[Federal Register Volume 85, Number 229 (Friday, November 27, 2020)]
[Notices]
[Pages 76174-76177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25274]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Notice of Funding Opportunity for Letters of Interest for the
RRIF Express Pilot Program Under the Railroad Rehabilitation &
Improvement Financing Program
AGENCY: Office of the Secretary, Department of Transportation (DOT).
ACTION: Notice of funding opportunity.
-----------------------------------------------------------------------
SUMMARY: This Notice of Funding Opportunity (NOFO) for the RRIF Express
Pilot Program expands eligibility criteria and extends the deadline for
submission of Letters of Interest. The eligibility criteria in section
IV. are revised to: Increase the total project size limit to $150
million, broaden project scope consistent with the RRIF statute, and
expand the proportion of refinancing allowed to 75%. Prospective RRIF
borrowers who have been accepted into the RRIF Express program may
amend their Letters of Interest to reflect the changed criteria.
Prospective RRIF borrowers who received advice from DOT on issues to
address in revising and resubmitting Letters of Interest may also take
advantage of the expanded criteria while also following the advice
provided. All projects that were previously eligible for RRIF Express
financing remain eligible under this NOFO.
DATES: Letters of Interest from prospective RRIF borrowers for the RRIF
Express Program will be accepted on rolling basis until available
funding is expended or this notice is superseded by another notice.
Prospective RRIF borrowers that have previously submitted a Letter
of Interest but that also seek acceptance into the RRIF Express Program
should resubmit a Letter of Interest following the instructions below.
Prospective RRIF borrowers who previously submitted Letters of Interest
under a previous RRIF Express Notice of Funding Opportunity (published
on December 13, 2019, March 16, 2020, or June 19, 2020), and whose
Letters of Interest have not been returned as ineligible, do not have
to re-apply, and may amend their Letter of Interest to take advantage
of the revised eligibility criteria. Prospective RRIF borrowers whose
Letter of Interest for RRIF Express was returned by the Bureau with
advice on issues to address in resubmitting a Letter of Interest may
also take advantage of the revised eligibility criteria while also
following the advice provided.
Irrespective of the above, the Bureau continues to accept Letters
of Interest on a rolling basis from any prospective RRIF borrower
interested in receiving RRIF credit assistance only (i.e., without
participation in the RRIF Express Program).
ADDRESSES: Applicants to the RRIF Express Program must use the latest
version of the Letter of Interest form available on the Build America
Bureau website: https://www.transportation.gov/content/build-america-bureau (including applicants who have previously submitted Letters of
Interest and who are now seeking participation in the RRIF Express
Program). Letters of Interest must be submitted to the Build America
Bureau via email at: [email protected] using the following subject
line: ``Letter of Interest for RRIF Express Program.'' Submitters
should receive a confirmation email, but are advised to request a
return receipt to confirm transmission. Only Letters of Interest
received via email at the above email address with the subject line
listed above shall be deemed properly filed.
FOR FURTHER INFORMATION CONTACT: For further information regarding this
notice please contact William Resch via email at [email protected]
or via telephone at 202-366-2300. A TDD is available at 202-366-3993.
SUPPLEMENTARY INFORMATION: The original NOFO with modifications
follows.
The RRIF Express Program is administered by the DOT's National
Surface Transportation and Innovative Finance Bureau (the ``Build
America Bureau'' or ``Bureau''). The overall RRIF program finances
development of railroad infrastructure, and is authorized to have up to
$35 billion in outstanding principal amounts from direct loans and loan
guarantees at any one time.
The 2018 Consolidated Appropriations Act \1\ appropriated $25
million in budget authority to the DOT to cover the cost to the Federal
Government (``the Government'') of RRIF credit assistance (Credit Risk
Premium (``CRP'') Assistance or ``CRP Assistance''). Additionally, the
2016 Consolidated Appropriations Act \2\ and the 2018 Consolidated
Appropriations Act \3\ provided $1.96 million and $350,000,
respectively (of which approximately $1 million remains available), to
the DOT to fund certain expenses incurred by prospective RRIF borrowers
in preparation of their
[[Page 76175]]
applications for RRIF credit assistance (this approximately $1 million
assistance, collectively, ``Cost Assistance''). Using existing
authorities and these new budget authorities, the DOT has established
the RRIF Express Program.
