The public agency building the Alameda Corridor rail cargo expressway on Wednesday approved use, operating and maintenance agreements with two railroads, triggering other decisions that finalized project funding.
The Governing Board of the Alameda Corridor Transportation Authority (ACTA), a joint powers authority of the cities and ports of Los Angeles and Long Beach, unanimously approved the pacts with Union Pacific Railroad and Burlington Northern Santa Fe Railway.
The agreements set fees for use of the Alameda Corridor and guarantee uninterrupted service during construction. The railroads will pay $30 per 40-foot shipping container, $8 per empty container and $8 for other types of railroad cars, such as tankers and coal carriers. Over a 30-year period, the cost will increase between 1.5 percent and 3 percent per year, depending on inflation.
The use fees create a stream of revenue that will be used to back the repayment of debt when ACTA sells bonds to help finance the project.
Based on approval of the agreements, the ACTA Governing Board increased the amount of debt it may incur from $800 million to $1.3 billion - in effect creating a reserve to pay for any unanticipated construction problems - and adopted a $2.4 billion project budget, up from about $2 billion. The Governing Board also approved a $712 million contract for construction of it's most critical segment - a 10-mile-long railroad trench (see companion news release).
"This is truly a momentous day in the history of the Alameda Corridor, a project that will enhance trade and provide jobs," said L.A. City Councilman Rudy
Svorinich, Jr., chairman of the Governing Board. "What started almost 10 years ago as a dream with little more than the creation of a small government partnership is now a reality, with financing in place, project work nearly completed in some areas and construction about to begin on the critical Mid-Corridor trench."
ACTA is building a 20-mile-long railroad freight expressway linking the ports of Long Beach and Los Angeles to the transcontinental rail yards just east of downtown Los Angeles. The project will speed the shipment of cargo by consolidating rail lines and improving the flow of rail and vehicle traffic through elimination of more than 200 street-level railroad crossings.
The most important segment, called the Mid-Corridor, includes construction of a 30-foot-deep trench running about 10 miles along Alameda Street between State Route 91 in Compton to 25th Street in Los Angeles. Bridges will be constructed to carry street traffic over the trench at 29 crossings.
ACTA is planning to sell about $1 billion in bonds early next year, said Chief Executive Officer Jim
Hankla. The remaining $300 million in debt capacity will be reserved and used only if needed to cover unforeseen costs as work concludes.
"Prudence and good business sense dictate that we have a reserve," Hankla said. "You can"t build a big project like this, including a 10-mile-long hole in the ground, without encountering unexpected circumstances."
Funding sources for the $2.4 billion Alameda Corridor project include:
$1.3 billion in bond proceeds.
$400 million loan from U.S. Department of Transportation.
$394 million in grants from the ports of Los Angeles and Long Beach.
$347 million administered by the Los Angeles County Metropolitan Transportation Authority.
$154 million in other state and federal sources and interest income.
Funding partners, the city councils and port commissions in Los Angeles and Long Beach have all signed off on or formally approved the railroad agreements, the increase in the debt limit and the overall project budget.