Financing Freight Improvements

Table of Contents 

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i

Financing Freight Improvements

Table of Contents 

Table of Contents 

1.0 Introduction ............................................................................... 1 

Freight Transportation Needs ..................................................... 2 

The Role of the Public Sector in Financing Freight Improvements. 5 

2.0 Funding and Financing Tools for Freight Investments......... 7 

The Federal-Aid Highway System and Federal-Aid Programs... 8 

Federal Highway Funding Programs .......................................... 9 

Federal Financing Tools ............................................................. 26 

State Grant and Loan Programs for Freight Improvements ....... 33 

Other Funding Methods and Financing Tools............................. 49 

3.0 Case Studies of Freight Financing.......................................... 59 

Arkansas ..................................................................................... 59 

California..................................................................................... 67 

Colorado...................................................................................... 72 

Delaware..................................................................................... 74 

Florida ......................................................................................... 75 

Illinois .......................................................................................... 76 

Indiana ........................................................................................ 85 

Iowa ........................................................................................... 87 

Kansas ........................................................................................ 88 

Kentucky ..................................................................................... 89 

Louisiana..................................................................................... 90 

Maine .......................................................................................... 93 

Michigan...................................................................................... 97 

Missouri-Kansas.......................................................................... 98 

North Carolina............................................................................. 100 

Nevada........................................................................................ 101 

New York..................................................................................... 103 

New Jersey ................................................................................. 108 

Ohio ........................................................................................... 110 

Oregon ........................................................................................ 113 

Pennsylvania............................................................................... 116 

Rhode Island............................................................................... 118 

South Carolina ............................................................................ 119 

Tennessee .................................................................................. 122 

Texas .......................................................................................... 123 

Virginia-West Virginia-Ohio......................................................... 126 

Washington ................................................................................. 128 

Wisconsin.................................................................................... 133 

4.0 References................................................................................. 137 

Federal Funding Programs ......................................................... 137 

Federal Financing Tools ............................................................. 138 

State Grant and Loan Programs for Freight Improvements ....... 138 

Case Studies............................................................................... 140 

Other Resources......................................................................... 141 

Glossary of Terms.............................................................................. 143 

Acronyms............................................................................................ 153 
Financing Freight Improvements 

Introduction 

List of Tables 

2.1 Federal Funding Programs....................................................... 23 

2.2 Federal Financing Tools ........................................................... 31 

2.3 Illustrative State Grant and Loan Programs ........................... 34 

3.1 Case Studies by Project Type .................................................. 61 

3.2 Case Studies by Funding Type/Project Size........................... 63 

List of Figures 

1.1 2020 Freight Shipments by Mode............................................. 2 

2.1 Public-Private Partnership Options ......................................... 54 

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Financing Freight Improvements

Introduction 

1.0 Introduction 

The Federal Highway Administration’s (FHWA) Office of Freight 

Management and Operations and Office of Planning developed this 

guidebook as a resource for FHWA, states, metropolitan planning 

organizations (MPOs), and other parties involved in the identification of 

freight needs, development of financing plans to fund projects designed 

to address these needs, and involved in the actual delivery of an eligible 

project. 

This guidebook is composed of four sections: 

1. Funding and Financing Tools for Freight Improvements – This 

section describes existing federal funding programs and 

financing tools that could be considered for funding freight 

improvements. In addition, this section provides an overview of 

several programs available through the States that have been 

created to support the increasing need for the public sector to 

invest in freight-related infrastructure as a way of promoting 

economic development and addressing multimodal 

transportation issues. 

2. Case Studies of Freight Financing – Each freight project and the 

approach to funding various freight projects is unique. Valuable 

information can be gleaned from investigations into the way that 

a variety of intermodal freight facility projects have been funded. 

Obviously, larger, more complex projects require more intricate 

financial planning and tend to require a wide array of funding 

instruments in delivery of the project. For this reason, this section 

provides brief summaries of how various types of freight-related 

projects were financed. 

3. References – Acknowledging that a significant amount of 

information is readily available to assist in developing funding 

strategies for freight projects, additional resources beyond the 

scope of this guidebook can assist in development of a reasonable 

project financing plan. This section provides links to such freight 

financing resources, including additional information on federal 

and state funding and financing programs. 

4. Glossary of Terms and List of Acronyms – This section provides 

descriptions for the various funding categories and terms used in 
Financing Freight Improvements 

Introduction 

2 

conjunction with the delivery of intermodal freight facility 

projects, and a list of acronyms of terms used in the guidebook. 

Freight Transportation Needs 

The efficient movement of goods is key to the continued economic health 

of the nation. Freight shipment tonnage moved by truck, rail, water, and 

air increased by 20 percent from 1993 to 2002, and is projected to increase 

by 65-70 percent by 2020. By 2020 (Figure 1.1), trucks are expected to 

haul about 75 percent of the tonnage, followed by rail (about 15 percent), 

water (about 7 percent), and air (less than 1 percent).1 The efficient 

movement of these goods will depend on the availability of a reliable 

and efficient transportation network, including highways, freight rail 

lines, airports, ports, intermodal terminals, and intermodal connectors. 

Truck

78.1%

Rail 

14.6%

Water

7.1%

Air

<1% 

Figure 1.1 2020 Domestic Freight Shipments by Mode

Trucks carry the largest share of domestic freight movements. In 2002, 

trucks moved 60 percent of freight by weight. Not surprisingly, truck 

traffic has doubled over the last 20 years, about the same growth rate as 

for highway travel as a whole. In 2004, truck traffic accounted for 

7.6 percent of the total vehicle-miles traveled (VMT) in the United States, 

but the impact of truck traffic is noticeable on major routes connecting 

major population centers, border crossings, and other major hubs of 

 

1 U.S. Department of Transportation, Federal Highway Administration. Freight 

Facts and Figures 2005. 
Financing Freight Improvements

Introduction 

3

activity. According to the 2004 Status of the Nation’s Highways, 

Bridges, and Transit: Conditions and Performance (2004 C&P Report),2

trucks account for 30 percent of the vehicles on 20 percent of the 

Interstate System. A study3 on freight bottlenecks on highways found 

that most bottlenecks are located at Interstate urban interchanges. 

Overall, highway truck bottlenecks generate 243 million hours of truck 

delays annually at a cost of $7.8 billion per year. 

Congestion is a problem that affects both the movement of people and 

goods. Between 1980 and 2004, route miles of public roads increased by 

4 percent compared with a 94 percent increase in VMT. The 2004 C&P 

Report estimates the highway capital investment needs, at all levels of 

government, at $73.8 to $118.9 billion per year (2004 dollars), which is 

much higer than current funding available. Meeting highway capital 

investment needs certainly benefits the movement of goods by truck. 

Other important highway infrastructure investment needs include 

additional and enhanced rest areas, improvements to intermodal 

connector facilities, improved operations at gateway and border 

crossings, and delivery of safety improvements at rail-highway crossings 

The physical condition of many existing National Highway System 

Intermodal Connectors has been identified as a concern along with the 

adequacy of the mileage designated as intermodal connectors. Many 

large nationally and regionally significant intermodal freight terminals 

are connected to higher order roadway networks like the Interstate 

System by local streets and roads that local governments struggle toward 

keeping in good physical condition. According to the 2004 C&P Report, 

about one-third of the intermodal connector system is in need of 

additional capacity due to current congestion conditions and over 

40 percent of intermodal connector mileage needs some type of 

pavement or lane width improvement. Improved land access from 

highway networks to airports and ports is critical for the movement of 

goods across the nation. 

 

2 U.S. Department of Transportation, Federal Highway Administration, and 

Federal Transit Administration. 2004 Status of the Nation’s Highway, Bridges, and 

Transit: Conditions and Performance – Report to Congress. Washington, D.C., 

February 2006. 

3 U.S. Department of Transportation, Federal Highway Administration. An 

Initial Assessment of Freight Bottlenecks on Highways. Prepared by Cambridge 

Systematics and Battelle Memorial Institute. October 2005. Available at 

http://www.fhwa.dot.gov/policy/otps/bottlenecks/index.htm. 
Financing Freight Improvements 

Introduction 

4 

Railroads are currently serving record volumes, despite the fact that rail 

miles have continued to decline since their peak in the 1920s. Just a 

two-year comparison of statistics for the seven Class I railroads 

operating in the United States shows a decline in rail miles from 97,662 

in 2004 to 95,830 in 2005, while tonnage increased from 1.84 billion in 

2004 to 1.90 billion in 2005.4 Volumes in 2006 are up 2.8 percent over 

2005 through the first 29 weeks of the year.5 Railroads have been 

reducing track through mergers and branchline rationalization in an 

effort to reduce costs. Increased volumes are resulting from higher 

densities on mainlines, which has so far offset traffic lost through the 

reduction in rail miles. The result is that railroads are currently 

operating at capacity in many parts of the country and have little ability 

to expand their role in freight transportation to more desirable levels. 

The AASHTO Freight Rail Bottom Line Report6 estimates that shifting all 

freight rail to trucks would add 92 billion truck VMT, creating the need 

for an additional $64 billion in highway improvements over the next 20 

years. Clearly, it is in the nation’s interest to keep the rail system 

operating effectively. Assuming rail maintains its current share of 

freight movements, annual capital for freight system needs were 

estimated between $5.3 to $11.2 billion. 

The interface among major transportation modes (i.e., highway, rail, air 

and waterborne) is a critical junction point in the freight mobility and 

goods movement chain. Rail and highway access has been identified as 

one of the main infrastructure needs at major port and airport locations. 

In addition, the growth of goods moving through ports and airports has 

increased considerably in recent years, and is expected to continue 

growing at an increasing rate. Current and future growth projected in 

freight demand puts increasing pressure on ports’ and airports’ capacity, 

especially since demand for port and airport sector has outpaced the 

growth in capacity.7

 

4 Association of American Railroads Class I Railroad Statistics. The seven Class I 

railroads are Burlington Northern Santa Fe, Canadian National, Canadian Pacific, 

CSX Transportation, Kansas City Southern, Norfolk Southern, and Union Pacific. 

5 Association of American Railroads, Freight Traffic Up on U.S. Railroads, July 27, 

2006. 

6 American Association of State Highway and Transportation Officials. FreightRail Bottom Line Report. Washington, D.C., 2002. 

7 Hudson Institute. 2010 and Beyond: A Vision of America’s Transportation Future. 

Washington, D.C., 2004. 
Financing Freight Improvements

Introduction 

The Role of the Public Sector in Financing 

Freight Improvements 

The ability of our nation’s transportation system to provide for and 

maintain the efficient movement of freight is important to the continuing 

economic health of the United States. Ports, railroads, and intermodal 

terminals are primarily owned and operated by the private sector. On 

the other hand, while the trucking industry belongs to the private sector, 

the infrastructure (i.e., highways) required to move goods by truck is 

owned and financed, for the most part, by the public sector. 

Governments at all levels have a critical interest in the health of the 

freight transportation network due to its role as an important contributor 

to local, state, regional and national economic growth and productivity. 

In addition, there has been increasing discussion over the last several 

years about government’s role in financing freight-oriented 

improvements, including investments in private infrastructure where 

there is a public benefit and, conversely, private sector investments in 

public infrastructure where, once again, a public benefit is identified. 

State and local governments typically have limited experience with 

financing freight transportation improvement projects. Although most 

freight projects have been delivered in the form of highway 

improvement projects, eligible for the same funds as other highway 

program projects, they often require a financial plan that includes a 

variety of funding opportunities derived from multiple sources, 

sometimes involving complex public-private partnership arrangements. 

These projects often require specialized finance skills not typically 

available within State departments of transportation (DOT), 

metropolitan planning organizations (MPOs), or local governmental 

units (i.e., county, city, town, etc.). 

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Financing Freight Improvements 

Introduction 

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Financing Freight Improvements

Funding and Financing Tools 

2.0 Funding and Financing 

Tools for Freight 

Improvement 

Improvements 

This section provides an overview of existing federal and state funding 

programs and financing tools that could be used to facilitate freight 

investments. 

Federal programs can be described as one of two types distinguished by 

the manner in which funding is made available: 

1. Funding Programs, that can be targeted to specific projects to 

address freight transportation needs. 

2. Financing Tools, that include loans, credit enhancement, and taxexempt financing programs. Loans and credit enhancement 

programs allow states to leverage both public and private 

resources and stimulate capital investment in transportation 

infrastructure. Local financing programs can be used to provide 

property tax relief and other tax benefits for investments made to 

improve efficiency or increase the capacity of the freight 

transportation system by reducing or eliminating tax burdens on 

interest paid by investors. 

Some states have created grant and loan programs to stimulate freight 

investment. This section also presents information on several of these 

programs. 

Additionally, this section provides an overview of other funding and 

financing tools – such as dedicated revenue sources, public debt, and 

institutional arrangements – that have been used by states, local 

government, and the private sector to finance freight projects. 
Financing Freight Improvements 

Funding and Financing Tools 

The Federal-Aid Highway System and 

Federal-Aid Programs 

The Federal-aid Highway System is defined in law as the National 

Highway System (NHS). The NHS is comprised of certain roadways 

identified as being of interest nationally. The NHS includes the 

Dwight D. Eisenhower National System of Interstate and Defense 

Highway (the “Interstate System”), the Strategic Highway Network 

(StraHNet), other Principal Arterial roadways not designated as part of 

the Interstate or StraHNet systems and connections from the NHS to 

intermodal or strategic military facilities. Highway program funding is 

not limited to the Federal-aid System as described above; the Surface 

Transportation System (STP) funds are viewed as a State administered 

program and may be used to fund projects on the NHS as well as other 

roadways not functionally classified as Rural Minor Collectors or Rural 

and Urban Local System roadways. NHS and STP eligible roadways, 

thereby, define the roadway systems eligible for federal highway aid. 

States and MPOs use the funding they receive for a wide variety of 

highway program-related activities including planning, design, 

environmental studies, construction, reconstruction, and improvements 

on the Federal-aid highway system authorized through legislation 

enacted by Congress. In general, funding under the Federal-aid 

highway program falls into two categories depending on the manner by 

which they are distributed to the States: apportionments and allocations. 

A significant difference between apportioned and allocated highway 

funding programs is that each state is guaranteed to receive funding via 

apportioned programs each year while there are no guarantees that a 

particular state will receive highway funding via an allocation in any 

given year. On a broader level, apportioned programs are guaranteed to 

be funded each year as long as authorizing legislation is in place while 

Congress may chose not to fund an authorized allocated program in any 

given fiscal year. 

1. Apportionments are distributed annually to all states via formula 

provided in law. Apportioned funds are made available to the 

states through the funding programs authorized by Congress. 

Once apportionments are distributed to states using these 

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Financing Freight Improvements

Funding and Financing Tools 

9

formulas,8 the use of these funds is subject to statewide and 

metropolitan planning process requirements provided in law and 

regulation. Although, the funding is federal, and must be used 

for projects that fit highway program eligibility criteria and 

follow all federal environmental and contracting rules (among 

others), states and MPOs have the discretion to determine which 

eligible projects will receive funding. The majority of the 

programs funded through the Highway Trust Fund 

(approximately $40 billion annually) are distributed through 

apportionments, and programmed by state and local 

governments and agencies. Thus, freight project sponsors (such 

as port authorities, local governments, industry members, and 

others) interested in funding projects with these types of federalaid funds should work through their state and MPOs, rather than 

directly through FHWA or U.S. Department of Transportation 

(U.S. DOT). 

2. Allocations. Congress creates and identifies intended funding 

levels for “discretionary” programs. To select projects under a 

discretionary program, the U.S. DOT conducts a nationwide 

selection process among eligible projects, under congressionally 

mandated criteria. Congress also has chosen to direct federal 

transportation funding specifically to states, local governments, 

or projects. This is often referred to as earmarking. In both cases, 

federal funds are not distributed by formula, but allocated to 

specific states or projects. Projects seeking discretionary funding 

under programs created by Congress must participate in the 

discretionary selection process, as designed by Congress and 

announced by U.S. DOT, typically in the Federal Register. 

Federal Highway Funding Programs 

Specific federal funding programs that can be used to fund freight 

transportation improvements are classified as: 

 

8 Apportionment formulas for Federal-aid Highway Programs are available in 

Table FA-4A of Highway Statistics, http://www.fhwa.dot.gov/policy/ohim/

hs04/htm/fa4a.htm. 
Financing Freight Improvements 

Funding and Financing Tools 

Formula Distributed Highway Funding Programs. These include 

Interstate National Highway System (NHS), Surface Transportation 

Program (STP), Interstate Maintenance (IM), and Coordinated Border 

Infrastructure Program. These programs are typically used to fund 

highway improvements, although the STP contains provisions for other 

transportation investments. 

1. Special Funding Programs. Programs in this category are 

identified by their specific program goals and objectives and, 

consequently, special eligibility criteria. For example, only certain 

areas, as identified by the U.S. Environmental Protection Agency 

(USEPA) are eligible to receive Congestion Mitigation and Air 

Quality Improvement Program (CMAQ) funds and these funds 

can only be used on projects that can demonstrate a reduction in 

highway-based vehicle emissions. Also included is Highway 

Bridge Program, Railway-Highway Crossings, Truck Parking 

Facilities, Capital Grants for Rail Line Relocation projects, the 

Fixed Guideway Modernization Program, and other federal 

funding programs. 

3. Discretionary Programs. There are several discretionary 

programs that support freight mobility projects, such as Projects of 

National and Regional Significance (PNRS), National Corridor 

Infrastructure Improvement Program and the Freight Intermodal 

Distribution Grant Program. Although most of these programs 

are fully earmarked in the Safe Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 

they have been included in the guidebook to demonstrate the 

potential of these discretionary programs to support additional 

freight investment. 

Table 2.1 at the end of the section summarizes the funding programs, 

including project eligibility and funding levels (where applicable) 

authorized in SAFETEA-LU for fiscal years (FY) 2005 through 2009. 

o Portway 

(New Jersey) 

(page 108) 

o North Carolina 

Railroad 

Improvement 

Program 

(page 100) 

NHS Examples: 

HIGHWAY FUNDING CORE PROGRAMS

National Highway System (NHS) – 23 USC 103, 104(b)(1) 

SAFETEA-LU Funding (FY 2005-2009): $30.5 Billion 

The NHS is currently comprised of approximately 160,000 miles (256,000 

kilometers) of roadway that have been determined to be important to the 

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Financing Freight Improvements

Funding and Financing Tools 

nation’s economy, defense, and mobility. The NHS includes the 

following five subsystems of roadways: 1) Interstate; 2) Other Principal 

Arterial; 3) Strategic Highway Network (StraHNet); 4) major strategic 

highway connectors providing access between major military 

installations and StraHNet; and 5) intermodal connectors. The NHS 

program provides funding for roadways designated as part of the 

National Highway System, including intermodal connectors between the 

NHS and intermodal terminals. Eligible activities include construction, 

reconstruction, resurfacing, and rehabilitation on a roadway connecting 

the NHS with a truck-rail facility, port, pipeline terminal, or an airport. 

The federal share of NHS funding is 80 percent. When the funds are 

used for Interstate projects to add high-occupancy vehicle or auxiliary 

lanes, but not other lanes, the federal share may be 90 percent. Certain 

safety improvements listed in 23 USC 120(c) have a federal share of 

100 percent. 

Surface Transportation Program (STP) – 23 USC 133, 104(b)(3), 140 

SAFETEA-LU Funding (FY 2005-2009): $32.6 Billion 

The STP program provides flexible funding for projects on any federalaid highway, bridges on public roads, transit capital investments, and 

intracity and intercity bus terminals and facilities. Eligible freight 

projects include: 

• Preservation of abandoned rail corridors; 

• Bridge clearance increases to accommodate double-stack freight 

trains; 

• Capital costs of advanced truck stop electrification systems; and 

• Freight transfer yards. 

The federal share of STP funding is generally 80 percent. When the 

funds are used for Interstate projects to add high-occupancy vehicle or 

auxiliary lanes, but not other lanes, the federal share may be 90 percent. 

Certain safety improvements listed in 23 USC 120(c) have a federal share 

of 100 percent. 

STP Examples: 

o Railroad Crossing 

Reliability Program 

(Dallas-Fort Worth, 

Texas) (page 123) 

o Red Hook Container 

Barge (Brooklyn, New 

York) (page 103) 

o Port of Tacoma 

Overpass (Tacoma, 

Washington) 

(page 132) 
Financing Freight Improvements 

Funding and Financing Tools 

Interstate Maintenance (IM) – 23 USC 119, 104(b)(4), 118(c) 

SAFETEA-LU Funding (FY 2005-2009): $25.2 Billion 

The IM program provides funding for resurfacing, restoring, 

rehabilitating and reconstructing (4R) routes on the Interstate System. 

These funds cannot be used to provide additional capacity on Interstate 

routes, and freight-specific projects are not eligible, although some 

activities may improve freight mobility. 

The federal share is 90 percent, subject to the sliding scale adjustment. 

Certain safety improvements listed in 23 USC 120(c) have a federal share 

of 100 percent. 

Coordinated Border Infrastructure Program – SAFETEA-LU 

Section 1303 

SAFETEA-LU Funding (FY 2005-2009): $833 Million 

The Coordinated Border Infrastructure Program provides funding for 

projects in border states that improve international cross-border 

movements of passenger vehicles and cargo. Previously provided as an 

allocated program, SAFETEA-LU changed the distribution mechanism to 

formula-based. Funds are distributed by formula to international border 

states based on factors related to the movement of people and goods 

through the land border ports of entry within the boundaries of the state 

as follows: 

• 20 percent based on the number of incoming commercial trucks; 

• 30 percent based on the number of incoming personal motor 

vehicles and buses; 

• 25 percent based on the weight of incoming cargo by commercial 

trucks; and 

• 25 percent based on the number of land border ports of entry. 

Eligible projects should be located within 100 miles of the border and 

may include the construction of transportation and supporting 

infrastructure, operational improvements, or coordination of planning 

activities. A border state may use these funds to construct a project in 

Canada or Mexico, if the project directly and predominantly facilitates 

cross-border vehicle and cargo movement at an international port of 

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Financing Freight Improvements

Funding and Financing Tools 

entry in the border region of the state. Canada/Mexico must assure that 

the project will be constructed to standards equivalent to those in the 

United States, and be maintained and used over the useful life of the 

facility only for the purpose for which the funds were allocated. 

The federal share is generally 80 percent. When the funds are used for 

Interstate projects to add high-occupancy vehicle or auxiliary lanes, but 

not other lanes, the federal share may be 90 percent. Certain safety 

improvements listed in 23 USC 120(c) receive a federal share of 

100 percent. 

SPECIAL FUNDING PROGRAMS

Congestion Mitigation and Air Quality Improvement Program 

(CMAQ) – 23 USC 149, 104(b)(2), 126(c) 

SAFETEA-LU Funding (FY 2005-2009): $8.6 Billion 

The CMAQ program funds transportation projects and programs that 

improve air quality (by reducing transportation-related emissions) in 

nonattainment and maintenance areas for ozone, carbon monoxide (CO), 

and particulate matter (PM10, PM2.5). 

CMAQ funds have been used for freight-related projects that improve air 

quality by reducing truck, locomotive or other emissions. Examples of 

CMAQ-funded freight projects include construction of intermodal 

facilities for moving containers off of highways and onto rail, defraying 

barge operating costs, rail track rehabilitation, diesel engine retrofits, 

idle-reduction projects, and new rail sidings. Additionally, though 

previously eligible, SAFETEA-LU highlighted advanced truck stop 

electrification system at truck parking facilities, on-road diesel engine 

retrofits, and other cost-effective mitigation activities as CMAQ eligible 

projects. In addition, SAFETEA-LU provided new eligibility for nonroad 

diesel engine retrofit projects. 

CMAQ funds may be used to fund construction and other activities that 

could benefit a private entity, if it can be documented that the project 

will remove truck traffic on the Federal-aid system or reduce other 

freight-related emissions, thus improving the region’s air quality. This 

would be accomplished through a public-private partnership agreement. 

It is the public-private partnership agreement that allows spending 

public CMAQ funds on most private freight projects. CMAQ is often the 

only funding source that many freight projects can access. 

CMAQ Examples: 

o Dixie Siding Installation 

(Indianapolis, Indiana) 

(page 85) 

o Auburn Intermodal 

Transfer Facility 

(Auburn, Maine) 

(page 93) 

o DVRPC CMAQ 

Competitive Program 

(New JerseyPennsylvania) 

(page 116) 
Financing Freight Improvements 

Funding and Financing Tools 

The federal share is generally 80 percent for CMAQ projects. Certain 

other activities, including carpool/vanpool projects, priority control 

systems for emergency vehicles and transit vehicles, and traffic control 

signalization receive a federal share of 100 percent. 

Highway Bridge Program – 23 USC 144 

SAFETEA-LU Funding (FY 2005-2009): $21.6 Billion 

The Bridge Program provides funding for replacement, rehabilitation, 

and systematic preventive maintenance of bridges. States must use a 

minimum of 15 percent of the funding for projects on off-system bridges 

(i.e., on non-federal-aid eligible roadways). 

The federal share for all projects, except those on the Interstate System, is 

80 percent. For those on the Interstate System, the federal share is 

90 percent. 

Railway-Highway Crossings – 23 USC 130 

SAFETEA-LU Funding (FY 2006-2009): $880 Million 

Formerly a set-aside of the STP program, the Railway-Highway 

Crossings program provides funding for projects that improve safety at 

public highway-rail at-grade crossings through the elimination of 

hazards and/or the installation/upgrade of protective devices at 

crossings. SAFETEA-LU requires that states set aside at least 50 percent 

of the funding allocation for the installation of protective devices at railhighway crossings. If all needs for installation of protective devices have 

been met, then the funds available can be used for other at-grade 

crossing projects eligible under this program. The federal share is 

90 percent. 

Rail-Highway 

Grade Crossing 

Examples: 

o Ohio Southern Rail 

Line Rehabilitation 

(page 109) 

o Southern Tier 

Project (Hornell, 

New York to Corry, 

Pennsylvania) 

(page 105) 

Eligible projects include: 

• Separation or protection of grades at crossings; 

• The reconstruction of existing railroad grade crossing structures; 

and 

• The relocation of highways or rail lines to eliminate grade 

crossings. 

14 
Financing Freight Improvements

Funding and Financing Tools 

Truck Parking Facilities – SAFETEA-LU Section 1305 

SAFETEA-LU Funding (FY 2006-2009): $25 Million 

The Truck Parking Facilities is a pilot program that provides grants for 

projects that address the shortage of long-term parking for commercial 

vehicles on the NHS. Eligible projects include construction of new or 

expanded commercial vehicle parking facilities, construction of turnouts 

for commercial vehicles, improvement to interchanges, electrification 

systems, and Intelligent Transportation System (ITS) deployments 

promoting availability of parking. 

The federal share for Truck Parking Facilities funding is generally 

80 percent. Certain safety improvements listed in 23 USC 120(c) receive 

a federal share of 100 percent. 

Capital Grants for Rail Line Relocation Projects – 49 USC 20154 

(SAFETEA-LU Section 9002) 

SAFETEA-LU Funding (FY 2006-2009): $1.4 Billion 

(Subject to annual appropriation) 

The Rail Line Relocation Grant program provides grants to states for 

local rail line relocation and improvement projects that improve rail 

traffic safety, motor vehicle traffic flow, community quality of life, or 

economic development, or involve relocation of any portion of the rail 

line. SAFETEA-LU authorized $350 million per year for FY 2006 through 

2009, subject to appropriations. No funds were appropriated for this 

program in FY 2006. At least 50 percent of the funds shall be awarded 

for grants of $20 million or less. The federal share shall not be more than 

90 percent. 

Federal Transit Administration (FTA) Fixed Guideway 

Modernization Program – 49 USC 5337 (SAFETEA-LU 

Section 3035) 

SAFETEA-LU Funding (FY 2006-2009): $6.1 Billion 

FTA’s Fixed Guideway Modernization program provides funding for 

capital improvements on “fixed guideway” systems, including heavy 

rail, commuter rail, high-occupancy vehicle (HOV) systems, and light 

rail. Transit and commuter rail providers are eligible to receive funds 

from this program for systems that have been in place for at least seven 

years. The funds are allocated to urbanized areas by statutory formula. 

Although freight projects are not eligible to use this funding source, 

15
Financing Freight Improvements 

Funding and Financing Tools 

capital improvements on passenger rail lines shared with freight rail 

could benefit railroads. The federal share for eligible projects is 

80 percent. 

Federal Aviation Administration (FAA) – Airport Improvement 

AIP Examples: Program (AIP) 

o Stockton Airport 

Freight Terminal 

(California) 

(page 71) 

o Air Freight 

Regional Hubbing 

Facility (Columbia, 

South Carolina) 

(page 119) 

FAA’s Airport Improvement Program (AIP) provides funding for airport 

planning and development projects at airports included in the National 

Plan of Integrated Airports Systems (FAA AIP Handbook). Eligible airports 

must meet the following criteria: 

• Cargo service airports receiving cargo in excess of 100 million 

pounds annually; and 

• Private commercial airports that enplane more than 10,000 

passengers annually. 

For large and medium primary hub airports, the grant covers 75 percent 

of eligible costs (or 80 percent for noise program implementation). For 

small primary, reliever, and general aviation airports, the grant covers 

95 percent of eligible costs. Eligible projects include those improvements 

related to enhancing airport safety, capacity, security, and environmental 

concerns. In general, sponsors can use AIP funds on most airfield capital 

improvements or repairs except those for terminals, hangars, and nonaviation development. 

OTHER FEDERAL FUNDING PROGRAMS (NON-U.S. DOT) 

U.S. Army Corps of Engineers (USACE) – Harbor Maintenance 

Trust Fund 

o Port of Humboldt 

Dredging (California) 

(page 68)

Harbor Maintenance 

Examples 

o Little Rock Port 

Authority Slackwater 

Harbor (Arkansas) 

(page 59) 

The Harbor Maintenance Trust Fund (HMTF) provides funding for 

operations and maintenance (i.e., dredging costs) of federally authorized 

channels for commercial navigation. Ports located along federal 

navigation channels are eligible to receive HMTF funding. The USACE 

FY 2007 budget includes approximately $2.3 billion for Operations and 

Maintenance (O&M), of which $707 million (31.3 percent) will be 

appropriated from the HMTF. The funds are distributed among 21 

designated USACE regions. The O&M budget for commercial 

navigation expenditures is estimated at $1.3 billion (56 percent). 

16 
17

Financing Freight Improvements

Funding and Financing Tools 

The federal share of O&M expenses funded by HMTF is 100 percent in 

coastal ports with a harbor less than 45 feet deep, and 50 percent for 

ports with harbors more than 45 feet deep. 

U.S. Department of Commerce – Economic Development 

Administration (EDA) Funds 

EDA provides grants for projects in economically distressed industrial 

sites that promote job creation and/or retention. Eligible projects must 

be located within an EDA-designated redevelopment area or economic 

development center. Eligible freight-related projects include: industrial 

access roads, port development and expansion, and railroad spurs and 

sidings. Grantees must provide evidence of economic distress that the 

project is intended to alleviate. Grant assistance is available up to 

50 percent of the project, although the EDA could provide up to 

80 percent for projects in severely depressed areas. 

During the last quarter of 2005, the EDA announced 117 grants greater 

than $100,000, totaling almost $103 million. These investments were part 

of projects that totaled over $240 million. EDA’s Fiscal Year 2004 

investments totaled approximately $278 million, with grants ranging 

from $12,000 to $5.6 million. 

U.S. Department of Agriculture (USDA) – Community Facility 

Program 

The USDA Rural Housing Service’s Community Facility Program 

provides three funding mechanisms to fund 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. 