---------------------------------------------------------------------------
\1\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
\2\ Public Law 114-113, div. L, tit. I, Sec. 152, 129 Stat.
2242, 2856.
\3\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
---------------------------------------------------------------------------
Subject to the availability of funds, applicants accepted into the
RRIF Express Program may benefit from two types of financial
assistance: (a) Cost Assistance up to $100,000 per application to pay
for a portion of the Bureau's advisor expenses borne by applicants; and
(b) for those applicants that ultimately receive RRIF credit
assistance, CRP Assistance up to 10% of the final RRIF loan amount, not
to exceed $5 million, to offset the CRP paid by the borrower. Any costs
beyond $100,000 and any CRP beyond the lower of 10% and $5 million
would be paid by the prospective RRIF borrower. These funds will be
made available to benefit applicants accepted into the RRIF Express
Program on a first come, first served basis until each source of
funding is expended or this notice is superseded by a new Notice of
Funding Opportunity. Letters of Interest will be accepted in the order
received and will be allocated cost assistance based on the date of
acceptance into the pilot program. CRP assistance will be allocated in
the order of financial close. For more information about potential
financial assistance for RRIF Express applicants, see Supplementary
Information: Section II. Funding of CRP and Cost Assistance.
This notice solicits Letters of Interest from prospective RRIF
borrowers seeking acceptance into the RRIF Express Program, establishes
eligibility criteria and describes the process that prospective
borrowers must follow when submitting Letters of Interest.
RRIF Express pilot program information, including any additional
resources, terms, conditions and requirements when they become
available, can be found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. For further
information about the overall RRIF program in general, including
details about the types of credit assistance available, eligibility
requirements and the creditworthiness review process, please refer to
the Build America Bureau Credit Programs Guide (``Programs Guide),''
available on the Build America Bureau website: https://www.transportation.gov/buildamerica/programs-services/tifia/program-guide.
Table of Contents
I. Background
II. Funding of CRP Assistance and Cost Assistance
III. Eligibility Requirements for RRIF Credit Assistance
IV. Eligibility Criteria for the RRIF Express Program
V. Letter of Interest Process and Review and Next Steps
I. Background
The Transportation Equity Act for the 21st Century,\4\ established
the RRIF program, authorizing the DOT to provide credit assistance in
the form of direct loans and loan guarantees to public and private
applicants for eligible railroad projects. The RRIF program is a DOT
program and final approval of credit assistance is reserved for the
Secretary of the DOT. The 2005 Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users; \5\ the Rail Safety
Improvement Act of 2008; \6\ and the 2015 Fixing America's Surface
Transportation Act \7\ (the ``FAST Act'') each made a number of changes
to the RRIF program. In addition, the FAST Act authorized the creation
of the Bureau to consolidate administration of certain DOT credit and
grant programs, including the RRIF program.
---------------------------------------------------------------------------
\4\ Public Law 105-178, 7203, 112 Stat. 107, 471.
\5\ Public Law 109-59, 9003, 119 Stat. 1144, 1921.
\6\ Public Law 110-432, 701(e), 122 Stat. 4848, 4906.
\7\ Public Law 114-94, Subtitle F, 129 Stat. 1312, 1693.
---------------------------------------------------------------------------
II. Funding of CRP Assistance and Cost Assistance
Through the RRIF program, the DOT is authorized to have, at any one
time, up to $35 billion in unpaid principal amounts of obligations
under direct loans and loan guarantees to finance development of
railroad infrastructure.
CRP Assistance
Prior to the 2018 Consolidated Appropriations Act, the RRIF program
did not have an appropriation of budget authority to pay the cost to
the Government of providing RRIF credit assistance. As a result, the
RRIF borrower or a third party was required to bear this cost through
the payment of a CRP. The 2018 Consolidated Appropriations Act \8\
provided $25 million to the DOT to cover the cost to the Government of
RRIF credit assistance. The DOT will use this funding to pay or offset
the CRP (up to 10% of the RRIF loan amount, not to exceed $5 million)
payable by participants in the RRIF Express Program, until this funding
is expended or this notice is superseded by a new Notice of Funding
Opportunity.
