Document ID: DOT-OST-2009-0092-0522
Agency: dot
Document Type: Notice
Title: Funding Opportunity for Letters of Interest for the RRIF Express Pilot Program under the Railroad Rehabilitation and Improvement Financing Program
Posted Date: 2020-03-16T04:00Z

[Federal Register Volume 85, Number 51 (Monday, March 16, 2020)]
[Notices]
[Pages 15029-15032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05282]

[[Page 15029]]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary of Transportation

Notice of Funding Opportunity for Letters of Interest for the 
RRIF Express Pilot Program Under the Railroad Rehabilitation & 
Improvement Financing Program

AGENCY:  Office of the Secretary of Transportation and U.S. Department 
of Transportation (the ``DOT'').

ACTION: Notice of funding opportunity

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SUMMARY: This notice modifies the pilot Railroad Rehabilitation and 
Improvement Financing (``RRIF'') Express Program (``RRIF Express'') 
aimed at increasing access to the RRIF program by short line and 
regional railroads. Specifically, this notice:
    1. Clarifies dates and responsibilities of applicants who have 
submitted RRIF Express Letters of Interest between January 13, 2020 and 
the date of this notice (Section DATES)
    2. Offers an alternative to the current requirement for five years 
of audited financial statements, allowing for audits of the two most 
recent years' financial statements. If this option is selected, 
applicants must produce five years of (non-audited) financial 
statements plus a self-certification from the applicant that they will 
provide the most recent two years of audited financial statements 
within 60 days of submitting the LOI and supporting materials (Section 
IV(iv)).
    3. Resets the 90-day application period to begin on the date that 
this revision is posted in the Federal Register (Section DATES)
    The original NOFO with modifications follows.
    The RRIF Express Program will be administered by the DOT's National 
Surface Transportation and Innovative Finance Bureau (the ``Build 
America Bureau'' or ``Bureau''). The overall RRIF program finances 
development of railroad infrastructure, and is authorized to have up to 
$35 billion in outstanding principal amounts from direct loans and loan 
guarantees at any one time.
    The 2018 Consolidated Appropriations Act \1\ appropriated $25 
million in budget authority to the DOT to cover the cost to the Federal 
Government (``the Government'') of RRIF credit assistance (Credit Risk 
Premium (``CRP'') Assistance or ``CRP Assistance''). Additionally, the 
2016 Consolidated Appropriations Act \2\ and the 2018 Consolidated 
Appropriations Act \3\ provided $1.96 million and $350,000, 
respectively (of which approximately $1 million remains available), to 
the DOT to fund certain expenses incurred by prospective RRIF borrowers 
in preparation of their applications for RRIF credit assistance (this 
approximately $1 million assistance, collectively, ``Cost 
Assistance''). Using existing authorities and these new budget 
authorities, the DOT has established the RRIF Express Program.
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    \1\ Pub. L. 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
    \2\ Pub. L. 114-113, div. L, tit. I, Sec.  152, 129 Stat. 2242, 
2856.
    \3\ Pub. L. 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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    Subject to the availability of funds, applicants accepted into the 
RRIF Express Program may benefit from two types of financial 
assistance: (a) Cost Assistance up to $100,000 per application to pay 
for a portion of the Bureau's advisor expenses borne by applicants; and 
(b) for those applicants that ultimately receive RRIF credit 
assistance, CRP Assistance up to 5% of the final RRIF loan amount to 
offset the CRP paid by the borrower. Any costs beyond $100,000 and any 
CRP beyond 5% would be paid by the prospective RRIF borrower. These 
funds will be made available to benefit applicants accepted into the 
RRIF Express Program on a first come, first served basis until each 
source of funding is expended or this notice is superseded by a new 
Notice of Funding Opportunity. Letters of Interest will be accepted in 
the order received and will be allocated cost assistance based on the 
date of acceptance into the pilot program. CRP assistance will be 
allocated in the order of financial close. For more information about 
potential financial assistance for RRIF Express applicants, see 
Supplementary Information: Section II. Funding of CRP and Cost 
Assistance.
    This notice solicits Letters of Interest from prospective RRIF 
borrowers seeking acceptance into the RRIF Express Program, establishes 
eligibility criteria and describes the process that prospective 
borrowers must follow when submitting Letters of Interest.

DATES: Letters of Interest from prospective RRIF borrowers for the RRIF 
Express Program must be submitted during the following submission 
window: From March 16, 2020 to June 15, 2020.
    Prospective RRIF borrowers that have previously submitted a Letter 
of Interest but that also seek acceptance into the RRIF Express Program 
should resubmit a Letter of Interest during the submission window above 
and follow the instructions below. Applicants who previously submitted 
Letters of Interest under the RRIF Express Notice of Funding 
Opportunity published on December 13, 2019 and whose Letters of 
Interest have not been returned as ineligible, do not have to re-apply.