Grant assistance is available up to 75 percent of the project cost. Eligible 

transportation-related community facilities include airport hangars, 

airports, bridges, parking facilities, sidewalks, street improvements, 

transportation infrastructure for industrial parks, railroads, marinas, 

municipal docks, and special transportation equipment. 

The Community Facility Program provides $297 million in direct loans, 

$208 million in loan guarantees, and $17 million in grants for FY 2007. 

The average loan is estimated at $442,000, whereas the average grant is 

estimated at approximately $32,000. The average loan guarantee is 

estimated at about $860,000. 

EDA Examples: 

o Southern Tier 

Project (Hornell, 

New York to Corry, 

Pennsylvania) 

(page 105) 

o Port of South 

Louisiana Rail Spur 

Upgrade (page 90) 

o I-55 Access to 

Center Point 

Intermodal Center 

at Deer Run 

(Joliet, Illinois) 

(page 81) 
Financing Freight Improvements 

Funding and Financing Tools 

Environmental Protection Agency (EPA) – Brownfield 

Revitalization Program 

Through EPA’s Brownfield Revitalization Program, the Federal 

government provides grants and loans for brownfield site cleanup. 

Brownfield sites could be redeveloped for commercial, residential, 

and/or industrial uses, including intermodal facilities (e.g., rail-truck 

transfer facilities). Site cleanup grants provide up to $200,000 per site to 

fund cleanup conducted by cities, development agencies, nonprofit 

groups, and similar entities at sites that they own. A 20 percent match 

(of funds or in-kind services) is required, although this can be waived in 

the case of hardship. The Revolving Loan Fund (RLF) grants provide up 

to $1 million per recipient, available for five years, to establish state or 

locally administered loan funds. Local governments, states, Indian 

tribes, and entities such as redevelopment agencies, regional councils, 

and land clearance agencies are eligible for these capitalization grants. 

RLF also can make low- or no-interest loans for cleanup. Beginning in 

FY 2003, recipients may use up to 40 percent of a capitalization award for 

cleanup subgrants at sites owned by subgrantees. Repayment of 

subgrants is not required. A 20 percent non-federal cost share in the 

form of money, labor, services, or materials is required. 

As of May 2006, EPA has awarded 202 RLF grants totaling $186.7 

million, and 238 cleanup grants totaling $42.7 million. 

DISCRETIONARY AND OTHER PROGRAMS

This section presents discretionary and other programs included in 

SAFETEA-LU that support projects with freight infrastructure elements. 

Through designation to a specific program, Congress allocates funding 

to carry out specific projects, or provides a set amount to states for a 

particular type of transportation investment. Funds from the programs 

presented below are dedicated to the projects specified in SAFETEA-LU. 

Discretionary programs are identified for funding at the “discretion” of 

the Secretary of Transportation or as identified specifically for funding 

by Congress (also known as “earmarking”). Project sponsors typically 

submit a request or application and must meet certain eligibility criteria. 

18 
Financing Freight Improvements

Funding and Financing Tools 

High-Priority Projects – 23 USC 117 

SAFETEA-LU Funding (FY 2005-2009): $14.8 Billion 

The High-Priority Projects Program provides designated funding for 

specific projects identified in SAFETEA-LU, some of which affect freight 

mobility. A total of 5,091 projects are identified, each with a specified 

amount of funding over the five years of SAFETEA-LU. The federal 

share for projects under this program is generally 80 percent. 

Section 1702 of SAFETEA-LU contains the complete list of High-Priority 

Projects. The full list of projects is available at: 

http://frwebgate.access.gpo.gov/cgi-bin/

getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ059.109.pdf. 

Transportation Improvement Projects – SAFETEA-LU 

Section 1934 

SAFETEA-LU Funding (FY 2005-2009): $2.6 Billion 

The Transportation Improvement provision in SAFETEA-LU provides 

approximately $2.6 billion for 466 earmarked projects designated under 

Section 1934. Some of these projects are freight-related and/or may 

affect freight mobility, including funding allocations for major freight 

corridor projects such as the Alameda Corridor East (California) and 

ReTRAC (Nevada). The federal share for Transportation Improvement 

projects is generally 80 percent and 100 percent for certain safety 

projects. 

Section 1934 of SAFETEA-LU contains a complete list of Transportation 

Improvement Projects to be funded through 2009. The full list of projects 

is available at: http://frwebgate.access.gpo.gov/cgi-bin/

getdoc.cgi?dbname=109_cong_public_laws&docid=f:publ059.109.pdf. 

Projects of National and Regional Significance – SAFETEA-LU 

Section 1301 

SAFETEA-LU Funding (FY 2005-2009): $1.8 Billion 

The Projects of National and Regional Significance program provides 

funding for high-cost projects that are expected to have national and 

regional benefits, including: 1) improving economic productivity by 

facilitating international trade; 2) relieving congestion; and 3) improving 

transportation safety and security by facilitating passenger and freight 

movement. 

19
Financing Freight Improvements 

Funding and Financing Tools 

Eligible projects include any surface transportation project eligible for 

federal assistance under 23 USC, including freight railroad projects. The 

total project cost must be greater or equal to the lesser of $500 million, or 

75 percent of the amount of federal highway assistance funds 

apportioned to the state where the project is located. The federal share 

for this program is 80 percent. 

SAFETEA-LU authorized $1.8 billion for fiscal years 2005-2009; these 

funds have been fully earmarked to 25 projects, some of which are 

freight projects, including the Heartland Corridor (Virginia-West 

Virginia-Ohio), CREATE (Chicago, Illinois), and the Alameda Corridor 

East (California). The full list of projects is available on the Office of 

Operations, Freight Management and Operations Web site, 

http://www.ops.fhwa.dot.gov/freight/policy.htm. 

National Corridor Infrastructure Improvement Program – 

SAFETEA-LU Section 130 

SAFETEA-LU Funding (FY 2005-2009): $1.9 Billion 

The National Corridor Infrastructure Improvement Program is a 

discretionary program that provides funding for construction of 

highway projects in corridors of national significance to promote 

economic growth and international or interregional trade. These 

corridors of national significance include major freight corridors. 

SAFETEA-LU authorized $1.9 billion for 33 earmarked projects. The 

federal share for projects under this program is 80 percent. When the 

funds are used for Interstate projects to add high-occupancy vehicle or 

auxiliary lanes, but not other lanes, the federal share may be 90 percent. 

Certain safety improvements listed in 23 USC 120(c) receive a federal 

share of 100 percent. The full list of projects is available on the Office of 

Operations, Freight Management and Operations Web site, 

http://www.ops.fhwa.dot.gov/freight/policy.htm. 

Freight Intermodal Distribution Grant Program – SAFETEA-LU 

Section 1306 

SAFETEA-LU Funding (FY 2005-2009): $30 Million 

The Freight Intermodal Distribution Grant Program is a pilot program 

that provides funding for intermodal freight transportation and 

distribution facilities at inland ports and intermodal freight facilities. 

Projects are intended to relieve congestion, improve safety, facilitate 

international trade, and encourage public-private partnerships. 

20 
Financing Freight Improvements

Funding and Financing Tools 

SAFETEA-LU authorized $6 million per year through FY 2009. All 

available funds have been earmarked to six projects. The full list of 

projects is available on the Office of Operations, Freight Management 

and Operations Web site, 

http://www.ops.fhwa.dot.gov/freight/policy.htm. 

Ferry Boat Discretionary Program – 23 USC 129(c) 

SAFETEA-LU Funding (FY 2005-2009): $285 Million 

The Ferry Boat Discretionary Program provides funds for the 

construction of ferry boats and ferry terminal facilities connecting to the 

NHS. Eligible locations represent logical extensions of the NHS 

roadways where construction of a bridge is neither practical or feasible. 

Ferry boat projects eligible under the program include services designed 

to carry motor vehicles from one point to another including commercial 

vehicles. A set-aside of $20 million per year is provided for the 

construction or refurbishment of ferry boats and ferry terminals and 

their approaches that are part of the NHS in the states of Alaska, New 

Jersey, and Washington. 

The remaining funds ($167 million for fiscal years 2006 through 2009) are 

available for projects on a competitive basis. Because of the large 

number of requests, $2 million or less is typically awarded, in order to 

disburse funding to as many states as possible. 

KEY ISSUES AFFECTING FEDERAL FUNDING PROGRAMS

Although SAFETEA-LU expanded the number and type of funding 

programs available for freight improvement projects, there remain 

several key issues affecting the ability of states and MPOs to use these 

programs or funds from other federal agencies to fund freight-specific 

projects: 

• Project Eligibility – The programs described above are limited to 

specific modes or specific types of projects. CMAQ has been 

widely used for several freight projects, including public-private 

partnerships. However, CMAQ funds cannot be used for 

highway improvements that increase capacity for single-occupant 

vehicles, and are limited to projects that improve air quality in 

nonattainment or maintenance areas. Projects funded by EDA 

grants must be located in economically distressed areas (as 

designated by the EDA) and are limited to projects that attract or 

21
Financing Freight Improvements 

Funding and Financing Tools 

retain jobs. While these funding programs are useful for some 

projects, many freight transportation improvement projects do not 

meet these specific eligibility requirements. 

• Competition from Other Priorities – Traditional programs, such 

as STP or NHS funds, are more flexible than mode-specific or 

special programs and can often be used to address a wide range of 

transportation needs in an area. However, potential freight 

projects have to compete with other transportation investments 

for funding under these programs. 

• Multijurisdictional Investments – The NHS and STP funding 

programs may not be eligible for multistate freight investments. 

Federal-aid funds are allocated by formula and must be matched 

by state or local funds, making it difficult for states to invest in 

projects beyond their state boundaries. 

• Funding for Complex Projects – Complex projects that include 

several construction elements could be funded using a 

combination of federal programs. For instance, a project that 

includes improvements on an intermodal connector, bridge 

rehabilitation, and rail-highway crossing safety improvement 

would be eligible for NHS, Bridge, and Rail-Highway Grade 

Crossing funds for respective eligible costs. Examples included in 

this guidebook in which multiple funding programs have been 

used to fund freight investments include the North Carolina 

Railroad Improvement Program (NCRRIP) and the FAST Corridor 

Program. 

22 
23

FinanciFunding 

Table 2.1 Federal Funding Programs

Funding Program Eligibility 

SAFETEA-LU 

Funding Level 

(FY 2005-2009) Freight Application Project Size 

Interstate Maintenance (IM) 23 USC 119 

Provides funding for resurfacing, restoration, rehabilitation, and 

reconstruction (4R) of Interstate facilities. 

$25.2 billion Ativities improve freight mobility. Any size depending on fund

available to state DOT; may require combination with otfunding sources for very larprojects. 

National Highway System (NHS) 23 USC 103 

Provides funding on designated highway intermodal connectors to intermodal facilities also NHS. 

$30.5 billion Funds can be applied for construction, 

reconstruction, resurfacing, and rehabilitation on a roadway connecting the NHS with a truck-rail transfer facility or an airport. 

Any size; may require combination with other fundsources for very large proje

Surface Transportation Program (STP) 23 USC 133 

Funds projects on any Federal aid highway, bridge projects on any public road, transit capital projects, and other state or local projects. Can be used for improvements to accommodate rail freight. 

$32.6 billion Rail freight improvements include: 

• Lengthening or increasing vertical clearance of 

bridges; 

• Adjusting drainage facilities; 

• Lightning; 

• Signage; 

• Minor adjustments to highway alignment. 

Any size; may require combination with other fundsources for very large proje

Coordinated Border Infrastructure Program SAFETEA-LU Section 1303 

Provides funding to border states for projects that improve the safe movement of motor vehicles and cargo at or across the U.S. border with Canada and Mexico. 

$710 million Projects that facilitate/expedite cross border 

crossing, such as: Operational improvements related to electronic data interchange and use of telecommunications Safety enforcement facilities related to international trade. 

Small projects; requires combination with other fundsources for very large proje

CMAQ Improvement Program 23 USC 149 

Funds transportation projects in nonattainment and maintenance areas that improve air quality. Can be used for start up costs associated with operations 

(for up to three years). 

$8.6 billion Freight-related eligible projects include: 

• Advanced truck stop electrification systems; 

• Construction of Intermodal freight facilities that 

result in air quality improvements; 

• On-road and nonroad diesel engine retrofits; 

• Cost-effective congestion mitigation activities. 

Any size. 
Financing Freight Improvements 

Funding and Financing Tools 

Table 2.1 Federal Funding Programs (continued)

Funding Program Eligibility 

SAFETEA-LU 

Funding Level 

(FY 2005-2009) Freight Application Project Size 

Bridge 23 USC 144 

Provides funding for replacement, rehabilitation, and systematic preventive maintenance of bridges. 

$21.6 billion Bridge rehabilitation and replacement with freightrelated components or serving high truck volumes. 

In some cases bridge replacements or rehabilitation 

can benefit freight by increasing height of ships that can pass under a bridge. 

Any size; may require combination with other fundsources for very large proje

Rail Grade Crossings 

23 USC 130 

Provides funding to eliminate rail-highway crossing hazards. 

$880 million Eligible uses include: 

• Separation or protection of at-grade crossings; 

• Reconstruction of at-grade crossings; 

• Highway relocation to eliminate crossing; 

• Rail relocation to eliminate crossing (where 

most cost-effective). 

Small projects; requires combination with other fundsources for very large proje

Truck Parking Facilities SAFETEA-LU Section 1305 

New funding program; provides funds for 

projects addressing the shortage of longterm parking for commercial vehicles on the NHS. 

$25 million Eligible projects include: 

• Construction of commercial vehicle parking 

facilities adjacent to truck stops and travel plazas; 

• Constructing turnouts for commercial vehicles; 

• Improving geometric design of interchanges to 

improve truck access to parking facilities; 

• Advanced truck electrification systems. 

Small project; requires combination with other fundsources for very large proje

Capital Grants for Rail Relocation Projects SAFETEA-LU Section 9002 

New program that provides grants for local rail line relocation and improvement projects. Projects should improve vehicle traffic flow, quality of life, and economic development. 

$1.4 billion authorized, subject 

to appropriations 

Relocation of a rail line, such that rail crossing impacts are mitigated. 

Any size, although legislatiorequires that at least half of funding is used for projects are $20 million or less. 

FTA Rail Modernization 49 USC 5309 

Funds for capital improvements on “fixed guideway” systems that have been operating for at least seven years. 

$6.07 billion Rehabilitation of tracks, structures, signals and 

communications, power equipment and substations, and preventive maintenance. Rail freight benefits from capital improvements on shared commuter rail lines. 

Any size; may require combination with other fundsources for very large proje

USACE Harbor Maintenance 

Funding for operations and maintenance of federally authorized channels for commercial navigation 

N/A Port O&M costs (e.g., dredging) Small projects; requires 

combination with other fundsources for very large proje

24 
Financi

Funding 

Table 2.1 Federal Funding Programs (continued)

Funding Program Eligibility 

SAFETEA-LU 

Funding Level 

(FY 2005-2009) Freight Application Project Size 

U.S. Department of Commerce – Economic Development Administration Funds 

Grants for projects sites that promote job creation and/or retention in economically distressed industrial. Eligible projects should be located within an EDAdesignated redevelopment area or economic development center. 

N/A Industrial access roads, port development and 

expansion, and railroad sidings. 

Small projects; requires combination with other fundsources for very large proje

U.S. Department of Agriculture – Community Facility Program 

Grants and loans to fund construction, enlargement, extension or improvement 

of community facilities in rural areas (population less than 20,000). 

N/A Roads, transportation infrastructure for industrial 

parks, and airports. 

Small projects; requires combination with other fundsources for very large proje

Environmental Protection Agency – Brownfield Redevelopment Program 

Provides grants and loans for brownfield site cleanup. 

N/A Brownfield sites could be redeveloped for 

commercial, residential, and/or industrial uses, including intermodal facilities (e.g., rail-truck transfer facilities). 

Small projects; requires combination with other fundsources for very large proje

Note: Earmarked programs have not been included in this table, since funds are committed to specific projects through 2009. 

25
26 

Financing Freight Improvements 

Funding and Financing Tools 

Federal Financing Tools 

Federal financing tools include four mechanisms to finance 

transportation investments: 

1. Loans, where a project sponsor borrows federal highway funds 

directly from a state DOT or the Federal Government [e.g., State 

Infrastructure Banks (SIB), and TIFIA loans]. 

2. Credit Enhancement, where a state DOT or the Federal 

Government makes federal funds available on a contingent (or 

standby) basis [e.g., Transportation Infrastructure Finance and 

Innovation Act (TIFIA) loan guarantees and lines of credit]. 

Credit enhancement helps reduce risk to investors and thus allows 

the project sponsor to borrow at lower interest rates. 

3. Debt financing through Grant Anticipation Revenue Vehicles 

(GARVEEs) bonds, where a state DOT can pledge a share of 

future federal highway funding toward debt service on a longterm bond issue. 

4. Special Experimental Project Number 15 (SEP-15), allows the 

Secretary to waive the requirements of title 23 and the regulations 

under title 23 on a case-by-case basis. SEP-15 allows FHWA to 

experiment in four major areas of project delivery – contracting, 

right-of-way acquisition, project finance, and compliance with the 

National Environmental Policy Act (NEPA) and other 

environmental requirements. 

Table 2.2 shows the financing tools that are included in SAFETEA-LU. 

TRANSPORTATION INFRASTRUCTURE FINANCE AND 

INNOVATION ACT (TIFIA) – SAFETEA-LU SECTION 1601 

o ReTRAC 

(Reno, Nevada) 

(page 101) 

o Cooper River 

Bridge 

(Charleston, 

South Carolina) 

(page 121) 

TIFIA Examples: The TIFIA credit program, originally enacted in the Transportation 

Equity Act for the 21st Century (TEA-21), was modified by SAFETEA-LU. 

The strategic goal of this program is to leverage limited federal resources 

and stimulate private capital investment by providing credit assistance 

(up to 33 percent of the project cost) for major transportation investments 

of national or regional significance. Credit assistance is provided 

through secured loans, loan guarantees, or lines of credit. Project costs 

must be at least $50 million or one-third of the state’s annual 

apportionment of federal-aid highway funds whichever is less. 

SAFETEA-LU expanded TIFIA eligibility to certain private rail projects. 

Eligibility for freight facilities include: 
27

Financing Freight Improvements

Funding and Financing Tools 

• Public or private freight rail facilities providing benefits to 

highway users; 

• Intermodal freight transfer facilities; 

• Access to freight facilities and service improvements, including 

capital investments for ITS; and 

• Port terminals, only when related to surface transportation 

infrastructure modifications to facilitate intermodal interchange, 

transfer, and access into and out of the port. 

SAFETEA-LU authorizes $122 million per year to pay the subsidy costs 

of supporting federal credit under TIFIA. There is no limit on the 

amount of credit assistance that can be provided to borrowers in a given 

fiscal year. Repayment of TIFIA loans is required to come from tolls, 

user fees, or other dedicated revenue sources. As of July 2006, TIFIA 

assistance amounted to $3.2 billion, leveraging $13.2 billion in 

transportation investments for a total of 14 projects. About $994 million 

in TIFIA debt has been repaid to date. Additional information on this 

financing program is available at http://tifia.fhwa.dot.gov/. 

STATE INFRASTRUCTURE BANKS (SIB) – SAFETEA-LU

SECTION 1602 

The SIB program, expanded under SAFETEA-LU, allows all states, the 

District of Columbia, Puerto Rico, and other United States territories to 

establish infrastructure revolving funds eligible to be capitalized with 

federal transportation dollars authorized through FY 2009. In addition, 

the implementation of multistate SIBs is permitted, which may 

encourage states to implement and fund projects (including regional 

freight improvements) that cross jurisdictional boundaries. States also 

are allowed to create a rail account within the SIB using funds available 

to capital projects under Subtitle V (Rail Programs) of 49 USC. Through 

the SIB, states can issue loans and other credit tools to public and private 

sponsor of transportation infrastructure projects. 

The SIB program was created within the Intermodal Surface 

Transportation Efficiency Act (ISTEA) legislation, and re-enacted under 

Transportation Equity Act fro the 21st Century (TEA-21). The first SIB 

pilot program was open to 10 states, but was expanded to include 38 

states plus Puerto Rico. Under TEA-21, only four states (California, 

Florida, Missouri, and Rhode Island) could transfer additional federal 

SIB Examples: 

o Ohio Southern 

Rail Line 

Rehabilitation 

(page 109) 

o Cooper River 

Bridge 

(Charleston, 

South Carolina) 

(page 121) 
Financing Freight Improvements 

Funding and Financing Tools 

funding to further capitalize their banks. Other SIBs could continue to 

operate by using whatever funds had already been deposited in the 

bank, supplementing the initial capitalization with additional state or 

local funds. 

States participating in the SIB program may capitalize their account(s) in 

their SIBs with federal surface transportation funds for each of FY 2005-

2009 as follows: 

• Highway Account – Up to 10 percent of the funds apportioned to 

the state for the NHS, STP, Bridge, and Equity Bonus. 

• Transit Account – Up to 10 percent of funds made available for 

capital projects under Urbanized Area Formula Grants, Capital 

Investment Grants, and Formula Grants for Other Than Urbanized 

Areas. 

• Rail Account – Funds made available for capital projects under 

Subtitle V (Rail Programs) of 49 USC. 

• The State must match federal funds used to capitalize the SIB on 

an 80-20 Federal/non-Federal basis. 

Currently 32 states and Puerto Rico participate in the NHS and TEA-21 

programs. These states have issued more than $5 billion in loans. No 

states have entered into cooperative agreement for SAFETEA-LU SIBs to 

date. 

RAIL REHABILITATION AND IMPROVEMENT FINANCING 

(RRIF) – SAFETEA-LU SECTION 9003 

o Iowa Interstate 

Railroad 

Rehabilitation and 

Purchase of 

Locomotives 

(page 87) 

o Riverport Railroad 

Rehabilitation and 

Yard Expansion 

(Savanna, Illinois) 

(page 83) 

RRIF Examples 

The RRIF program provides loans and credit assistance to both public 

and private sponsors of rail and intermodal projects. Eligible projects 

include acquisition, development, improvement, or rehabilitation of 

intermodal or rail equipment and facilities. Direct loans can fund up to 

100 percent of a railroad project with repayment terms of up to 25 years 

and interest rates equal to the cost of borrowing to the government. 

Thirteen loans have been issued since 2002 for a total of $517 million. 

The smallest and largest loans approved were $2.1 million (Mount Hood 

Railroad) and $233 million (Dakota, Minnesota & Eastern Railroad), 

respectively. 

SAFETEA-LU authorizes $35 billion for this credit program, of which 

$7 billion is directed to short line and regional railroads. In addition, 

SAFETEA-LU eliminated two major issues that had made RRIF loans 

virtually unusable to the railroads. First, it removed the requirement 

28 
29

Financing Freight Improvements

Funding and Financing Tools 

that collateral be provided. Second, it removed the “lender of last resort”

provision, that required applicants to provide evidence that private 

lending was denied for the project by two lenders. 

GARVEE BONDS

A Grant Anticipation Revenue Vehicle (GARVEE) bond is a financing 

instrument that allows states to issue debt backed by future federal-aid 

highway revenues. Eligibility for freight projects is constrained by the 

underlying federal-aid highway programs that will be used to repay 

debt service. 

PRIVATE ACTIVITY BONDS

Title XI Section 11143 of SAFETEA-LU amends Section 142(a) of the IRS 

Code to allow the issuance of tax-exempt private activity bonds for 

highway and freight transfer facilities. Therefore, states and local 

governments are allowed to issue tax-exempt bonds to finance highway 

and freight transfer facility projects sponsored by the private sector. 

SAFETEA-LU includes a cap of $15 billion on private activity bonds. 

Passage of the private activity bond legislation reflects the Federal 

Government’s desire to increase private sector investment in United 

States transportation infrastructure. Providing private developers and 

operators with access to tax-exempt interest rates lowers the cost of 

capital significantly, enhancing investment prospects. Increasing the 

involvement of private investors in highway and freight projects 

generates new sources of money, ideas, and efficiency. 

SPECIAL EXPERIMENTAL PROJECT 15 (SEP-15) 

SEP-15 is an experimental process for FHWA to identify, for trial 

evaluation, new public-private partnership approaches to project 

delivery. It is anticipated that these new approaches will allow the 

efficient delivery of transportation projects without impairing FHWA’s 

ability to carry out its stewardship responsibilities to protect both the 

environment and American taxpayers. 

GARVEE 

Examples: 

o Rhode Island 

Freight Rail 

Improvement 

Project (page 118) 

o Widening of I-64, 

I-65, and I-75 

(Kentucky) 

(page 89) 
Financing Freight Improvements 

Funding and Financing Tools 

SEP-15 addresses, but is not limited to, four major components of project 

delivery: 

• Contracting; 

• Compliance with environmental requirements; 

• Right-of-way acquisition; and 

• Project finance. 

Elements of the transportation planning process may be also involved. 

SEP-15 applications may include suggested changes to the FHWA’s 

traditional project approval procedures and may require some 

modifications in the implementation of FHWA policy. Deviations from 

current title 23 USC, requirements and generally applicable FHWA 

regulations also may be involved. 

KEY ISSUES AFFECTING FEDERAL FINANCING TOOLS

SAFETEA-LU greatly enhanced the loan and credit enhancement 

programs available to finance freight improvements. Some of these 

programs are primarily targeted at major transportation improvements, 

which can limit their applicability in some regions. Although 

SAFETEA-LU reduced the minimum project size for TIFIA loans, 

projects must still cost at least $50 million, or one-third of a state’s 

annual federal-aid apportionments, whichever is less. While some 

freight projects are large, multimodal projects that fit within this 

category, many others are small, local roadway, rail, or access projects 

that do not meet this threshold. SIB loans and GARVEE bonds are more 

suitable for smaller freight investments. 

30 
31

FinanciFunding 

Table 2.2 Federal Financing Tools Funding Program Eligibility 

SAFETEA-LU Funding Level 

(FY 2005-2009) Application Projec

Transportation Infrastructure Finance and Innovation Act (TIFIA) SAFETEA-LU Section 1601 

Provides loans and credit assistance for major transportation investments of national or regional significance, including public intermodal freight facilities. SAFETEA-LU expanded TIFIA eligibility to private rail projects. Private sponsors are eligible. 

SAFETEA-LU authorizes $122 million per year to pay the subsidy costs of supporting federal credit under TIFIA. This level of funding can support loans with a total value of more than $2 billion annually. 

Any project eligible for federal funding under Title 23 and Chapter 53 of Title 49. International bridge or tunnel Intercity passenger bus and rail facilities and vehicles (including Amtrak and magnetic levitation systems) Freight-specific projects eligible for TIFIA include: • Public or private rail facilities providing benefits to 

highway users; 

• Intermodal freight transfer facilities; 

• Access to freight facilities and service 

improvements, including ITS; 

• Surface transportation infrastructure 

modifications to facilitate intermodal interchange, transfer, and access into and out of ports. 

$50 million no specific but credit aunder TIFIA support 33eligible pro

State Infrastructure Banks (SIB) SAFETEA-LU Section 1602 

SAFETEA-LU authorizes all 50 states, the District of Columbia, Puerto Rico, and U.S. territories to establish infrastructure revolving funds that can be capitalized with federal transportation funds authorized through FY 2009. Current legislation allows for the creation of rail accounts. Private sponsors are eligible. 

Highway Account – up to 10% of NHS, STP, Bridge, and Equity Bonus programs, at the discretion of the state DOT. Rail Account – funds made available for capital projects under Subtitle V (Rail Programs) of Title 49. 

Any project eligible for federal funding under Title 23 and Section 5302 of Title 49. 

Any size; dstate capitaGenerally sprojects ar

Rail Rehabilitation and Improvement Financing (RRIF) SAFETEA-LU Section 9003 

Loans and credit assistance to both public and private sponsors of rail and intermodal projects. Private sponsors are eligible. 

$35 billion; $7 billion is directed to short line and regional railroads. 

Acquisition, development, improvement, or rehabilitation of intermodal or rail equipment and facilities. 

Any size; gsmall proje
Financing Freight Improvements 

Funding and Financing Tools 

Table 2.2 Federal Financing Tools (continued) Funding Program Eligibility 

SAFETEA-LU Funding Level 

(FY 2005-2009) Application Projec

Private Activity Bonds SAFETEA-LU Section 11143 

Title XI Section 1143 of SAFETEA-LU amends Section 142(a) of the IRS code to allow the issuance of tax-exempt private activity bonds for highway and freight transfer facilities. Private sponsors are eligible. 

Up to $15 billion. Surface transportation projects (including highways, 

toll roads and truck only lanes), international bridges and tunnels receiving federal assistance under Title 23. Rail-truck transfer facilities receiving federal assistance under Title 23 or 49. 

Any size; plarge infrasprojects. 

GARVEE Bonds 23 USC 122 

Financing instrument that allows state to issue debt backed by future federal-aid highway revenues. Eligibility for freight projects is constrained by the underlying federal-aid programs that will be used for debt service. 63-20 Corporation may be eligible. 

N/A All Title 23 eligible projects. 

Intermodal facilities that are eligible for federal assistance under Title 23 or 49; NHS-eligible intermodal connectors. 

Typically laprojects or projects ($or larger). 

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Funding and Financing Tools 

In addition, while loan and credit enhancement programs can accelerate 

the time it takes to move projects from the planning stage to actual 

implementation, some states – particularly those that do not have many 

large urban areas or significant congestion problems – do not have a 

need to accelerate projects, making these types of programs less useful. 

In these areas, regional or statewide freight mobility can be effectively 

improved by using smaller projects that do not require innovative 

financing techniques. 

Other issues on the application of these financing tools include: 

• Financing Tools Require Dedicated Revenue – The financing 

tools described above still require a dedicated revenue source, 

such as tolls, user fees, or dedicated taxes, to repay debt. Some 

state DOTs and MPOs find it difficult to identify or develop such 

dedicated sources of revenue, limiting the use of these financing 

tools. 

• Some of These Federal Financing Tools Require State Enabling 

Legislation – While the use of innovative financing tools has 

proven to be very useful to accelerate and implement 

transportation investments, some states are unable to use these 

tools. For instance, several states have reached the limits on the 

amount of debt that can be incurred, whereas other states’

legislators have not specifically authorized the use of SIBs or 

GARVEE bonds. 

State Grant and Loan Programs for 

Freight Investments 

When it comes to the implementation of freight projects, several states 

have created innovative programs that provide ongoing capital 

resources to support freight-related improvements. Illustrative examples 

of some of these programs are described below.9 Table 2.3 shows a list 

of these programs, along with the type of freight modes that they 

support. 