---------------------------------------------------------------------------
\8\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
---------------------------------------------------------------------------
Cost Assistance
As described in the Programs Guide, RRIF borrowers are required to
pay (or reimburse the DOT) for costs incurred by the Bureau in
connection with the review of Letters of Interest and applications for
RRIF credit assistance. The 2016 Consolidated Appropriations Act \9\
and the 2018 Consolidated Appropriations Act \10\ collectively provided
$2.31 million to the DOT to be used to fund expenses incurred by
prospective RRIF borrowers in preparation to apply for RRIF credit
assistance. A portion of these funds have already been allocated for
prior RRIF projects. The DOT is reserving approximately $1 million of
remaining funds from these appropriations to offset the cost of DOT
advisors (up to $100,000 per application) that would be payable by
participants in the RRIF Express Program, until this funding is
expended or this notice is superseded by a new Notice of Funding
Opportunity.
---------------------------------------------------------------------------
\9\ Public Law 114-113, div. L, tit. I, Sec. 152, 129 Stat.
2242, 2856.
\10\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
---------------------------------------------------------------------------
III. Eligibility Requirements for RRIF Credit Assistance
The RRIF statute and implementing rules set forth eligibility
requirements for applicants and projects. These requirements as well as
other applicable federal requirements are described in detail in the
Programs Guide and apply to all applicants and projects, including
those seeking acceptance into the RRIF Express Program. In addition,
for prospective borrowers seeking RRIF Express Program benefits, the
requirements set forth in section IV (Eligibility Criteria for the RRIF
Express Program) of this notice also apply.
IV. Eligibility Criteria for the RRIF Express Program
The DOT has identified the following strategic objectives for the
RRIF Express Program: Encouraging increased utilization of RRIF credit
assistance by Class II and Class III railroads; reducing transaction
costs for Class II and Class III railroads; and streamlining the
underwriting process for Class II and Class III railroads. These
priorities are reflected in the eligibility criteria below. Generally,
projects most suitable for the RRIF Express Program are rail line
modernization projects where the borrower has a well-documented
financial history and easily identified revenue stream(s) for loan
repayment.
[[Page 76176]]
To differentiate among Letters of Interest received for projects
under this notice of funding opportunity, the DOT will consider whether
the project satisfies the following eligibility criteria as
demonstrated by the Letter of Interest:
(i) Applicant: The applicant must be a Class II railroad, a Class
III railroad, a commuter railroad or a joint venture with a Class II,
III, or commuter railroad.
(ii) Project Size: The project must have eligible project costs of
$150 million or less with no minimum amount.
(iii) Project Scope: The project scope, as described in Section B4
of the Letter of Interest, must be limited to the support of railroad
activities that are otherwise eligible for RRIF financing and as
outlined below:
(a) Acquire, improve, or rehabilitate intermodal or rail equipment
or facilities, including track, components of track, bridges, yards,
buildings, and shops, and costs related to these activities, including
pre-construction costs. Note that this category of eligible activities
includes the installation of positive train control systems;
(b) Develop or establish new intermodal or railroad facilities;
(c) Reimburse planning and design expenses relating to activities
listed above;
(d) Refinancing of non-federal debt (incurred at least three years
prior to November 27, 2020) and for the purpose of one or more of the
activities listed in 45 U.S.C. 822(b)(1)(A) or (C). Refinancing is
limited to up to 75% of the final RRIF loan amount. Letters of Interest
including refinancing must demonstrate with specificity in Section D5
how the refinancing would improve the creditworthiness of the applicant
and document how such improvement would facilitate the activities
referenced in items (a) and (b) above and would increase the
applicant's ability to repay a RRIF loan and the overall financial
health of the applicant.
