Clinton to Seek Loan for L.A. Rail Corridor

The Clinton administration today will announce a $400-million loan for Los Angeles’ Alameda Corridor that, if approved by Congress, would allow construction to begin on the economy-boosting rail cargo artery.

Federal transportation officials said Monday that the administration will include in its 1997 budget an appropriation of $59 million to cover the government’s start-up costs for the loan. The Alameda Corridor Transportation Authority would repay the loan within 30 years from user fees. Payments would not begin until the rail line is completed, now scheduled for 2001.

The loan completes funding for the $1.8-billion project, which would dramatically increase the region’s ability to capitalize on the burgeoning Pacific Rim trade.

Mayor Richard Riordan has been pushing for the Alameda Corridor project as a major boost toward making good on his 1993 campaign promise to turn around Los Angeles’ recession-plagued economy.

“I was truly elated when [Transportation Secretary] Federico Pena called me today. . . . I just about jumped to the ceiling,” said Riordan, who last month led a delegation to Washington to lobby for funds to complete the financing.

A joint venture with the highly competitive ports of Long Beach and Los Angeles as major partners, the Alameda Corridor calls for construction of rail lines to move more freight, at greater speed and efficiency, from the two ports to Union Station in downtown Los Angeles, where it would be dispatched around the nation. The lines, to be built in a trench for much of the route, would relieve traffic by eliminating about 200 street-grade crossings and allow trains to move faster.

The project is expected to generate at least 10,000 construction-related jobs, plus an estimated 700,000 permanent jobs by 2010 from increased trade in the region. The $116 billion in annual trade now handled by the two ports--one-fourth of the nation’s water-borne international trade--is expected to climb to $253 billion by then.

Shortly after taking office, Riordan began pushing for the project and engaged the volunteer services of commercial real estate consultant and close advisor Steven Soboroff to lead complicated right of way negotiations with three major railroads. Riordan’s office also took a key role, along with harbor area Councilman Rudy Svorinich Jr. and the city of Long Beach, in getting support from 26 cities along the corridor’s route and in lining up financing for the project.

Officials of these cities, including Compton, South Gate and Lynwood, have expressed concerns that their towns will bear much of the disruption from construction, perhaps even some loss of businesses, without getting any direct benefit. Riordan has assigned staff member David Cobb to work full time with these cities.

Riordan said he was not disappointed that the federal government came through with a loan package instead of an outright grant. He noted that the loan carried favorable terms and repayment to federal taxpayers. Riordan also credited one of his top aides, Michael Keeley, for putting together a financing proposal that fit both the administration’s and the city’s needs.

While the complicated project still needs some “finishing touches,” it nonetheless is “one of the most important economic tools for the Los Angeles region for the next 50 years,” Riordan said.

The corridor project, on which some construction could begin later this year, had received $1.6 billion in financing commitments to date, including $400 million from the ports of Los Angeles and Long Beach, $700 million from project revenue bonds and $350 million from other local and state sources. The federal government earlier kicked in $47 million in commerce and transportation grants.

Calling the fund a “critical investment in Southern California,” President Clinton, a Democrat, has again given his imprimatur to a program forwarded by the Republican mayor.

This is not the first time Riordan has found himself in sync with the president, who clearly understands the benefit of helping vote-rich California.

The administration also has provided millions in federal grants for Riordan’s efforts to increase the size of the city’s police force and is putting up even more in grants and loan guarantees for a soon-to-open community development bank to spur the economies of the city’s poorest neighborhoods.

“This is the last piece that allows [the Alameda Corridor Transportation Authority] to manage the cash flows of the project,” said Michael Huerta, an associate deputy transportation secretary.

Although the loan fund proposal still needs approval from Congress, Washington observers said its prospects look good, given the project’s strong bipartisan backing from California House members and the payback feature.

--- UNPUBLISHED NOTE ---

The Alameda Corridor will run from the ports of Los Angeles and Long Beach to a major freight rail switching yard just south of the Santa Monica Freeway (20 miles), and NOT to Union Station downtown.

--- END NOTE ---