 

9 The information in this section has been accumulated over the last few years. 

Some of these programs contain information that was collected for FHWA’s 

Funding and Institutional Options for Freight Infrastructure Improvement (report 

done in 2002). Updated information has been incorporated were available. 
Financing Freight Improvements 

Funding and Financing Tools 

Table 2.3 Illustrative State Grant and Loan Programs 

Program State Highway Rail Airport Port Intermodal

California Infrastructure and Economic Development Bank (I-Bank) CA z z z

California Maritime Infrastructure Bank (CMIB) CA z z

Florida Seaport Transportation and Economic Development Funding (FSTED) FL z z z z

Florida Strategic Intermodal System (SIS) FL z z z z z

Illinois Rail Freight Program (IRFP) IL z

Indiana Rail Service Fund/Grade Crossing Improvement Fund IN z z

Maine Industrial Rail Access Program (IRAP) ME z

Michigan Rail Loan Assistance Program (MiRLAP) MI z z

Michigan Freight Economic Development Program MI z

Michigan Local Grade Crossing Program MI z z

Michigan Grade Separation Loan Program MI z z

Minnesota Port Development Assistance Program MN z

Minnesota Rail Service Improvement Program MN z z

Mississippi Multimodal Transportation Improvement Program MS z z z

New York State DOT Industrial Access Program (IAP) NY z z

Ohio Rail Development Commission (ORDC) OH z

Oregon Port Revolving Fund (OPRF) OR z

Oregon Transportation Investment Act OR z

Pennsylvania Rail Freight Assistance Program (RFAP) PA z

Pennsylvania Airport Assistance Program PA z

Tennessee Aeronautics Transportation Equity Fund (TEF) TN z z z

Texas Rail Relocation and Improvement Fund TX z

Virginia Rail Enhancement Funds (VREF) VA z

Virginia Rail Industrial Access Program (RIAP) VA z z

Washington Freight Mobility Strategic Investment Board (FMSIB) WA z z z

Wisconsin Harbor Assistance Program WI z

Wisconsin Rail Freight Programs WI z z

CALIFORNIA INFRASTRUCTURE AND ECONOMIC 

DEVELOPMENT BANK (I-BANK) 

The California I-Bank was established in 1994 to finance public 

infrastructure and private investments that promote economic growth, 

revitalize communities, and enhance the quality of life throughout 

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Funding and Financing Tools 

California. I-Bank’s Infrastructure State Revolving Fund (ISRF) Program 

provides low-cost financing to public agencies for a wide variety of 

infrastructure projects, including city streets, county highways, state 

highways, drainage, water supply and flood control, educational 

facilities, environmental mitigation measures, parks and recreational 

facilities, port facilities, public transit, sewage collection and treatment, 

solid waste collection and disposal, water treatment and distribution, 

defense conversion, public safety facilities, and power and 

communications facilities. ISRF Program funding is available in 

amounts ranging from $250,000 to $10,000,000, with loan terms of up to 

30 years. The I-Bank issued a second series of ISRF Revenue Bonds in 

December 2005, worth $52.8 million. 

The interest rate is fixed for the term of financing and is set at 67 percent 

of a tax-exempt “A” rated bond with a weighted average life similar to 

the I-Bank financing. Projects must pay either a one-time origination fee 

of 0.85 percent of the ISRF financing amount, or $10,000, whichever is 

greater, and an annual fee of 0.3 percent of the outstanding principal 

balance. The origination fee may be included in the ISRF financing 

amount. There is no required match or leverage amount, and ISRF 

financing can be the sole source of financing for a project. 

CALIFORNIA MARITIME INFRASTRUCTURE BANK (CMIB) 

In 1994, California State legislation established CMIB as the first 

statewide, maritime-specific public investment bank in the United States. 

CMIB was developed to service the financing needs of projects not 

funded by the State of California or the private sector. The idea behind 

CMIB is that the bank would request a one-time grant from federal or 

state sources for initial capitalization. Once capitalized, CMIB’s potential 

tools for financing would include long-term, low-interest loans, and 

taxable and tax-exempt bonds. Funds provided through CMIB would be 

less restrictive than other state funding sources such as the State Harbors 

and Watercraft Revolving Fund (HWRF). For instance, HWRF funds 

cannot be used on a project for a private tenant on public land, but funds 

coming from the CMIB could be used for that purpose. 

CMIB has been heralded as an innovative financing mechanism in the 

maritime industry, but it has yet to gain the financial support needed to 

capitalize the bank and begin loaning to projects. Although, lacking in 

funding capacity, CMIB has been able to provide conduit financing using 

its status as a public agency with Joint Powers Authority (JPA). As a 
Financing Freight Improvements 

Funding and Financing Tools 

JPA, CMIB has been able to issue bonds to finance several port projects. 

To date, CMIB has issued $200 million in bonds for several port projects. 

FLORIDA SEAPORT TRANSPORTATION AND ECONOMIC 

DEVELOPMENT FUNDING (FSTED) 

Florida has 14 deepwater ports that serve interests in domestic trade, 

international cargo, and cruise ship operations. The seaports are 

represented by a trade association, the Florida Ports Council, which 

succeeded in getting Florida Senate Bill 1316 passed by the Florida 

Legislature in 1990. This bill established the state-funded Florida 

Seaport Transportation and Economic Development Program (FSTED). 

Since then, FSTED Program has been amended from the original $8 

million to provide $15 million annually in grants and a total of $25 

million annually to support bondable state revenues. State funding 

cannot exceed 50 percent of the total cost of a project. 

In order to be approved, a proposed project must be found to be 

consistent with the seaport’s comprehensive master plan and the local 

government’s comprehensive plan, be of demonstrable economic benefit 

to the State, and be found consistent with the Florida DOT’s adopted 

five-year work program. Candidate projects to be financed through 

bondable funding must also meet statutory eligibility and consistency 

requirements. Waterside dredging-related improvements require a 

75/25 port/local government match. Landside access improvements 

(off-port) and on-port bonded projects require a minimum 50/50 

contribution from recipient ports. 

FLORIDA STRATEGIC INTERMODAL SYSTEM (SIS) 

Florida’s SIS was established in 2003 to enhance Florida’s economic 

competitiveness by focusing limited state resources on those 

transportation facilities that are critical to Florida’s economy and quality 

of life. The SIS is a statewide network of high-priority transportation 

facilities, including the State’s largest and most significant commercial 

service airports, spaceport, deepwater seaports, freight rail terminals, 

passenger rail and intercity bus terminals, rail corridors, waterways, and 

highways. 

Legislation enacted in 2003 and 2004 identified SIS as the State’s top 

transportation priority and made all SIS and emerging SIS facilities, 

including those owned by local governments, independent authorities or 

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private sector partners, eligible for state funding. Florida DOT’s new 

investment policy is expected to dedicate about $2 billion per year for SIS 

and Emerging SIS improvement projects by 2015. SIS investments are 

expected to be funded through a combination of dedicated state funds, 

anticipated revenues, innovative financing, and joint funding by public 

and private partners. Florida DOT and its partners will work to expedite 

project delivery and provide sufficient flexibility in the planning and 

funding process to address unanticipated economic opportunities. 

Implementation of the SIS began in 2004 with the identification and 

funding of 36 projects on SIS connectors totaling $100 million. The 

improvements included additional capacity, geometry improvements, 

and ITS deployments on several SIS connectors; design of exclusive truck 

lanes to the Port of Tampa; and dredging at Port Manatee. 

ILLINOIS RAIL FREIGHT PROGRAM (IRFP) 

The IRFP was established in 1983 by the Illinois DOT to facilitate 

investments in rail service by serving as a link between interested parties 

and to channel government funds to projects that achieve statewide 

economic development. Illinois DOT generally provides low-interest 

loans to finance rail improvements and, in some cases, provide grants. 

The focus of the program is on those projects that have the greatest 

potential for improving access to markets and maintaining 

transportation cost savings, and those where state participation will 

leverage private investments to foster permanent solutions to rail service 

problems. A benefit/cost ratio is used to evaluate potential rail freight 

projects. The program uses federal and state funding to support this 

loan program. The federal funds came originally from the Local Freight 

Rail Assistance Program (LFRA), which was eliminated in the 1990s. 

State funding comes from General Fund appropriations. 

INDIANA RAIL SERVICE FUND (IRSF) AND GRADE CROSSING 

IMPROVEMENT FUND

The IRSF Program is administered by the Rail Section of Indiana DOT. 

The program provides grants and loans to assist with both the funding 

of rail infrastructure improvements and with the purchase of lines 

threatened with abandonment. The level of grant funding available for 

each project is determined based on project cost, IRSF balance, and the 

number of anticipated applicants in any funding cycle. The program is 

targeted towards short line railroads and port authorities (the program’s 

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Financing Freight Improvements 

Funding and Financing Tools 

funds are not available for use by Class I railroads). IRSF grants totaling 

more than $1.7 million were provided to short line railroads throughout 

the state for 2006. 

IRSF funds have been used to improve one-third of the short line track 

designated as “excepted” (i.e., lines that are in such poor condition that 

speed is limited to a maximum of 10 miles per hour (mph) to Class I 

standards). Program funds also can be used to provide loans to railroads 

for the purchase or rehabilitation of real or personal property that will be 

used by the railroad in providing rail transportation services; provide 

$50,000 annually to the Indiana DOT for rail planning activities; provide 

money for the high-speed rail development fund; provide grant funding 

for railroads owned or operated by a port authority; and provide grant 

funding to a Class II or III railroad for the rehabilitation of railroad 

infrastructure or railroad construction. The maximum funding provided 

to any one railroad is $200,000 and a minimum match of 25 percent is 

required. 

The Passive Grade Crossing Improvement Fund was established in 1997 

to upgrade at-grade crossings that do not have automatic train-activated 

warning devices to indicate the presence of an oncoming train. Since the 

commencement of the fund, more than $1.5 million in state funds has 

been made available to local jurisdictions and railroads, resulting in over 

2,000 passive grade crossing improvements in 36 counties. Examples of 

eligible improvements include crossbucks, advance warning signs, 

pavement marking, and overhead streetlights to illuminate a crossing, 

median barriers, and improvements for better sight distance. 

MAINE INDUSTRIAL RAIL ACCESS PROGRAM (IRAP) 

Maine DOT provides rail funding through IRAP. This program was 

designed to encourage economic development and employment growth; 

preserve essential rail service; enhance intermodal transportation; and 

preserve rail corridors for future transportation uses. The program, 

funded through revenues from General Fund bonds, provides up to 

50 percent of the estimated project cost. The 2003 transportation bond 

referendum contained $2.6 million for the IRAP. The Office of Freight 

Transportation administers the Program, and selects potential projects 

based on the ratings a project received for 10 criteria that measure the 

impact on the economy, the environment, and the transportation system. 

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Funding and Financing Tools 

MICHIGAN RAIL LOAN ASSISTANCE PROGRAM (MIRLAP) 

The MiRLAP is designed to help preserve and improve Michigan’s rail 

freight infrastructure through the provision of non-interest-bearing loans 

to fund eligible improvement projects with a repayment period of up to 

10 years. The MiRLAP operates as a revolving fund, with an estimated 

$1.8 million available for the current funding year. Examples of eligible 

projects include track rehabilitation, bridge and culvert repair, new 

construction, transload facilities, and rail consolidation projects. 

Projects are evaluated to determine their relative merit in conjunction 

with program goals. The selection process evaluates a project’s 

economic and safety benefits to the public, improvement of rail service to 

industrial and agricultural rail customers, elimination of grade crossings, 

and reduction in highway traffic congestion. All loans must be 

approved by the State Transportation Commission and the State 

Administrative Board. 

MICHIGAN FREIGHT ECONOMIC DEVELOPMENT PROGRAM

The Freight Services and Safety Division of Michigan DOT offers 

financial assistance to transportation companies, private companies, or 

local units of government in the development and/or expansion of 

business and industries. The program offers financial assistance in the 

form of loan/grants covering up to 50 percent of the rail freight portion 

of the project when the rail improvement facilitates economic 

development. All loans are made at a minimum interest rate of 2 percent 

below the prime rate then in effect. Priority is given to projects that can 

demonstrate multiple users or the potential for future public use, such as 

spur tracks into new or expanding industrial parks or transloading 

facilities. The number of jobs created or retained, total anticipated 

carloadings, and relative project cost are other important considerations. 

Over the 1995 through 2005 period, the program has funded 33 projects, 

for a total state investment of $13.1 million. 

MICHIGAN LOCAL GRADE CROSSING PROGRAM

The Local Grade Crossing Program provides local governmental units 

and railroad companies with assistance for developing and 

implementing projects to enhance motorist safety at public highwayrailroad grade crossings. Locations are selected using a statewide 

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Financing Freight Improvements 

Funding and Financing Tools 

prioritization system that identifies crossings where safety enhancements 

will have the greatest benefit to the motoring public. 

The selection process evaluates a number of factors, including the 

average numbers of vehicles and trains per day, the existing level of 

warning devices, and the five-year vehicle/train crash history. Funding 

assistance can be used for projects such as the installation of new active 

warning devices or the upgrade of existing devices. 

MICHIGAN GRADE SEPARATION LOAN PROGRAM

The Local Road/Railroad Grade Separation Loan Program was recently 

established to encourage and facilitate the construction of grade 

separations where essential local roads must intersect railroads. Loans 

are available to local road authorities for preliminary engineering and 

design (capped at 10-15 percent of project costs) and for 100 percent of 

the construction of new structures (overpasses and underpasses) that 

separate the grade between local roads and railroads. 

The Program is funded with $4 million in state funds. The interest rate 

varies based on payback term, ranging from 4-5 percent. All 

applications received are reviewed by Michigan DOT’s Freight Services 

and Safety Division. All recommended loans must be approved by the 

State Transportation Commission and the State Administrative Board. 

MINNESOTA PORT DEVELOPMENT ASSISTANCE PROGRAM 

(PDA) 

The Minnesota Legislature began funding the PDA in 1996. The PDA 

program is designed to assist private sector operators of public facilities 

through the provision of grants and loans paid out of a revolving fund. 

The program provides a state match of up to 80 percent and requires a 

local match of at least 20 percent for port improvements. The Ports and 

Waterways Section of the Minnesota DOT is responsible for the 

administration of the program. 

As of June 2005, the State of Minnesota had appropriated a total of $14.5 

million toward the PDA Program. Eligible projects include dredging of 

dock areas, dock wall reconstruction, building rehabilitation, and 

bringing facilities up to safety code. 

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MINNESOTA RAIL SERVICE IMPROVEMENT (MRSI) PROGRAM

The MRSI Program was established in 1976 to prevent the loss of rail 

service on lines subject to abandonment. As of 2003, the MRSI Program 

had received $14.5 million in state general funds and $25.5 million in 

general obligation bonds. 

The five subprograms that fall under the broader MRSI Program are 

presented below: 

1. Rail Line Rehabilitation Program – This Program provides lowor no-interest loans to rehabilitate and preserve rail lines. Upon 

completion of the rail rehabilitation project, the railroad repays the 

State on a negotiated per-car basis or at a predetermined fixed 

rate. The State provides up to 70 percent of the rehabilitation 

costs. 

2. Rail Purchase Assistance Program – This Program helps regional 

rail authorities purchase rail lines if a financial analysis shows that 

the line can operate at a profit, that purchase cost and necessary 

rehabilitation will not exceed benefits, and that the regional 

railroad authority is capable of operating the rail line or can 

contract with an operator to do so. 

3. Rail User and Rail Carrier Loan Guarantee Program – This 

program helps shippers and carriers to obtain loans for rail 

rehabilitation and capital improvements. The program guarantees 

up to 90 percent of the loan. 

4. Capital Improvement Loans – This Program lends rail users up to 

$200,000 or up to 100 percent of the project, whichever is less, to 

improve rail facilities. Capital improvement loans are available to 

improve rail service through construction or improvements to rail 

line segments (i.e., side track and team track connections); and to 

construct or improve facilities used to load, unload, store and 

transfer freight and commodities. Loans are repaid on a quarterly 

basis or a lump sum within 10 years. 

5. Rail Bank Program – This Program is used to acquire and 

preserve abandoned rail lines for future state, public, and 

commercial transportation; and for transmission needs (transit, 

trails, pipelines, etc.). 

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Funding and Financing Tools 

Minnesota DOT uses the capital improvement portion of the MRSI 

Program on a regular basis, with other program areas (rail line 

rehabilitation, rail purchase assistance, rail bank, and rail user and rail 

carrier loan guarantee) used on an as-needed basis. 

MISSISSIPPI MULTIMODAL TRANSPORTATION IMPROVEMENT 

PROGRAM

The Mississippi Multimodal Transportation Improvement Program was 

created in 2002 by the Mississippi Legislature, with the purpose of 

providing funds for nonhighway transportation projects. The legislation 

establishes funding percentages for each mode as follows: 38 percent for 

ports, 34 percent for airports, 16 percent for transit systems, and 

12 percent for rail. Mississippi DOT has included $5 million annually in 

its budget for FY 2005 and 2006. To date, the Program has funded 19 

port projects, 29 airport projects, 8 rail projects, and 35 transit projects. 

NEW YORK STATE DEPARTMENT OF TRANSPORTATION 

INDUSTRIAL ACCESS PROGRAM (IAP) 

The New York State IAP was designed to complement economic 

development projects where transportation access may pose a problem 

or may offer a unique opportunity to improve the viability of a project. 

Awards are made on a 60 percent grant, 40 percent interest-free loan 

basis, up to a maximum of $1 million or 20 percent of any annual 

appropriation. The loan must be paid back within five years, although 

the repayment terms are negotiable. IAP funds are not designed to be a 

substitute for private financing and are only available to those projects 

where attempts to obtain conventional (government and private) 

financing do not result in the necessary support on a timely basis. 

Eligible work includes design, acquisition of property, public access 

road/rail construction or reconstruction, curbing, sidewalks, traffic 

control and safety devices, drainage systems, landscaping, and similar 

work that may facilitate industrial access. IAP funds cannot be used for 

debt service payments or for costs incurred prior to the effective date of 

the agreements. 

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OHIO RAIL DEVELOPMENT COMMISSION (ORDC) 

The ORDC was established in 1994 within the Ohio DOT to provide 

assistance to companies for new rail and rail-related infrastructure. 

ORDC funding is used to promote the retention and development of 

Ohio companies through the use of effective rail transportation, and also 

is available to companies that are increasing existing rail operations 

within the State. ORDC works closely with the Ohio Department of 

Development and other public and private development-related 

organizations to provide assistance to companies. 

Grant funding is generally limited to projects where significant job 

creation or retention is involved (25 or more jobs). ORDC loan financing 

is available to qualified applicants even when jobs are not being created 

or retained. ORDC’s standard loan package is a five-year loan term and 

an interest rate that equals two-thirds of prime at the time of the loan 

closing. 

OREGON PORT REVOLVING FUND (OPRF) 

The OPRF was established in 1977 in order to provide long-term loans at 

below-market interest rates for the planning and construction of facilities 

and infrastructure that promote maritime shipping, aviation, and 

commercial/industrial activities of ports. The fund is focused towards 

small- and medium-sized projects that are not suitable to finance 

through a large bond program. The loan fund makes projects possible 

that otherwise would not be undertaken due to lack of funding. For 

instance, many ports developing commercial waterfront property would 

prefer to lease the land rather than sell it. Because businesses usually 

cannot qualify for a loan to build facilities on leased land, 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 OPRF loan program is administered by the Port’s Division of the 

Oregon Economic Development Department. Loan applicants are 

limited to total awards of not more than $3 million outstanding at any 

one time. The loan term can be as long as 20 years or the useful life of 

the project, with interest rates set by the Department at market rates, but 

not less than Treasury Notes of a similar term minus 1 percent. 

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Funding and Financing Tools 

OREGON TRANSPORTATION INVESTMENT ACT (OTIA) 

Over the last five years, the Oregon Legislation has enacted the OTIA I, 

OTIA II, and OTIA III to support Oregon’s transportation needs. 

OTIA I was passed by the 2001 Legislature with the goal of funding 

bridge replacement and highway improvement programs. OTIA I 

increased several Driver and Motor Vehicle fees to secure $400 million in 

bonds to increase lane capacity and improve interchanges ($200 million), 

repair and replace bridges ($130 million), and preserve road pavement 

($70 million). OTIA II, passed a year later, added $50 million for projects 

to increase lane capacity and improve highway interchanges, $45 million 

for additional bridge projects, and $5 million to preserve road pavement. 

The $500 million in bonds from the two acts was used to leverage $172 

million in matching funds from local governments. 

OTIA III, signed into law in 2003, provides about $2.5 billion to improve 

Oregon’s highways, roads, and streets over a 10-year period. Of the 

total, $1.6 billion will be used to repair and replace bridges, $361 million 

to preserve road pavement, and $500 million to increase lane capacity 

and improve interchanges. Of the $500 million for capacity and 

interchange improvements, $100 million was directed to projects that 

would enhance freight mobility, access to industrial lands, and/or access 

to job creation sites. The program is supported by increases in title, 

registration, and other fees authorized by the legislation, as well as 

transfer payments of $25 million from Oregon DOT’s annual state 

modernization program budget of about $56 million. 

Projects for the OTIA program are selected through an extensive public 

input process. Local governments and area commissions on 

transportation work together to forward project lists to the Oregon 

Transportation Commission, which approves the final list. For OTIA III, 

Oregon DOT worked with local governments and the Oregon Freight 

Advisory Committee to assist in identifying bridges that are important to 

freight movements and to identify projects that enhance freight mobility 

and access. 

PENNSYLVANIA RAIL FREIGHT ASSISTANCE PROGRAM (RFAP) 

The RFAP provides financial assistance for investment in rail freight 

infrastructure through grants of up to $250,000 or 70 percent of rail 

project costs, whichever is less. The purpose of the Program is to 

44 
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preserve essential freight rail service where economically feasible, and to 

preserve or stimulate economic growth through new or expanded rail 

service. Railroads, shippers, and local development agencies can apply 

for grants through RFAP. The Program is funded with appropriations 

from the general fund and is administered by the Bureau of Rail Freight 

within the Pennsylvania DOT. Eligible projects include both 

maintenance of existing infrastructure and new railroad construction, 

but funding cannot be used to cover the cost of land, rights of land, 

buildings, or building materials to construct a new building. 

PENNSYLVANIA AIRPORT ASSISTANCE PROGRAM

Three major programs are administered under Pennsylvania DOT’s 

Bureau of Aviation: Airport Development grants (including the Federal 

Aviation Administration Block grants); Real Estate Tax Reimbursement 

grants; and Capital Budget grants. While the FAA has traditionally 

provided AIP funds directly to airports, it offers states block grants for 

nonprimary airports. Act 164 of 1984 authorized the Bureau of Aviation 

to provide assistance to all public airports, including those privately 

owned, and also provided for expanded airport development and real 

estate tax relief to public airports. These funds are needed to ensure the 

growth and development of Pennsylvania’s airport system. 

The FAA Block Grant, 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. 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. 

TENNESSEE AERONAUTICS TRANSPORTATION EQUITY FUND 

(TEF) 

TEF was created in 1986. This fund allocates receipts from taxes 

collected from transportation fuels based on the actual annual individual 

collection percentage for each mode. Aviation accounts for the largest 

share, followed by rail and waterways. The 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 
Financing Freight Improvements 

Funding and Financing Tools 

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. 

All rail funds were spent on the State’s 19 short line railroads. In 

addition to funds received from the TEF, the Tennessee DOT Rail 

Program receives a $3.5 million annual transfer from user fees collected. 

These funds also are used primarily to support the State’s short line 

railroads. 

TEXAS RAIL RELOCATION AND IMPROVEMENT FUND

In November 2005, voters in Texas approved the creation of the Texas 

Rail Relocation and Improvement Fund. The fund was created to 

finance or partially fund the relocation and improvement of both 

privately and publicly owned passenger and freight rail facilities. 

Eligible projects should: 1) relieve congestion on public highways; 

2) enhance public safety; 3) improve air quality; and 4) expand economic 

opportunity. The Texas Transportation Commission administers the 

fund and is authorized to issue and sell obligations that will be paid 

from fund revenues. No funds have been appropriated yet to establish 

the fund. 

VIRGINIA RAIL ENHANCEMENT FUNDS (VREF) 

VREF was established in 2005 to support improvements for intercity 

passenger, commuter, and freight rail throughout the State. The VREF 

provides $23 million in annual, dedicated funding for passenger or 

freight rail improvements. Use of these funds requires a minimum 

matching contribution of at least 30 percent, which must come from 

nonstate sources such as railroads, local governments, or regional 

authorities. 

Projects are selected by the Commonwealth Transportation Board based 

upon the recommendations of the Rail Advisory Board. Potential uses of 

the VREF could include the creation of additional track and capacity, 

track and infrastructure improvements, improved intermodal facilities, 

and advancement of passenger rail initiatives. Eligible expenses may 

include preliminary service, engineering, or feasibility study; final 

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Funding and Financing Tools 

engineering; acquisition, lease, or improvement of rights-of-way or 

facilities; environmental mitigation directly related to the project; site 

preparation, including grading, drainage, and relocation of utilities; 

acquisition, lease, or improvement of railways, including signal and 

communications equipment; acquisition, lease, or improvement of 

railroad equipment; and acquisition, lease, or improvement of rolling 

stock. However, at least 90 percent of VREF funds must be spent on 

capital improvements. 

VIRGINIA RAIL INDUSTRIAL ACCESS PROGRAM (RIAP) 

Virginia’s RIAP was established in 1987 to provide 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. 

Funds are allocated by the Commonwealth Transportation Board. 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 2004-2005, the program had funds totaling $1.5 million available for 

distribution to localities. The funds that are not used do not carry over 

into the next year. Instead, they are used for highway industrial access 

projects. 

WASHINGTON FREIGHT MOBILITY STRATEGIC INVESTMENT 

BOARD (FMSIB) 

FMSIB provides matching funds for freight improvement projects of 

regional or statewide significance. Every other year, the board receives a 

slate of potential freight improvement project proposals from cities, 

towns, counties, ports, and Washington DOT. Potential projects must 

meet three important criteria: 

1. The project must be included in an established regional or state 

transportation plan; 

2. The project must fall on one of Washington’s defined Strategic 

Freight Corridors (which are updated every two years by 

Washington DOT) or emerging corridors; and 

3. The project must provide a minimum 35 percent match. 

47
Financing Freight Improvements 

Funding and Financing Tools 

The FMSIB Capital Account was established in 2005 to receive levies 

from license fees, weight fees, motor vehicle or multimodal fees and 

private funds. The 2006 funding recommendations are estimated at over 

$350 million, providing matching funds for a total investment of almost 

$4 billion. 

WISCONSIN HARBOR ASSISTANCE PROGRAM (HAP) 

Wisconsin’s Legislature created the HAP in 1979 to assist harbor 

communities along the Great Lakes and Mississippi River in maintaining 

and improving waterborne commerce. The Program provides grants of 

up to 80 percent of total project cost to publicly owned harbors in 

Wisconsin for facility improvement projects. Harbor projects typically 

include dock reconstruction, mooring structure replacement, dredging, 

and the construction of facilities to hold dredged material. 

To be eligible for funding, the project must: benefit facilities that are 

used for cargo transfer, ship building, commercial fishing, or regular 

ferry service; be a local unit of government or a private owner of a 

harbor facility; pass a rigorous benefit/cost analysis; and have been 

identified in a current Three-Year Harbor Development Plan. Project 

selection criteria include the economic impact of the project; type and 

urgency of the project; and priority of the project. 

Recent grants include $2 million toward a total project cost of $2.6 

million for the construction of a new dock wall for the City of 

Manitowoc, and $1 million for a dock facility in Milwaukee for the Lake 

Express high-speed ferry. 

WISCONSIN FREIGHT RAIL PROGRAMS

The Wisconsin DOT has been providing freight rail assistance since 1977. 

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. Currently, two programs 

operate under this authority: the Freight Rail Infrastructure 

Improvement Program (FRIIP) and the Freight Rail Preservation 

Program (FRPP). 

48 
Financing Freight Improvements

Funding and Financing Tools 

FRIIP loans enable the State to encourage a broad array of improvements 

to the rail system, particularly on privately owned lines. It also provides 

funding for other rail-related projects such as loading and transloading 

facilities. Since 1992, $79 million in FRIIP loans have been awarded. The 

available funding is from repayments of prior loans. The FRIIP provides 

up to 100 percent loans for rail projects that connect an industry to the 

national railroad system; make improvements to enhance transportation 

efficiency, safety, and intermodal freight movement; accomplish line 

rehabilitation; and develop the economy. 

FRPP provides grants to local units of government, industries, and 

railroads for the purpose of preserving essential rail lines and 

rehabilitating them following purchase. Since 1980, under the original 

Rail Assistance Program and later FRPP, some $80 million in grants have 

been awarded for rail acquisition and rehabilitation projects. The 2005-

2007 state budget provides $6.5 million in bonding authority for the 

program. The FRPP provides grants up to 80 percent of the cost to 

purchase abandoned rail lines in an effort to continue freight service, or 

for the preservation of the opportunity for future rail service; and to 

rehabilitate facilities, such as tracks or bridges, on publicly owned rail 

lines. 

Other Funding Methods and Financing Tools 

The previous sections provided an overview of the federal and state 

programs that are available to fund freight improvements. This section 

covers other ways to raise dollars to fund freight improvements and/or 

match grant funds, grouped in three major categories: 

1. Funding Sources, which refers to dedicated revenue sources to 

support freight investments, either as “pay-as-you-go” funding, or 

to support debt; 

2. Financing Tools that use debt; and 

3. Institutional Arrangements, which include public-private 

partnerships and tax-exempt corporations. 

FUNDING SOURCES

User Fees/Tolls 

User fees commonly provide a dedicated stream of revenue to repay the 

loans or bonds issued to support freight investments. For instance, 

49
Financing Freight Improvements 

Funding and Financing Tools 

50 

railroads pay fees on the Alameda Corridor (per container) or the 

Shellpot Bridge (per rail car) for using the new infrastructure.10

Truck-only toll (TOT) lanes have been studied in the Los Angeles region 

on SR-60 and I-710, both of which are heavily used by trucks accessing 

the Ports of Los Angeles and Long Beach. In 2005, the Georgia State 

Road and Tollway Authority published a study that proposed the 

construction of TOT lanes in the Atlanta Metropolitan Area. These 

studies have paved the way for potential exploration of TOT lanes on 

heavily congested truck routes in urban corridors, and provide a 

potential innovative use of toll revenue to implement freight 

infrastructure. In May 2006, the Georgia DOT signed a $38.5 million 

agreement with Georgia Transportation Partners to develop a concept 

for the expansion of I-75 and I-575 northwest of Atlanta. Georgia DOT 

estimates the project cost at $1.8 billion (2004 dollars), and includes TOT, 

high-occupancy toll lanes, bus rapid transit station, and additional 

capacity. 

Dedicated Taxes 

The use of dedicated taxes at the state and local level for transportation 

investments has increased significantly in the past few years. Highway 

projects are traditionally funded with motor fuel taxes levied at the state 

level. Local governments have used property taxes to fund local 

transportation investments, because such taxes are the primary revenue 

source at the local level. However, in recent years, local governments 

have implemented other local option taxes to support transportation 

investments, mainly for highway and transit projects. 

The ReTRAC project in Reno, Nevada provides an example of local 

government dedicating taxes for freight investments. The City of Reno 

dedicated a one-eighth-cent sales tax and a 1 percent hotel occupancy tax 

as part of a package of dedicated revenue sources to repay a TIFIA loan. 

Special Taxing and Assessment Districts 

Special taxing or assessment districts capture the benefits of particular 

improvements. Residents and/or business owners agree to pay 

additional property taxes that are allocated for specific improvements. 

In some instances, the assessment district is dissolved once the proposed 

 

10 Projects referenced in this section are discussed in more detail in Section 3.0 – 

Case Studies. 
Financing Freight Improvements

Funding and Financing Tools 

improvements are completed. Special taxing or assessment districts are 

commonly used for transit investments, although they have been 

increasingly used for general highway or port, and even for freight rail 

investments. 

Revenues from special assessment districts can be applied to the full 

value of the subject property, or used as a tax increment financing 

technique in which bonds are issued to finance public infrastructure 

improvements, and repaid with dedicated revenues. These 

improvements encourage redevelopment, which in turn increases the 

value of property surrounding the redeveloped area. The incremental 

property taxes that are used to pay for these bonds are collected within 

the boundaries of a “tax increment district.”