(iv) Applicant Financial History and Projections: Attachment D-1 of
the Letter of Interest must include audited financial statements (by a
qualified third party, e.g., a certified public accountant) for the two
(2) most recent consecutive years preceding the year of application and
that have no significant unresolved findings (e.g., fiscal years 2018
and 2019). Interim unaudited financial statements may be submitted with
a letter pledging to provide these audited statements within 60 days of
submitting of the LOI and supporting materials. Failure to provide the
audited financial statements within 60 days will disqualify the LOI.
Applicants choosing this option must still provide unaudited financial
statements for the previous five years and prospective financial
projections (pro-forma) for the term of the loan.
(v) Collateral: If collateral will be pledged for the RRIF loan,
Section D9 of the Letter of Interest must be supported with an
independent appraisal of the collateral that must have been completed
within the past 12 months preceding submission of an LOI. Section D9 of
the Letter of Interest must demonstrate that the collateral will be
unencumbered at time of closing, including a description of any lien
release process that would occur prior to closing on the RRIF loan to
render currently pledged collateral unencumbered.
(vi) Environmental Documentation: Section B6 and Attachment B-6 of
the Letter of Interest must demonstrate that either NEPA review is
complete or the project is likely to qualify for a Categorical
Exclusion (CE) or Finding of No Significant Impact (FONSI) under NEPA.
If a NEPA review has not been completed, Attachment B-6 must include a
Federal Railroad Administration (FRA) CE worksheet with its Letter of
Interest. Where appropriate, the CE worksheet must include substantive
analysis of potential impacts to environmental resources and indicate
the sources of the information or data used to reach conclusions. For
some project types, the CE worksheet will satisfy NEPA review and
documentation requirements; however, for other project types, the CE
worksheet will inform FRA with sufficient details about the project
scope and potential environmental impacts to determine if an
Environmental Assessment (EA) is required. The Applicant would be
responsible for providing sufficient information and funding for the
preparation of an EA, which would also extend the duration of project
development activities. FRA may require the use of a third-party
contractor consistent with 23 CFR 771.109 (e) for the preparation of an
EA. In the event that an EA is necessary, eligible projects must
receive a FONSI to qualify for RRIF Express.
To help address compliance with Section 106 of the National
Historic Preservation Act, supporting documentation must be submitted
for projects involving reconstruction or replacement of existing
railroad bridges, tunnels, culverts, stations, or depots that assesses
the eligibility of these architectural properties for listing in the
National Register of Historic Places. Supporting documentation must
also be provided for projects involving ground-disturbing site
preparation and construction activities in areas that have not been
previously disturbed (such as by prior land development, agricultural
activities, or the placement of fill), that assesses the archaeological
sensitivity of the project area.
(vii) Domestic Preference: Section B4(a) of the Letter of Interest
must demonstrate that the steel, iron, and manufactured goods used in
the project will be produced in the United States in accordance with
the Federal Railroad Administration RRIF Buy America policy, which
follows 49 U.S.C. 24405(a). Projects that require a waiver are not
eligible for the RRIF Express Program, however, prospective borrowers
can seek a loan from the overall RRIF program for projects that require
a waiver.
(viii) Project Readiness: Section B4(c) of the Letter of Interest
must demonstrate the prospective borrower's ability to commence the
contracting process for construction of the project (e.g., issuance of
a final RFP) by not later than 90 days after the date on which a RRIF
credit instrument is obligated for the project.
V. Letter of Interest Process and Review and Next Steps
A. Submission of Letters of Interest
All prospective borrowers seeking acceptance into the RRIF Express
Program should submit a Letter of Interest following the instructions
described in this notice of funding opportunity. The Letter of Interest
should be annotated with ``RRIF EXPRESS'' immediately following the
Applicant Name in the Summary Information section on page one of the
Letter of Interest. The Letter of Interest must, among other things:
(i) Describe the project and its components, location, and purpose
in Section B, and include as Attachment B-2 the project budget
organized according to construction elements from preliminary
engineering estimates, and including costs as appropriate for property,
vehicles, professional services, allocated and unallocated contingency,
and finance charges;
(ii) Outline the proposed financial plan in Section C, and include
the financial model, that addresses such aspects as model assumptions,
annual cash flows, balance sheets, income statements and repayment
schedules for the duration of the loan, as well as coverage ratios and
debt metrics. The model should allow reviewers the flexibility to
evaluate scenarios in the native spreadsheet (Microsoft Excel, or
[[Page 76177]]
equivalent) format and be included in the application as Attachment C-
1;
(iii) Provide information regarding satisfaction of other statutory
eligibility requirements of the RRIF credit program; and
(iv) Provide information regarding satisfaction of the RRIF Express
Program eligibility criteria (as described in Section IV above).
