastructure by attracting private-sector participation in
projects that serve both public and private ends.[^29] According to the
same TRB study, the drawbacks from eliminating these rules are perhaps
as compelling, and include the following:

-   Tax-exempt bonds have the same effect as a subsidy from all Federal
    taxpayers to the beneficiaries of the project. If the public
    benefits are primarily local or regional, the subsidy might be
    considered inequitable.

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-   Tax-exempt bonds bias the capital market in favor of
    government-selected investments, although there are precedents in
    homeownership, enterprise zoning, and the US DOT grant programs for
    highway infrastructure

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-   Expanded use might increase the frequency of default and might
    possibly raise the cost of borrowing for all users of tax-exempt
    financing

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-   If tax-exempt finance is liberally available for a class of
    projects, the tendency will be for it to be used routinely.

A final consideration is the fit for Federal credit enhancement
programs. ISTEA and TEA-21 both introduced credit enhancement programs
state infrastructure banks (SIB), TIFA and RIFF. However, the 1986 Tax
Reform Act stipulates that Federal funds cannot guarantee tax-exempt
financing.

#### Short-term Borrowing and Standby Credit

Short-term borrowing is helpful for accelerating construction projects.
Grant funding, including Federal-aid highway, may be received as
reimbursement for costs incurred on eligible projects. By issuing notes,
funds are available sooner to begin construction with aid used for
reimbursement on a delayed basis. The U.S. DOT *Advance Construction*
provision is designed to address this process by permitting State DOTs
to spend their own funds in anticipation of Federal aid highway-grant
reimbursement. Alternatively, short-term notes may be refinanced by the
sale of bonds. As referenced above, borrowings where there is an
explicit pledge of future Federal aid payments are prohibited to be
issued on a tax-exempt basis by the Federal Tax Reform Act of 1986.
Federally backed notes may be issued on a taxable basis, typically at
Treasury bill rates, but few public entities have chosen this finance
mechanism due to the higher interest rates.[^30]

Federal standby credit or loans pledge future support only if the need
arises, thus avoiding an actual outlay of funds, except in the event
project-related revenues drop below a certain level. With the Orange
County toll roads, financing was structured so that the back-up Federal
line of credit was not considered a Federal guarantee, in order to
benefit from tax-exempt rates. The line of credit, if used, must be paid
back at a non-subsidized rate.

#### Patient Money and Junior Liens

Governments can help infrastructure projects by providing patient
subordinated capital. The interest cost of this capital typically is
less important than the repayment schedule. The junior lien is helpful
for ensuring that the operating costs and other (senior lien) debt are
paid off before the subordinated debt. By providing a junior lien, the
public-sector sponsor facilitates a higher rating for the senior lien,
which helps lower the overall project finance costs. The TIFIA program
provides a good example of how Federal loans can be structured as junior
liens. In the case of the Alameda Corridor, the Federal credit
enhancement was instrumental in assuring the project's overall financial
viability.

#### Variable Rate Commercial Paper 

Commercial paper is a short-term financing instrument that is currently
used by some ports, airports and railroads to meet their short-term
financing needs. Commercial paper can provide the issuer with a method
of meeting their financing needs in the short term while their revenues
may be tightly constrained (i.e., during initial capital construction).
Additionally, variable rate commercial paper usually offers lower
interest rates than fixed rate revenue bonds, thereby reducing a
project's financing cost.

#### Joint Public/Private Partnerships 

The concept of joint development takes on many meanings in the area of
public capital development. In the freight arena, these partnerships
have seen the greatest application and success at port facilities. For
the purposes of this report, joint development is defined as: any formal
arrangement between a public port authority and a private organization
that involves either private sector payments to the public port
authority, or the private sector sharing port project capital costs.
This definition essentially describes two classes of joint development
strategies: 1) revenue sharing arrangements and 2) cost-sharing
arrangements:

1\) Revenue Sharing Arrangements:

> [Leases:]{.underline} For public ports in the U.S., leases are the
> most common form of joint development. When a public port enters into
> a contractual lease arrangement, it is transferring the future
> services rendered by a fixed asset (e.g. a container crane or other
> terminal facility) to a private organization, while retaining the
> title to that fixed asset. In the case of container terminal leasing,
> for example, there are three major types of lease arrangements: the
> flat rate lease, a defined minimum/maximum compensation lease, and a
> shared revenue lease. While these three lease types vary in terms of
> the amount of risk that is assumed by the port and the incentives it
> creates for the lessee, all three lease types provide two important
> features for ports. First, long-term lease relationships provide a
> secure cash flow base upon which to issue bonds to finance new
> facilities. Second, a long-term lease relationship allows the port, to
> varying degrees, to share some of the risk inherent in major capital
> investments with the lessee and insure some steady level of cash flow
> into the ports revenue base.