Equity and In-Kind Contributions 

Private sector funding for freight improvements could be in the form of 

cash or in-kind contributions. For the CREATE project in Chicago, 

Illinois the railroads pay a share of the total project costs based on the 

anticipated railroad benefits from the project. In the case of in-kind 

contributions, private entities (such as railroads) donate land or 

professional services, which are included as part of the project costs. 

Local governments often donate right-of-way for highway projects, 

which accounts for the non-federal share for federally funded projects. 

FINANCING TOOLS

Public 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 or tolls. In the case of the Alameda Corridor 

project in California, user fees were pledged both to the TIFIA loan and 

to debt issuances for the project. Lease revenue bonds or certificates of 

participation 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. 

51
Financing Freight Improvements 

Funding and Financing Tools 

Special tax district bonds are paid from special charges added to 

property tax bills, and only beneficiaries pay the special assessment. As 

discussed earlier, an important subclass 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 a long-term development perspective to realize significant 

funding levels. 

Tax-Exempt Facility Bonds/Private Activity Bonds 

Tax-exempt facility bonds have been extensively used to finance port 

and airport capital projects. SAFETEA-LU amended the IRS code to 

allow these type of bonds for highway and freight transfer facilities. 

Tax-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 for individuals and corporations. With 

this qualified status and the accompanying tax benefit to investors, 

exempt facility bonds can be offered at a lower interest rate, thus 

providing the issuer with considerable financing cost savings. 

INSTITUTIONAL ARRANGEMENTS

Joint Development 

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 guidebook, joint development is defined as any formal 

arrangement between a public authority and a private organization 

(beyond just ports) that involves either private sector payments to the 

public authority, or the private sector sharing project capital costs. This 

definition essentially describes two classes of joint development 

strategies: 1) revenue-sharing arrangements, and 2) cost-sharing 

arrangements: 

Revenue-Sharing Arrangements/Leases – For public ports in the United 

States, 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, there are 

52 
Financing Freight Improvements

Funding and Financing Tools 

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 and assure a steady base revenue base for 

the port. Second, a long-term lease relationship allows for specifying 

appropriate risk sharing between the public and private sector. 

Other lease transactions, include sale/lease-back arrangements, in which 

assets are sold and then leased back by the seller. An example of such 

transaction is the Southern Tier Rail Rehabilitation project, in which 

Norfolk Southern transferred the rail line title to a rail authority for 10 

years and then leased the rail line from the rail authority. The purpose 

of this transaction was to allow for a tax abatement on the rail line over 

the lease period. 

Cost Sharing/Voluntary Agreements – 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 enable capital costs funded from the port’s revenues to be 

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. 

Public-Private Partnerships for Freight Investments 

Public-private partnerships (PPP) refer to contractual agreements formed 

between a public agency and private sector entity that allow for greater 

private sector participation in the delivery of transportation projects. 

The three principal aspects of private sector participation are: 1) Project 

Delivery (development phase through design and construction); 

2) Project Management (long-term operational and maintenance 

responsibilities); and 3) Project Financing (raising the capital necessary to 

fund the project). Some PPP approaches involve just one of these 

services (such as design-build contracting for a public-sponsored project, 

such as highway construction), whereas others may involve all three 

(e.g., user-charge project financings under long-term private 

concessions). 

53
Financing Freight Improvements 

Funding and Financing Tools 

In the case of freight investments, PPPs are essential for project 

implementation for several reasons. First, the private sector is heavily 

invested in freight transportation, whether it is through ownership of 

infrastructure or by facilitating the movement of goods. Second, unlike 

other transportation investments, much of the freight investments are on 

private property, which makes it difficult for allocation of public 

funding. Third, the efficient movement of goods is important to both the 

private and public sectors. Overall, the creation of partnerships can 

facilitate freight investments by leveraging scarce resources, and 

accelerating the benefits realized through these investments. 

Public-Private Partnership Options 

Traditionally, private sector participation in surface transportation 

projects was limited to either planning, design, or construction contracts. 

Figure 2.1 shows the different options of PPPs. These PPP arrangements 

provide for expanded participation and responsibility from the private 

sector in traditionally public investments on transportation. A brief 

description of these PPP options is provided below. 

Design

Build

Finance

Operate

(DBFO)

Design

Bid

Build

Private

Contract

Fee Service

Design

Build

Build

Operate

Transfer

(BOT)

Build

Own

Operate

(BOO)

Public Responsibility Private Responsibility

Source: FHWA.

Figure 2.1 Public-Private Partnership Options

• Design-Bid-Build. This is the traditional project delivery 

approach for public works. The design-bid-build model separates 

design and construction responsibilities by awarding them to an 

independent private design engineer and a separate private 

contractor. The design engineering firm is responsible for 

completing the final project design, including plans, specifications, 

and supporting documentation. During the bidding phase, 

contractors submit competitive bids, which are reviewed by the 

public entity. Once a contractor is selected (based on the lowest 

bid), the project moves into the construction phase. Once 

construction is completed, the facility is operated and maintained 

54 
Financing Freight Improvements

Funding and Financing Tools 

by the public sector. The project design and construction is 

financed by the public sector. 

• Private Contract Fee Services. For this PPP option, the public 

sector transfers the responsibility for services that would be 

typically performed in-house to the private sector. Two functions 

that the public sector has transferred to private sector partners as 

contract fee services are operations and maintenance of publicowned facilities, and program and financial management. 

• Design-Build. The design-build method combines two typically 

separate services into one single contract. The public sector owns 

the facility under construction, and retains responsibility for 

financing, operating, and maintaining the project. It is usual for 

the project sponsor to have completed a certain level of 

preliminary engineering and project definition (e.g., preliminary 

design at about 10-15 percent complete) before letting the project 

for bids. 

• Build-Operate-Transfer/Design-Build-Operate-Maintain This 

model (also known as “turnkey” procurement) combines designbuild with operations and maintenance. A single contract is 

awarded to a private entity that would design, construct, and 

operate/maintain the project. Once the contract expires, the 

facility is turned over to the public owner. The public sector can 

decide on whether to extend or rebid the operations and 

maintenance contract or take over the operations and maintenance 

responsibilities. For this model, the financing responsibility is 

retained by the public sector. 

• Design-Build-Finance-Operate. With this approach, the 

responsibilities for designing, building, financing, and operating 

are bundled together and transferred to private sector partners. 

Arrangements can vary greatly, especially concerning the degree 

of financial responsibilities that are actually transferred to the 

private sector. For this model, a project could be entirely financed 

by either the public sector or the private sector or a combination of 

both. A common trait across all Design-Build-Finance-Operate 

projects is that they are either partly or wholly financed by debt 

that is backed by revenue sources dedicated to the project. Direct 

user fees are the most common revenue source. However, others 

55
Financing Freight Improvements 

Funding and Financing Tools 

56 

ranging from shadow tolls11 to vehicle registration fees and other 

dedicated revenues. Future revenues are leveraged to issue bonds 

or other debt that provide funds for capital and project 

development costs. They also are often supplemented by public 

sector grants in the form of money or contributions in kind, such 

as right-of-way. In certain cases, private partners may be required 

to make equity investments as well. Ownership of the facility 

remains in the public sector. 

• Build-Own-Operate. With this model, a private company is 

granted the right to develop, finance, design, build, own, operate, 

and maintain a transportation project for a specified concession 

period. Public sector involvement is limited to assuring 

performance of the concession provisions. 

The concepts presented above describe PPPs in terms of both project 

implementation and financing. In terms of funding/financing schemes 

specifically for freight infrastructure projects, the PPP projects that are 

presented in Section 3.0 can be grouped in the following categories: 

• Public sector provides funding up-front through grants and 

loans and the private sector pays back through user fees. 

Examples: Sheffield Flyover/Argentine Connection, Ohio 

Southern Railroad Project, Shellpot Bridge. 

• Investment fully paid by the public sector and the private sector 

provides in-kind contributions. Example: North Carolina 

Railroad Improvement Program. 

• Public-Private Funded, where the funding share determined by 

benefits realized by each sector. Example: CREATE. 

• Public-Private Funded, where the funding share determined 

through agreements between partners. Examples: FAST 

Corridor, ReTRAC. 

 

11 Shadow tolls refer to public sector “toll” payments to the private operator for 

the use of a facility. Drivers do not pay tolls for using the roadway. Instead, 

the public sector make payments based on the volumes and service levels. 
57

Financing Freight Improvements

Funding and Financing Tools 

• Concessions (Private sector financing and ownership) – 

Example: Texas Pacifico Rail Line. 

• Operations and Maintenance or warrants by private sector 

Examples of Recent PPP Solicitations 

In Virginia, the Public-Private Transportation Act of 1995 allows private 

entities to enter into agreements to construct, improve, maintain, and 

operate transportation facilities. The Virginia DOT has implemented 

several highway projects through public-private partnerships. Recently, 

Virginia DOT began soliciting proposals for the U.S. Route 460 Corridor 

Improvements Project. This corridor carries significant truck volumes, 

and traffic on this road, mostly generated by the ports located in the 

Hampton Roads area, is expected to grow significantly in the future. 

Additionally, the U.S. Route 460 corridor is considered an excellent 

location for additional warehouse and distribution centers needed in the 

region. Through this PPP, Virginia DOT is seeking a private entity to 

develop and/or operate the new roadway. All or most of the project 

finance is expected to come from the private sector, and may include 

tolling or other innovative finance methods. 

The Port of Miami Tunnel will provide access between the Seaport, I-395, 

and I-95 in Miami. Currently, the Port Bridge is the only connection 

between the Seaport and the mainland. The Florida DOT plans to 

implement this project through a concession, in which a private entity 

will be responsible to design, finance, build, operate, and maintain the 

tunnel. In return, Florida DOT will provide annual “availability 

payments” based on the availability of the project for use by trucks and 

buses and such other factors as safety and compliance with other 

performance standards.12 Florida DOT recently selected three qualified 

“proposers,” who are eligible to submit project proposals by March 2007. 

Final decision and contract award to a concessionaire is expected by the 

spring of 2007. 

As mentioned earlier, Georgia DOT recently signed a $38.5 million 

agreement with Georgia Transportation Partners to develop the concept 

for the I-75 and I-575 expansion project in northwest Atlanta. This is the 

 

12 Testimony of Karen J. Hedlund, Partner of Nossaman, Guthner, Knox and Elliot 

LLP, before the Highway, Transit, and Pipelines Subcommittee on 

Transportation and Infrastructure, U.S. House of Representatives, May 24, 2006. 

Port of Miami 

Source: Florida Department of 

Transportation, The Port of 

Miami Tunnel Project, http:// 

www.portofmiamitunnel.com. 
Financing Freight Improvements 

Funding and Financing Tools 

third project that has been submitted to Georgia DOT under Georgia’s 

2003 Public-Private Initiative law, which allows private entities to submit 

unsolicited proposals for highway projects, but is the first to advance 

into concept development. The expansion project has been estimated at 

$1.8 billion, including TOT lanes, HOT lanes, bus rapid transit stations, 

and roadway widening. The concept development contract awarded to 

Georgia Development Partners includes preliminary engineering and the 

development of a financial plan and an investment-grade traffic and 

revenue study. 

Tax-Exempt Corporations 

A common barrier to project implementation by the private sector is the 

high costs of financing projects. The creation of tax-exempt corporations 

allows for the issuance of debt at lower interest rates, reducing the 

financing costs of the project. In recent years, a couple of highway 

projects have been financed through the creation of 63-20 Nonprofit 

Corporations. A 63-20 Nonprofit Corporation is an entity created under 

IRS Rule 63-20, which allows it to issue tax-exempt debt on behalf of 

private project developers. The Pocahontas Parkway in Virginia and the 

Southern Connector in South Carolina were partially financed through 

the issuance of tax-exempt debt issued by 63-20 corporations specifically 

created for these projects. 

The Missouri Transportation Corporation statute is an example of 

legislation created to facilitate major investments through the creation of 

tax-exempt corporations. Missouri statute permits the formation of 

transportation corporations for the purposes for issuing tax-exempt debt. 

One recent project that has taken advantage of this statute is the 

widening of the Highline Bridge and the construction of a railroad 

flyover in the Argentine area of Kansas City. For the Argentine 

Connection, the Missouri Highway and Transportation Commission 

created Westside Intermodal Transportation Corporation, which issued 

about $46 million in bonds to fund the project. The Highline Bridge 

spans the Kansas River, and its rehabilitation allowed for increased train 

speeds and a second line to run across the bridge. The combined cost of 

the two projects was about $120 million. The bonds will be repaid 

through user fees paid by the railroads operating in the area. 

The railroad flyover was developed through a public-private partnership 

between BNSF, KC Terminal Railway, the State of Missouri, and the 

unified government of Kansas City. The two-year project was funded in 

the same way as the Sheffield Flyover, which opened in July 2000. 

58 
59

Financing Freight Improvements

Case Studies of Freight Financing 

3.0 Case Studies of 

Freight Financing 

This section provides case studies of financing strategies used for 

different types of freight-related projects. Table 3.1 lists the case studies 

discussed in this section, by type of freight need addressed by each 

project. Table 3.2 lists the same case studies, by project size and type of 

funding and financing tools used for project implementation. The case 

studies are organized by state. 

Arkansas 

LITTLE ROCK PORT AUTHORITY SLACKWATER HARBOR 

IMPROVEMENTS

Location: Little Rock, Arkansas 

Project Type: Rail construction, highway access to port, dock 

construction, intermodal facility 

Project Cost: $11.8 million 

Project Sponsors/Partners: Arkansas State Highway Commission, 

Arkansas Department of Economic Development, City of Little Rock, 

and Little Rock Port Authority 

Federal Agencies: FHWA, U.S. Army Corps of Engineers, and Economic 

Development Administration 

Project Status: Projects completed between 2002 and 2003 

Project Description: The Little Rock Port Authority Complex is a freight 

intermodal facility, consisting of an industrial park, a Class III railroad, a 

riverport terminal, and a slackwater harbor. Due to the lack of funding, 

the harbor area had remained undeveloped. The Slackwater Harbor 

Improvements included: 

• Railroad line extension; 

• Highway access improvements; 

• Dock construction and paved working area; 
Financing Freight Improvements 

Case Studies of Freight Financing 

• Warehouses; 

• Water and sewer lines; 

• Major drainage structures; 

• Product staging area, and 

• Bank stabilization. 

The rail and highway components of the project have enhanced cargo 

shipments at this facility by increasing throughput capacity. The rail line 

was extended to the harbor, with a loop back to the main line. The 

highway improvements included the connection of Harbor Drive to 

Frazier Pike Road, providing more direct access between the industrial 

park and the harbor. 

Funding Sources: The Little Rock Port Authority Slackwater Harbor 

improvements were funded through a combination of federal, state, city, 

and port funding. The High-Priority Projects program under TEA-21 

included $750,000 for road improvements and $4.0 million for port 

development and the rail improvements. The funding partners and 

contributions to the project: 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Federal $7.2 FHWA; U.S. Army Corps of Engineers; 

Economic Development Administration 

State $1.1 Department of Economic Development; 

Arkansas State Highway Commission 

City of Little Rock $1.5 

Little Rock Port Authority $2.0 

Source: AASHTO, 2005 Freight Transportation Achievers, http://freight.

transportation.org/freight_awards.html. 

Additional Information: 

• Little Rock Port Authority – http://lrport.dina.org 

• Arkansas State Highway Commission – 

http://www.arkansashighways.com 

• AASHTO 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

60 
FinancinFunding 

Table 3.1 Case Studies by Project Type 

Highway Rail Air 

Project Name State 

Page Number 

Truck Lanes/Routes 

Emission Reduction/Fuel Savings 

Bridge 

Highway Improvements

/

Capacity 

Highway Access to Port/

Airport/Intermodal 

Railroad Rehabilitation 

Railroad Construction 

Railroad Relocation 

Rail Terminal/Yard 

Freight/Commuter 

Rail Separation 

Highway-Rail Crossing 

Upgrade/Elimination 

Rail Crossing Separation 

Vertical/Horizontal Clearance 

Rail Access to Port/

Airport/Intermodal 

Airport Expansion 

Barge Service 

Little Rock Port Authority Slackwater Harbor Improvements AR 59 z z Alameda Corridor CA 67 z z zPort of Humboldt Dredging CA 68 Port of San Diego Land Acquisition CA 69 Port of San Diego West Terminal Airport Expansion CA 70 zStockton Airport Freight Terminal CA 71 z zDenver International Airport Cargo Facility CO 72 z Shellpot Bridge Replacement DE 74 z zPalm Beach Skypass Bridge Construction FL 75 z zBensenville Rail Yard Improvements IL 76 z z zChicago Area Consolidation Hub IL 77 z z z CREATE IL 79 z z z z zI-55 Access to CenterPoint Intermodal Center at Deer Run IL 81 z zKedzie Avenue Access Road/Stoplight IL 82 z zRiverport Railroad Rehabilitation and New Facilities IL 83 z z Rochelle Intermodal Center/UP Global III IL 84 z zDixie Siding Installation IN 85 zIowa Interstate Railroad Rehabilitation and Locomotive Purchase IA 87 z Marysville Rail Projects KS 88 z zWidening of I-64, I-65, and I-75 KY 89 zPort of South Louisiana Rail Spur Upgrade LA 90 zTchoupitoulas Corridor Improvements LA 91 z z z zAuburn Intermodal Freight Facility ME 93 Calais/St. Stephen Commercial Vehicle Border Crossing ME 94 z z Guilford Intermodal Yard – Lifting Equipment Lease ME 96 Luce County Industrial Park Rail Project MI 97 z z zSheffield Flyover and Argentine Connection MO-KS 98 zNorth Carolina Railroad Improvement Program NC 100 z z
Financing Freight Improvements 

Funding and Financing Tools 

Table 3.1 Case Studies by Project Type (continued) 

Highway Rail Air 

Project Name State 

Page Number 

Truck Lanes/Routes 

Emission Reduction/Fuel Savings 

Bridge 

Highway Improvements

/

Capacity 

Highway Access to Port/

Airport/Intermodal 

Railroad Rehabilitation 

Railroad Construction 

Railroad Relocation 

Rail Terminal/Yard 

Freight/Commuter 

Rail Separation 

Highway-Rail Crossing 

Upgrade/Elimination 

Rail Crossing Separation 

Vertical/Horizontal Clearance 

Rail Access to Port/

Airport/Intermodal 

Airport Expansion 

Barge Service 

ReTRAC NV 101 z zRed Hook Container Barge NY 103 zSouthern Tier Extension Railroad Restoration Project NY 105 z zAlbany Express Barge 

NYNJ 106 z

Portway NJ 108 z z zOhio Southern Line Rehabilitation OH 109 z z Rickenbacker Intermodal Facility Construction OH 111 Columbia Slough Bridge to Intermodal Yards OR 112 z zImproving Fuel Economy and Air Quality on the I-5 Corridor 

ORCAWA 114 z

DVRPC CMAQ Competitive Program 

PANJ 116 z z z 

Freight Rail Improvement Project RI 118 z z zAir Freight Regional Hubbing Facility SC 119 z Cooper River Bridge Replacement SC 121 z zTravel Center Electrification Units TN 122 zRailroad Crossing Reliability Partnership Program TX 123 zTexas Pacífico Rail Line TX 125 z Heartland Corridor VA-WV-OH 126 z z FAST Corridor WA 128 z z z zHyundai Terminal at Port Tacoma WA 131 Port of Tacoma Overpass Construction WA 132 z z zDidion Milling Project and Rail Line Improvements WI 133 z Port of Superior General Mills S/X Elevator Project WI 135 

62
Financin

Funding 

Table 3.2 Case Studies by Funding Type/Project Size 

Federal Funds/Grants 

Federal 

Financing Tools 

State/Local 

Funds/Grants 

State/Local 

Financing Tools Other 

Project Name State 

Cost 

(Millions of Dollars) 

IM 

NHS 

STP 

CMAQ 

Rail-Highway 

Grade Crossing 

USACE Harbor 

Maintenance 

EDA 

FAA Airport 

Improvement 

FHWA Earmarks 

Other Federal Grants 

TIFIA 

SIB 

RRIF 

GARVEE 

State Funds/Grants 

Local Funds/Grants 

Port Funding 

Airport Funding 

State Loan 

G.O. Bonds 

Revenue Bonds 

Tax-Exempt Bonds 

Private Sector 

Uncommitted/ 

kdi

Project Cost – Less than $5 million Luce County Industrial Park Rail Project 

MI 0.6 z z z z

Gilford Intermodal Yard – Lifting Equipment Lease 

ME 1.2 z z

Travel Center Electrification Units TN 1.3 z zPort of Superior General Mills S/X Elevator Project 

WI 1.4 z z

Dixie Siding Installation IN 1.5 z z zStockton Airport Freight Terminal CA 1.7 z z z zPort of South Louisiana Rail Spur Upgrade 

LA 2.7 z z z

Improving Fuel Economy and Air Quality on the I-5 Corridor 

ORCAWA 3.3 z z z z

DVRPC CMAQ Competitive Program PA-NJ 4.4 z z z zKedzie Avenue Access Road/Stoplight IL 4.7 z zAuburn Intermodal Freight Facility ME 4.8 z z zProject Cost – $5 million to $15 million Riverport Railroad Rehabilitation and New Facilities 

IL 5.5 z

Albany Express Barge NY-NJ 5.7 z zColumbia Slough Bridge to Intermodal Yards 

OR 6.0 z z z

Didion Milling Project and Rail Line Improvements 

WI 8.7 z z z

Rochelle Intermodal Center/UP Global III 

IL 9.8 z z z
Financing Freight Improvements 

Funding and Financing Tools 

Table 3.2 Case Studies by Funding Type/Project Size (continued) 

Federal Funds/Grants 

Federal 

Financing Tools 

State/Local 

Funds/Grants 

State/Local 

Financing Tools Other 

Project Name State 

Cost 

(Millions of Dollars) 

IM 

NHS 

STP 

CMAQ 

Rail-Highway 

Grade Crossing 

USACE Harbor 

Maintenance 

EDA 

FAA Airport 

Improvement 

FHWA Earmarks 

Other Federal Grants 

TIFIA 

SIB 

RRIF 

GARVEE 

State Funds/Grants 

Local Funds/Grants 

Port Funding 

Airport Funding 

State Loan 

G.O. Bonds 

Revenue Bonds 

Tax-Exempt Bonds 

Private Sector 

Uncommitted

/

Project Cost – $5 million to $15 million (continued) Ohio Southern Line Rehabilitation OH 11.0 z z z z z Railroad Crossing Reliability Partnership Program 

TX 11.7 z z z z

Little Rock Port Authority Slackwater Harbor Improvements 

AR 11.8 z z z z z z

Shellpot Bridge Replacement DE 13.9 z z Port of Humboldt Dredging CA 14.3 z z zRed Hook Container Barge NY 14.7 z z z z zProject Cost – $15 million to $50 million Palm Beach Skypass Bridge Construction 

FL 29.7 z z z 

Port of Tacoma Overpass Construction WA 30.8 z z z z z zI-55 Access to CenterPoint Intermodal Center at Deer Run 

IL 33.3 z z

Texas Pacífico Rail Line TX 31.0 z zBensenville Rail Yard Improvements IL 35.0 z zSouthern Tier Extension Railroad Restoration Project 

NY 38.2 z z z z

Iowa Interstate Railroad Rehabilitation and Locomotive Purchase 

IA 42.1 z

64
Financin

Funding 

Table 3.2 Case Studies by Funding Type/Project Size (continued) 

Federal Funds/Grants 

Federal 

Financing Tools

State/Local 

Funds/Grants 

State/Local 

Financing Tools Other 

Project Name State 

Cost 

(Millions of Dollars) 

IM 

NHS 

STP 

CMAQ 

Rail-Highway 

Grade Crossing 

USACE Harbor 

Maintenance 

EDA 

FAA Airport 

Improvement 

FHWA Earmarks 

Other Federal Grants 

TIFIA 

SIB 

RRIF 

GARVEE 

State Funds/Grants 

Local Funds/Grants 

Port Funding 

Airport Funding 

State Loan 

G.O. Bonds 

Revenue Bonds 

Tax-Exempt Bonds 

Private Sector 

Uncommitted/ 

Unknown Funding 

Project Cost – $50 million to $100 million Air Freight Regional Hubbing Facility SC 64.3 z z z z zMarysville Rail Projects KS 75.8 z z zNorth Carolina Railroad Improvement Program 

NC 77.8 z z z z z 

Portway NJ 83.7 z z z z Chicago Area Consolidation Hub IL 97.6 z z zTchoupitoulas Corridor Improvements LA 100.0 z z z z z Denver International Airport Cargo Facility 

CO 100.0 z z 

Calais/St. Stephen Commercial Vehicle Border Crossing 

ME 100.0 z z z

Rickenbacker Intermodal Facility Construction 

OH 100.0 z z z

Project Cost – Over $100 million Hyundai Terminal at Port Tacoma WA 101.0 z z z Port of San Diego Land Acquisition CA 115.0 z Sheffield Flyover and Argentine Connection 

MOKS 133.8 z z z 

Freight Rail Improvement Project RI 196.0 z z z z z 
Financing Freight Improvements 

Funding and Financing Tools 

Table 3.2 Case Studies by Funding Type/Project Size (continued) 

Federal Funds/Grants 

Federal 

Financing Tools

State/Local 

Funds/Grants 

State/Local 

Financing Tools Other 

Project Name State 

Cost 

(Millions of Dollars) 

IM 

NHS 

STP 

CMAQ 

Rail-Highway 

Grade Crossing 

USACE Harbor 

Maintenance 

EDA 

FAA Airport 

Improvement 

FHWA Earmarks 

Other Federal Grants 

TIFIA 

SIB 

RRIF 

GARVEE 

State Funds/Grants 

Local Funds/Grants 

Port Funding 

Airport Funding 

State Loan 

G.O. Bonds 

Revenue Bonds 

Tax-Exempt Bonds 

Private Sector 

Uncommitted/ 

Unknown Funding 

Project Cost – Over $100 million (continued) Port of San Diego West Terminal Airport Expansion 

CA 232.0 z z 

ReTRAC NV 279.9 z z z z z Heartland Corridor VA-WV-OH 309.0 z z z zWidening of I-64, I-65 and I-75 KY 440.0 z z z z Cooper River Bridge Replacement 

SC 667.0 z z z z z

FAST Corridor WA 863.8 z z z z z zCREATE IL 1,500.0 z z z z zAlameda Corridor CA 2,431.0 z z z z z z z 

66
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California 

ALAMEDA CORRIDOR

Location: Los Angeles to Long Beach, California 

Project Type: Port access, highway-rail crossing elimination, rail 

construction 

Project Cost: $2.4 billion 

Project Sponsors/Partners: Alameda Corridor Transportation 

Authority, Los Angeles County Metropolitan Transportation Authority, 

and Ports of Los Angeles and Long Beach 

Federal Agencies: U.S. DOT and Economic Development 

Administration 

Project Status: Completed in 2002 

Project Description: The Alameda Corridor is a 20-mile freight-rail line 

linking the ports of Los Angeles and Long Beach to the transcontinental 

rail yards and railroad mainlines near downtown Los Angeles. The 

Corridor’s centerpiece is the Mid-Corridor Trench, a below-ground 

railway that is 10 miles long, 30 feet deep, and 50 feet wide. The 

Corridor project consolidated 90 miles of branch rail lines into a highspeed line, thereby eliminating conflicts at more than 200 at-grade 

railroad crossings and cutting by more than half the time it takes to 

transport cargo containers by train between the ports and downtown 

Los Angeles rail yards. The Corridor began operations on April 15, 2002.

Funding and Financing Mechanisms: The project was constructed at a 

cost of $2.4 billion by the Alameda Corridor Transportation Authority 

(ACTA), a joint powers agency, and governed by the cities and ports of 

Los Angeles and Long Beach and the Los Angeles County Metropolitan 

Transportation Authority. The Alameda Corridor was funded through a 

unique blend of public and private sources, including $1.16 billion in 

proceeds from bonds sold by ACTA; a $400 million loan by the U.S. 

DOT; $394 million from the ports; $347 million in grants administered by 

the Los Angeles County Metropolitan Transportation Authority; and 

$130 million in other state and federal sources and interest income. 
Financing Freight Improvements 

Case Studies of Freight Financing 

Debts are retired with fees paid by the railroads for transportation of 

cargo into and out of the region.

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

U.S. DOT Loan $400 Precursor of TIFIA loan 

Port of Los Angeles and Long Beach $394 

Los Angeles Metropolitan 

Transportation Authority 

$347 

Federal/State/Interest Income $130 Includes a $2 million grant from EDA

Revenue Bonds $1,160 Repaid by user fees 

Source: NCHRP 8-36 Task 43, Return on Investment on Freight Rail Capacity 

Improvement. Available at http://www.transportation.org/sites/

planning/docs/nchrp43.pdf. 

Additional Information: 

• Alameda Corridor Transportation Authority – 

http://www.acta.org 

PORT OF HUMBOLDT DREDGING

Location: Humboldt, California 

Project Type: Dredging 

Project Cost: $14.3 million 

Project Status: Completed in 2000 

Project Sponsors/Partners: Port of Humboldt, City of Eureka, and 

California Maritime Infrastructure Bank 

Federal Agencies: U.S. Army Corps of Engineers 

Project Description: The project consisted of channel dredging at the 

Port of Humboldt. 

Funding and Financing Mechanisms: The Port of Humboldt had never 

issued bonds before. They used the California Maritime Infrastructure 

Bank (CMIB) as the “bank of last resort” to generate the local match for 

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the federal share for dredging. The U.S. Army Corps of Engineers 

required $3.9 million to match the federal grant of $10.4 million. The 

City of Eureka contributed $1 million in combination with the CMIB 

bond issuance. The Port of Humboldt used the CMIB to issue the 

remaining share for the local match, $2.9 million in tax-exempt revenue 

bonds for private placement. CMIB worked with a local bank to buy the 

bonds. The project was completed in 2000. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

USACE – Harbor Maintenance Fund $10.4 

CMIB $2.9 Tax-exempt bonds 

City of Eureka $1.0 

Source: FHWA, Funding and Institutional Options for Freight Infrastructure 

Improvements. Available at http://ops.fhwa.dot.gov/freight/

freight_analysis/financing.htm. 

Additional Information:

• Port of Humboldt Bay – 

http://www.humboldtbay.org/about/about.html 

PORT OF SAN DIEGO LAND ACQUISITION

Location: San Diego, California 

Project Type: Land acquisition 

Project Cost: $115 million 

Project Sponsors/Partners: Port of San Diego, California Maritime 

Infrastructure Bank;, and Duke Power 

Federal Agencies: None 

Project Status: Land purchased in 1999 

Project Description: The Port of San Diego used California Maritime 

Infrastructure Bank (CMIB) financing to purchase land. CMIB issued 

taxable bonds to be repaid under a leaseback arrangement between the 

Port of San Diego and Duke Power. Duke Power contracted with the 

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Port to operate and sell power for a 10-year period, after which the 

power plant will be dismantled and the land may be used by the Port for 

other purposes.

Funding and Financing Mechanisms: CMIB issued taxable short-term 

bonds that qualified for a lower rate of 6 percent than private capital 

sources available to Duke Power. The project did not qualify for taxexempt status under the Industrial Development Act because the extent 

of the benefit to be derived by the private-sector, Duke Power. By using 

CMIB to issue debt instead of issuing debt itself, the Port was able to 

avoid a lengthy internal Board of Commission review process that is 

required for any major financing activity undertaken by the Port. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMIB $115.0 Taxable short-term bonds 

Source: FHWA, Funding and Institutional Options for Freight Infrastructure 

Improvements. Available at http://ops.fhwa.dot.gov/freight/

freight_analysis/financing.htm. 

