Agreements likely finalized by spring on passenger rail funding

DES MOINES – State transportation officials said Wednesday they expect agreements will be finalized by spring with federal and Illinois officials that will enable Iowa to begin using funds from Iowa's $86.8 million federal allocation aimed at making Chicago-to-Iowa City passenger rail service an eventual reality.

Nancy Richardson, director of the state Department of Transportation, said she discussed the passenger rail expansion with federal officials last week and assured them Iowa was moving ahead with the proposed project but noted that Gov. Terry Branstad wants to explore options that would keep the state from having to provide up to $3 million annually to subsidize the service. She said possible sources could be a federal new startup program, existing state transportation funds or help from beneficiaries of the line.

“We're moving forward on the project. The governor has not said otherwise,” she said. “We are not backing away from this project.”

Sen. Matt McCoy, D-Des Moines, co-chairman of a House-Senate budget subcommittee that oversees transportation, said he was concerned the public, Iowa's Illinois partners and federal officials were getting a “mixed, muddled message” on passenger rail because House Republicans voted last month to repeal the $3.5 million in state match already committed to the project while Branstad has opposed an ongoing subsidy to operate the 220-mile inter-city route projected to carry 246,000 passengers per year with twice-daily trains beginning in 2015..

Although Branstad has said he doesn't want the state “getting into the operating-subsidy business,” he hasn't withdrawn $11.5 million in state money through July 2013 for planning and early capital improvements needed before the trains can roll.

Most of the start-up costs are covered by a $230 million Federal Railroad Administration grant. That will cover the purchase of cars and locomotives for the service as well as well as improvements to track and signals owned by the BNSF Railway and Cedar Rapids-based Iowa Interstate Railroad over whose tracks the trains will operate.

Once the state passes the threshold where it signs the agreement with federal and Illinois officials and begins to spend federal grant money, Richardson said, those funds would have to be remitted it the Legislature and governor later decide to pull out of the project that is projected to create 209 jobs during the four-year design and construction period, create 31 permanent jobs once the trains are operational and provide economic and transportation cost benefits to communities served by the new service, passengers and the two participating states, according to DOT officials.