Prospective RRIF Express borrowers should describe in Letter of
Interest Section D8 if the project will (1) decrease transportation
costs and improve access, especially for rural communities or
communities in Opportunity Zones,\11\ through reliable and timely
access to employment centers and job opportunities; (2) improve long-
term efficiency, reliability or costs in the movement of workers or
goods; (3) increase the economic productivity of land, capital, or
labor, including assets in Opportunity Zones; (4) result in long-term
job creation and other economic opportunities; or (5) help the United
States compete in a global economy by facilitating efficient and
reliable freight movement. Projects that bridge gaps in service in
rural areas, and projects that attract private economic development,
all support local or regional economic competitiveness.
---------------------------------------------------------------------------
\11\ See https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx
for more information on Opportunity Zones.
---------------------------------------------------------------------------
Letters of Interest must be submitted using the latest form on the
Build America Bureau website: https://www.transportation.gov/content/build-america-bureau. Other RRIF Express pilot program information
including any additional terms, conditions, and requirements can be
found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. The Bureau may
contact a prospective borrower for clarification of specific
information included in the Letter of Interest. The Bureau will review
all Letters of Interest properly filed and received in the submission
time window provided herein.
B. Review and Evaluation
Each Letter of Interest that is properly filed and received will be
evaluated for completeness and eligibility for the RRIF Express Program
using the criteria in this notice. This initial step of the review
process will include (1) an evaluation as to whether the proposed
project and applicant satisfy RRIF statutory eligibility requirements,
and (2) an evaluation as to whether the proposed project and applicant
satisfy the RRIF Express Program eligibility criteria. In addition, the
Bureau will conduct a high-level feasibility assessment of the proposed
project and the applicant's plan of finance before a Letter of Interest
is accepted into the RRIF Express Program and before a Letter of
Interest enters the creditworthiness process. With respect to the
project, factors that will be considered include, but are not limited
to, (1) the completion of the project being financed is not necessary
to repay the proposed RRIF loan; (2) the project budget is in year of
expenditure and includes contingencies to account for potential project
risks; and (3) the maturity of the proposed RRIF loan does not extend
beyond the project's anticipated useful life. With respect to the
applicant's plan of finance, factors that will be considered include,
but are not limited to, (1) a maximum loan size that, when added to the
proposed borrower's existing outstanding and undrawn available debt,
does not substantially exceed an earnings before interest, taxes,
depreciation, and amortization multiple that would be market
appropriate in a similar circumstance, for the most recent trailing
twelve month period and for any period of the applicant's forecast; and
(2) consistent levels of revenue and operating profitability
demonstrated by the proposed borrower over the most recent fiscal year.
The Letters of Interest determined to be eligible for the RRIF
Express Program will then be advanced to the Bureau's creditworthiness
review process, which is an in-depth creditworthiness review of the
project sponsor and the revenue stream proposed to repay the RRIF
credit assistance as described in the Programs Guide. The Secretary
reserves the right to limit the number of applications from a single
entity or subordinates of a single parent or holding company.
Prospective RRIF borrowers whose RRIF Express Program Letters of
Interest are determined to be ineligible, but whose projects are
otherwise statutorily eligible for standard RRIF credit assistance,
have the option to be considered under the overall RRIF program.
Issued in Washington, DC, on October 22, 2020.
Elaine L. Chao,
Secretary of Transportation.
[FR Doc. 2020-25274 Filed 11-25-20; 8:45 am]
BILLING CODE 4910-9X-P