Additional Information:

• Port of San Diego – http://www.portofsandiego.org 

PORT OF SAN DIEGO WEST TERMINAL AIRPORT EXPANSION

Location: San Diego, California 

Project Type: Airport terminal expansion 

Project Cost: $232 million (airport expansion) and $90 million (CMIB 

funding) 

Project Sponsors/Partners: Port of San Diego, and California Maritime 

Infrastructure Bank 

Federal Agencies: None 

Project Status: Completed in 1998 

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Project Description: The Port of San Diego undertook major expansion 

of the west terminal, mainly to accommodate increased passenger traffic 

along with proportionate increases in cargo shipment.

Funding and Financing Mechanisms: The Port of San Diego used 

California Maritime Infrastructure Bank (CMIB) to expand the San Diego 

Airport to avoid lengthy commission approval activities. CMIB issued 

Certificates of Participation to finance long-term borrowing. Qualifying 

for tax-exempt status, they were issued at 5.1 percent. Certificate of 

Participation debt was secured by net airport revenues, which protected 

general port revenue. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMIB $90.0 Tax-exempt COPS 

Source: FHWA, Funding and Institutional Options for Freight Infrastructure 

Improvements. Available at http://ops.fhwa.dot.gov/freight/

freight_analysis/financing.htm. 

Additional Information:

• San Diego Airport – http://www.san.org 

STOCKTON AIRPORT FREIGHT TERMINAL

Location: Stockton, California 

Project Type: Airport freight terminal and highway access to airport 

Project Cost: $1.7 million 

Project Sponsors/Partners: San Joaquin County, and Farmington Fresh 

Federal Agencies: Federal Aviation Administration 

Project Status: Completed in 1995 

Project Description: The project consisted of the development of an air 

freight terminal at Stockton Airport. This included airport apron 

improvements, the relocation of Webber’s Slew (a small stream running 

through the airport), and access road (shoulder) improvements. The 

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freight terminal houses the operations of Farmington Fresh, a company 

that specializes in the import and export of fresh produce. 

Funding and Financing Mechanisms: With San Joaquin County 

support, Farmington Fresh built a $6.5 million air freight terminal and 

made improvements to a cargo handling facility on a county-owned 

airport to meet their shipping needs. No public funds aided in the 

construction of the terminal. Public funding was directed at the airport 

apron and road improvements. At the end of the 49-year lease on the 

airport land, the county will own the Farmington Fresh terminal. The 

County can then lease the terminal at market prices. 

The airport apron and road improvements were funded through a 

combination of federal, state, local, and private funds. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Federal – FAA Airport Improvement 

Program grant 

$1.40 

State $0.07 FAA grant matching funds 

Local $0.20 FAA grant matching funds 

Farmington Fresh $0.07 Private contribution for airport apron 

and road improvements 

only/Matching funds to FAA grant 

Source: FHWA, Funding and Institutional Options for Freight Infrastructure 

Improvements. Available at http://ops.fhwa.dot.gov/freight/

freight_analysis/financing.htm. 

Additional Information:

• Stockton Airport – http://www.co.san-joaquin.ca.us/airport/ 

Colorado 

DENVER INTERNATIONAL AIRPORT (DIA) CARGO FACILITY

Location: Denver, Colorado 

Project Type: Airport cargo facility, intermodal facility, airport 

expansion 

Project Cost: $100 million 

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Project Sponsors/Partners: City of Denver, WorldPort at DIA Owners 

LLC, and Lehman Brothers 

Federal Agencies: None 

Project Status: Under construction; construction to be completed in 2006 

Project Description: DIA entered a 30-year ground lease with a thirdparty developer (WorldPort at DIA Owners LLC), to design, construct, 

and operate a cargo handling facility on 70 acres of DIA property. The 

new cargo facility, WorldPort at DIA, consists of seven buildings 

(500,000 square feet), a new taxiway, and an aircraft ramp. Two of the 

buildings are completed and have been in operations since 2001/2002.

Funding and Financing Mechanisms: The City of Denver, which owns 

the airport, issued special facility bonds to finance construction. Special 

facility revenue bonds are repaid solely from revenues generated by the 

facility, in this case, leases. This protects general airport authority 

revenues. Bond repayment will be collected from the third-party 

developer who will collect rents from subleases with cargo airlines, 

freight forwarders, and the U.S. Departments of Agriculture and 

Homeland Security (Customs operations). 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

City of Denver $54.0 Special facility bonds, repaid by 

lease income 

Lehman Brothers $46.0 Equity 

Source: Denver International Airport. Wing Tips. Volume 1, Issue 1, April 2002. 

Available at http://www.flydenver.com/biz/news/wingtips/

2002_qtr1.pdf. 

Additional Information:

• Denver International Airport – 

http://www.flydenver.com/guide/facility/cargo.asp 

• World Port – http://www.worldportatdia.com 

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Delaware 

SHELLPOT BRIDGE REPLACEMENT

Location: Port of Wilmington, Delaware 

Project Type: Rail bridge replacement, rail access to port 

Project Cost: $13.9 million 

Project Sponsors/Partners: Delaware DOT and Norfolk Southern 

Federal Agencies: None 

Project Status: Completed in 2004 

Project Description: The Shellpot Bridge rehabilitation project 

reinstated a freight rail connection between the Port of Wilmington, 

Delaware and Norfolk Southern’s (NS) Edgemoor Yard and rail system. 

Rail service on the bridge had been suspended in 1994, when the 

foundation could no longer support the heavy freight trains. The bridge 

provided access to and from the Port of Wilmington to the NS line that 

provides northbound service. After the bridge went out of service, 

freight trains that served the Port of Wilmington were forced to take a 

longer route in order to connect with the NS line. The bridge opened in 

October 2004. 

Funding and Financing Mechanism: The Delaware DOT provided a $5 

million grant and an $8.9 million loan to NS for the bridge replacement 

project. The payment agreement requires NS to make payments based 

on the number of rail cars using the bridge, with guaranteed minimum 

annual payment over a 20-year period. The annual minimum payments 

increase every five years, from $150,000 during the first five years, to 

$300,000 over the last five years of the agreement. The guaranteed 

minimum would ensure a minimum payback of 50 percent of the loan. 

The rail car fees are based on a sliding scale, in which NS pays a toll of 

$35 per car on the first 5,000 cars crossing the bridge, decreasing to $5 

per car when the number of cars using the bridge exceeds 50,000. The 

purpose of the sliding scale scheme is to encourage NS to increase their 

traffic over a certain threshold, in order to pay the lowest sliding rate per 

car. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

DelDOT Loan $8.9 Repaid by rail car fees 

DelDOT Grant $5.0 

Source: Delaware Department of Transportation. 

Additional Information:

• Delaware DOT– http://www.deldot.gov 

• Port of Wilmington – http://www.portofwilmingtonde.com 

Florida 

PALM BEACH SKYPASS BRIDGE CONSTRUCTION

Location: Palm Beach, Florida 

Project Type: Rail-highway grade separation, port access 

Project Cost: $29.7 million 

Project Sponsors/Partners: Port of Palm Beach, Florida DOT, Florida 

Office of Trade Tourism, and Economic Development 

Federal Agencies: None 

Project Status: Completed in 1999 

Project Description: The Skypass Bridge is a four-lane overpass on 

U.S. 1 that eliminated a highway-rail crossing along U.S. 1, and 

improved internal access at the Port of Palm Beach. Prior to the overpass 

construction, the Port of Palm Beach was divided by U.S. 1. The west 

side of the port houses the Florida East Coast Railroad yard and storage 

facilities, whereas the waterfront and marine terminal lies on the east 

side of the port. The construction of the overpass was completed in 1999. 

Funding and Financing Mechanisms: The Skypass Bridge was funded 

through a combination of state and port funding sources. The State 

provided funds through the Florida Seaport Transportation and 

Economic Development (FSTED) program, Florida DOT funds, and a 

grant from the Office of Trade, Tourism, and Economic Development. 

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Financing Freight Improvements 

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The Port of Palm Beach used $10 million in bond proceeds and $0.1 

million in cash for the project. Bonds are repaid through user fees from 

port operations, although these fees are not directly related to the 

improvements. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

FDOT $0.9 For right-of-way 

Florida Office of Trade, Tourism, and 

Economic Development grant 

$2.0 

FSTED Program $16.7 

Port of Palm Beach $10.1 $10 million from port bonds; $0.1 

million in cash 

Source: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• Port of Palm Beach – http://www.portofpalmbeach.com 

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

Illinois 

BENSENVILLE RAIL YARD IMPROVEMENTS

Location: Chicago, Illinois 

Project Type: Rail access to rail yard, rail construction, rail rehabilitation 

Project Cost: $35 million 

Project Sponsors/Partners: Chicago Area Transportation Study and 

Canadian Pacific Railroad 

Federal Agencies: FHWA 

Project Status: Completed in 1998 

Project Description: The Bensenville rail yard project improved rail 

access and egress to and from the yard, and rerouted trains from an east 

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Financing Freight Improvements

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route to a west route. The construction cost included new tracks, 

interlockings, and signals to raise train speeds and reduce rail/traffic 

conflict at rail-highway crossings. The estimated emission reductions 

were 54 kg/day VOC and 48 kg/day NOx. 

Funding and Financing Mechanisms: The project was funded through 

a combination of federal and private funds. Federal funding included a 

CMAQ grant of $2.1 million. The CMAQ grant was justified based on 

the reduction in emissions and traffic congestion resulting from the rail 

improvements. The remaining funds were provided by Canadian Pacific 

Railroad. 

The Chicago Area Transportation Study conducted an evaluation to 

estimate the public benefits realized from the project. Public benefits 

were estimated at $2.6 million. The CMAQ grant was equivalent to 

80 percent of the share of public benefits. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $2.1 

Canadian Pacific $32.9 Private Sector funding 

Source: FHWA. 

Additional Information:

• Chicago Area Transportation Study (CATS) – 

http://www.catsmpo.org 

CHICAGO AREA CONSOLIDATION HUB (CACH) 

Location: Hodgkins, Illinois 

Project Type: Highway access to terminal, intermodal facility, railhighway crossing separation, highway improvements 

Project Cost: $97.6 million 

Project Sponsors/Partners: Illinois DOT, Illinois State Toll Highway 

Authority, Illinois Department of Commerce and Community Affairs, 

Village of Hodgkins, United Parcel Service and Burlington Northern 

Santa Fe 

77
Financing Freight Improvements 

Case Studies of Freight Financing 

Federal Agencies: None 

Project Status: Completed in 1995 

Project Description: The CACH, the largest sorting facility in the world, 

is owned by United Parcel Service (UPS) and built in the mid-1990s. A 

number of projects were implemented to improve access to the facility, 

including: 1) interchange access from I-294 to the facility; 2) a rail 

intermodal facility; 3) rail-highway crossing separation, and 4) local 

street access improvements. 

Funding and Financing Mechanisms: The projects were funded 

through a combination of state, local, and private funds. The funding 

partners for this effort included the Illinois State Toll Highway Authority 

(ISTHA), Illinois IDOT, Illinois Department of Commerce and 

Community Affairs (DCCA), Village of Hodgkins, UPS, and Burlington 

Northern Santa Fe (BNSF). 

• I-294 Interchange. The cost of the I-294 Interchange was $15.6 

million. This interchange was funded through a public-private 

partnership that included ISTHA, Illinois DOT, DCCA, Village of 

Hodgkins, and UPS. No federal funds were used to fund this 

project, even though the interchange was constructed on an 

Interstate road. 

• Intermodal Facility. The intermodal facility was entirely funded 

by BNSF. The cost was estimated at $70 million. 

• Rail-Highway Crossing Separation. The at-grade crossing 

separation was funded by Illinois DOT and BNSF. The grade 

separation cost was $10 million. 

• Local Road Improvements. The local road improvements were 

entirely funded by UPS, at a cost of $1.3 million. 

78
Financing Freight Improvements

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Illinois DOT $7.5 $2.5 million for I-294 Interchange; $5 million for 

rail grade separation 

ISTHA $7.0 For I-294 Interchange 

DCCA $2.5 For I-294 Interchange 

Village of Hodgkins $0.65 For I-294 Interchange 

UPS $4.75 $3 million for I-294 Interchange; $1.3 million for 

local road improvements; $0.45 million on 

annexation fees to the Village of Willow 

Springs 

BNSF $75.0 $70 million for intermodal facility; $5 million for 

rail grade separation 

Source: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

CHICAGO REGION ENVIRONMENTAL AND TRANSPORTATION 

EFFICIENCY (CREATE) PROGRAM

Location: Chicago, Illinois 

Project Type: Rail crossing separation, highway-rail crossing, rail 

rehabilitation, rail construction, new/improved signaling systems 

Project Cost: $1.5 billion 

Project Sponsors/Partners: Illinois DOT, City of Chicago; Metra, Union 

Pacific, Burlington Northern Santa Fe, Norfolk Southern, Canadian 

Pacific, Canadian National, and CSX 

Federal Agencies: FHWA 

Project Status: Currently in planning stages 

Project Description: The CREATE Program encompasses the 

rationalization, reconstruction and upgrade of five cross-town passenger 

and freight rail corridors in Chicago. Approximately 70 projects are 

planned as part of this program, including: 

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• Grade separation of six railroads crossings (rail-rail flyovers); 

• Grade separation of 25 highway-rail crossings; 

• Upgrade of existing track infrastructure; 

• Double or triple tracking along certain corridors, and 

• Installation of new or improved signaling system. 

The CREATE program is aimed at addressing existing and future 

congestion issues on the rail system, which are expected to bring adverse 

effects to the national economy and the transportation system if they are 

not addressed in the near future. The CREATE program partners 

include: the Illinois DOT, Metra (passenger rail), and six of the largest 

North American freight railroads (Union Pacific, Burlington Northern 

Santa Fe, Norfolk Southern, Canadian Pacific, Canadian National, and 

CSX). 

Funding and Financing Mechanisms: The cost of the program is 

estimated at $1.5 billion. The railroads will provide $212 million, based 

on the value of the economic benefits (estimated by the CREATE 

partnership) that the private sector will gain from the proposed 

improvements. Since the majority of the work will be completed on 

railroad-owned right-of-way, the land ownership will be considered part 

of the private contribution. The remainder of the funds will be provided 

by the public sector partners, including federal and state. 

SAFETEA-LU authorized $100 million through the “Projects of National 

and Regional Significance” program. The CREATE program partners are 

in the process of selecting the projects that will go into Phase I. The 

railroads and the state plan to provide $100 million each (for a total of 

$200 million) to match the SAFETEA-LU earmark and the City of 

Chicago plans to commit about $30 million. Phase I will provide 

funding for about one-fifth of the total program costs. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

FHWA $100.0 SAFETEA-LU Projects of National and 

Regional Significance 

Illinois DOT $100.0 Planned to date to match federal earmark 

City of Chicago $30.0 Planned to date to match federal earmark 

Railroads $212.0 Private contribution, based on economic 

benefits to private sector. Includes $100 

million planned to date to match federal 

earmarks, and the value of railroad-owned 

right-of-way used for the program. 

Note: Total program cost is $1.5 million; funding amounts in this table only 

includes funding that may be committed for Phase I and the estimated 

total private contribution. 

Additional Information:

• CREATE Program – http://www.createprogram.org 

I-55 ACCESS TO CENTERPOINT INTERMODAL CENTER AT 

DEER RUN

Location: Joliet, Illinois 

Project Type: Highway improvements and access to intermodal facility 

Project Cost: $33.3 million (for I-55 interchange construction) 

Project Sponsors/Partners: Illinois DOT 

Federal Agencies: FHWA and Economic Development Administration 

Project Status: Included in FY 2007-2012 Highway Improvement 

Program 

Project Description: The Center Point Intermodal Center encompasses 

the BNSF Logistics Park. Roadway improvements include the 

construction of a new interchange on I-55 to handle traffic generated by 

the industrial park, replacing an existing intersection, and improvements 

to the arterial road (Arsenal Road) connecting I-55 and the intermodal 

facility. 

Funding and Financing Mechanisms: The Illinois DOT has included the 

I-55 interchange construction in the FY 2007-2012 Highway 

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Improvement Program and committed $27 million for the construction 

of the interchange, in addition to $6.3 million for engineering and land 

acquisition. 

The Economic Development Administration (EDA) granted $3 million to 

Will County for improvements on Arsenal Road. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Illinois DOT $33.3 Funding for I-55 Interchange 

EDA $3.0 Grant for improvements on 

Arsenal Road 

Source: Illinois Department of Transportation; AASHTO 2005 Freight 

Transportation Achievers. 

Additional Information:

• Illinois Department of Transportation FY 2007-2012 Highway 

Improvement Program – http://www.dot.il.gov/hip0712/

hwyimprov.html 

• AASHTO 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

KEDZIE AVENUE ACCESS ROAD/STOPLIGHT

Location: Chicago, Illinois 

Project Type: Highway reconstruction, traffic signal installation and 

synchronization, highway access to rail yard 

Project Cost: $4.7 million 

Project Sponsors/Partners: City of Chicago DOT 

Federal Agencies: FHWA 

Project Status: Completed in 1997 

Project Description: The Kedzie Avenue project consisted of the 

reconstruction of about 1.5 miles of roadway, the installation of a traffic 

signal at the intersection of Kedzie Avenue and 47th Street, and the 

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modernization and synchronization of signals along Kedzie Avenue. 

Kedzie Avenue provides access to the BNSF Corwith Rail Yard. Prior to 

the implementation of this project, the area experienced significant 

congestion from trucks trying to access or exit the rail yard. 

Funding and Financing Mechanisms: CMAQ funds ($720,000) were 

used to procure the installation of the traffic signal at the entrance of the 

rail yard since it would improve air quality by reducing truck emissions. 

The City of Chicago DOT provided $4 million to match the CMAQ grant 

and for the roadway reconstruction. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $0.7 

City of Chicago DOT $4.0 Including matching funds for CMAQ ($180,000) 

Sources: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

RIVERPORT RAILROAD REHABILITATION AND NEW FACILITIES

Location: Savanna, Illinois 

Project Type: Rail rehabilitation, car storage facility expansion, and yard 

and transload facility construction 

Project Cost: $5.5 million 

Project Sponsors/Partners: Riverport Railroad 

Federal Agencies: Federal Railroad Administration 

Project Status: Rail Rehabilitation and Improvement Financing (RRIF) 

loan awarded in 2005, under construction 

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Project Description: This short line operator located in Northwestern 

Illinois, received a RRIF loan to rehabilitate rail-related infrastructure 

and facilities that were once part of the Savanna Army Ordnance Depot. 

The loan is being used to improve and consolidate about six miles of 

existing track to make operations more efficient and install new, heavier 

track to handle the industry standard 286,000-pound railcars. In 

addition, yard storage capacity will be increased by 33 percent (from 

3,000 to 4,000 railcars) and real estate will be acquired to support 

planned business expansion. New facilities include a bulk commodity 

yard and transload facility, and a marshalling yard to store up to 110-car 

trains. Additionally, a portion of the funding will be used to remove and 

relocate about 9.6 miles of track from land owned by the U.S. Fish and 

Wildlife Service. 

Funding and Financing Mechanisms: FRA approved a RRIF loan in 2005 

for $5.5 million. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

RRIF loan $5.5 

Source: Federal Railroad Administration. 

Additional Information:

• Riverport Railroad – http://www.riverportrailroad.com 

• Federal Railroad Administration – http://www.fra.dot.gov 

ROCHELLE INTERMODAL CENTER/UP GLOBAL III 

Location: Rochelle, Illinois 

Project Type: Highway access to intermodal facility; rail access to 

intermodal facility 

Project Cost: $9.8 million in federal and state funds for highway and rail 

access projects, plus water and sanitary sewer lines funded by an EDA 

grant. 

Project Sponsors/Partners: City of Rochelle; Illinois Department of 

Transportation; Union Pacific 

Federal Agencies: Economic Development Administration (EDA) 

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Project Status: Completed in 2003 

Project Description: The Rochelle Intermodal Center was built in recent 

years to help alleviate some of the freight congestion in Chicago. The 

project included providing highway and rail access to the facility. 

Funding and Financing Mechanisms: Roadway and rail access projects 

were funded through federal, state, and local funds. The Illinois DOT 

provided $4.3 million through the Economic Development Program for 

roadway access, and $3.3 million in loans through the Rail Freight 

Program for the construction of rail lines into the main facility and rail 

spurs. An EDA grant for $2.2 million was used for construction of water 

and sewer lines and several roadway improvements. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Illinois DOT $4.3 Economic Development Program grant for 

roadway access 

Illinois DOT $3.3 Rail Freight Program loan 

EDA Grant $2.2 Funding for water and sanitary sewer lines, 

and roadway improvements 

Source: AASHTO 2005 Freight Transportation Achievers. 

Additional Information:

• Illinois Department of Transportation – http://www.dot.il.gov/ 

• AASHTO 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

Indiana 

DIXIE SIDING INSTALLATION

Location: Indianapolis, Indiana 

Project Type: Rail siding 

Project Cost: $1.5 million 

Project Sponsors/Partners: Indiana Railroad Company, Indiana DOT, 

and Indianapolis Metropolitan Planning Organization 

Federal Agencies: FHWA 

Dixie Siding 

Source: Indianapolis MPO.
Financing Freight Improvements 

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Project Status: Completed in 2003 

Project Description: The Dixie Siding project consisted of the 

construction of a mile-long siding between Epler Avenue and Lick Street 

to eliminate traffic blockage on West Street and Bluff Road in the west 

side of Indianapolis. The siding was built to handle the exchange of 

empty and loaded coal cars from the Indianapolis Power & Light 

Company (IPL). Prior to the construction of the Dixie Siding, empty coal 

trains moved from the IPL Harding Street Station to the Senate Avenue 

Terminal to provide space for incoming loaded coal trains. The 

placement and retrieval of empty coal trains from the Senate Avenue 

Terminal would disrupt traffic at the West Avenue rail-highway 

crossing, causing significant delays. With the construction of the siding, 

the empty cars are placed at the siding, eliminating the trips to and from 

the Senate Avenue Terminal, and consequently, reducing the number of 

trains passing at the West Avenue crossing and vehicle congestion and 

delays at this location and improving air quality. 

Funding and Financing Mechanisms: The Dixie Siding project was 

funded through a combination of federal, state, and private sector funds. 

The Indiana Rail Road Company (IRR) provided $815,000 for the project. 

The Indiana DOT provided a grant of $200,000 through its Industrial Rail 

Service Fund. A CMAQ grant of $480,000 provided the remaining funds 

needed for the project. An air quality analysis by the Indianapolis 

Metropolitan Planning Organization showed that air quality 

improvements would be realized from reduced traffic congestion at the 

West Street Crossing. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $0.48 

Indiana DOT Industrial Rail Service Fund 

Grant 

$0.20 

Indiana Railroad Company funds $0.82 Private sector funding 

Source: FHWA Indiana Division. 

Additional Information:

• Indianapolis Metropolitan Organization, TeMPO (Volume 7, 

Issue 4, Special Edition 2003) – http://www.indympo.org/

Public/tempo.htm 

• Indiana Department of Transportation – http://www.ai.org/dot 

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Iowa 

IOWA INTERSTATE RAILROAD REHABILITATION AND 

LOCOMOTIVE PURCHASE

Location: Atlantic, Iowa to Bureau, Illinois 

Project Type: Rail rehabilitation; equipment purchasing 

Project Cost: $42.1 million 

Project Sponsors/Partners: Iowa Interstate Railroad 

Federal Agencies: Federal Railroad Administration 

Project Status: Loans awarded in 2005 and 2006, under construction 

Project Description: The Iowa Interstate Railroad received two RRIF 

loans from FRA. The first RRIF loan will be used to improve service to 

rural areas that rely on trains to ship corn, soybeans, steel, chemicals, 

and other products to market. This loan will pay for track improvements 

needed to haul heavier freight cars and get products to key shipping 

points faster and safer. Specifically, RRIF funds will improve 266 miles 

of track, replace 180,000 crossties, lay thousands of tons of new ballast, 

and rebuild 95 highway-rail grade crossings between Atlantic, Iowa, and 

Bureau, Illinois. A portion of the loan also will be used to purchase a rail 

line that Iowa Interstate Railroad currently is leasing, and refinance debt 

incurred from previous infrastructure improvement projects. 

The second RRIF loan will be used to purchase 22 locomotives that it 

currently leases from General American Transportation Corporation 

(GATX) Rail. 

Funding and Financing Mechanisms: FRA approved two loans to Iowa 

Interstate Railroad in 2005 and 2006 for $32.7 million and $9.4 million, 

respectively. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

RRIF Loans $42.1 

Source: Federal Railroad Administration. 

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Additional Information:

• Iowa Interstate Railroad – http://www.iaisrr.com 

• Federal Railroad Administration – http://www.fra.dot.gov 

Kansas 

MARYSVILLE RAIL PROJECTS

Location: Marysville, Kansas 

Project Type: Rail-highway crossing separation and rail relocation 

Project Cost: $75.8 million 

Project Sponsors/Partners: City of Marysville, Kansas DOT, and Union 

Pacific 

Federal Agencies: None 

Project Status: Currently under construction; scheduled for completion 

in 2006. Roadway construction completed in 2004. 

Project Description: The north-south Marysville subdivision of the 

Union Pacific Railroad divided the City of Marysville, separating the 

majority of the city from the business district. The rail line is heavily 

traveled, causing major vehicle traffic delays at five rail-highway 

crossings. Daily delays have been estimated at 7.5 to 8 hours. These 

delays affect not only the passenger vehicle traffic, but are a major 

concern for the mobility of emergency vehicles. 

The proposed solution consisted of relocating the rail line to the south 

and west edge of the city and providing grade separations at U.S. 36 and 

U.S. 77. The project also includes the construction of a levee for flood 

protection. 

Funding and Financing Mechanisms: The project was funded with 

state, local, and private monies. Kansas DOT provided almost 52 percent 

of the project cost. The City of Marysville contributed $1 million, and the 

remaining funds came from Union Pacific. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Kansas DOT $39.2 

Union Pacific $35.6 

City of Marysville $1.0 

Source: AASHTO, 2005 Freight Transportation Achievers, http://freight.

transportation.org/freight_awards.html. 

Additional Information:

• Kansas Department of Transportation – http://www.ksdot.org 

• AASHTO 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

Kentucky 

WIDENING OF I-64, I-65, AND I-75 

Location: I-64 (Shelby County from Jefferson County line to Shelbyville); 

I-65 (from Tennessee State line to Bowling Green); and I-75 (from 

northern Scott County to south of KY-22 in Grant County), Kentucky 

Project Type: Highway capacity 

Project Cost: $440.0 million 

Project Sponsors/Partners: Kentucky Transportation Cabinet 

Federal Agencies: FHWA 

Project Status: Currently under construction, included in FY 2005-2007 

STIP 

Project Description: The project consists of widening Interstates 64, 65 

and 75 in northern Kentucky from three to six lanes. The Kentucky 

General Assembly approved the issuance of GARVEE bonds to 

accelerate the widening in these three corridors. The widening projects 

are expected to increase the State’s ability to accommodate freight and 

passenger movements. 

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Funding and Financing Mechanisms: In 2005, Kentucky issued $139.6 

million in GARVEE bonds to fund the first phase. They will be repaid 

with IM and NHS funding. Debt service funding will be matched with 

toll credits. The Kentucky Transportation Cabinet plans to issue $290 

million in additional GARVEE bonds in fiscal year 2007 and 2008 to 

complete the widening projects. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

GARVEE Bonds $139.6 Issued to date; repaid with IM and 

NHS funds 

Source: Innovative Finance.Org, http://www.innovativefinance.org. 

Additional Information:

• Kentucky Transportation Cabinet – http://transportation.ky.gov 

Louisiana 

PORT OF SOUTH LOUISIANA – RAIL SPUR UPGRADE

Location: LaPlace, Louisiana 

Project Type: Rail rehabilitation, roadway improvements 

Project Cost: $1.2 million (rail component); $1.5 million (roadway 

improvements) 

Project Sponsors/Partners: Port of South Louisiana 

Federal Agencies: Economic Development Administration 

Project Status: Roadway improvements completed in 2003 and rail 

rehabilitation completed in 2005. 

Project Description: The Port of South Louisiana, which stretches for 54 

miles along the Mississippi River, is the third-largest port in the world in 

terms of total tonnage handled, and some of the most prestigious names 

in industry operate cargo transfer terminals and manufacturing plants. 

The Port handled over 248 million tons of cargo in 2004, brought to its 

terminals by vessel, barge, rail, and truck. The Port is ranked highest in 

the nation for export tonnage and total tonnage, with over 50,000 barges 

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and 4,000 ocean-going vessels calling at the port each year. The Port 

purchased the Globalplex Intermodal Terminal in 1992, and currently is 

redeveloping the facility into a world-class complex to accommodate a 

variety of dry bulk and break-bulk cargo. Roadway improvements 

within the Port were completed in 2003. The Port recently completed a 

$1.2 million effort to upgrade a 1,500-foot rail spur that will eventually 

link the Canadian National/Illinois Central Railroad and the Kansas City 

Southern Railroad at the northern end of the 335-acre industrial park. 

Funding/Financing Mechanisms: Roadway improvements within the 

Port of South Louisiana were funded by a Community Development 

Grant and Port funds. The cost of the road improvements were 

estimated at $1.5 million, of which 75 percent were provided by federal 

grant. The rail rehabilitation project was partly funded by an EDA grant 

of $900,000. The project is expected to attract an estimated $56 million in 

private sector investments and create an additional 200 jobs. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

EDA grant $0.9 For rail rehabilitation project 

U.S. Department of Housing and 

Urban Development – Community 

Development Block Grant 

$1.1 For roadway improvements 

Port of South Louisiana $0.7 Matching funds for federal grants 

Source: Port of South Louisiana. 

Additional Information:

• Port of South Louisiana – http://www.portsl.com 

TCHOUPITOULAS CORRIDOR IMPROVEMENTS

Location: New Orleans, Louisiana 

Project Type: Truck route, highway access to port, highway capacity, 

and rail relocation 

Project Cost: Approximately $100 million 

Project Sponsors/Partners: Port of New Orleans, New Orleans 

Department of Public Works, State of Louisiana, and City of New 

Orleans Regional Planning Commission 

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Federal Agencies: FHWA 

Project Status: Completed in 2005 

Project Description: The Tchoupitoulas Corridor project consisted of 

several transportation access and infrastructure improvements to the 

Port of New Orleans. The project included the expansion of a two-lane 

local road to a four-lane boulevard, the construction of an exclusive porttraffic access road, sewer and drainage system repairs/replacement, 

modifications to existing flood walls, and the relocation and 

consolidation of railroad trackage. One of the main elements of this 

project, the port access road, consolidated four existing truck routes into 

one, and separated truck traffic from local traffic. The exclusive truck 

route improved access to the port, but also improved safety and the level 

of service on local streets. The project was completed during the 

summer of 2005. 

Funding/Financing Mechanisms: The Tchoupitoulas Corridor project 

was funded through a combination of federal, state, local, and port 

funds. The State provided $55 million through the Transportation 

Infrastructure Model for Economic Development (TIMED) program, 

which was created by the legislature in 1989 and is funded through 

bonds backed by a 4 cent per gallon tax on motor fuels. Other funding 

sources included $13.7 million in STP funds, $8.0 million in bond 

proceeds from the City of New Orleans, $12 million from the City of 

New Orleans Regional Planning Commission, and $12 million from the 

Port of New Orleans. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

STP funds $13.7 

TIMED program $55.0 Backed by dedicated motor 

fuel tax (4 cent per gallon) 

City of New Orleans Bond proceeds $8.0 

City of New Orleans Regional Planning 

Commission 

$12.0 

Port of New Orleans $12.0 

Sources: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003; Transportation Infrastructure Model for 

Economic Development (TIMED), http://www.timedla.com/. 

