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)
Projects are rated in
the following ten categories;
Private share of project cost - the greater the share the higher
Anticipated decrease in air emissions
Anticipated decrease in highway maintenance costs
Anticipated decrease in highway congestion
Transportation and logistics cost savings
Improvements in rail service
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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