2 Alameda Corridor Proposals Approved

The long-awaited $2-billion Alameda Corridor project took two major steps toward reality Friday, when the Port of Los Angeles approved a railroad operating agreement and raised the debt ceiling on bonds that can be sold to fund construction of the 20-mile rail expressway.

The city’s Board of Harbor Commissioners voted 3 to 0 to approve a pact with Union Pacific and Burlington Northern Santa Fe that set fees for hauling cargo on the corridor and provided for uninterrupted rail service during construction of the below-ground route.

Commissioners also increased the amount of bonded indebtedness that can be incurred by the Alameda Corridor Transportation Authority from $800 million to $1.3 billion. Officials for the agency in charge of the project said they might need more funding in case unforeseen problems are encountered during construction.

The debt ceiling and railroad agreement are scheduled to go before the Long Beach Harbor Commission on Monday, the Los Angeles City Council on Wednesday, and the corridor authority board for final approval on Thursday.

Corridor authority Chief Executive Officer James C. Hankla has said the long delays in reaching the rail and bond decisions should not interfere with the project’s main construction phase, which could begin later this year.

Corridor officials say that the railroad agreement is also critical to the agency’s plan to finance much of the project’s construction through the sale of revenue bonds. Underwriters, they say, will now get the chance to analyze the project’s future source of income.

Under terms of the agreement, the railroads will pay $30 per 40-foot shipping container, $8 for an empty container and $8 for other types of railroad cars, such as tank cars and coal carriers.

Depending on inflation, prices will increase no more than 3% per year and no less than 1.5% a year over a 30-year period.

“This is a nice little revenue stream,” said Jeffrey D. Holt, vice president of municipal finance for Goldman, Sachs & Co., which is underwriting the corridor’s bonds. Holt said the corridor agency will probably sell about $1 billion in bonds, leaving a cushion of $300 million that could be used for contingencies or the final stages of construction if the money is needed.

Bond sales were scheduled to begin in November, but the date has been postponed until February. Hankla said the delay is not significant and that the construction schedule is still basically intact. Due to the change, however, the project’s completion has been reset from the end of 2001 to February 2002.