Re: Carrizo Gorge-Gov Sub or Profit?
Author: Short Line Guy
Date: 11-25-2013 - 10:04
What you may be forgetting is the access railroads (especially short lines) have to public capital, i.e., grants. The Carizzo Gorge line could qualify for $10 million or more in federal TIGER grants. Awards in this program are highly-political. Success in securing a TIGER grant would depend strong support from the state of California and local authorities. The railroad could also apply for an FRA RRIF Loan. RRIF loans provide 30 (or even 35) year money at T-bill rates (fixed for the life of the loan). They have ranged up to $100 million.
Expenditures for track work last year, and in the current year, should qualify the railroad for a Short Line Maintenance Tax Credit (45G Credit). Legislation authorizing the credit is due to expire on Dec. 31st, but it may be extended. (The 45G credit provides a reclaim of up to $3500 per track mile for expenditures on qualified maintenance. It can be assigned to certain outside parties if the railroad itself does not have a tax liability. Obviously, 45G is not a game changer by itself - but every little bit helps.)