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Additional Information:

• Louisiana’s Transportation Infrastructure Model for Economic 

Development – http://www.timedla.com/ 

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

Maine 

AUBURN INTERMODAL FREIGHT FACILITY

Location: Auburn, Maine 

Project Type: Truck-rail intermodal facility 

Project Cost: $3.1 million (Phase I); $1.7 million (Phase II) 

Project Sponsors/Partners: Maine DOT, City of Auburn, and 

St. Lawrence & Atlantic Railroad 

Federal Agencies: FHWA 

Project Status: Phase I completed in 1994 and Phase II completed in 

2001 

Project Description: The Auburn Intermodal Freight Transfer Facility 

opened in 1994, with an expansion completed in 2001. The facility is 

used to transfer cargo between truck and rail. Rail service at the facility 

is operated by the St. Lawrence & Atlantic Railroad (SLR). 

The intermodal facility consists of a double-track rail line, parking and 

container storage, a weighing and freight-control operations center, and 

a lift for transferring cargo containers between flatbed rail cars and 

trucks. A customs clearance facility recently opened at the facility. 

The project’s first phase resulted in estimated emissions reductions of 7 

kg/day VOC and 77 kg/day NOx. 

Funding and Financing Mechanisms: Funding for the construction and 

subsequent expansion of the facility included federal, local, and private 

funds. 

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For the Phase I, SLR approached the State of Maine requesting funding 

for the construction of the intermodal facility. Because the City of 

Auburn was an air quality nonattainment area and the facility was built 

on public land, the City was able to obtain CMAQ funding to construct 

the facility based on projected reductions of long-haul truck traffic and 

the corresponding decrease in vehicle emissions. Additionally, the 

creation of an intermodal hub in Auburn was seen as an opportunity for 

economic growth in the region. The project costs were funded using 

CMAQ (80 percent), with matching funds from the City of Auburn. SLR 

pays a lease to the city for the use of the facility. 

A 19-acre expansion, completed in 2001, was implemented when the 

cargo volume at the facility reached a point that justified the expansion. 

Phase II also was funded using CMAQ funds and City of Auburn funds, 

matched with private funds. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $2.7 $2.3 million – Phase I; 

$0.4 million – Phase II 

City of Auburn $1.0 $0.6 million – Phase I; 

$0.4 million – Phase II 

St. Lawrence & Auburn Railroad $1.0 $0.2 million – Phase I; 

$0.8 million – Phase II 

Source: Maine Department of Transportation; FHWA, http://www.fhwa.dot.

gov/environment/cmaqpgs/retroatt.htm. 

Additional Information:

• Maine DOT – http://www.maine.gov/mdot/index.php 

CALAIS/ST. STEPHEN BORDER CROSSING

Location: Calais, Maine/St. Stephen, New Brunswick, Canada 

Project Type: Border crossing, highway capacity, bridge 

Project Cost: $100 million 

Project Sponsors/Partners: Maine DOT and New Brunswick DOT 

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Federal Agencies: U.S. General Services Administration, Canada Border 

Services Agency, and U.S. Department of Homeland Security’s Customs 

and Border Protection 

Project Status: Planning stages; project completion scheduled by 2008. 

Project Description: Over the last several years Maine DOT and New 

Brunswick DOT have been collaborating, along with the U.S. General 

Services Administration (GSA), Canada Border Services Agency (CBSA), 

and U.S. Department of Homeland Security’s (DHS) Customs and 

Border Protection (CBP) to plan and design new border crossing facilities 

in Calais, Maine and St. Stephen, New Brunswick. The new crossing will 

be located upstream on the St. Croix River just outside of both town 

centers. It will become the third crossing in the region and will be the 

only commercial vehicle crossing in the Calais/St. Stephen region. This 

crossing represents the first new crossing in several decades along the 

United States/Canadian border. The existing crossing, which is located 

in the downtowns of both cities, will remain in place exclusively for 

passenger cars. 

The selected alternative for the new border crossing includes a bridge 

across the St. Croix River, a four-lane highway bypassing the town of 

St. Stephen that connects to Route 3 and includes a Route 1 bypass, and a 

new connection to U.S. 1 through an industrial park in Calais, Maine. 

Each facility will have multiple lanes for cars and trucks, including some 

dedicated specialized lanes. The Maine DOT and New Brunswick DOT 

will be responsible for the highways leading into the facilities as well as 

the bridge across the St. Croix that connects the two countries. CBSA 

will design and construct the Canadian facility and GSA will design and 

construct the United States facility. 

Funding and Financing Mechanisms: Funding for the new border 

crossing is split between Canada and the United States. In 2005, $3.2 

million was secured from the GSA’s FY 2005 budget for the design and 

site acquisition for a new customs house, while a further $50 million was 

secured in the FY 2006 budget. Additional funding is still being sought 

for road and bridge work on the United States side of the project. 

SAFETEA-LU earmarked $12.0 million for this project through the HighPriority Projects and Transportation Improvement Programs. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

GSA $53.2 

FHWA SAFETEA-LU Earmarks $12.0 Funding from the High-Priority 

Projects and the Transportation 

Improvement Programs 

Source: Maine Department of Transportation; FHWA. 

Note: Funding listed above only includes existing funding commitments. 

Additional Information:

• Maine DOT – http://www.maine.gov/mdot/index.php 

GUILFORD INTERMODAL YARD – LIFTING EQUIPMENT LEASE

Location: Waterville, Maine 

Project Type: Intermodal yard equipment 

Project Cost: $3.0 million 

Project Sponsors/Partners: Maine DOT, and Guilford Transportation 

Federal Agencies: FHWA 

Project Status: Completed in 1997 

Project Description: Guilford Transportation used public funding to 

improve a truck-rail intermodal yard, including equipment purchase. 

The project allows trailers and containers of central Maine products to 

move via rail, reducing heavy truck traffic and diesel emissions. The 

estimated emissions reductions were 28 kg/day VOC and 6.3 kg/day 

NOx.

Funding and Financing Mechanisms: Maine DOT used CMAQ funding 

to lease port packer lift equipment to support the operations of a private 

intermodal yard in Waterville, Maine. CMAQ funding was granted 

because the project demonstrated that truck traffic and emissions would 

be reduced. This project was sponsored by Guilford Transportation, a 

regional rail company supporting CSX and Norfolk Southern shipments. 

Since the project was built on private land, CMAQ funding could only be 

applied under a leaseback arrangement with the intermodal operator. A 

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total of $1.2 million of CMAQ funding was used to buy the equipment, 

which the operator leases through the useful life of the equipment with 

the option to purchase at the end of the lease. 

Maine DOT conducted a similar deal at the Presque Isle Intermodal 

Facility. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $1.2 Funding for lifting equipment 

Other $1.8 

Source: Maine Department of Transportation. 

Additional Information:

• Maine Department of Transportation – 

http://www.maine.gov/mdot/index.php 

Michigan 

LUCE COUNTY INDUSTRIAL PARK RAIL PROJECT

Location: Luce County, Michigan 

Project Type: Rail rehabilitation, rail construction, rail access to 

industrial park 

Project Cost: $647,000 

Project Sponsors/Partners: Michigan DOT, Luce County Economic 

Development Corporation, and Sustainable Forest Products, Inc. 

Federal Agencies: None 

Project Status: Completed in 2004 

Project Description: The freight-related investments at the Luce County 

Industrial Park consisted of the rehabilitation of an unused rail line, and 

the construction of new rail tracks into the Industrial Park and into the 

Sustainable Forest Products facility. The project was completed in 2004. 

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98

Funding and Financing Mechanisms: The rail rehabilitation and 

construction were funded through a combination of state, local, and 

private funds. 

The Michigan MDOT provided a total of $324,000 through the Michigan 

Rail Loan Assistance (MiRLAP) and the Freight Economic Development 

(FEDP) programs. The Luce County Economic Corporation contributed 

to the project with $218,000. 

Private contributions came from the Canadian National Railroad 

($95,000) and Sustainable Forest Products, Inc. ($10,000). 

Funding Source/ 

Financing Mechanism 

Amount 

Comments 

Michigan DOT – MiRLAP $198,000 

Michigan DOT – FEDP $126,000 

Luce County EDC $218,000 

Canadian National $95,000 

Sustainable Forest Products $10,000 

Source: AASHTO, 2005 Freight Transportation Achievers, http://freight.

transportation.org/freight_awards.html. 

Additional Information:

• Michigan Department of Transportation, 

http://www.michigan.gov/mdot/ 

• AASHTO 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

Missouri-Kansas 

SHEFFIELD FLYOVER AND ARGENTINE CONNECTION

Location: Kansas City, Missouri/Kansas City, Kansas 

Project Type: Rail crossing separation 

Project Cost: $74 million (Sheffield Flyover); $59.8 million (Argentine 

Connection) 

Project Status/Sponsors: Kansas City Intermodal Transportation 

Corporation, Westside Intermodal Transportation Corporation, Unified 

Source: Don Rickle, 

http://www.trainboard.com. 

Sheffield Flyover 
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Government of Wyandotte County/Kansas City, Kansas City Terminal 

Railway, Burlington Northern Santa Fe, Union Pacific, and Kansas City 

Southern Railroad 

Federal Agencies: None 

Project Status: Sheffield Flyover completed in 2000 and Argentine 

Connection completed in 2004 

Project Description: The Sheffield Flyover and the Argentine 

Connection projects consisted of the construction of flyovers to eliminate 

at-grade rail crossings. 

Before the grade separation was completed, the Sheffield Junction was 

the third-busiest rail crossing in the country, causing major bottlenecks 

to both east-west and north-south rail traffic through Kansas City. The 

Sheffield Flyover resulted in speed improvements and reducing the 

travel time of freight trains through Kansas City from 40 minutes to 15 

minutes. 

Similarly, the Argentine Connection consisted of a grade separation 

project at the Santa Fe Junction. The project resulted in increased 

capacity on east-west and north-south routes. Prior to the project, the 

Santa Fe junction handled 55 trains east-west and 25 train north-south 

per day. The Argentine Connection increased capacity to 70-95 trains 

east-west and 40 trains north-south. 

Funding and Financing Mechanisms: The Sheffield Flyover was 

financed through the issuance of bonds by a nonprofit transportation 

corporation, created under Missouri law. The Kansas City Terminal 

Railway created a transportation corporation, the Kansas City 

Intermodal Transportation Corporation, for the purpose of issuing debt 

for construction and accessing tax-exempt status from property tax. The 

railroads (BNSF, UP, and Kansas City Southern) are responsible to pay 

back the bonds over a 20-year period. 

The Argentine Connection project was located in the state border area 

between Missouri and Kansas. Therefore, two financing mechanisms 

were devised to fund the construction of the flyover. The Missouri 

portion of the project was financed by issuing bonds through a 

transportation corporation, the Westside Intermodal Transportation 

Corporation. For the Kansas portion of the project, the Unified 

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Government of Kansas City/Wyandotte issued bonds. The Kansas City 

Railway Terminal is responsible for debt service on those bonds. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Kansas City Intermodal 

Transportation Corporation bonds 

$70.0 Sheffield Flyover bonds 

Westside Intermodal Transportation 

Corporation 

$46.3 Argentine Connection bonds – 

Missouri share 

Unified Government of Wyandotte 

County/Kansas City 

$13.5 Argentine Connection bonds – 

Kansas share 

Sources: Mid-America Regional Council; Kansas City Business Journal, 

http://www.bizjournals.com/kansascity/stories/2001/11/05/

story1.html. 

Additional Information:

• Missouri Department of Transportation – http://www.modot.org 

North Carolina 

NORTH CAROLINA RAILROAD IMPROVEMENT PROGRAM

Location: Raleigh to Charlotte, North Carolina 

Project Type: Rail improvements, rail extension, rail modernization 

Project Cost: $19.3 million (completed projects); $77.8 million (total 

program) 

Project Sponsors/Partners: North Carolina DOT and Norfolk Southern 

Federal Agencies: FHWA 

Program Status: Six projects completed in 2005 and other projects under 

construction 

Project Description: The North Carolina Railroad Improvement 

Program (NCRRIP) consists of several upgrades and improvements 

along existing rail corridors to enhance safety, efficiency, and capacity 

for passenger rail. The program is expected to increase train speeds and 

capacity on the 172-mile corridor between Raleigh and Charlotte. 

However, these improvements have an indirect and positive impact for 

freight rail service operating on this corridor. 

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Funding and Financing Mechanisms: The NCRRIP program has been 

financed through a combination of federal and state funds. Federal 

funds include NHS, CMAQ, and STP funds. State grants include 

matching funds to federal grants, and funds from the State’s Rail and 

Moving Ahead programs. A total of $37.8 million has been spent in the 

program (including project currently under construction). 

Norfolk Southern (NS) operates freight service on the corridor. As part 

of the NCRRIP program, NS is responsible for the design and 

construction of the program elements. While NS is not a funding partner 

of the program, the company has covered the cost of project 

management, which could be considered an in-kind contribution. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) 

NHS $2.90 

STP $4.00 

CMAQ $13.36 

NC State – Match for federal funds $5.31 

State Rail funds $7.80 

State Moving Ahead $4.39 

Source: North Carolina Department of Transportation, Rail Division. 

Additional Information:

• North Carolina Department of Transportation, 

http://www.bytrain.org/track/ 

Nevada 

RENO TRANSPORTATION RAIL ACCESS CORRIDOR (RETRAC) 

Location: Reno, Nevada 

Project Type: Rail construction and rail-highway grade separation 

Project Cost: $279.9 million 

Project Sponsors/Partners: City of Reno and Union Pacific Railroad 

Federal Agencies: FHWA 

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Project Status: Trench opened for traffic service on November 18, 2005, 

with final completion in spring 2006. 

Project Description: The Reno Transportation Rail Access Corridor 

(ReTRAC) program consists of the construction of a 33-foot-deep trench 

below existing tracks to separate auto traffic from rail traffic in 

downtown Reno. The project also includes the reconstruction of 11 

bridges to provide crossing over the trench and an access road. The 

corridor length is 2.3 miles. 

Funding and Financing Mechanisms: The ReTRAC program is funded 

through a public-private partnership that includes federal, local, and 

private sector funds. Several revenue sources have been dedicated to 

repay a TIFIA loan. 

Federal funding includes $21.3 million in earmarked funds within 

TEA-21 legislation. The project was approved for TIFIA credit assistance 

up to $73.5 million that was to be repaid through local revenue sources, 

including: 1) one-eighth-cent sales tax; 2) one percent hotel-occupancy 

tax; 3) lease income from Union Pacific properties, and 4) tax 

assessments from a downtown special assessment district. The City of 

Reno repaid the original TIFIA loan issued in 2002 of $50.5 million in 

May 2006. 

Local funding includes $111.5 million in General Obligation bonds 

issued by the City of Reno, and $79.6 million in city funding allocated for 

the project. 

Union Pacific contributions to the ReTRAC project include $17 million 

towards the construction of track ballast and ties. Other contributions 

include in-kind donations of land and air rights to the City of Reno that 

will generate revenue to pay back the TIFIA loan. In addition, Union 

Pacific will pay for the rail signal systems to be installed in the corridor. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

TEA-21 earmarks $21.3 

TIFIA direct loan $50.5 To be repaid through local revenue 

sources; paid back in May 2006 through 

refinancing 

City of Reno revenue bonds $111.5 

Cash on-hand and interest 

earnings 

$79.6 

Union Pacific funds $17.0 

Source: City of Reno; Cambridge Systematics, Inc. 

Additional Information:

• City of Reno, ReTRAC – 

http://www.cityofreno.com/gov/retrac/ 

New York 

RED HOOK CONTAINER BARGE SERVICE

Location: Brooklyn, New York 

Project Type: Barge system 

Project Cost: $14.7 million for capital costs; $58.8 million for capital and 

operations (excluding private contribution) through 2001. 

Project Sponsors/Partners: New York State DOT, New Jersey DOT, Port 

Authority of New York and New Jersey, and American Stevedoring 

Federal Agencies: FHWA 

Project Status: Operating since 1993 

Project Description: The Red Hook Container Barge project consisted of 

the implementation of a barge service between the Red Hook Marine 

Terminal in Brooklyn, New York and the American Stevedoring terminal 

at the Port Newark, New Jersey. The purpose of this project was to 

provide alternative access between these two facilities to mitigate the 

impacts of construction on the Gowanus Expressway, which was the 

main route used by trucks accessing the Red Hook Marine Terminal. 

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The estimated emissions reductions were 12 kg/day VOC, 48 kg/day 

CO, and 53 kg/day NOx. 

Funding and Financing Mechanisms: The Red Hook Container Barge 

service was funded through a combination of federal, state, and port 

funds. American Stevedoring (Red Hook terminal operator) also has 

supported the service, although investment amounts have not been 

specified. 

Federal funding sources include allocations from CMAQ and STP funds, 

and TEA-21 funds. This project was the first freight project to apply for 

CMAQ funds. In addition to matching funds to federal grants, New 

York State DOT and New Jersey DOT have supported the project, and 

the Port Authority of New York and New Jersey has provided almost 

$40 million to fund the barge operation. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) 

CMAQ $7.7 

STP $1.6 

TEA-21 $3.0 

CMAQ, STP, and TEA-21 matching funds $3.2 

New York State DOT $1.8 

New Jersey DOT $1.7 

Port Authority of NY and NJ $39.8 

Sources: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

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SOUTHERN TIER EXTENSION RAILROAD RESTORATION PROJECT

Location: Hornell, New York to Corry, Pennsylvania 

Project Type: Railroad rehabilitation The Southern Tier 

Extension Railroad 

Authority and Norfolk 

Southern entered 

in a sale-leaseback 

agreement in which 

NS passes ownership 

of the rail line to 

STERA, leases back 

the line, and receives a 

property tax abatement 

for 10 years. 

Project Sponsors/Partners: Southern Tier West Regional Planning and 

Development Board; New York State DOT, Pennsylvania DOT, and 

Norfolk Southern 

Federal Agencies: FHWA and Economic Development Administration 

Project Status: Restoration of rail service along the rail line completed in 

the fall of 2003; other rehabilitation activities underway/planned 

Project Cost: $38.2 million through 2006 

Project Description: The Southern Tier Extension Railroad Restoration 

Project consisted of the implementation of several rehabilitation tasks 

along the 145-mile-long rail line between Hornell, New York and Corry, 

Pennsylvania. Tasks completed to date include: 1) repair of two 

washouts; 2) replacement of ties; 3) signal upgrades, and 4) grade 

crossing improvements. 

The Southern Tier Extension rail line had been threatened with 

abandonment since the 1980s. The counties within the Southern Tier 

West (Allegany, Cattaraugus, Chautauqua, and Steuben) initiated efforts 

in the late 1980s to retain service on the line after the expiration of the 

Conrail-New York State DOT agreement to provide service until 1998. 

As part of the of the CSX-Norfolk Southern acquisition of Conrail, 

Norfolk Southern (NS) would acquire the Southern Tier Extension. The 

Southern Tier West and NS reached a sale-leaseback agreement in which 

NS would sell the line to a railroad authority, leaseback the line and 

receive a property tax abatement for a period of 10 years. After the 

10-year period, ownership of the rail line will revert back to NS, and in 

the last 3 years of the agreement, NS will begin paying property taxes on 

the line to the local communities. The Chautauqua, Cattaraugus, 

Allegany and Steuben Southern Tier Extension Railroad Authority 

(STERA), was created in 2000, and the sale-leaseback agreement was 

executed in 2001. NS currently subleases the rail line to the Western 

New York and Pennsylvania Railroad Company (WNYP). Service along 

the entire line was restored in fall 2003. 

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Funding and Financing Mechanisms: The initial rehabilitation work 

was funded with an Economic Development Administration grant ($3 

million) and $8.9 million from New York State DOT, including capital 

grants and Federal Rail-Highway Grade Crossing funds. As of 

September 2006, PennDOT and WNYP had provided $7.6 million and 

over $10 million, respectively, to bring the rail line back to operation. 

The counties have provided about $0.3 million, and local communities 

have contributed to the investment by giving up the property tax 

revenues on the rail line over a 10-year period. About $38.2 million had 

been invested in the line through 2006. Future investments to complete 

the rail line restoration are estimated at over $20 million, including: 

Phase 6 improvements ($7.5 million), which are schedule for completion 

by the spring of 2007; and an intermodal study ($225,000) funded with 

EDA, NYSDOT and private funds. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

FHWA $0.9 

FEMA $0.2 

EDA Grant $3.1 

New York State DOT Capital 

Funding 

$8.9 Including initial $2 million to match EDA 

grant 

Pennsylvania DOT $7.6 

Counties $0.3 

Local Communities $10.0 Tax abatement (through 2006) 

Sources: NYSDOT; Southern Tier West Regional Planning and Development 

Board presentation at FHWA Talking Freight Seminar, September 2006. 

Provided by Thomas M. Barnes; additional NYSDOT funding 

information provided by Steve Slavick. 

Additional Information:

• Southern Tier West Regional Planning and Development Board – 

http://www.southerntierwest.org 

Source: Southern Tier West 

Regional Planning and 

Development Board.

Southern Tier Line Washout –

Before and After

ALBANY EXPRESS BARGE

Location: Albany, New York to Port of New York and New Jersey 

Project Type: Short sea shipping 

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Project Cost: $5.7 million in public sector subsidies for operations 

(excluding Port of Albany contributions to match CMAQ funds). 

Project Sponsors/Partners: Port of Albany and Port Authority of New 

York and New Jersey 

Federal Agencies: FHWA 

Project Status: Service in operation since 2003, other routes are in 

planning stages 

Project Description: The Albany Express Barge service transports 

containers by barge between the Port of Albany and the Port of New 

York and New Jersey. The service began operating in the spring of 2003, 

and is the first element of the Port Inland Distribution Network (PIDN) 

initiative. The PIDN initiative is envisioned as a system to distribute 

containers between the Port of New York and New Jersey and other 

inland container terminals by barge and rail to relieve highway 

congestion. In addition to the Port of Albany, other potential barge 

routes include: 1) Bridgeport, Connecticut; 2) Camden, New Jersey; 

3) Providence, Rhode Island; 4) Wilmington, Delaware, and 5) Boston, 

Massachusetts. 

Funding and Financing Mechanisms: The Albany Express Barge 

service is paid through user fees, and federal and local port subsidies. 

The user fees have been set at 10 percent below the truck shipping fees to 

attract users, since the barge service is slower than truck shipping on this 

route. The federal port subsidies are needed to support the service. 

The Albany Express Barge service has received CMAQ grants, with 

matching funds coming from the Port of Albany. In addition, the Port 

Authority of New York and New Jersey has provided $0.5 million to 

subsidize operations and provides $25 per container moved to keep the 

user fees below trucking fees. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $5.3 Federal funds are matched with Port 

of Albany and PANYNJ contributions

Port Authority of NY and NJ $0.5 Operations subsidy 

Sources: U.S. Government Accountability Office, Freight Transportation: Short Sea 

Shipping Option Shows Importance of Systematic Approach to Public 

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Investment Decisions. Washington, D.C. July 2005. Report Number 

GAO-05-768. 

Additional Information:

• Port Authority of New York and New Jersey – 

http://www.panynj.com 

• Port of Albany – http://www.portofalbany.com 

New Jersey 

PORTWAY

Location: Port of New York/New Jersey 

Project Type: Rail access to port, rail-highway grade separation, and 

highway improvements 

Project Cost: $83.7 million (for three Phase I projects, excluding 

Doremus Avenue roadway improvements) 

Project Sponsors/Partners: New Jersey DOT and Port Authority of New 

York and New Jersey 

Federal Agencies: FHWA 

Project Status: Three Phase I projects completed with other projects 

under planning/design stages 

Project Description: The New Jersey DOT is the lead agency behind 

Portway, which consists in a series 11 projects that will improve access 

between key maritime, air cargo, railroad, regional roadways, and 

warehouse/distribution facilities. The Port Authority of New York and 

New Jersey (PANYNJ) is responsible for the remaining projects. Projects 

implemented to date include: 

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• Doremus Avenue Bridge and roadway improvements (NJDOT) – 

$36.5 million; 

• Rail-highway crossing separation (rail flyover) at McLester Street 

(PANYNJ) – $35 million; and 

• Charlotte and Tonnele Circle Improvements (NJDOT) – $12.2 

million. 

Funding and Financing Mechanisms: The projects listed above were 

funded with federal, state, and port funds. NHS funds were used for the 

Charlotte and Tonnele Circle Improvements. The state funding 

contribution included allocations from the New Jersey Transportation 

Trust Fund (TTF) and the 1999 NJ Bridge bonds. PANYNJ paid for the 

rail flyover. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

NHS $11.2 For Charlotte and Tonnele Circle improvements 

New Jersey TTF $21.5 $20.5 million for the Doremus Avenue project; 

matching funds for NHS 

1999 NJ Bridge bonds $36.5 Doremus Avenue Bridge only 

PANYNJ $35.0 Rail flyover 

Source: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

• New Jersey Department of Transportation – http://www.state.

nj.us/transportation/works/portway/index.html 

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Ohio 

OHIO SOUTHERN LINE REHABILITATION

Location: Zanesville to New Lexington, Ohio 

Project Type: Rail rehabilitation, highway-rail crossings 

Project Cost: $11 million 

Project Sponsors/Partners: Ohio Rail Development Commission, Ohio 

DOT, and Ohio Southern Railroad 

Federal Agencies: FHWA 

Project Status: Completed in 2000 

Project Description: The Ohio Southern Line Rehabilitation consisted of 

the rehabilitation of an out-of-service rail line to provide rail service 

between a coal mine in Glouster, Ohio and the American Electric Power 

(AEP) Conesville Power Plant. The rehabilitation work included: 

1) renovation of 12 railroad bridges; 2) renewal and upgrading of 16 

public rail-highway crossings; 3) replacement of 19 miles of existing 

obsolete rail with modern heavy rail; 4) replacement of crossties; and 

5) two new passing sidings and a 13-track bulk loading facility. The rail 

line is owned by the State, and rail service on the line currently is 

provided by the Ohio Southern Railroad Company. 

Funding and Financing Mechanisms: The total cost of the project was 

$11 million, of which $5.5 million (50 percent) was paid by public sector 

loans repaid by rail fees, $3.0 million (27 percent) was paid by public 

grants, and $2.5 million (23 percent) was paid by the private sector. The 

Ohio DOT issued a State Infrastructure Bank (SIB) loan for $2 million. 

The Ohio Rail Development Commission (ORDC) allocated $1 million in 

federal funds from the Rail-Highway Crossing Program, and provided a 

$2 million grant and a $3.5 million loan for track improvements. The 

project loans already have been repaid with rail fees. The Ohio Southern 

Railroad provided the remaining $2.5 million to fund the rail line 

rehabilitation. 

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The Ohio Southern Railroad is in the process of purchasing the rail line 

from the State for its liquidation value, estimated at $362,000 in 2000, 

before it was rebuilt. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Rail-Highway Crossing $1.0 

Ohio DOT SIB loan $2.0 Ohio Southern Railroad paid back SIB 

loan with rail user fees 

ORDC Grant $2.0 

ORDC loan $3.5 Ohio Southern Railroad paid back 

ORDC loan with rail user fees 

Ohio Southern Railroad $2.5 Private sector share 

Source: Ohio Rail Development Commission, 

http://www.dot.state.oh.us/ohiorail. 

Additional Information:

• Ohio Rail Development Commission – 

http://www.dot.state.oh.us/ohiorail 

RICKENBACKER INTERMODAL FACILITY CONSTRUCTION

Location: Columbus, Ohio 

Project Type: Intermodal facility 

Project Cost: $100 million ($65 million for intermodal facility/$35 

million for road and utility work) 

Project Partners/Sponsors: Columbus Regional Airport Authority, 

Pickaway County, Franklin County, City of Columbus, Mid-Ohio 

Regional Planning Commission, Ohio DOT, and Norfolk Southern 

Federal Agencies: FHWA 

Project Status: Currently under construction 

Project Description: Rickenbacker Airport in Columbus, Ohio, is an 

international multimodal cargo airport with Foreign-Trade Zone (FTZ) 

status that serves as a national and international distribution hub. The 

facility also is a high-speed international logistics hub with a strategically 

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planned cargo complex that serves several key business segments, 

including international airfreight, freight forwarding, corporate aviation, 

e-commerce fulfillment, and distribution. 

The Columbus Regional Airport Authority has partnered with Norfolk 

Southern Corporation to create an intermodal facility on an adjacent to 

the Rickenbacker Airport property. The new Rickenbacker Intermodal 

Facility is expected to be operational by early 2007. The facility will 

relieve pressure on the area’s existing intermodal facility at Discovery 

Park. Discovery Park has been operating at capacity for several years, 

forcing Norfolk Southern to turn away business from the Central Ohio 

region. 

Funding and Financing Mechanisms: The new intermodal facility will 

be a public-private partnership among Norfolk Southern, the Columbus 

Regional Airport Authority, and other government agencies. The 

Airport Authority is paying for various environmental and traffic 

studies, and currently is working with Pickaway County, Franklin 

County, the City of Columbus, Mid-Ohio Regional Planning 

Commission, Ohio DOT, and FHWA to obtain funding for the other 

needed improvements. SAFETEA-LU provided $30.4 million in funding 

for the facility and Norfolk Southern is investing $34 million. Additional 

funding support is derived from Norfolk Southern Railroad, and from 

the States of Virginia, West Virginia, and Ohio for rail-related 

improvements to the Heartland Corridor. The Heartland Corridor, 

which runs between the deep water port at Norfolk, Virginia, and the 

planned Rickenbacker intermodal facility, is detailed in a separate case 

study. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

SAFETEA-LU $30.4 Earmark 

Norfolk Southern $34.0 Private Sector investment 

Source: Columbus Regional Airport Authority. 

Note: The table does not include funds from other project partners. 

Additional Information:

• Rickenbacker Airport – http://www.rickenbacker.org 

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Oregon 

COLUMBIA SLOUGH BRIDGE TO INTERMODAL YARDS

Location: Portland, Oregon 

Project Type: Railroad construction and railroad bridge 

Project Cost: $6 million 

Project Sponsors/Partners: Port of Portland and Ohio DOT 

Federal Agencies: FHWA 

Project Status: Completed in 1997 

Project Description: The project consisted of construction of a railroad 

bridge over the Columbia Slough to connect the Port of Portland to 

inland rail yards and eliminate the need for truck drayage from the port. 

The project was part of a series of projects under the Partnership for 

Transportation Investment (PTI), an Oregon DOT program that 

encourages states and localities to use a variety of sources to pay for 

transportation infrastructure. The project was completed in 1997. The 

estimated truck emissions reductions were 52 kg/day VOC, 241 kg/day 

CO, and 364 kg/day NOx. 

Funding and Financing Mechanisms: The rail bridge was funded 

through a combination of federal and port funds. Federal funds came 

from ISTEA Demonstration ($2.1 million) and CMAQ funds ($0.9 million). 

