Dredging for Dollars

Dredging for Dollars

The nation’s largest port complex hopes to benefit from what would be one of the largest loans ever made under a Federal Railroad Administration program for track system improvements.

Officials at the Port of Los Angeles said the plan could allow Los Angeles and the Port of Long Beach to avoid providing $86 million to help the Alameda Corridor Transportation Authority meet scheduled debt service payments, money the ports otherwise might have to divert from other infrastructure spending plans.

Recent signs indicate the U.S. Department of Transportation may expand the little-used Railroad Rehabilitation and Improvement Financing program, from making occasional small railroad loans to becoming a major federal source of assistance for rail projects.

It also would show a new flexibility of the Obama administration to put more money behind the DOT’s multimodal spending focus for infrastructure, and could signal firmer support for the nation’s ports.

Geraldine Knatz, executive director at the Port of Los Angeles, and Government Affairs Director Issac Kos-Read said they visited the DOT and other Washington offices this month to pursue funding options for their port or related entities.

The largest would be for the ACTA, which built a 20-mile freight rail express line from the Los Angeles and Long Beach ports, paid for by long-term bonds, to national rail links in Los Angeles. A big drop in anticipated corridor revenue during the recession left the ACTA with a looming debt-service shortfall the ports would have to cover.

A proposed $550 million RRIF loan to restructure some of ACTA’s $1.7 billion debt, Knatz said, “will help the port, because we don’t have to make up shortfalls as a result of volume declines.”

Knatz and Kos-Read met with Polly Trottenberg, the DOT’s assistant secretary for transportation policy and a veteran of major port authorities in the Northeast. Kos-Read later said the applicants will need to show how an ACTA refinancing credit also supports port jobs.

Up to now, the RRIF’s largest loan since it began issuing credit in 2002 was for $230 million in 2003, and it has loaned a total of just $851 million despite authority to issue $35 billion. Another port agency is negotiating for an RRIF loan of nearly $500 million, a DOT official said, but an ACTA loan could become the program’s largest.

After they failed to win any of the $1.5 billion in the DOT’s stimulus “TIGER” grants (for Transportation Investment Generating Economic Recovery) when Transportation Secretary Ray LaHood made the awards earlier this year, the Southern California ports started reworking plans for other projects.

Under TIGER, the DOT awarded money outside traditional state allocation or mode-specific formulas. The “LA-Long Beach ports got zero, and so we were pretty surprised,” Knatz said.

Still, “we like the TIGER strategy,” Knatz told The Journal of Commerce. “It’s a good overall strategy, because somebody back in Washington’s got to be looking at the big picture and saying, ‘Where can we make the strategic investments?’”

The DOT is taking applications for what it calls TIGER II, a $600 million grant pool for the current budget year that will be allocated largely along the same lines. The port industry wants the DOT to carve out 25 percent just for ports.

One of two Los Angeles port applications under TIGER made it into a near-final group of 157 “highly recommended” projects before the grant money was spread among 51 projects. Knatz and others have met with DOT officials to see how to resubmit that project for TIGER II. It plans to build a $126 million intermodal railyard linking the port to Alameda, plus on-dock rail for a tenant. Documents indicate the combined projects could cut out more than 2,000 daily truck moves.

Earlier, the port sought a grant of $49 million for the railyard project; it is still reshaping its request but may seek less from the smaller TIGER II grant pool.

Kos-Read said the port and its partners also are exploring Department of Energy aid for clean cities and for cargo equipment electrification, possible money from the Environmental Protection Agency for diesel emission reduction programs, and perhaps broadening the eligibility of federal highway funds to include the port’s congestion and air quality mitigation programs.

“We’re trying to increase the volume and success that we have with all grants,” Kos-Read said.

Contact John D. Boyd at jboyd@joc.com.