ADDRESSES: Applicants to the RRIF Express Program must use the latest 
version of the Letter of Interest form available on the Build America 
Bureau website: https://www.transportation.gov/content/build-america-bureau (including applicants who have previously submitted Letters of 
Interest and who are now seeking participation in the RRIF Express 
Program). Letters of Interest must be submitted to the Build America 
Bureau via email at: RRIFexpress@dot.gov using the following subject 
line: ``Letter of Interest for RRIF Express Program.'' Submitters 
should receive a confirmation email, but are advised to request a 
return receipt to confirm transmission. Only Letters of Interest 
received via email at the above email address with the subject line 
listed above shall be deemed properly filed.

FOR FURTHER INFORMATION CONTACT: For further information regarding this 
notice please contact William Resch via email at william.resch@dot.gov 
or via telephone at 202-366-2300. A TDD is available at 202-366-3993.

SUPPLEMENTARY INFORMATION: RRIF Express pilot program information, 
including any additional resources, terms, conditions and requirements 
when they become available, can be found on the Build America Bureau 
website at: https://www.transportation.gov/buildamerica/rrif-express. 
For further information about the overall RRIF program in general, 
including details about the types of credit assistance available, 
eligibility requirements and the creditworthiness review process, 
please refer to the Build America Bureau Credit Programs Guide 
(``Programs Guide),'' available on the Build America Bureau website: 
https://www.transportation.gov/buildamerica/programs-services/tifia/program-guide.

Table of Contents

I. Background
II. Funding of CRP Assistance and Cost Assistance
III. Eligibility Requirements for RRIF Credit Assistance
IV. Eligibility Criteria for the RRIF Express Program
V. Letter of Interest Process and Review and Next Steps

[[Page 15030]]

I. Background

    The Transportation Equity Act for the 21st Century,\4\ established 
the RRIF program, authorizing the DOT to provide credit assistance in 
the form of direct loans and loan guarantees to public and private 
applicants for eligible railroad projects. The RRIF program is a DOT 
program and final approval of credit assistance is reserved for the 
Secretary of the DOT. The 2005 Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users; \5\ the Rail Safety 
Improvement Act of 2008; \6\ and the 2015 Fixing America's Surface 
Transportation Act \7\ (the ``FAST Act'') each made a number of changes 
to the RRIF program. In addition, the FAST Act authorized the creation 
of the Bureau to consolidate administration of certain DOT credit and 
grant programs, including the RRIF program.
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    \4\ Public Law 105-178, Sec.  7203, 112 Stat. 107, 471.
    \5\ Public Law 109-59, Sec.  9003, 119 Stat. 1144, 1921.
    \6\ Public Law 110-432, Sec.  701(e), 122 Stat. 4848, 4906.
    \7\ Public Law 114-94, Subtitle F, 129 Stat. 1312, 1693.
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II. Funding of CRP Assistance and Cost Assistance

    Through the RRIF program, the DOT is authorized to have, at any one 
time, up to $35 billion in unpaid principal amounts of obligations 
under direct loans and loan guarantees to finance development of 
railroad infrastructure.

CRP Assistance

    Prior to the 2018 Consolidated Appropriations Act, the RRIF program 
did not have an appropriation of budget authority to pay the cost to 
the Government of providing RRIF credit assistance. As a result, the 
RRIF borrower or a third party was required to bear this cost through 
the payment of a CRP. The 2018 Consolidated Appropriations Act \8\ 
provided $25 million to the DOT to cover the cost to the Government of 
RRIF credit assistance. The DOT will use this funding to pay or offset 
the CRP (up to 5% of the RRIF loan amount) payable by participants in 
the RRIF Express Program, until this funding is expended or this notice 
is superseded by a new Notice of Funding Opportunity.
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    \8\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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Cost Assistance

    As described in the Programs Guide, RRIF borrowers are required to 
pay (or reimburse the DOT) for costs incurred by the Bureau in 
connection with the review of Letters of Interest and applications for 
RRIF credit assistance. The 2016 Consolidated Appropriations Act \9\ 
and the 2018 Consolidated Appropriations Act \10\ collectively provided 
$2.31 million to the DOT to be used to fund expenses incurred by 
prospective RRIF borrowers in preparation to apply for RRIF credit 
assistance. A portion of these funds have already been allocated for 
prior RRIF projects. The DOT is reserving approximately $1 million of 
remaining funds from these appropriations to offset the cost of DOT 
advisors (up to $100,000 per application) that would be payable by 
participants in the RRIF Express Program, until this funding is 
expended or this notice is superseded by a new Notice of Funding 
Opportunity.
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    \9\ Public Law 114-113, div. L, tit. I, Sec.  152, 129 Stat. 
2242, 2856.
    \10\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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III. Eligibility Requirements for RRIF Credit Assistance

    The RRIF statute and implementing rules set forth eligibility 
requirements for applicants and projects. These requirements as well as 
other applicable federal requirements are described in detail in the 
Programs Guide and apply to all applicants and projects, including 
those seeking acceptance into the RRIF Express Program. In addition, 
for prospective borrowers seeking RRIF Express Program benefits, the 
requirements set forth in section IV (Eligibility Criteria for the RRIF 
Express Program) of this notice also apply.

