In freight transportation policy circles the Alameda Corridor project one day may be legend. The ports of Los Angeles and Long Beach were the gaping end of a freight funnel that emptied import boxes onto the exit rails and streets. In essence the solution was to eliminate grade crossings by building a blow-grade rail way out of town. A big project with a $2.4B price tag. A key to the financing was Federal credit assistance. The project and two others in California were the first to benefit by this innovation. A paper on the FHWA website tells the story.
Due to Federal budgetary constraints, however, the grant was not deemed to be a fiscally or politically viable option. An alternative form of Federal support for this project was needed, and by 1997 the answer was clear: Federal credit enhancement in the form of a junior-lien loan to ACTA.
The fiscal year 1997 Omnibus Consolidated Appropriations Act (Public Law 104-208) provided $58.7 million for DOT to cover the capital reserve charges associated with making a direct loan of up to $400 million to ACTA for the Alameda Corridor Project. This represents an actual budgetary cost of 14.7 percent of the face value of credit assistance. The legislation also provided that the loan be repaid within 30 years from the date of project completion and that the interest rate on the loan not exceed the 30-year Treasury rate.
Inspired by the success of leveraging non-Federal investment for large infrastructure project, particularly private financing, Congress in 1998 fashioned a fully articulated TIFIA program. It was adjusted in SAFETEA-LU with a lowered threshold to make more projects eligible.
Nearly $7 billion in projects in 13 states have benefited since TIFIA was created by Congress. The Port of Miami’s rail freight tunnel had an uncertain future but with the October announcement the financing is in place and a $607 million construction project soon will be underway. Not bad. Pbea