Alameda Corridor weighs heavily on LA, Long Beach finances

CONCERNS have been raised that the US$2.4 billion Alameda Corridor that allows freight trains to travel to and from the Los Angeles and Long Beach docks may become a financial burden for the ports.

When the corridor opened it was intended to pay for itself through user fees on each shipping container moved. However, with port cargo down sharply from the peak in 2006 when the twin ports complex handled nearly 16 million containers, the payments on debt that was taken on to build the route will rise until 2033, reports the Los Angeles Times.

"Until two years ago we were on track to have the traffic we needed," said Los Angeles City Councilwoman Janice Hahn, who also serves as chairwoman of the Alameda Corridor Transportation Authority Board.

"We were going to triple the amount of cargo we received. We weren't going to be able to handle the growth. My, how a few years have changed that outlook."

The Alameda Corridor Transportation Authority hopes to refinance about one third of the debt, or $550 million, with a federal loan. If the government lends only part of that amount or none at all, the authority would sell new bonds with later maturity dates and use the proceeds to buy older bonds that mature sooner. If that solution fails or is delayed, officials will have to ask the ports for loans, or "shortfall advances," by October 2011, the report said.

In 2009, the twin ports saw throughput volumes dive almost 17.5 per cent compared with the year before, to 11.8 million containers, the lowest total since 2003. So far in 2010, the ports have seen more business but experts say this is not enough.

"The corridor authority's payments on debt principal and interest will jump to $117.1 million in 2012 from $102.5 million the year before. The tab keeps rising so that in 2033 the corridor will need to handle twice the cargo it received in 2009 to make $198.6 million in debt payments - an unlikely prospect," the report said.
(Source:www.schednet.com)