The Port of Portland provided $3 million for the project. The tracks are 

leased to Union Pacific and Burlington Northern Santa Fe. The railroads 

pay a “wheelage” fee of $53 per rail car for 15 years. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

ISTEA Demonstration grant $2.1 

CMAQ $0.9 

Port of Portland $3.0 

Source: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

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Additional Information:

• Port of Portland – http://www.portofportland.com 

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

IMPROVING FUEL ECONOMY AND AIR QUALITY ON THE 

I-5 CORRIDOR

Location: Oregon, Washington and California 

Project Type: Emission Reduction and Fuel Savings 

Project Cost: $3.3 million to date, $5.7 million available in loan fund 

Project Sponsors/Partners: State and Local Agencies: Oregon Department 

of Transportation; Oregon Department of Energy, Oregon Department of 

Environmental Quality, Lane Regional Air Protection Agency, 

Sacramento Air Quality Management District, Port of Seattle, Puget 

Sound Clean Air Agency, Washington Department of Ecology, 

Sacramento Council of Governments, Lane Council of Governments; 

Portland Metro; Trade Associations: Oregon Trucking Association, 

National Fuel Negotiators; truck stops: Jubitz Truck Stop, Truck and 

Travel, The 49er; trucking companies: over 300 small fleets and owneroperators; SmartWay Transport; West Coast Diesel Collaborative; and 

others 

Federal Agencies: U.S. Environmental Protection Agency; Federal 

Highway Administration, National Research Energy Lab, Clean Cities 

Project Status: Ongoing 

Project Description: This project consists of providing and facilitating 

EPA SmartWay upgrades to trucks traveling along the I-5 Corridor in 

Oregon. EPA SmartWay upgrades consists of a combination of 

technologies that improve fuel efficiency and reduce emissions. The 

SmartWay upgrade includes: 

• Auxiliary Power Units (APU); 

• Single wide tires and aluminum wheels; 

• Light-weight truck and trailer components; 

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• Aerodynamic packages; 

• Automatic tire inflation systems; 

• Shore Power HVAC systems with plug in capability; 

• Exhaust retrofits; and 

• Heaters. 

Cascade Sierra Solutions (CSS) has showcase centers of SmartWay 

technologies in truck stops in Oregon and is in the process of setting up 

centers in California and Washington. CSS breaks down the awareness 

barrier by showcasing technologies, educating and providing 

information to truck drivers about these technologies and coordinating 

the installation of equipment. CSS breaks down the capital cost barrier 

by providing low-cost financing with no down payment and extended 

terms. CSS also provides grants and tax credits for truck owners. CSS 

breaks down the regulatory barrier by providing information about 

impending laws and rules that impact the trucking industry. 

Funding Sources: CSS purchases the SmartWay equipment and pays for 

installation (with SIB loan money, and state energy loan funds). The 

final cost of the SmartWay upgrades to truck owners includes a small 

percentage for risk and a low interest rate for the term of the lease. 

Currently, the interest rate is zero percent because of a U.S. EPA grant 

that is being used to pay the interest. The next round of funding will be 

below market between 4 and 7 percent with no down-payment and a 

five-year payback period. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Sacramento AQMD/SACOG $0.2 For Sacramento Center 

U.S. EPA Grant $0.2 For Coburg Center and initial project 

development 

Oregon State Department of 

Energy 

$2.7 plus 30.5% 

of Oregon leases

Oregon DOT – SIB Loan $3.0 

Original Equipment 

Manufacturer (OEM) support 

6% of sales Manufacturers contribute 6 percent of 

sales generated; currently have more 

than 30 OEM partners with CSS. 

Source: Cascade Sierra Solutions 

Additional Information: 

• Cascade Sierra Solutions, http://www.cascadesierrasolutions.org 

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Pennsylvania 

DELAWARE VALLEY REGIONAL PLANNING COMMISSION 

(DVRPC) CMAQ COMPETITIVE PROGRAM

Location: Greater Philadelphia-Camden-Trenton Area, PennsylvaniaNew Jersey 

Project Type: Intermodal facility, rail construction, port access, truck 

idle-reduction 

The DVRPC CMAQ 

competitive program 

awarded funds to five 

freight projects in the 

last round of project 

selection. 

Project Cost: Five freight-related projects, $4.4 million 

Project Sponsors/Partners: Delaware Valley Regional Planning 

Commission, IdleAire Technologies Corporation, Brandywine Valley 

Railroad Company, Philadelphia Industrial Development Corporation, 

Philadelphia Regional Port Authority, and Norfolk Southern 

Federal Agencies: FHWA 

Project Status: Included in FY 2005-2008 TIP 

Project Description: Every two to three years, DVRPC sets a specific 

amount of CMAQ funds within its Transportation Improvement 

Program (TIP) to fund projects through a competitive program. Projects 

may be submitted by any public agency or public-private partnership. 

On the last round of competitive CMAQ projects, DVRPC selected a total 

of 24 projects, of which 5 are freight projects. 

• Coatesville Transload/Intermodal Facility – This project consists 

of the development of a new regional transload/intermodal 

facility that will allow use by bulk commodity shippers and 

receivers, and enable commercial shipments to be accommodated 

by rail instead of long-haul truck service. The project includes the 

rebuilding of track, installing ties, and one switch, among other 

activities. The total cost of the project is $395,500. 

• Philadelphia Food Distribution Center Cross-Dock Facility – 

This project consists of the construction of a railroad boxcar-totruck transfer terminal for transloading frozen/refrigerated food 

in the Philadelphia Food Distribution Center. The air quality goal 

is to eliminate long-distance truck trips from Interstate highways 

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and local streets by converting trips to boxcars. The total project 

cost is $843,000. 

• New Rail line track to Former Philadelphia Navy Yard – The 

project includes rebuilding 2.1 miles of track, and reconstructing 

and reinstalling lead track into a new intermodal terminal. The air 

quality goal is to eliminate long-distance truck trips from 

Interstate highways and local streets by converting trips to 

boxcars. The project cost is $1.7 million. 

• Advanced Travel Center Electrification – This project consists of 

installation of equipment at selected truck rest stops to provide 

heat/air conditioning, electric power, phone, Internet, and other 

amenities, for an hourly fee to drivers so that they may turn off the 

truck engines while resting. The project cost is $905,750. 

• Packer Avenue Marine Terminal Gate Enhancement – This 

project includes the construction of improvements to modernize 

the gate structure, and the purchase and installation of software 

and hardware to automate the gate process at the Packer Avenue 

Marine Terminal in the Port of Philadelphia. The cost of this 

project is $525,000. 

Funding and Financing Mechanisms: The competitive CMAQ program 

awarded $2.7 million to the freight projects listed above. Other project 

funds come from the project sponsors. For instance, the project sponsor 

for the rail line into the Former Philadelphia Navy Yard is Norfolk 

Southern railroad. Their share for this project is $546,700. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $2.7 

Project Sponsor Share $1.7 Matching to CMAQ funding 

Source: DVRPC. 

Additional Information:

• Delaware Valley Regional Planning Commission – 

http://www.dvrpc.org/transportation/capital/cmaq.htm 

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Rhode Island 

FREIGHT RAIL IMPROVEMENT PROJECT (FRIP) 

Location: Rhode Island 

Project Type: Rail construction and vertical clearance 

Project Cost: $196 million 

Project Sponsors/Partners: Rhode Island DOT and Amtrak 

Federal Agencies: FHWA 

Project Status: Completed in October 2006 

Project Description: The FRIP is a 22-mile project located within 

Amtrak’s Northeast Corridor in Rhode Island. It entails constructing a 

freight dedicated track along Amtrak’s mainline tracks, and linking 

Quonset/Davisville to the Boston Switch at Central Falls and out to 

western markets. 

As part of the project, several bridges had to be reconstructed or raised 

to provide additional clearance. Parallel tracks to Amtrak’s existing 

tracks also had to be built to further accommodate freight rail. In 

northern areas of the corridor, Rhode Island DOT undercut the existing 

tracks to provide additional vertical clearance from the tracks. This 

alteration also helped to prevent modifying the existing transportation 

infrastructure, including a series of bridges in Pawtucket and Central 

Falls. There was track access for the trains in 2005. Additional work not 

related to train operations (i.e., landscaping) was completed in 2006. 

Funding and Financing Mechanisms: The FRIP is administered by the 

Amtrak Force Account (work performed by Amtrak forces) as well as 

Rhode Island DOT construction contracts. Funding for the project is a 

mix of state and federal funds, including a combined $51 million in 

planned GARVEE and Motor Fuel bonds. Use of the GARVEE allowed 

Rhode Island to “reserve,” or program, its future annual highway dollars 

in order to complete this project. The project also received a $6 million 

congressional earmark that required a 50 percent local match. The local 

match was provided by the State and private sector through general 

obligation bonds and private user fees, respectively. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Bonds $51.0 GARVEE and Motor Fuel bonds 

Congressional Earmark $6.0 

State/Private Sector $6.0 Matching funds to federal grant 

Source: Rhode Island DOT; FHWA Innovative Finance Quarterly, Fall 2003. 

Additional Information:

• Rhode Island Department of Transportation – 

http://www.dot.state.ri.us 

South Carolina 

AIR FREIGHT REGIONAL HUBBING FACILITY

Location: Columbia, South Carolina 

Project Type: Air-truck cargo facility 

Project Cost: $64.3 million 

Project Sponsors/Partners: South Carolina DOT, South Carolina 

Coordinating Council for Economic Development, Central Midlands 

Regional Planning Council, Richland-Lexington Airport Commission, 

and United Parcel Service 

Federal Agencies: Federal Aviation Administration 

Project Status: Completed in 1996 

Project Description: This project involved the installation of a southeast 

regional air freight hubbing facility for United Parcel Service (UPS) at the 

Columbia Metropolitan Airport. The installation of the facility was 

initiated with design in September 1994, and construction was completed 

in July 1996. Freight arrives by truck and plane, is tugged to a sorting 

facility and sorted, and is then distributed by truck and plane across the 

southeastern United States and beyond. To accommodate this process, 

various transportation facilities were constructed. These included: an 

aircraft parking apron (over 35 acres for 14 DC-8 aircraft), a bridge for 

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trucks and tugs, a vertical depression of SC 302 to separate local traffic 

from trucks, and a sorting facility (260,000 square feet). 

Funding and Financing Mechanisms: Federal, state, local, and private 

sector funds were committed for the construction of the facility and 

access elements. 

The Federal Aviation Administration provided $21.6 million for the 

aircraft parking and other airfield improvements. 

State and local funds came from the South Carolina DOT, South Carolina 

Coordinating Council for Economic Development, and Central Midlands 

Regional Planning Council. These agencies provided $1.2 million for the 

bridge and vertical depression of SC 302. The Richland-Lexington 

Airport Commission provide $6.5 million for the entire project (except 

the sorting facility). 

UPS paid for the construction of the sorting facility ($35.0 million). 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Federal Aviation Administration $21.6 Aircraft parking apron and other airfield 

improvements 

South Carolina DOT $0.05 Vertical depression of SC 302 

South Carolina Coordinating 

Council for Economic 

Development 

$0.7 Bridge and vertical depression of 

SC 302 

Central Midlands Regional 

Planning Council 

$0.5 Bridge and vertical depression of 

SC 302 

Richland-Lexington Airport 

Commission 

$6.5 Aircraft parking apron, airfield, bridge 

and vertical depression of SC 302 

UPS $35.0 Sorting facility 

Source: FHWA, Freight Planning, http://www.fhwa.dot.gov/

freightplanning/index.htm. 

Additional Information:

• FHWA, Freight Planning, http://www.fhwa.dot.gov/

freightplanning/index.htm 

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COOPER RIVER BRIDGE REPLACEMENT

Location: Charleston, South Carolina 

Project Type: Bridge replacement and highway access to port 

Project Cost: $667 million 

Project Sponsors/Partners: South Carolina DOT, South Carolina State 

Ports Authority, and Charleston County 

Federal Agencies: FHWA 

Project Status: Completed in 2005 

Project Description: The Cooper River Bridge was built to replace two 

obsolete bridges over the Cooper River, providing improved access and 

capacity between Charleston and Mount Pleasant. The new eight-lane 

bridge opened to traffic in July 2005, and includes an oceanside 

pedestrian/bicycle lane. The new bridge also provides increased 

clearance for vessels accessing the Port of Charleston and has the 

capacity of handling heavy vehicles. The bridge is an important 

roadway link to the Port of Charleston. 

Funding and Financing Mechanisms: The Cooper River Bridge was 

financed with a TIFIA loan, and FHWA, state, and local funds. The 

TIFIA loan provided $215 million; the loan was refinanced in 2004 

through the issuance of tax-exempt bonds by the South Carolina 

Transportation Infrastructure Bank (SCTIB). In addition, $127 million 

came from FHWA and South Carolina DOT matching funds. 

The SCTIB provided a grant of $325 million. Before the repayment of the 

TIFIA loan, the SCTIB was responsible for the loan payments, estimated 

at $15 million annually. Funding sources to repay the TIFIA loan 

included funds from South Carolina DOT, the South Carolina State Ports 

Authority (SCSPA), and Charleston County. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

TIFIA Loan $215 

FHWA Funds (including state match) $127 

SCTIB Grant $325 

Source: NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 2003. 

Additional Information:

• South Carolina Department of Transportation – 

http://www.scdot.org 

• Cooper River Bridge – http://www.cooperriverbridge.org 

• NCHRP Report 497 Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs. Available at 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf 

Tennessee 

TRAVEL CENTER ELECTRIFICATION UNITS

Location: Petro Travel Center Number 12 on Watt Road just south of the 

I-40/75 interchange, Knoxville, Tennessee 

Project Type: Truck Idle Reduction 

Project Cost: $1.3 million 

Project Sponsors/Partners: Knox County, Knoxville Regional 

Transportation Planning Organization, IdleAire Corporation 

Federal Agencies: FHWA 

Project Status: Completed November 2002 

Project Description: The primary goal of the Advanced Travel Center 

Electrification (ATE) units are to reduce emissions created by idling 

trucks. Large diesel truck idling contributes significantly to air pollution 

levels in and around the Watt Road area. IdleAire’s Advanced Travel 

Center Electrification (ATE) units can eliminate truck idling emissions 

while drivers rest by providing power to the truck cab, temperature 

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control, and other amenities such as Internet. This proposal is to design 

and construct a demonstration ATE project at the Watt Road Petro 

Travel Center, consisting of 100 ATE parking spaces. By converting the 

parking spaces to ATE, IdleAire hopes demonstrate the viability of the 

technology, judge the acceptability of the technology among truck 

owners and drivers, and lay a foundation for expanding across 

Tennessee and the nation as an effective idling alternative. The 100 ATE 

parking spaces will remove emissions by about 3,753 metric tons 

annually or 10,283 kilograms per day. The project has a projected useful 

life of 15 years or longer and is self-supporting after initial funding. 

Funding and Financing Mechanisms: Congestion Mitigation and Air 

Quality (CMAQ) funds contributed $1 million to this project. Knox 

County acted as the sponsor and provided the funding match of $250,000 

which was refunded to the county by IdleAire Corporation. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

CMAQ $1.0 

Knox County $0.3 

Source: Knoxville Regional Transportation Planning Organization 

Additional Information: 

• Knox County Department of Engineering and Public Works, 

http://knoxcounty.org/epw/highwaymain.php 

• IdleAire Technologies Corporation, http://www.idleaire.com 

• Knoxville Regional Transportation Planning Organization, 

http://www.knoxtrans.org. 

Texas 

RAILROAD CROSSING RELIABILITY PARTNERSHIP PROGRAM

Location: Dallas-Fort Worth, Texas 

Project Type: Rail-highway crossing improvements 

Project Cost: $11.74 million (projects selected in 2004); $4.99 million 

(projects selected in 2005) 

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Project Sponsors/Partners: North Central Texas Council of 

Governments, Dallas Area Rapid Transit, Texas DOT, local 

municipalities in Dallas-Fort Worth region, and Burlington Northern 

Santa Fe 

Federal Agencies: FHWA 

Project Status: Program currently under implementation; some projects 

completed and/or under construction. 

Project Description: The goal of the Railroad Crossing Reliability 

Partnership Program was to improve the safety and/or reliability of atgrade railroad crossings in the Dallas-Forth Worth region. Eligible 

projects include: crossing elimination, gate improvements, structural 

barriers, channelization, ITS deployments, improvement to roadway 

geometry and crossing surfaces, access roads, pedestrian or bicycle 

facilities, improved signs or warning devices, and other capital expenses 

necessary to meet the Program goals. The sponsor is the Regional 

Transportation Council (RTC). A process for project selection was 

approved in September 2002. Projects were submitted between August 

and October 2003, and evaluations and project recommendations made 

by the evaluation committee were approved in August 2004. In 2005, 17 

projects to improve rail-highway crossings along the Trinity Railway 

Express (Dallas-Fort Worth commuter rail) were approved for a total 

program investment of $5 million. The timeframe for contract letting of 

the last round of projects is 2006 through 2012. 

Funding and Financing Mechanisms: The Program is funded with STP 

funds. The program requires a 20 percent match. Funding partners 

include Burlington North Santa Fe Railway, Dallas Area Rapid Transit, 

local Texas DOT, North Central Texas Council of Governments local 

municipalities. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

STP $3.12 Fort Worth District 

Local Match $0.78 Fort Worth District 

STP $6.27 Dallas District 

Local Match $1.57 Dallas District 

Source: North Central Texas Council of Governments. 

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Additional Information:

• North Central Texas Council of Governments – 

http://www.nctcog.org 

TEXAS PACIFICO RAIL LINE

Location: Forth Worth to Presidio, Texas 

Project Type: Railroad acquisition and rehabilitation 

Project Cost: $9.5 million for railroad acquisition; initial rehabilitation 

cost estimated at $21.5 million 

Project Sponsors: Texas DOT and Grupo México 

Federal Agencies: None 

Project Status: Railroad acquired by TxDOT in 2001 

Project Description: The South Orient Railroad Company filed for 

abandonment of the Texas Pacifico Rail Line (formerly known as the 

South Orient Rail Line) in 1998. The rail line is 400 miles long, running 

between Forth Worth to the border of Mexico, at Presidio, where it 

connects to Ferromex railroad in Mexico. TexasDOT purchased the rail 

line in 2001, acquiring all rights, titles, and interests in the rail line. The 

rail line was leased and is currently operated by Grupo México. 

Funding and Financing Mechanisms: The rail line acquisition cost was 

$9.5 million. The Texas legislature appropriated $6 million in 1999 to 

purchase the rail line. The remaining $3.5 million came from a 40-year 

lease and operating agreement with Grupo México. Initial rehabilitation 

expenditures have been reported at $21.5 million, shared between Grupo 

México ($15 million) and Texas DOT ($6.5 million). 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Texas DOT $6.0 Texas Legislature appropriation for rail 

line acquisition 

Grupo México $3.5 Lease and Operating agreement 

Texas DOT $6.5 Rehabilitation funding 

Grupo México $15.0 Rehabilitation funding 

Source: Traffic World, February 14, 2005. 

Additional Information: 

• Texas Department of Transportation – 

http://www.dot.state.tx.us/ 

Virginia–West Virginia–Ohio 

HEARTLAND CORRIDOR

Location: Norfolk, Virginia to Columbus, Ohio 

Project Type: Vertical clearance, intermodal facilities, and rail relocation 

Project Cost: $309 million 

Project Sponsors/Partners: Norfolk Southern, Virginia DOT, West 

Virginia DOT, and Ohio Rail Development Commission 

Federal Agencies: FHWA 

Project Status: Currently in planning stages; intermodal terminal in 

Columbus, Ohio currently is under construction (see Rickenbacker 

Intermodal Facility Construction case study, page 111). 

Project Description: The Heartland Corridor project includes: 

1) providing double-stack clearance between Roanoke, Virginia, through 

West Virginia to Columbus, Ohio; 2) new or expanded intermodal 

facilities in three locations along the corridor, and 3) rail relocation of the 

Western Freeway Rail Corridor in Portsmouth, Virginia. The total 

project costs are distributed among the elements listed below as follows: 

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• Heartland Corridor Double-Stack Clearance (including intermodal 

facility in Prichard, West Virginia) – $169 million; 

• Intermodal Terminals in Columbus, Ohio and Roanoke, Virginia – 

$80 million; and 

• Western Freeway Rail Relocation – $60 million. 

Funding and Financing Mechanisms: Federal and state funding sources 

have been identified to fund all the elements of this project. About $11 

million of the project cost remain unfunded, related to the Western 

Freeway rail relocation. 

SAFETEA-LU authorized a total of $143 million for this project, 

including $95 million for the double-stack clearance work, $15 million for 

the rail relocation, and $33 million for the intermodal facilities. 

Virginia has approved a $22.4 million grant through the Rail 

Enhancement Fund to pay for the Virginia components of the Heartland 

Corridor (double-stack clearance and Roanoke intermodal facility). The 

Rail Enhancement Fund grant requires a 30 percent match, which is 

expected to come from Norfolk Southern. The Ohio Rail Development 

Commission (ORDC) recently approved (April 2006) $836,355 to pay for 

the double-stack clearance work in Ohio, with matching funds (10 

percent) from Norfolk Southern. Norfolk Southern has committed $44.4 

million to the double-stack clearance and $5.4 million for the Roanoke 

intermodal facility. 

For the Western Freeway rail relocation projects, $25.8 million will be 

provided from the Rail Enhancement Fund, $5.0 million from the 

Governor’s Transportation Funds, and $3.75 million from the state to 

match the SAFETEA-LU earmark. The Rail Enhancement Fund grant 

requires a 30 percent match that would complete the unfunded costs of 

this project. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Projects of National and Regional 

Significance 

$90.0 For double-stack clearance work 

Projects of National and Regional 

Significance 

$15.0 For Western Freeway Rail Relocation

High-Priority Projects $5.0 For Roanoke intermodal facility 

VA Rail Enhancement Fund $48.2 For double-stack clearance (VA), 

Roanoke intermodal facility, and 

Western Freeway Rail Relocation 

Governor’s Transportation Funds $5.0 For Western Freeway Rail Relocation

VA Match to Federal Funds $3.7 For Western Freeway Rail Relocation

ORDC grant $0.8 For double-stack clearance work 

Norfolk Southern $49.8 Includes matching funds for VA Rail 

Enhancement Fund and ORDC 

grants (double-stack clearance and 

Roanoke intermodal facility) 

Sources: FHWA, SAFETEA-LU Legislation, available at http://www.fhwa.dot.

gov/safetealu/index.htm, and Public Private Partnership Case Studies, 

http://www.fhwa.dot.gov/ppp/heartland.htm; Virginia Department 

of Rail and Public Transportation, http://www.drpt.state.va.us/

projects/current/rail-fund.aspx; Ohio Rail Development Commission, 

http://www.dot.state.oh.us/OHIORAIL/. 

Note: The table includes only committed funds and matching funds for 

Virginia and Ohio grants. Funding for the Rickenbacker Intermodal 

Facility are excluded; see case study on page 111. 

Additional Information:

• Virginia Department of Rail and Public Transportation – 

http://www.drpt.state.va.us 

• Ohio Rail Development Commission – 

http://www.dot.state.oh.us/OHIORAIL/ 

Washington 

FREIGHT ACTION STRATEGY (FAST) CORRIDOR 

Location: Puget Sound Region; Everett-Seattle-Tacoma, Washington 

Project Type: Highway and rail port access, highway improvements, 

and rail capacity 

Project Cost: Phase I – $545.6 million; Phase II – $318.2 million 

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Project Sponsors/Partners: Puget Sound Regional Council, Washington 

State DOT, Ports of Everett, Seattle and Tacoma, Transportation 

Improvement Board, Freight Mobility Strategy Investment Board, local 

governments, Union Pacific, and Burlington Northern Santa Fe. 

Federal Agencies: FHWA 

Project Status: Eight projects completed; remaining projects under 

design or construction 

Project Description: The FAST Corridor Program started in 1996, and 

consists of several freight-related investments to address future increases 

of freight traffic at the ports in the Puget Sound region due to projected 

increases in imported goods (mainly from Asia), and needed 

improvements on east-west access from the ports to outside of the 

region. FAST Corridor improvements were needed to ensure that ports 

in the Puget Sound region remain competitive with other ports on the 

United States West and East coasts, and Vancouver, Canada. 

Phase I of the FAST Corridor program included 15 projects, of which 

eight have been completed, and the remaining are under design or 

construction. Funding for Phase I already has been identified and 

committed. Phase II consists of 10 projects, which focus mainly on truck 

mobility improvements. FAST Corridor partners are still in the process 

of obtaining funds for remaining projects. 

Funding and Financing Mechanisms: Federal funding for the FAST 

Corridor Phase I has been provided through several grant and 

discretionary programs, earmarks, STP and NHS. The Federal 

Government has provided $190.9 million for Phase I and $88.5 million 

for Phase II. 

Burlington Northern Santa Fe and Union Pacific have provided $19.8 

million for the Phase I project. The railroads agreed to provide 5 percent 

of the cost of grade separation projects. For Phase II, the railroads are 

expected to contribute about $3.4 million to fund four rail-related 

projects. 

State funding includes funds from the Washington DOT, the 

Transportation Improvement Board, and the Freight Mobility Strategy 

Investment Board. Local governments and the ports also have provided 

funding for the FAST program. 

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Phase I 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

ISTEA Earmarks $13.5 

STP and NHS $63.8 

TEA-21 High-Priority Projects $44.0 

TEA-21 Demonstration (Section 378) $22.0 

TEA-21 FAST earmarks $2.0 

TEA-21 National Corridors and Borders 

(Sections 1118/1119) 

$33.5 

SAFETEA-LU $3.5 

Anticipated federal funds $8.7 

Washington DOT $29.3 

Transportation Improvement Board $49.3 

Freight Mobility Strategy Investment 

Board 

$92.6 

Ports $36.6 

Railroads $19.8 

Local/Other $67.3 

Unknown Funds $59.7 

Source: FAST Project Funding Matrix (Updated: September 2005), 

provided by Puget Sound Regional Council (PSRC). 

Phase II 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

ISTEA $10.9 

STP and NHS $7.1 

TEA-21 FAST earmarks $44.7 

TEA-21 National Corridors and 

Borders (Sections 1118/1119) 

$6.2 

SAFETEA-LU $3.9 

Anticipated federal funds $15.9 

Transportation Investment 

Board 

$29.3 

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Phase II (continued) 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Freight Mobility Strategy 

Investment Board 

$41.2 

2003 Nickel Package 

(Washington DOT) 

$46.0 Funded by an increase of five cents per 

gallon of gas. Program includes 158 

projects and a total investment of $3.9 

billion over 10 years. 

Ports $9.1 

Railroads $3.4 

Local/Other $49.6 

Unknown Funds $51.0 

Source: FAST Project Funding Matrix (Updated: September 2005), provided by 

PSRC. 

Additional Information:

• FAST Corridor – http://www.wsdot.wa.gov/mobility/fast/ 

HYUNDAI TERMINAL AT PORT OF TACOMA

Location: Port of Tacoma, Washington 

Project Type: Port terminal and lifting equipment 

Project Cost: $101 million 

Project Sponsors/Partners: Port of Tacoma and Hyundai Corporation 

Federal Agencies: None 

Project Status: Completed in 1999 

Project Description: Port of Tacoma Hyundai terminal construction and 

equipment purchase.

Funding and Financing Mechanisms: The Port of Tacoma partnered 

with the Hyundai Corporation to build the Hyundai Terminal, a $101 

million 50-acre facility. The Port provided $56 million for new terminal 

construction and a new pier. The Port of Tacoma issued $40 million in 

tax-exempt private activity bonds, which are repaid through lease 

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income and container handling fees. Hyundai Corporation contributed 

$45 million for four new cranes and other lifting equipment in return for 

a leasehold interest in the new terminal. In 2000, the Port of Tacoma 

initiated the expansion of the original facility to increase the terminal size 

to 100 acres. To date, the terminal has been expanded to 80 acres, with 

plans to add the final 20 acres by 2006. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Port of Tacoma – Private Activity 

Bonds 

$40.0 Repaid with lease income and container 

handling fees 

Port of Tacoma $16.0 

Hyundai Corporation $45.0 For cranes and cargo handling 

equipment 

Source: University of Washington, Multimodal and Intermodal Infrastructure 

Development in Washington State. Written by Balwani, Seema Kimberly 

Berry, Angela Leung, Joseph Llobrera, Evan Matthews, and Lisa Voight. 

May 2001. 

Additional Information:

• Port of Tacoma – http://www.portoftacoma.com 

PORT OF TACOMA OVERPASS CONSTRUCTION

Location: Port of Tacoma, Washington 

Project Type: Highway crossing separation, port access, and rail 

construction 

Project Cost: $30.8 million 

Project Sponsors/Partners: Port of Tacoma, Washington DOT, and 

Burlington Northern Santa Fe 

Federal Agencies: FHWA 

Project Status: Completed in 2001 

Project Description: The Port of Tacoma Overpass project, the first 

project from the FAST Corridor program to be implemented, was 

completed in August 2001. The project consisted of the construction of 

an overpass (to eliminate the intersection of the Port of Tacoma Road 

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and SR-509) and construction of a new interchange connecting both 

roadways. The project also provided additional rail capacity with the 

construction of “arrival and departure” tracks. 

Funding and Financing Mechanisms: Funding for this project included 

federal, state, port, and railroad sources. Federal funds for the project 

totaled $24.3 million and included STP, High-Priority Project, and 

Borders and Corridors funds. Washington DOT provided 

approximately $2 million, and Burlington Northern Santa Fe contributed 

with $1.1 million. The remaining funding was provided by the Port of 

Tacoma. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

STP $15.4 

TEA-21 High-Priority Projects $4.5 

TEA-21 National Corridors and Borders 

(Sections 1118/1119) 

$4.4 

Washington DOT $1.9 

Port of Tacoma $3.5 

Burlington Northern Santa Fe $1.1 

Source: FAST Project Funding Matrix (Updated: September 2005), provided by 

PSRC. 

Additional Information:

• Port of Tacoma – http://www.portoftacoma.com 

• FAST Corridor – http://www.wsdot.wa.gov/mobility/fast/ 

Wisconsin 

DIDION MILLING PROJECT AND RAIL LINE IMPROVEMENTS

Location: Horicon-Cambria, Wisconsin 

Project Type: Rail loading/unloading facilities and rail rehabilitation 

Project Cost: $3.87 million for Didion Milling facilities and rail 

connections; $4.85 million for Horicon to Cambria rail line rehabilitation 

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Project Sponsors/Partners: Wisconsin DOT, Didion Milling, and 

Wisconsin & Southern Railroad Company 

Federal Agencies: None 

Project Status: N/A 

Project Description: The Didion Milling project consisted of the 

construction of a food packaging/processing facility in Cambria, 

Wisconsin. The Wisconsin DOT provided two loans for the construction 

of a rail-related storage and loading/unloading facility, and spur track 

connecting to the rail line from Cambria to Horicon. 

The Horicon-Cambria rail line, owned by Wisconsin DOT and the East 

Wisconsin Counties Railroad Consortium, and rail service is provided by 

the Wisconsin & Southern Railroad Company (WSOR). The rail line was 

in need of substantial upgrading to ensure long-term service to the 

Cambria milling facility. The rail line rehabilitation project included 

replacement of cross-ties and switches, rail tracks, new ballast, and the 

reconstruction of 31 road crossings. In addition, a classification yard was 

constructed in Horicon to serve the northern division of the Wisconsin & 

Southern Railroad System. 

Funding and Financing Mechanisms: The Didion Milling projects were 

funded through loans provided by Wisconsin DOT, totally $3.87 million. 

The rail rehabilitation work was funded with a loan and a grant from 

Wisconsin DOT, with matching funds provided by WSOR. The loans 

were provided through the Freight Rail Infrastructure Program (FRIIP), 

which provides loans to local governments, railroads, and private 

industries for railroad projects and repaid by revenues generated by 

Didion Milling and WSOR respectively. The grants were provided 

through the Freight Railroad Preservation Program (FRPP), which 

provides funding to local governments, railroads, and private industries 

for rail preservation, rehabilitation on publicly owned rail lines, and for 

purchasing abandoned rail lines. 

