Bill Mongelluzzo | Feb 10, 2011 2:42PM EST
The Federal Rail Administration approved an $83.7 million loan for the Alameda Corridor Transportation Authority that should delay until late 2012 the need for assistance from the ports of Los Angeles and Long Beach to help ACTA pay its debt obligation.
The Alameda Corridor, a 20-mile, grade-separated project that expedites the flow of intermodal containers from the nation's largest port complex to the transcontinental rail networks, was covering its $1.7 billion debt obligation through operating revenue until container volume plummeted more than 20 percent during the global trade recession of 2008-2009.
The sharp drop in container volume significantly reduced ACTA's revenue. ACTA last year applied to the Department of Transportation's Federal Rail Administration for a Railroad Rehabilitation & Improvement Financing loan of $553 million.
Although the federal agency has billions of dollars at its disposal, it noted ACTA's request was twice the amount the FRA has ever granted through the assistance program, so ACTA last month reduced its loan request to $83.7 million. The FRA on Tuesday approved the request.
The ports of Los Angeles and Long Beach have a contractual obligation to help ACTA meet its debt obligations if there is a shortfall in revenue. During the depths of the recession, it appeared the ports might have to make their shortfall payments in October 2011.
However, due to a surge of cargo volume of about 15 percent in 2010, John Doherty, ACTA's chief executive officer, said the date for port assistance has been pushed back to Oct. 1, 2012.
Doherty estimates the shortfall will average less than $5 million each year over the ensuing 10 years, based on an assumed growth in container volume of 5 percent per year. If growth exceeds 5 percent, the annual shortfall would be reduced, he said.
-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com.