2)  Cost Sharing:

> [Voluntary Agreements]{.underline}: These are agreements between
> public ports and private organizations whereby the private party
> recognizes a specific port capital investment as sufficiently
> beneficial or even necessary to enhancing its own operations that it
> will share the initial capital costs with the port. These voluntary
> joint development agreements are both highly desirable by ports and
> very uncommon. The benefits to ports are obvious: capital costs funded
> from the port's revenues are decreased, and any risk associated with
> the capital investment is shared with the private organization.
> Additionally, a long-term lease for other terminal facilities usually
> accompanies the joint venture, and therefore a secure revenue source
> is often concomitant with the joint venture. While these cost sharing
> joint development projects are uncommon, a specific case of the
> Hyundai Terminal currently being built at the Port of Tacoma is
> presented in the case studies section.

[^1]:
    > ^.^ Transportation Research Board, Special Report 252, *Policy
    > Options for Intermodal Freight Transportation*. 1998. National
    > Academy Press. Washington, D.C. Page 207.

[^2]:
    > ^.^ 1993 Report to Congress B *Small Railroad Investment Goals and
    > Financial Options*. Federal Railroad Administration, U.S.
    > Department of Transportation. Page iv.

[^3]:
    > ^.^ Ibid. page v.

[^4]:
    > ^.^ DRI/McGraw Hill, 1996, as reported by the American Trucking
    > Association, *Freight Stakeholders Resource Guide*. Page 5.

[^5]:
    > ^.^ FHWA, 1995, as cited by TRB Special Report 252, page 157.

[^6]:
    > ^.^ TRB Special Report 252, page 207.

[^7]:
    > ^.^ Paul Yager, Stark County Planner. Stark County, Ohio. personal
    > conversation.

[^8]:
    > ^.^ John Lohrey, Federal Highway Administration, October 4, 1999.
    > personal conversation (907) 586-7422.

[^9]:
    > ^.^ FHWA, Office of Highway Safety, Fred Small, Tel: 202-366-9212.

[^10]:
    > ^.^ Susan Kirkland, Manager, Safety Programs, ORDC. October 1999.
    > Personal conversation.

[^11]:
    > ^.^ Bob MacGuire. Department of Hazardous Materials Program, RSPA,
    > Tel: 202-366 4377

[^12]:
    > ^.^ Obtained from Coast Guard web site

[^13]:
    > ^.^ personal phone conversation. Roskind, Frank. Federal Railroad
    > Administration, Tel: 202-493 6284

[^14]:
    > ^.^ personal phone conversation. Janet McLaughlin. Federal
    > Aviation Administration, Tel: 202-267 8434

[^15]:
    > ^.^ DOT sources: MD-DOT: 410-545 0302, NY-DOT: 518-457 3406,
    > IL-DOT: 217-782-7074, CA-DOT: 916-654 5266

[^16]:
    > ^.^ Extracted from section 5108 of the Hazardous Materials
    > Transportation Law.

[^17]:
    > ^.^ FAA AIP Handbook.

[^18]:
    > ^.^*Multimodal /Intermodal Transportation in the United States,
    > Western Europe, and Latin America*. Managed by Leigh Boske. Policy
    > Research Project Report No. 130. Lyndon B. Johnson School of
    > Public Affairs, the University of Texas at Austin. Page. 113.

[^19]:
    > ^.^ *Multimodal /Intermodal Transportation in the United States*.
    > Page. 259-260

[^20]:
    > ^.^ Pennsylvania A1996 Comprehensive Rail Freight Study.@ Prepared
    > by Cambridge Systematics. Prepared for the Pennsylvania Department
    > of Transportation, Harrisburg, PA.

[^21]:
    > ^.^ Pennsylvania Rail Freight Assistance Program Application.
    > Available from the Aviation and Rail Freight Division,
    > Pennsylvania Department of Transportation, Harrisburg, PA.

[^22]:
    > ^.^ TRB Special Report 252, Page 201.

[^23]:
    > ^.^ Ibid. Page. 260

[^24]:
    > ^.^ Bureau of Aviation website.

[^25]:
    > ^.^ Most of the financial tool description is based on a review of
    > John Petersen=s contribution to *Policy Options for Intermodal
    > Freight Transportation* - TRB Special Report 252, pages 258-312.

[^26]:
    > ^.^ TRB, Special Report 252. Page 284.

[^27]:
    > ^.^ Introduction to Public Finance and Public Transit. Page 55.

[^28]:
    > ^.^ *Public Port Financing in the United States.* July, 1994.
    > Maritime Administration. U.S. Department of Transportation. Page
    > 84.

[^29]:
    > ^?.^ TRB, Special Report 252. Page 106.

[^30]:
    > ^.^ TRB, Special Report 252. Page 292.