Kansas Increases Funding for Railroad Loan/Grant Program

Recognizing the importance of rail service to industries and communities dependent on moving heavy, lower-value-per-ton goods, Kansas recently increased funding for its State Rail Service Improvement Fund (SRSIF) from $3 million to $5 million annually.

The program provides low-interest loans and grants to short line railroads, which serve local customers and provide access to the Class I rail network.

The purpose of the program, initiated in 1999, is to preserve and improve rail service in order to support economic development and reduce highway maintenance costs.  By maintaining or increasing the share of freight moving by rail instead of truck, the SRSIF provides significant air quality benefits as well.

When the SRSIF was set up in 1999 with $3 million in annual funding, it was intended to be self-sustaining through the repayment of principal and interest from loan recipients.  However, a significant grant – in the amount of $11.5 million over several years – was used to facilitate the purchase of the Central Kansas Railway (CKR) by Watco Companies (a short line railroad holding company).  The CKR, now known as the Kansas and Oklahoma Railroad (KO), operated 900 miles of track in west central and south central Kansas that would otherwise have been abandoned.  With the grant, 725 miles of the CKR were maintained in operation and shippers of heavy relatively low-value commodities, such as wheat, are still able move their goods over the railroad network rather than by truck.

A 2005 study by the Kansas Department of Transportation found the program to be a success.  According to the study, the program has enabled higher train speeds on short line railroad track, reduced derailments, extended the service life of existing rail lines, and improved capacity in rail yards.  In addition, the program has prevented the abandonment of the majority of the former CKR line and, by funding service improvements on other short line railroads, has reduced the likelihood that these lines will be abandoned.

In 2010, the State Legislature decided to fund the program at $5 million annually starting in 2013 and expanded eligibility for funding to include shippers and local units of government, in coordination with the serving railroad.  Project eligibility has been expanded beyond the rehabilitation projects funded with SRSIF loans in the past.  Capacity enhancement projects, such as the construction of new passing tracks, and economic development projects, such as the construction of new rail spurs or improvements to rail car loading facilities at grain elevators, are now eligible for loans through the program.

More information can be found at:
Review of the Kansas Railroad Rehabilitation Program. [PDF]

Kansas Statewide Rail Plan Draft Final Report. [PDF]