(The FRA distributed the following news release on January 7.)
WASHINGTON — A $233 million federal loan granted today by the Federal Railroad Administration will provide enhanced access to international markets and expanded economic benefits for regional railroad customers in Iowa, Minnesota and South Dakota. The Railroad Rehabilitation and Improvement Financing (RRIF) direct loan was provided to Dakota, Minnesota & Eastern Railroad (DM&E) and its subsidiary Iowa, Chicago & Eastern Railroad (IC&E), both headquartered in Sioux Falls, SD.
U.S. Secretary of Transportation Norman Y. Mineta stressed the vital role of regional railroads in the American economy, “President Bush is committed to growing the economy and the RRIF program provides targeted innovative finance opportunities that yield significant economic benefits.”
The DM&E and IC&E serve a large area in eight North Central states and are a major component of the freight transportation systems of Iowa, Minnesota and South Dakota. The DM&E is 1,103-mile regional railroad that currently serves 130 companies. The IC&E is a wholly owned subsidiary of the DM&E that serves approximately 750 companies on a 1,403-mile system.
The $233,601,000 RRIF loan will be used to:
* refinance existing debt for rail line acquisition and track rehabilitation: $194,212,457;
* improve rail lines between Wolsey, SD and Tracy, MN: $24,369,900;
* improve rail bridges between Wolsey, SD and Springfield, MN: $5,855,000; and
* rehabilitate tracks from Owatonna, MN to Mason City, IA and from Lawler, IA to Calmar, IA: $9,163,643.
In addition, the DM&E/IC&E will use its enhanced cash flow, resulting from the refinancing of existing debt on substantially better terms, for an expanded program of infrastructure investment to address deferred maintenance and make other capital improvements. The loan is expected to result in a physically and financially sustainable regional railroad. Companies dependent on the railroads generate an estimated $6.5 to $7.0 billion in annual sales. Planned improvements to DM&E/IC&E infrastructure will also help assure safe rail operations, and ensure that significant amounts of freight traffic continue to be carried by rail transportation.
The RRIF Program provides direct loans or loan guarantees for the acquisition, development, improvement or rehabilitation of existing or new intermodal or rail equipment facilities. Eligible borrowers include railroads, state and local governments and government sponsored authorities. Detailed information about the program is on FRA’s website at www.fra.dot.gov.