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Industrial Rail Access Program (IRAP)

Office of Freight Transportation

The Industrial Rail Access Program has been designed by the Maine Department of Transportation to encourage economic development and increased use of the rail transportation mode. The 2007 program is funded with $1,000,000 in state funds to provide a maximum of 50% of estimated project costs.  Please contact Nathan Moulton for additional information on available funding at (207) 624-3560.

Projects are rated in the following ten categories;

  1. Job creation/retention

  2. New investment

  3. Intermodal efficiencies

  4. Private share of project cost - the greater the share the higher the rank

  5. Anticipated decrease in air emissions

  6. Anticipated decrease in highway maintenance costs

  7. Anticipated decrease in highway congestion

  8. Transportation and logistics cost savings

  9. Improvements in rail service

  10. Benefit-Cost ratio

The application package defines five project categories: accelerated maintenance, rehabilitation, new siding improvements, right-of-way acquisition, and intermodal facility construction. However, the Department has, and will, entertain any project that enhances rail transportation without necessarily involving actual track work, such as construction of systems to transfer bulk materials between rail and other transportation modes.

The Benefit-Cost methodology used in the application process is the same methodology used by the Federal Railroad Administration for the former Local Rail Freight Assistance Program. The analysis is a nine step procedure, each of which is briefly defined below.

  • Establish the Project Alternative: in this step the applicant defines the project, and should also include discussion of any alternatives that were reviewed and rejected.

  • Determine Project Costs: the application package contains sheets for detailed project estimates, the totals of which can be used in this step.

  • Determine the Null Alternative: the null alternative is an estimate of what will happen if the project is not undertaken and is the alternative against which the proposed project must be compared during the benefit-cost analysis.

  • Use the Standard Planning Horizon: through two round of project solicitations, the Department has used ten years as the standard planning horizon.

  • Use a Discount Rate: the discount rate is generally the State's cost of borrowing (general fund bonds) less the portion of the borrowing costs estimated to be caused by inflation. The discount rate is used to calculate the present value of the estimated benefits over the standard planning horizon. In the two rounds to date 6% has been used.

  • Calculate Transportation Efficiency Benefits: these are a direct effect of project completion and generally are incurred by the operating railroad and its shippers. The application package provides examples of such benefits but each applicant is encouraged to apply any such benefits which may be unique to the proposed project.

  • Calculate Secondary Benefits: these benefits cover a broad spectrum of possibilities. It is up to the writer of the application to find those benefits which are an indirect consequence of project completion. One such benefit is the reduction in State spending on highway maintenance which may be attributable to the project removing truck traffic from the State's highways.

  • Calculate Salvage Value: the project's material salvage value must be calculated for the last year of the planning horizon. The salvage value is used in the final calculations to arrive at an accurate benefit-cost ratio.

  • Calculate the Benefit-Cost Ratio: the discount rate is used to calculate the present value of the benefits accrued over the planning horizon. The ratio is equal to the present value of the benefits divided by the project cost.

 

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