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Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Wisconsin DOT – FRIIP Loan $2.21 1999 loan to Didion Milling; for railrelated storage and loading/unloading 

facilities 

Wisconsin DOT – FRIIP Loan $1.66 2003 loan to Didion Milling; for spur 

track and rail-related infrastructure at 

soybean processing facility 

Wisconsin DOT – FRIIP Loan $1.07 2001 and 2002 loans to WSOR for rail 

line rehabilitation 

Wisconsin DOT – FRPP Grant $3.03 2001 and 2002 grants to WSOR for rail 

line rehabilitation 

WSOR/East Wisconsin Counties 

Railroad Consortium 

$0.76 Rail line rehabilitation 

Source: Wisconsin Department of Transportation, 

http://www.dot.wisconsin.gov/localgov/aid/railprojects.htm. 

Additional Information:

• Wisconsin Department of Transportation – 

http://www.dot.wisconsin.gov 

• AASHTO, 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

PORT OF SUPERIOR GENERAL MILLS S/X ELEVATOR PROJECT

Location: Superior, Wisconsin 

Project Type: Dock reconstruction 

Project Cost: $1.4 million 

Project Sponsors/Partners: Wisconsin DOT, City of Superior, and 

General Mills 

Federal Agencies: None 

Project Status: N/A 

Project Description: The S/X Facility is a large grain-handling facility 

currently leased by General Mills from Burlington Northern Santa Fe. 

Access to the facility is through vessel, truck, and rail. According to 

Wisconsin DOT, the facility’s primary transfer operation is rail to vessel. 

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The existing dock was in need for extensive repair after the collision of 

two vessels, and many years of exposure to the elements. 

Funding and Financing Mechanisms: Wisconsin DOT awarded a $1.1 

million grant through the Harbor Assistance Grant Program for the dock 

restoration. The City of Superior assisted with the grant request. 

General Mills will provide matching funds (20 percent) to this grant. 

Funding Source/ 

Financing Mechanism 

Amount 

(Millions) Comments 

Wisconsin DOT – Harbor 

Assistance Program Grant 

$1.1 

General Mills $0.3 Matching funds to Wisconsin DOT grant 

Source: Wisconsin Department of Transportation. 

Additional Information:

• Wisconsin Department of Transportation – 

http://www.dot.wisconsin.gov 

• AASHTO, 2005 Freight Transportation Achievers – http://freight.

transportation.org/freight_awards.html 

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References 

4.0 References 

Federal Funding Programs 

• SAFETEA-LU Legislation and Fact Sheets, 

http://www.fhwa.dot.gov/safetealu/index.htm. 

• FHWA CMAQ Program Guide, 

http://www.fhwa.dot.gov/environment/cmaq99gm.htm. 

• FHWA Freight Management and Operations, 

http://ops.fhwa.dot.gov/freight/. 

• FHWA Freight Planning, Freight Provisions in SAFETEA-LU, 

http://www.fhwa.dot.gov/freightplanning/safetea_lu.htm. 

• FHWA Freight Planning, Funding Programs, 

http://www.fhwa.dot.gov/freightplanning/funding.htm. 

• FHWA Freight Management and Operations, Funding and 

Institutional Options for Freight Infrastructure Improvements, 

http://ops.fhwa.dot.gov/freight/freight_analysis/financing.htm. 

• Financing Federal-aid Highways 

http://www.fhwa.dot.gov/reports/finfedhy.htm 

• Highway Trust Fund Primer 

http://www.fhwa.dot.gov/policy/primer98.pdf 

• A Guide to Federal-Aid Programs and Projects 

http://www.fhwa.dot.gov/programadmin/covert21.htm 

• FAA Airport Improvement Program, 

http://www.faa.gov/airports_airtraffic/airports/aip/, 

http://www.Federalgrantswire.com/airport_

improvement_program.html. 

• U.S. Department of Commerce, Economic Development 

Administration, 

http://www.eda.gov/InvestmentsGrants/Investments.xml, 
Financing Freight Improvements 

References 

http://www.Federalgrantswire.com/grants_for_public_

works_and_economic_development_facilities.html. 

• U.S. Department of Agriculture, Community Facility Program 

http://www.rurdev.usda.gov/rhs/cf/cp.htm, 

http://www.Federalgrantswire.com/community_facilities_

loans_and_grants.html. 

• U.S. Environmental Protection Agency, Brownfields Cleanup and 

Redevelopment 

http://www.epa.gov/swerosps/bf/partners/2005_fpg.pdf 

Federal Financing Tools 

• FHWA Innovative Finance, 

http://www.fhwa.dot.gov/innovativeFinance/index.htm. 

• FHWA Public-Private Partnerships, 

http://www.fhwa.dot.gov/ppp 

• Federal Railroad Association, Freight Financial Assistance, 

http://www.fra.dot.gov/us/content/26. 

• FHWA Transportation Infrastructure Finance and Innovation Act 

(TIFIA) Program, 

http://tifia.fhwa.dot.gov 

• FHWA Special Experimental Project Number 15 

http://www.fhwa.dot.gov/ppp/sep15.htm 

State Grant and Loan Programs for 

Freight Improvements 

• California Infrastructure and Economic Development Bank, 

http://www.ibank.ca.gov/state/ibank/ibank_homepage.jsp. 

• Florida Seaport Transportation and Economic Development 

Funding, http://www.dot.state.fl.us/seaport/fsteddesc.htm. 

• Florida Strategic Intermodal System, 

http://www.dot.state.fl.us/planning/sis/. 

138
Financing Freight Improvements

References 

• Illinois Rail Freight Program, 

http://www.dot.state.il.us/rfp.html. 

• Indiana Rail Service Fund, 

http://www.in.gov/dot/modetrans/train/page3.html. 

• Maine Industrial Rail Access Program, 

http://www.maine.gov/mdot/freight/irap.php. 

• Michigan Rail Loan Assistance Program, 

http://www.michigan.gov/mdot/0,1607,7-151-11056_22444-

22233-,00.html. 

• Michigan Freight Economic Development Program, 

http://www.michigan.gov/mdot/0,1607,7-151-11056_22444-

59638-,00.html. 

• Michigan Local Grade Crossing Program, 

http://www.michigan.gov/mdot/0,1607,7-151-11056_22444-

59617-,00.html. 

• Michigan Grade Separation Loan Program, 

http://www.michigan.gov/documents/gradesepprogram_

55324_7.pdf. 

• Minnesota Port Assistance Development Program, 

http://www.dot.state.mn.us/ofrw/waterways.html. 

• New York Industrial Access Program, 

http://www.dot.state.ny.us/progs/iap.html. 

• Ohio Rail Development Commission, 

http://www.dot.state.oh.us/ohiorail/Programs/

Rail%20Programs.htm. 

• Pennsylvania Rail Freight Assistance Program, 

http://www.dot.state.pa.us/Internet/Bureaus/pdBRF.nsf/

RailFreightHomepage?OpenFrameset. 

• Tennessee Aeronautics Transportation Equity Fund, 

http://www.tdot.state.tn.us/aeronautics/handbook/

SponsorsTOC.htm. 

• Virginia Rail Enhancement Fund, 

http://www.drpt.virginia.gov/projects/current/rail-fund.aspx. 

139
Financing Freight Improvements 

References 

• Virginia Rail Industrial Access Program, 

http://www.drpt.virginia.gov/downloads/files/rail_indust_

appl_2003.pdf. 

• Washington Freight Mobility Strategic Investment Board, 

http://www.fmsib.wa.gov/. 

• Wisconsin Harbor Assistance Program, 

http://www.dot.wisconsin.gov/localgov/aid/hap.htm. 

• Wisconsin Railroad Infrastructure Improvement Program, 

http://www.dot.wisconsin.gov/localgov/aid/friip.htm, 

http://www.dot.wisconsin.gov/business/econdev/friip.htm. 

• Wisconsin Railroad Preservation Program, 

http://www.dot.wisconsin.gov/localgov/aid/frpp.htm. 

Case Studies 

• NCHRP Report 497, Financing and Improving Land Access to U.S. 

Intermodal Cargo Hubs, 

http://trb.org/publications/nchrp/nchrp_rpt_497.pdf. 

• AASHTO Innovative Finance, http://www.innovativefinance.org. 

• AASHTO 2005 Freight Transportation Achievers, 

http://freight.transportation.org/freight_awards.html. 

• U.S. Government Accountability Office, Freight Transportation: 

Short Sea Shipping Options Shows Importance of Systematic Approach 

to Public Investment Decisions, 

http://www.gao.gov/new.items/d05768.pdf. 

• U.S. Government Accountability Office, Port Infrastructure: 

Financing of Navigation Projects at Small- and Medium-Sized Ports, 

http://www.gao.gov/archive/2000/rc00058.pdf. 

• FHWA Freight Management and Operations, Funding and 

Institutional Options for Freight Infrastructure Improvements, 

http://ops.fhwa.dot.gov/freight/freight_analysis/financing.htm. 

• California – Alameda Corridor, http://www.acta.org. 

140
Financing Freight Improvements

References 

• Louisiana – Tchoupitoulas Corridor (TIMED Program 

Information), http://www.timedla.com. 

• Nevada – ReTRAC, http://www.cityofreno.com/gov/retrac/. 

• New York – Southern Tier Rail Project, 

http://www.southerntierwest.org/L5/trans_railauthority.htm. 

• New York-New Jersey – Albany Express Barge, 

http://www.panynj.gov/commerce/PIDN-2-2004-rev.pdf. 

• New York-New Jersey – Portway, 

http://www.state.nj.us/transportation/works/portway/

index.html. 

• South Carolina – Cooper River Bridge, 

http://www.cooperriverbridge.org. 

• Texas – Railroad Crossing Reliability Partnership Program, 

http://www.nctcog.org/trans/goods/rcrpp/index.asp. 

• Texas – Texas Pacífico Rail Line, 

Gallagher, John, Rail Bridge for Growth: Resurrected Line in West 

Texas could serve as model for future government investment. Traffic 

World. February 14, 2005. 

• Washington – FAST Corridor, 

http://www.wsdot.wa.gov/mobility/fast/. 

Other Resources 

• AASHTO Directory – State DOTs Contact Information, 

http://www.transportation.org/?siteid=37&pageid=332 

• Association of Metropolitan Organizations – MPO Directory, 

http://www.ampo.org/directory/index.php 

• Federal Transit Administration – Transit Agencies by State, 

http://www.fta.dot.gov/35_ENG_HTML.htm 

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Financing Freight Improvements 

References 

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142
143

Financing Freight Improvements

Glossary of Terms 

Glossary of Terms 

63-20 Corporations – Corporations established under IRS Revenue Rule 

63-20, which permits nonprofit corporations other than solely 

governmental bodies to issue tax-exempt debt. 

Airport Improvement Program – FAA program that provides funding 

for airport planning and development projects at airports included in the 

FAA AIP Handbook.

Allocations – Method of delivering Federal-aid Highway Funds without 

a codified formula. Allocated federal funds are distributed, at the 

discretion of the U.S. DOT Secretary, to states based on specific selection 

criteria serving specific program goals identified by Congress or 

distributed to projects identified by Congress through “earmarking.”

Apportionments – Federal funds distributed to states by 

Congressionally designed formulas. Includes FHWA programs such as 

Bridge (HBRR), Congestion Management and Air Quality (CMAQ), 

Interstate Maintenance (IM), National Highway System (NHS), Surface 

Transportation Program (STP), Highway Safety Improvement Program 

(HSIP), and Corridor Border Infrastructure Program (CBI). 

Assessment District – A special district created where additional 

property taxes are levied to generate revenue used for a specific purpose 

such as infrastructure improvements. Often implemented using tax 

increment financing techniques. 

Authorization Act – In most recent years, a multiyear substantive 

legislation that establishes or continues federal programs or agencies and 

establishes an upper limit on the amount of funds made available for the 

program(a) for a certain period (historically, four to six years). The 

current authorization acct for surface transportation programs is the 

Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 

Legacy for Users (SAFETEA-LU; PL 109-59). 

Bidding Process – Process in which transportation agency requests 

contractors to submit proposals for the construction of transportation 

infrastructure. Usually, a contractor is selected based on best value 

determined and the lowest cost proposal. 
Financing Freight Improvements 

Glossary of Terms 

Bridge Program – Provides funding for replacement, rehabilitation and 

systematic preventive maintenance of the Nation’s highway bridges. 

Brownfield Revitalization Program – A program of the Environmental 

Protection Agency that provides grants or loans for brownfield site 

cleanup. 

Capitalization – Process of depositing funds as seed capital into a State 

Infrastructure Bank (or for other state/local loan programs) to enable 

financial assistance. 

Concession – Long-term agreement in which the private sector obtains 

the rights to operate and collect revenues on a transportation facility. 

Congestion Mitigation Air Quality (CMAQ) Improvement Program – 

Provides funding for transportation projects and programs that improve 

air quality in nonattainment and maintenance area for ozone, carbon 

monoxide, and particulate matter by delivering transportation 

improvements that lead to measurable reductions in highway-based 

emissions. 

Corridor Border Infrastructure Program – Program designed to improve 

the safe and efficient movement of motor vehicles at or across the land 

border between the United States and Canada and the land border 

between the United States and Mexico. 

Credit Enhancement – Financial guarantees or other types of assistance 

that improve credit of underlying debt obligations. Credit enhancement 

has the effect of lowering the interest costs and improving marketability 

of bond issues. 

Credit Ratings – Credit quality evaluations of bonds and notes made by 

independent rating services. A higher bond rating generally lowers the 

interest rate that the borrower must pay, and therefore, overall capital 

costs. 

Debt Service – The amount of money necessary to pay principal and 

interest on a debt instrument (i.e., a bond or loan). 

Dedicated Revenues – Funding source funded through certain deposits 

for funding specific purposes and includes repayment of debt, and may 

144
Financing Freight Improvements

Glossary of Terms 

include tolls, lease income, or dedicated taxes (e.g., motor fuel taxes, or 

sales taxes). 

Economic Development Administration Funds – A U.S. Department of 

Commerce program that provides grants for projects in economically 

distressed industrial sites that promote job creation and/or retention. 

Equity – Commitment of money from public or private sources for 

project finance, with a designated rate of return target. 

Fixed Guideway Modernization Program – Federal Transit 

Administration program that provides funding for capital improvements 

on “fixed guideway” systems, including heavy rail, commuter rail, HOV 

systems, and light rail. 

Flexible Match – Any non-federal match that is allowed under FHWA 

laws and regulations other than state and local cash contributions to a 

project. Flexible match permitted include use of private cash and in-kind 

contributions, publicly owned right-of-way, and funds from other 

federal agencies. 

General Obligation (G.O.) Bond – A security backed by the full faith 

and credit of a state, locality, or other governmental authority. In the 

event of default, holders of G.O. bonds have the right to compel a tax 

levy, other borrowing, or legislative appropriation in order to satisfy the 

debt obligation. 

Grant Anticipation Revenue Vehicle (GARVEE) – A GARVEE is any 

bond or any other form of debt repayable, either exclusively or 

primarily, with future federal aid highway funds under Section 122 of 

Title 23. Although the source of payment is federal aid fund, GARVEEs 

cannot be backed by a federal guarantee, but are issued at the sole 

discretion of, and on the security of, the state issuing entity. 

Harbor Maintenance Fund – A U.S. Army Corps of Engineers program 

that provides funding for operations and maintenance of federally 

authorized channels for commercial navigation. 

Highway Safety Improvement Program (HSIP) – Program established 

under SAFETEA-LU consolidating several safety-based highway 

programs and creating new safety programs designed to achieve a 

145
Financing Freight Improvements 

Glossary of Terms 

significant reduction in traffic fatalities and serious injuries on all public 

roads. 

In-Kind Contributions – Contributions employed in funding a project 

other than cash (including land and professional services) usually used 

to meet non-federal share payable (match) program requirements. 

Interest – Sum paid for the use of capital. 

Interstate Maintenance Program – Provides funding for resurfacing, 

restoration, rehabilitation, and reconstruction (the four “R’s”) of 

Interstate System facilities. 

Intermodal Connectors – Roadways providing a connection major, 

intermodal facilities and routes designated as part of the National 

Highway System. 

Investment-Grade Traffic and Revenue Study – Detailed study of 

current travel demand levels and forecasts of future traffic levels used in 

estimating potential revenues required to support project financing and 

bond issuance of toll projects. 

Joint Development – Any formal arrangement between a public entity 

and a private organization that involves either private sector payments 

to the public authority or the private sector sharing project capital costs. 

Junior Debt – Debt having subordinate or secondary claim on an 

underlying security or source of payment for debt service, relative to 

another issue with a higher priority claim (e.g., Senior Debt). 

Letter of Credit – An instrument or document issued by a bank 

guaranteeing debt holder payment by enabling the bond trustee to draw 

from the bank the full amount of principal and interest due on each debt 

payment date. 

Leverage – A financial mechanism used to increase available funds 

usually by issuing debt (typically bonds) or by guaranteeing or 

otherwise assuming liability for others’ debt on an amount greater than 

cash balances. 

Liability – Amount owed (i.e., payable) by an individual or entity, such 

as for terms received, service rendered, expenses incurred, assets 

146
Financing Freight Improvements

Glossary of Terms 

acquired, construction performed, and amount received but not yet 

earned. 

Line of Credit – A form of loan to be used only in the instance of a 

shortfall in net revenue debt service or other financial commitment (i.e., 

a contingent loan). A line of credit, while similar to a letter of credit, is 

security available directly to the borrower/project sponsor with 

flexibility in the use of funds. 

Loan – Legally binding document which obligates a specific value of 

funds available for disbursement. The amount of funds disbursed is to 

be repaid (with or without interest and late fees) in accordance with the 

terms of a promissory note and/or repayment schedule. 

Long-Range Transportation Plan (LRTP) – Transportation plan 

developed for Urbanized Areas (population greater than 50,000) that 

covers at least a 20-year period and includes both short- and long-term 

strategies and actions that develop and maintain an integrated, 

intermodal transportation system. LRTPs are developed at statewide 

and metropolitan areas. In metropolitan areas, the LRTP must be 

constrained to reasonably available funding sources. In air quality 

nonattainment and maintenance areas the metropolitan LRTP must 

conform to air quality State Implementation Plans. The plan must 

conform to regional air quality implementation plans, where applicable. 

The plan must be constrained to available funding resources. 

Municipal Bonds – Interest bearing obligations issued by state or local 

governments to finance operating or capital costs. The principal 

characteristic that has traditionally set municipal bonds apart from other 

capital market securities is the exemption of interest income from 

Federal income tax. 

National Highway System (NHS) – The NHS is approximately 160,000 

miles (256,000 kilometers) of roadway important to the nation’s 

economy, defense, and mobility designated by Congress. The National 

Highway System (NHS) includes the following subsystems of roadways: 

1) Interstate; 2) other principal arterial; 3) Strategic Highway Network 

(STRAHNET); 4) major strategic highway connectors providing access 

between major military installations and STRAHNET; and 5) intermodal 

connectors (see definition). 

147
Financing Freight Improvements 

Glossary of Terms 

Non-Federal Match – The commitment of state or other non-federal 

funds required to receive federal funds where non-federal share payable 

apply. 

Pay-As-You-Go Financing – Describes government financing of capital 

projects from current revenues or grants, rather than by borrowing. 

Principal – Amount loaned to the borrower and owed to the lender 

which excludes interests, penalties, administrative costs, loan fees, and 

prepaid charges. 

Private Activity Bonds – Tax-exempt bonds issued by states and local 

governments for projects sponsored by a private entity. 

Project Revenues – All rates, rents, fees, assessments, charges and other 

receipts derived by a project sponsor from a project. 

Public-Private Partnerships (PPP) – Contractual agreement between a 

public agency and the private sector that allows for greater private sector 

participation in the delivery of transportation projects. 

Rail Line Relocation Grant Program – New federal funding program 

that provides grants to states for local rail line relocation and 

improvement projects. No funding appropriations were provided for 

fiscal year 2006. 

Rail Rehabilitation and Improvement Financing (RRIF) – RRIF is an 

FRA program that provides loans and credit assistance for acquisition, 

development, improvement, or rehabilitation of intermodal or rail 

equipment and facilities. 

Rail-Highway Crossing Program – Provides funding for projects that 

reduce the number of fatalities and injuries at public highway-rail 

crossings. 

Revenue Bonds – Bonds whose principal and interest are payable 

exclusively from earnings of a public enterprise. 

Revolving Fund – Financing tool that recycles funds by providing loans, 

receiving loan repayments, and then providing further loans. 

148
Financing Freight Improvements

Glossary of Terms 

Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 

Legacy for Users (SAFETEA-LU) – Current transportation authorization 

act, signed into legislation in August 2005 (PL 109-59) providing for 

transportation programs continuity through FY 2009. 

Senior Debt – Debt obligations having a priority claim on the source of 

payment for debt service. 

Shadow Tolls – Per vehicle amounts paid to a facility operator by a third 

party such as a sponsoring governmental entity and not directly by 

facility users. Shadow toll amounts paid to a facility operator can be 

based upon the type of vehicle and distance traveled. 

State Infrastructure Bank (SIB) – A state or multistate revolving fund 

that provides loans, credit enhancement and other forms of financial 

assistance to surface transportation projects. 

State Transportation Improvement Program (STIP) – A short-range 

transportation planning document developed by state DOTs, in 

cooperation/consideration with MPOs, tribal governments, and 

nonmetropolitan local officials. The STIP includes prioritized 

projects/project phases that cover at least four years and is developed at 

least every four years. Projects in the STIP must be consistent with 

LRTPs. In addition, the STIP must be financially constrained (achievable 

within existing or reasonably anticipated funding sources).

State/Local Match – Funding required to match federal funding and 

discretionary funds. Requirements toward this non-federal share 

payable funding is provided in 23 USC Section 120. 

Strategic Highway Network (STRAHNET) – A network of highways 

important to the United States’ strategic defense policy and which 

provide defense access, continuity and emergency capabilities for 

defense purposes. 

Surface Transportation Program (STP) – FHWA program that provides 

flexible funding for projects on any federal aid highway, bridges on 

public roads, transit capital investments, and intracity and intercity bus 

terminal and facilities. 

Tax Increment Financing – Financing technique in which bonds are 

issued to finance public infrastructure improvements, and repaid from 

149
Financing Freight Improvements 

Glossary of Terms 

dedicated revenues from the increase in property taxes as a result of such 

improvements. 

Tax-Exempt Bonds – A bond, issued by a state or local government, 

whose interest payments are not subject to Federal income tax, and 

sometimes also state or local income tax. 

Title 23 of the United States Code (USC) – Highway Title of the United 

States Code that sets forth many of the laws governing the Federal-aid 

Highway Program. The title embodies substantive provisions of law 

that Congress considers permanent and need not to be re-enacted in each 

new highway authorization act. 

Title 49 of the United States Code (USC) – Transportation title that 

includes laws governing various transportation-related programs and 

agencies, including the U.S. DOT, general and intermodal programs, 

interstate commerce, rail and motor vehicle programs, aviation 

programs, pipeline, and commercial space transportation. 

Toll Credits – Section 1044 of the Intermodal Surface Transportation 

Efficiency Act permitted states to apply the value of certain highway 

expenditures funded with toll revenues toward the required state match 

on current federal aid projects. States may only substitute toll credits for 

state match if they demonstrate that a state’s prior year highway 

spending equaled or exceeded the average of the previous three years’

expenditures. 

Transportation Improvement Program (TIP) – A short-range 

transportation planning document developed by MPOs, in 

cooperation/consideration with state DOT(s), Transit Operator(s), tribal 

governments, and nonmetropolitan local officials. The TIP includes 

prioritized projects/project phases that cover at least four years and is 

developed at least every four years. Projects in the TIP must be 

consistent with LRTPs. In addition, the TIP must be financially 

constrained (achievable within existing or reasonably anticipated 

funding sources). 

Transportation Infrastructure Finance and Innovation Act (TIFIA) – 

Federal transportation credit program enacted under TEA-21, and 

modified by SAFETEA-LU, that provides direct federal loans, lines of 

credit, or loan guarantees provided through U.S. DOT to large projects of 

national significance, under criteria developed by Congress. 

150
Financing Freight Improvements

Glossary of Terms 

Truck Parking Facilities Program – New program under SAFETEA-LU 

that provides funding for projects which address the shortage of longterm parking for commercial vehicles on the NHS. 

Turnkey – A generic term for a variety of public-private partnership 

arrangements whereby a public sector entity awards a contract to one or 

more private firms to undertake the development, construction, and/or 

operation of an infrastructure project for a predetermined period of time 

before turning the project back over to the public entity. Turnkeys may 

take various forms, including design-build-transfer and build-operatetransfer. 

User Fees – Revenue collected directly from facility users, including tolls 

or container fees. 

151
Financing Freight Improvements 

Glossary of Terms 

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152
153

Financing Freight Improvements

Acronyms 

Acronyms 

AIP Airport Improvement Program 

AASHTO American Association of State Highway and 

Transportation Officials 

BOO Build-Own-Operate 

BOT Build-Operate-Transfer 

CFR Code of Federal Regulations 

CMAQ Congestion, Mitigation, and Air Quality Improvement 

Program 

DBFO Design-Build-Finance-Operate 

DBOM Design-Build-Operate-Maintain 

DOT Department of Transportation 

EDA Economic Development Administration 

FAA Federal Aviation Administration 

FRA Federal Railroad Administration 

FHWA Federal Highway Administration 

FTA Federal Transit Administration 

FY Fiscal Year 

GARVEE Grant Anticipation Revenue Vehicle 

HOT High-Occupancy Vehicle 

IM Interstate Maintenance 

IRS Internal Revenue Service 

ISTEA Intermodal Surface Transportation Efficiency Act 

MPO Metropolitan Planning Organization 

NHS National Highway System 

PPP Public-Private Partnership 

RLF Revolving Loan Fund 

RRIF Rail Rehabilitation and Improvement Financing 

SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation 

Equity Act: A Legacy for Users 

SIB State Infrastructure Bank 

STP Surface Transportation Program 

STRAHNET Strategic Highway Network 

TEA-21 Transportation Equity Act of the 21st Century 

TIFIA Transportation Infrastructure Finance and Innovation Act 

TOT Truck-Only Toll 

USACE U.S. Army Corps of Engineers 

USC United States Code 

USDA U.S. Department of Agriculture 

USEPA U.S. Environmental Protection Agency 

VMT Vehicle-Miles Traveled 

Technical Report Documentation Page 

1. Report No. 

FHWA-HOP-06-108 

(EDL 14295) 

2. Government Accession No. 

 

3. Recipient’s Catalog No. 

 

5. Report Date 

January 2007 

4. Title and Subtitle 

Financing Freight Improvements 

6. Performing Organization Code 

 

7. Author(s) 

Jeffrey Buxbaum, Iris N. Ortiz, Cambridge Systematics, Inc.; 

Carol Keenan, FHWA 

8. Performing Organization Report No. 

10. Work Unit No. 

 

9. Performing Organization Name and Address 

Cambridge Systematics, Inc. 

100 CambridgePark Drive, Suite 400 

Cambridge, MA 02140 

11. Contract or Grant No. 

DTFH61-01-C-00181 

13. Type of Report and Period Covered 

Final Report 

12. Sponsoring Agency Name and Address 

Federal Highway Administration 

400 Seventh Street S.W. 

Washington, DC 20590 14. Sponsoring Agency Code 

 

15. Supplementary Notes 

16. Abstract 

This Guidebook describes funding and financing tools available for freight investments. The Guidebook 

has been designed to provide information to the FHWA, states, MPOs, and other parties interested in 

investing in freight infrastructure. 

The Guidebook is composed of four sections: 

1. Funding and Financing Tools for Freight Investment – This section describes existing Federal 

funding programs and financing tools that could be used to fund freight investments. It also provides 

an overview of several state programs that support freight projects. 

2. Case Studies of Freight Financing – This section provides brief summaries of how various types of 

freight-related projects were financed. 

3. References – This section provides links to other freight financing resources. 

4. Glossary of Terms. 

17. Key Words 

freight, airports, ports, rail, intermodal, funding, 

financing tools 

18. Distribution Statement 

No restrictions. This document is available to the 

public through the National Technical Information 

Service, Springfield, VA 22161. 

19. Security Classif. (of this report) 

Unclassified 

20. Security Classif. (of this page) 

Unclassified 

21. No of Pages 

159 

22. Price 

 

Form DOT F 1700.7 (8-72) Reproduction of completed pages authorized 
SI* (MODERN METRIC) CONVERSION FACTORS 

APPROXIMATE CONVERSIONS TO SI UNITS

Symbol When You Know Multiply By To Find Symbol 

LENGTH 

in inches 25.4 millimeters mm 

ft feet 0.305 meters m 

yd yards 0.914 meters m 

mi miles 1.61 kilometers km 

AREA 

in2 square inches 645.2 square millimeters mm2

ft2 square feet 0.093 square meters m2

yd2 square yard 0.836 square meters m2

ac acres 0.405 hectares ha 

mi2 square miles 2.59 square kilometers km2

VOLUME 

fl oz fluid ounces 29.57 milliliters mL 

gal gallons 3.785 liters L 

ft3 cubic feet 0.028 cubic meters m3 

yd3 cubic yards 0.765 cubic meters m3 

NOTE: volumes greater than 1000 L shall be shown in m3

MASS 

oz ounces 28.35 grams g

lb pounds 0.454 kilograms kg

T short tons (2000 lb) 0.907 megagrams (or "metric ton") Mg (or "t") 

TEMPERATURE (exact degrees) o

F Fahrenheit 5 (F-32)/9 Celsius oC 

or (F-32)/1.8 

ILLUMINATION 

fc foot-candles 10.76 lux lx 

fl foot-Lamberts 3.426 candela/m2 cd/m2

FORCE and PRESSURE or STRESS 

lbf poundforce 4.45 newtons N 

lbf/in2 poundforce per square inch 6.89 kilopascals kPa 

APPROXIMATE CONVERSIONS FROM SI UNITS 

Symbol When You Know Multiply By To Find Symbol 

LENGTH

mm millimeters 0.039 inches in 

m meters 3.28 feet ft 

m meters 1.09 yards yd 

km kilometers 0.621 miles mi 

AREA mm2

 square millimeters 0.0016 square inches in2 

m2 square meters 10.764 square feet ft2 

m2 square meters 1.195 square yards yd2 

ha hectares 2.47 acres ac 

km2 square kilometers 0.386 square miles mi2 

VOLUME 

mL milliliters 0.034 fluid ounces fl oz 

L liters 0.264 gallons gal 

m3 cubic meters 35.314 cubic feet ft3 

m3 cubic meters 1.307 cubic yards yd3 

MASS 

g grams 0.035 ounces oz

kg kilograms 2.202 pounds lb

Mg (or "t") megagrams (or "metric ton") 1.103 short tons (2000 lb) T 

TEMPERATURE (exact degrees) o

C Celsius 1.8C+32 Fahrenheit oF 

ILLUMINATION 

lx lux 0.0929 foot-candles fc 

cd/m2 candela/m2 0.2919 foot-Lamberts fl

FORCE and PRESSURE or STRESS 

N newtons 0.225 poundforce lbf 

kPa kilopascals 0.145 poundforce per square inch lbf/in2

*SI is the symbol for th International System of Units. Appropriate rounding should be made to comply with Section 4 of ASTM E e 380. 

(Revised March 2003)