IV. Eligibility Criteria for the RRIF Express Program

    The DOT has identified the following strategic objectives for the 
RRIF Express Program: Encouraging increased utilization of RRIF credit 
assistance by Class II and Class III railroads; reducing transaction 
costs for Class II and Class III railroads; and streamlining the 
underwriting process for Class II and Class III railroads. These 
priorities are reflected in the eligibility criteria below. Generally, 
projects most suitable for the RRIF Express Program are rail line 
modernization projects where the borrower has a well-documented 
financial history and easily identified revenue stream(s) for loan 
repayment.
    To differentiate among Letters of Interest received for projects 
under this notice of funding opportunity, the DOT will consider whether 
the project satisfies the following eligibility criteria as 
demonstrated by the Letter of Interest:
    (i) Applicant: The applicant must be a Class II railroad, a Class 
III railroad, or a joint venture with a Class II or III railroad.
    (ii) Project Size: The project must have eligible project costs of 
$50 million or less.
    (iii) Project Scope: The project scope, as described in Section B4 
of the Letter of Interest, must be limited to the activities below:
    (a) Track improvement predominantly within existing railroad right-
of-way, including stabilizing embankments, installing or reinstalling 
track, re-grading, replacing rail, ties, slabs and ballast, installing, 
maintaining, or restoring drainage ditches, cleaning ballast, 
constructing minor curve realignments, improving or replacing 
interlockings, improving grade crossings and warning devices, and the 
installation of ancillary equipment such as for communication, signals 
and train control;
    (b) Bridge rehabilitation, including reconstruction or replacement, 
the rehabilitation of the rail elements of docks or piers for the 
purposes of intermodal transfers, and the construction of bridges, 
culverts, or grade separation projects that are predominantly within 
existing right-of-way and that do not involve extensive in-water 
construction activities, such as projects replacing bridge components 
including stringers, caps, piles, or decks, the construction of roadway 
overpasses to replace at-grade crossings, construction or 
reconstruction of approaches or embankments to bridges, or construction 
or replacement of short span bridges;
    (c) Rolling stock acquisition including locomotives, passenger 
coaches, freight cars, trainsets, and construction, maintenance or 
inspection equipment;
    (d) Planning and design related to the project activities included 
under items (a)-(c) above;
    (e) Refinancing of non-federal debt (incurred at least three years 
prior to March 16, 2020 and for the purpose of one or more of the 
activities listed in 45 U.S.C. 822(b)(1)(A) or (C). Refinancing is 
limited to up to 40% of the final RRIF loan amount. Letters of Interest 
including refinancing must demonstrate with specificity in Section D5 
how the refinancing would improve the creditworthiness of the applicant 
and document how such improvement would facilitate the activities 
referenced in items (a)-(c) above and would increase the applicant's 
ability to repay a RRIF loan and the overall financial health of the 
applicant.
    (iv) Applicant Financial History and Projections: Attachment D-1 of 
the Letter of Interest must include audited financial statements (by a 
qualified third

[[Page 15031]]

party, e.g., a certified public accountant) for the two (2) most recent 
consecutive years preceding the year of application and that have no 
significant unresolved findings (e.g. fiscal years 2018 and 2019). 
Interim unaudited financial statements may be submitted with a letter 
pledging to provide these audited statements within 60 days of 
submitting of the LOI and supporting materials. Failure to provide the 
audited financial statements within 60 days will disqualify the LOI. 
Applicants choosing this option must still provide unaudited financial 
statements for the previous five years and prospective financial 
projections (pro-forma) for the term of the loan.
    (v) Collateral: If collateral will be pledged for the RRIF loan, 
Section D9 of the Letter of Interest must be supported with an 
independent appraisal of the collateral that must have been completed 
within the past 12 months preceding submission of an LOI. Section D9 of 
the Letter of Interest must demonstrate that the collateral will be 
unencumbered at time of closing, including a description of any lien 
release process that would occur prior to closing on the RRIF loan to 
render currently pledged collateral unencumbered.
    (vi) Environmental Clearance: Section B6 and Attachment B-6 of the 
Letter of Interest must demonstrate that either NEPA review is complete 
or the project qualifies for a Categorical Exclusion under NEPA, in 
which case Attachment B-6 must include a completed Federal Railroad 
Administration Categorical Exclusion worksheet with its Letter of 
Interest. For projects involving replacement of existing railroad 
bridges, supporting documentation must be provided that assesses the 
eligibility of the bridge for listing in the National Register of 
Historic Places and addressing compliance with Section 106 of the 
National Historic Preservation Act.
    (vii) Domestic Preference: Section B4(a) of the Letter of Interest 
must demonstrate that the steel, iron, and manufactured goods used in 
the project will be produced in the United States in accordance with 
the Federal Railroad Administration ``RRIF Buy America'' policy, which 
follows 49 U.S.C. 24405(a). Projects that require a waiver are not 
eligible for the RRIF Express Program, however, prospective borrowers 
can seek a loan from the overall RRIF program for projects that require 
a waiver.
    (viii) Project Readiness: Section B4(c) of the Letter of Interest 
must demonstrate the prospective borrower's ability to commence the 
contracting process for construction of the project (e.g., issuance of 
a final RFP) by not later than 90 days after the date on which a RRIF 
credit instrument is obligated for the project.

