Review of State-Level Loan and Grant Funding Programs for Local Freight Rail Infrastructure

This paper reports the results of a comprehensive review of state-level loan and grant funding programs specifically for local freight railroad infrastructure improvements. A total of 33 unique funding programs exist in 24 states. A majority of the programs are administered through the State DOT; however, other agencies can be involved. Programs typically offer a low-interest loan, grant, or a combination of loan and grant assistance; however, some loan programs allow for conversion to a grant if performance targets (typically jobs or local carloads) are achieved. Eligible entities typically include public agencies, freight railroad companies, or private industry. While these programs appear to be providing local communities with much-needed funding for rail projects, this review finds that administrative details of state-level funding programs within the public domain, such as published project selection criteria or a clear process of decision-making for funding, are the exception rather than the rule. Furthermore, ex post evaluation of project outcomes appears to be rare, underscoring the need for greater transparency in reporting of funding awards and assessment of how funding has been used to advance economic development goals. The findings from this paper can be used by state and local policymakers considering the creation of loan or grant funding programs for freight railroad infrastructure projects or by those who are seeking to improve existing programs.