Notice2023-11576
Notice of Funding Opportunity for Letters of Interest for the RRIF Express Pilot Program Under the Railroad Rehabilitation & Improvement Financing Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 1, 2023
Issuing agencies
Transportation DepartmentTransportation Department
Abstract
This Notice of Funding Opportunity ("NOFO") for the RRIF Express Pilot Program ("RRIF Express") expands the ability of eligible borrowers to access funds by removing the caps on Cost Assistance for advisor fees and Credit Risk Premium ("CRP") Assistance, provides greater flexibility by allowing unaudited financial statements in lieu of audited financial statements in certain circumstances, and makes other clarifications. The NOFO also implements a sunset date of December 1, 2023. Following the sunset date, this NOFO will expire, and all benefits made available in this Notice will become available to any eligible RRIF borrower, consistent with existing law. All projects that were previously eligible for RRIF Express financing remain eligible under this NOFO. The original NOFO with modifications is in the SUPPLEMENTARY INFORMATION section.
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<title>Federal Register, Volume 88 Issue 105 (Thursday, June 1, 2023)</title>
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[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Notices]
[Pages 35995-35998]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-11576]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary 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 of Transportation, Department of
Transportation (the ``DOT'').
ACTION: Notice of funding opportunity.
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SUMMARY: This Notice of Funding Opportunity (``NOFO'') for the RRIF
Express Pilot Program (``RRIF Express'') expands the ability of
eligible borrowers to access funds by removing the caps on Cost
Assistance for advisor fees and Credit Risk Premium (``CRP'')
Assistance, provides greater flexibility by allowing unaudited
financial statements in lieu of audited financial statements in certain
circumstances, and makes other clarifications. The NOFO also implements
a sunset date of December 1, 2023. Following the sunset date, this NOFO
will expire, and all benefits made available in this Notice will become
available to any eligible RRIF borrower, consistent with existing law.
All projects that were previously eligible for RRIF Express financing
remain eligible under this NOFO. The original NOFO with modifications
is in the SUPPLEMENTARY INFORMATION section.
DATES: Letters of Interest from prospective RRIF borrowers for RRIF
Express 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 Pilot
Program should resubmit a Letter of Interest following the instructions
below. Prospective RRIF borrowers who previously submitted Letters of
Interest under a preceding RRIF Express Notice of Funding Opportunity
(published on December 13, 2019, March 16, 2020, June 19, 2020, or
November 27, 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 provisions of this NOFO.
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
provisions of this NOFO 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 RRIF Express).
ADDRESSES: Applicants to RRIF Express must use the latest version of
the Letter of Interest form available on the Build America Bureau
website: <a href="https://www.transportation.gov/content/build-america-bureau">https://www.transportation.gov/content/build-america-bureau</a>
(including applicants who have previously submitted Letters of Interest
and who are now seeking participation in RRIF Express). Letters of
Interest must be submitted to the Build America Bureau via email at:
<a href="/cdn-cgi/l/email-protection#4614140f00233e36342335350622293268212930"><span class="__cf_email__" data-cfemail="f2a0a0bbb4978a8280978181b2969d86dc959d84">[email protected]</span></a> 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 <a href="/cdn-cgi/l/email-protection#1a6d737676737b7734687f6979725a7e756e347d756c"><span class="__cf_email__" data-cfemail="bfc8d6d3d3d6ded291cddaccdcd7ffdbd0cb91d8d0c9">[email protected]</span></a>
or via telephone at 202-366-2300. A TDD is available at 202-366-3993.
SUPPLEMENTARY INFORMATION: RRIF Express 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--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 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 RRIF Express.
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\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).
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Subject to the availability of funds, applicants accepted into the
RRIF Express Pilot Program may benefit from two types of financial
assistance: (a) Cost Assistance to pay for any portion of the Bureau's
advisor expenses borne by applicants; and (b) for those applicants that
ultimately receive RRIF credit assistance, CRP Assistance to pay the
CRP normally paid by the borrower. These funds will be made available
to benefit applicants accepted into RRIF Express 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 RRIF Express. 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 assistance from RRIF Express, establishes eligibility
criteria, and describes the process that prospective borrowers must
follow when submitting Letters of Interest.
