While you may not spend a lot of time connecting the dots of how your tube of toothpaste got to the store shelf, one dedicated group at the Iowa Department of Transportation is constantly working to enhance how they can make lives better through transportation by improving the logistics for commodities that ship by rail.
Jim Glaspie is the administrator of the Railroad Revolving Loan and Grant Program that helps get entities including cities, counties, development organizations, businesses, or rail companies connected with rail transportation. Glaspie said, “This program is one of the few sources of state funding for rail infrastructure. Although building new rail can be costly, shipping by rail is an economical way to move goods long distances. With the loan and grant program, we work with shippers to support their efforts to secure access to the rail system, helping them be more efficient and reducing the wear-and-tear large trucks cause on the road at the same time.”
How is the program funded and who approves the applications?
The Railroad Revolving Loan and Grant program is funded each year by an appropriation from the Iowa Legislature and with loan repayments from previously awarded projects. Loan and grant applications are reviewed by Iowa DOT staff and approved by the Iowa Transportation Commission.
Depending on the nature of the project, the program provides either grants, loans, or a combination of the two to improve rail facilities that create jobs, spur economic activity, and improve Iowa’s rail system. While the loan and grant sides of the program function a little differently, the goal of economic development is the same.
How does the program work?
Glaspie said, “Between 2006 and 2022, $29 million or 53 percent of the program was awarded as loans. The loan part of the program provides incentives for rail infrastructure improvements and expansion. Loans through the program require a 20 percent match and have a 10-year term with no interest. Loan repayments are recycled into the program and used for future loans and/or grants. The grant side of the program focuses on job creation and serves as an incentive to attract jobs to and keep jobs in Iowa.”
He continued, “The grant part of the program is meant to bridge a gap to help a project move forward. The grants provide $12,000 per job created or retained and require a 50 percent match from the applicant. We can also approve grants for planning studies that include rail in the mix of transportation options.”
How are businesses impacted by the program?
Gabe Claypool is the president and chief operating officer of a company in Des Moines called Des Moines Industrial. This facility connects shippers with options for transferring loads from trucks to rail. Claypool said, “Des Moines Industrial is a start-up, and as such, needed financial support to go from concept to operational. We did it, and the early $1.7M Iowa DOT Railroad Revolving Loan was fundamental to our successful $33M project.”
He explained, “The concept was driven by the multi-carrier railroad connections, and unparalleled access to BNSF, Iowa Interstate Railroad, Norfolk Southern, and Union Pacific. On our 40-acre footprint, we have now built close to three miles of railroad track, a 115,000-square-foot warehouse, and more than 10 acres of developable land. Ziegler Caterpillar leased 100 percent of our warehouse and three acres of laydown yard. The balance of the transloading activity is currently focused on scrap metal, fly ash, lime, organic grains, recycled rubber, lumber, drywall, and more.”
Another example of the use of the program was the Iowa Northern Railway company whose goal was to connect customers to the worldwide market. In 2019 the company took over operations and maintenance of approximately seven miles of track from Union Pacific in Waterloo. This section of the Union Pacific track connects seven industries to the global fuel, plastics, and feed markets. Dan Sabin, president of the Iowa Northern Railway Company, and his staff identified the need to upgrade rail and three bridges on this section of track.
Sabin said, “The assistance we received from the Iowa DOT’s program for the replacement of the largest of the three bridges allowed us to upgrade all three bridges. These bridge upgrades were crucial to keeping these customers competitive in the global market years into the future. The program allowed current and future customers to transport railcars up to 286,000 pounds gross weight on rail while reducing the risk of catastrophic bridge failure, improving overall efficiency, and reducing downtime due to track and bridge maintenance.”
What other tools are available to businesses?
In addition to the Railroad Revolving Loan and Grant Program, we’ve developed a rail tool kit in collaboration with the Iowa Economic Development Authority. The tool kit contains references and a resource guide to help new freight rail users and economic development professionals with basic information about railroad transportation options and access.
Amanda Martin, the leader of our Rail Transportation team, said, “A lot of times the Iowa Economic Development Authority is contacted by companies looking to start or relocate in Iowa. They can use the tool kit and contact us to find out about opportunities for transportation options very early in the process.”
Glaspie said, “This is a multi-faceted program to assist non-traditional projects. The tool kit has a lot of information that companies would need to help them make informed decisions about the many opportunities of freight rail in Iowa.”