V. Letter of Interest Process and Review and Next Steps

A. Submission of Letters of Interest

    All prospective borrowers seeking acceptance into the RRIF Express 
Program should submit a Letter of Interest following the instructions 
described in this notice of funding opportunity. The Letter of Interest 
should be annotated with ``RRIF EXPRESS'' immediately following the 
Applicant Name in the Summary Information section on page one of the 
Letter of Interest. The Letter of Interest must, among other things:
    (i) Describe the project and its components, location, and purpose 
in Section B, and include as Attachment B-2 the project budget 
organized according to construction elements from preliminary 
engineering estimates, and including costs as appropriate for property, 
vehicles, professional services, allocated and unallocated contingency, 
and finance charges;
    (ii) Outline the proposed financial plan in Section C, and include 
the financial model, that addresses such aspects as model assumptions, 
annual cash flows, balance sheets, income statements and repayment 
schedules for the duration of the loan, as well as coverage ratios and 
debt metrics. The model should allow reviewers the flexibility to 
evaluate scenarios in the native spreadsheet (Microsoft Excel, or 
equivalent) format and be included in the application as Attachment C-
1;
    (iii) Provide information regarding satisfaction of other statutory 
eligibility requirements of the RRIF credit program; and
    (iv) Provide information regarding satisfaction of the RRIF Express 
Program eligibility criteria (as described in Section IV above).
    Prospective RRIF Express borrowers should describe in Letter of 
Interest Section D8 if the project will (1) decrease transportation 
costs and improve access, especially for rural communities or 
communities in Opportunity Zones,\11\ through reliable and timely 
access to employment centers and job opportunities; (2) improve long-
term efficiency, reliability or costs in the movement of workers or 
goods; (3) increase the economic productivity of land, capital, or 
labor, including assets in Opportunity Zones; (4) result in long-term 
job creation and other economic opportunities; or (5) help the United 
States compete in a global economy by facilitating efficient and 
reliable freight movement. Projects that bridge gaps in service in 
rural areas, and projects that attract private economic development, 
all support local or regional economic competitiveness.
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    \11\ See https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx 
for more information on Opportunity Zones.
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    Letters of Interest must be submitted using the latest form on the 
Build America Bureau website: https://www.transportation.gov/content/build-america-bureau. Other RRIF Express pilot program information 
including any additional terms, conditions, and requirements can be 
found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. The Bureau may 
contact a prospective borrower for clarification of specific 
information included in the Letter of Interest. The Bureau will review 
all Letters of Interest properly filed and received in the submission 
time window provided herein.

B. Review and Evaluation

    Each Letter of Interest that is properly filed and received will be 
evaluated for completeness and eligibility for the RRIF Express Program 
using the criteria in this notice. This initial step of the review 
process will include (1) an evaluation as to whether the proposed 
project and applicant satisfy RRIF statutory eligibility requirements, 
and (2) an evaluation as to whether the proposed project and applicant 
satisfy the RRIF Express Program eligibility criteria.
    The Letters of Interest determined to be eligible for the RRIF 
Express Program will then be advanced to the Bureau's creditworthiness 
review process, which is an in-depth creditworthiness review of the 
project sponsor and the revenue stream proposed to repay the RRIF 
credit assistance as described in the Programs Guide. The Secretary 
reserves the right to limit the number of applications from a single 
entity or subordinates of a single parent or holding company. 
Prospective RRIF borrowers whose RRIF Express Program Letters of 
Interest are determined to be ineligible, but whose projects are 
otherwise statutorily eligible for standard RRIF credit assistance, 
have the option to be considered under the overall RRIF program.

[[Page 15032]]

    Issued in Washington, DC, on March 10, 2020.
 Morteza Farajian,
Executive Director, The Build America Bureau.
[FR Doc. 2020-05282 Filed 3-13-20; 8:45 am]
 BILLING CODE 4910-9X-P