RRIF Express information, including any additional resources,
terms, conditions and requirements when they become available, can be
found on the Build America Bureau website at: <a href="https://www.transportation.gov/buildamerica/rrif-express">https://www.transportation.gov/buildamerica/rrif-express</a>. 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: <a href="https://www.transportation.gov/buildamerica/financing/program-guide">https://www.transportation.gov/buildamerica/financing/program-guide</a>.
[[Page 35996]]
Table of Contents
I. Background
II. Funding of CRP Assistance and Cost Assistance
III. Eligibility Requirements for RRIF Credit Assistance
IV. Eligibility Criteria for RRIF Express
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.
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\4\ Public Law 105-178, Sec. 7203, 112 Stat. 107, 471.
\5\ Public Law 109-59, Sec. 9003, 119 Stat. 1144, 1921.
\6\ Public Law 110-432, Sec. 701(e), 122 Stat. 4848, 4906.
\7\ Public Law 114-94, Subtitle F, 129 Stat. 1312, 1693.
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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 any CRP
that would otherwise be payable by participants in RRIF Express, until
this funding is expended, or this notice is superseded by a new Notice
of Funding Opportunity.
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\8\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as
enrolled Mar. 23, 2018).
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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 that would be payable by participants in RRIF Express, until
this funding is expended, or this notice is superseded by a new Notice
of Funding Opportunity.
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\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).
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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 RRIF Express. In addition, for
prospective borrowers seeking RRIF Express benefits, the requirements
set forth in section IV (Eligibility Criteria for RRIF Express) of this
notice also apply.
IV. Eligibility Criteria for RRIF Express
The DOT has identified the following strategic objectives for RRIF
Express: 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
RRIF Express are rail line modernization projects where the borrower
has a well-documented financial history and easily identified revenue
stream(s) for loan repayment.
To differentiate among Letters of Interest received for projects
under this NOFO, 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 the date of acceptance into RRIF Express and for the purpose
of one or more of the following activities: (1) 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;
and (2) develop or establish new intermodal or railroad facilities;
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 \11\ 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
[[Page 35997]]
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. In lieu of providing
audited financial statements as documentation of historical financial
information in Attachment D-1 of the Letter of Interest, an applicant
meeting the size standard for small business concerns established under
section 3(a)(2) of the Small Business Act (15 U.S.C. 632(a)(2)) may
provide unaudited financial statements if such statements are
accompanied by the applicant's Federal tax returns and Internal Revenue
Service tax verifications for the corresponding years. Borrowers
exercising this option should note that it may impact the time required
to process their application.
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\11\ Certain applicants may not need to provide audited
financial statements, as explained in more detail below.
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(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, manufactured goods, and
construction materials used in the project will be produced in the
United States in accordance with the Build America, Buy America Act
(BABA), Public Law 117-58, 70914 and the Federal Railroad
Administration RRIF Buy America policy, which follows 49 U.S.C.
22905(a). Projects that require a waiver are not eligible for RRIF
Express, 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 RRIF Express
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
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 RRIF Express
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,\12\ 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.
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\12\ See <a href="https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx">https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx</a>
for more information on Opportunity Zones.
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Letters of Interest must be submitted using the latest form on the
Build America Bureau website: <a href="https://www.transportation.gov/content/build-america-bureau">https://www.transportation.gov/content/build-america-bureau</a>. Other RRIF Express information including any
additional terms, conditions, and requirements can
[[Page 35998]]
be found on the Build America Bureau website at: <a href="https://www.transportation.gov/buildamerica/rrif-express">https://www.transportation.gov/buildamerica/rrif-express</a>. 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 RRIF Express 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
RRIF Express 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 RRIF Express 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 RRIF Express
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 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.
Peter Paul Montgomery Buttigieg,
Secretary of Transportation.
[FR Doc. 2023-11576 Filed 5-31-23; 8:45 am]
BILLING CODE 4910-9X-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.