[Federal Register Volume 84, Number 240 (Friday, December 13, 2019)]
[Notices]
[Pages 68298-68300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26743]
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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, U.S. Department of
Transportation (DOT).
ACTION: Notice of funding opportunity.
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SUMMARY: This notice establishes a 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. 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\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
\2\ Public Law 114-113, div. L, tit. I, Sec. 152, 129 Stat.
2242, 2856.
\3\ Public Law 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 January 13, 2020 to April 13, 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.
Irrespective of the above, the Bureau continues to accept Letters
of Interest on a rolling basis from any prospective RRIF borrower
interested in receiving RRIF credit assistance only (i.e., without
participation in the RRIF Express Program).
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: [email protected] 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 [email protected]
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
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
[[Page 68299]]
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, 7203, 112 Stat. 107, 471.
\5\ Public Law 109-59, 9003, 119 Stat. 1144, 1921.
\6\ Public Law 110-432, 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 December 13, 2019 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 party, e.g., a certified public accountant) for the
consecutive five years preceding the year of application and that have
no significant unresolved findings. Attachment D-1 must also include
five years of prospective financial projections (pro-forma).
(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,
[[Page 68300]]
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.
Issued in Washington, DC, on November 12, 2019.
Elaine L. Chao,
Secretary of Transportation.
[FR Doc. 2019-26743 Filed 12-12-19; 8:45 am]
BILLING CODE 4910-9X-P