Chicago will seek for a $1 billion federal loan to renovate and modernize historic Union Station.

DALLAS – Chicago will work with federal officials to obtain a low-interest loan of up to $1 billion to finance redevelopment of the city's historic Union Station rail depot and its surroundings.

The ultimate goal of the Emerging Projects Agreement (EmPA) with the U.S. Transportation Department announced on Thursday is a loan of $750 million to $1 billion from the Railroad Rehabilitation and Improvement Financing program, Chicago Mayor Rahm Emanuel said.

Attracting development around and above the downtown rail station, which opened in 1925 and was last renovated in 1991, has been a top priority for Emanuel since he was elected mayor in 2011.

"Today marks a major step forward both in the future of Union Station, and in the economic life of our city," Emanuel said.

The agreement allows the department to give technical assistance to Chicago in drafting the RRIF application as well as submissions for Transportation Infrastructure Finance and Innovation Act loans.

The agreement does not commit the new president to approval of the RRIF loan, Emanuel said.

"There is no way I can say you're going to do this, but he did put infrastructure and transportation at the top of his list," Emanuel said.

EmPAs were authorized by the Fixing America's Surface Transportation Act, adopted in late 2015, to provide contingent commitments of credit for the early stages of high-priority projects.

The Chicago agreement is only the second such federal pact with local governments. The first covered the Gateway Program to rebuild tunnels between New Jersey and Manhattan.

Amtrak, which owns the station, is expected to select a private partner soon to act as the master developer that will finance expansion and renovation of the facility as well as commercial and residential developments around and above it.

Amtrak in November asked four teams of private investors to submit detailed bids for commercial and retail redevelopment of Union Station and for the use of the three million square feet of air-rights over the rail tracks and above the properties on the 14 acres that Amtrak controls around the station.

Sterling Bay, one of the four finalists, said it would build a 958-foot-tall office tower connected to the station if it is selected.

The others on the short list are Golub Capital, Jones Lang LaSalle, and Riverside Investment & Development.

Amtrak's intention to use a public-private partnership to finance the project should fit in well with President-elect Trump's 10-year, $1 trillion infrastructure plan, said Chicago transportation commissioner Rebekah Scheinfeld.

"The president-elect has already identified infrastructure and transportation investment as a priority," she said. "And no matter your political leaning, everyone can agree that Chicago's Union Station needs investment."

The proposed RRIF loan would finance modernization of the station's Canal Street lobby and various entrances, new pedestrian tunnels connecting with the city's commuter and light rail systems, and widening of train platforms.

The signing of the EmPA means that the project will receive strong consideration for the federal loan, said Ray Lang, the Chicago-based senior director of national state relations at Amtrak.

The agreement puts the Union Station project at the top of the Transportation Department's priority list, he said.

"In layman's terms, this is a little like being pre-approved for a credit card," Lang said. "This is another milestone in all of our efforts to improve Union Station to make it a world-class transportation facility for a world-class city."

An average of 120,000 commuters and 300 trains per day pass through the 92-year-old station, he said.

"The station is at capacity during certain times of the day," Lang said. "There's really no more room for trains. But there's demand for more trains."

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