2004 ANNUAL REPORT OF THE IOWA RAILWAY FINANCE AUTHORITY PURPOSE The Iowa Railway Finance Authority (IRFA) was created in 1980 by the 68th General Assembly to provide for the financing of rail facilities, and to enhance and continue the operation of essential rail facilities. IRFA is authorized to offer financial assistance for the acquisition, rehabilitation, construction, refinancing, extension, replacement, maintenance, repair or leasing of any rail facility. Financial assistance may be in the form of nointerest or lowinterest loans, grants, partnerships or equity interests. IRFA is also authorized to purchase and temporarily operate a railway if necessary to preserve essential service. FUNDING When IRFA was established the Legislature funded it by imposing state taxes on railroad activity. However, state and federal court decisions invalidated the locomotive fuel tax and the car mileage tax. IRFA collected approximately $2.5 million in delinquent railroad property taxes, primarily from 1983 collections involving the bankruptcies of the Rock Island and Milwaukee railroads. Also, in 1983 the 70th General Assembly authorized a $15 million interestfree loan to IRFA from the use tax on motor vehicles. These two funding sources provided revenue for IRFA totaling $17.5 million. Most of this initial funding was used in 1984 to provide $17 million in loans to shipper groups for the purchase of lines of the bankrupt Rock Island Railroad ($2 million to Iowa Northern Railroad and $15 million to Heartland Rail Corporation). IRFA has repaid $2.5 million of the use tax loan. Under 1988 legislation, the remainder is due 30 years after IRFA's receipt of Heartland loan repayments. In 1988 legislation also allowed IRFA to issue bonds which must be paid solely with IRFA revenue (e.g., project loan repayments), but can be backed with a bond guarantee from the use tax. However, this has never been used. In 1989 the Legislature repealed the deposit of delinquent railroad property taxes into IRFA'