A U.S. House of Representatives subcommittee is scheduled to hold a hearing Tuesday about the role that innovative financing tools, such as tax-increment financing, federal loans and public-private partnerships, can play in funding intercity passenger rail projects.

The hearing is being held by the House Transportation and Infrastructure Committee’s subcommittee on railroads, pipelines and hazardous materials.

Tightened federal and state budgets, as well as rising municipal bond costs, have led to more and more state and local governments taking advantage of federal credit programs, P3s, and other methods to finance infrastructure projects, according to a briefing memo the subcommittee staff released Monday. Traditionally, most infrastructure projects using these types of financing have been tolled highways, but state and local governments are also looking at using these tools to advance intercity passenger rail projects, the memo said.

One major tool that can be used to finance intercity passenger rail is the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Under the program, public and private entities undertaking projects sponsored by public authorities can get federal credit assistance to help finance surface transportation projects considered to be of national and regional significance. They can receive federal loans, loan guarantees and standby lines of credit.

Governments, public authorities, railroads and freight shippers can get financing for rail projects through the Railroad Rehabilitation and Improvement Financing (RRIF) program, which provides low-interest federal loans and loan guarantees.

The railroad industry has not historically used RRIF loans for several reasons, including that it has had sufficient access to private credit markets and has found the RRIF loan approval process to be cumbersome, according to the subcommittee memo. But recently, a number of entities have begun using these loans for capital projects.

The Alameda Corridor Transportation Authority -- which runs a rail line that takes container freight from the ports of  Los Angeles and Long Beach to downtown Los Angeles -- used an RRIF loan of about $84 million to call bonds maturing in 2014 as part of an effort to restructure its debt. In 2011, Amtrak received a $563 million RRIF loan, the largest of these loans to date, to obtain electric trains for the Northeast Corridor.

Public-private partnerships can also be used to help finance railroad infrastructure needs. The subcommittee staff memo suggested P3s could be essential to financing projects that develop rail stations and the areas around them.

Additionally, governmental entities can also use tax-increment financing, in which tax-exempt bonds are issued to finance economic development and the increase in property values and taxes in the development’s financing district is used to repay the bonds.

Witnesses at the hearing are to include: Deputy U.S. Transportation Secretary John Porcari, Union Station Redevelopment Corporation President and CEO Beverley Swaim-Staley, Parallel Infrastructure CEO Frank Chechile and Reconnecting America President and CEO and former Meridian, Miss. Mayor John Robert Smith.

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