Colorado: Polis Administration Launches Program to Support Thriving Rail Lines in Coal Transition Communities

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CRAIG – Today, Governor Polis and the Colorado Office of Economic Development and International Trade (OEDIT), including the Business Funding Incentives division and the Rural Opportunity Office, announced the Freight Rail Tax Credit program to diversify business use of freight rail lines affected by coal plant closures. Initially, the program will focus on incentivizing use of the Union Pacific's Craig Branch Line to support the diversification of local economies that traditionally relied on the coal industry and set the stage for future passenger rail.

"As the economy moves away from the high cost of coal power, Colorado is focused on saving people money and supporting local job creation and business growth. This initiative will encourage the continued use of existing rail lines, increase business activity in northwest Colorado and set the stage for passenger rail," said Governor Polis.

Established by SB24-190 and codified under Colorado Revised Statute 39-22-563, the Freight Rail Tax Credit will cover up to 75% of the costs associated with establishing or increasing freight rail transportation. Eligible expenses include railroad fees, transloading costs, and capital costs associated with rail infrastructure. The intent is to identify specific rail lines experiencing decreased usage due to changes in coal production and support their continued use.

At this time, eligible businesses must use freight rail transportation along Union Pacific's Craig Branch Line to be eligible for the Freight Rail Tax Credit. The Craig Branch Line runs through the Yampa Valley, which is a coal transition community including Moffat, Rio Blanco, and Routt counties.

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"Developing a combination of freight traffic and passenger rail use on the Craig Branch will foster economic development in Northwest Colorado and ensure this important asset continues to support the local economy and community," said Eve Lieberman, OEDIT Executive Director.

The Freight Rail Tax Credit program can reserve up to $5 million in freight rail tax credits each year, starting in 2025 and ending before January 1, 2036. OEDIT manages the program in consultation with the Office of Just Transition (OJT) and the Colorado Department of Transportation (CDOT). CDOT will conduct annual reviews to determine whether additional freight rail lines will be added.

Interested businesses may visit the Freight Rail Tax Credit website for more information.

"We need to support the use of rail lines in coal transition communities because they are critical to supporting a range of new business opportunities, from manufacturing to outdoor recreation," said Wade Buchanan, Director of the Office of Just Transition. "Programs like this can help ensure Colorado's coal communities continue to thrive through transition."

To support the development of passenger rail within the region, the City of Craig, the Town of Hayden, Routt County, and the City of Steamboat Springs, have all passed resolutions supporting both the Colorado Department of Transportation's (CDOT) planned Mountain Rail project and the placement of Mountain Rail stations within the region, committing to coordinating with state and local partners on their development.

The Freight Rail Tax Credit, established by SB24-190, was sponsored by Speaker of the House Julie McCluskie, Senate Majority Caucus Chair Dylan Roberts and Rep. Meghan Lukens.

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"Maintaining and expanding mountain rail infrastructure is critical to supporting economic diversification efforts in transitioning coal communities and to increasing sustainable access to the high country. I have worked hard to bring investment in passenger rail to Colorado's mountain communities, and I will continue to make sure mountain rail remains a key part of Colorado's transportation infrastructure," said House Speaker McCluskie.

"The timing is right to support rail use. By encouraging businesses to move to coal-transitioning communities and use the rail line to move freight, this program will bring new jobs and make passenger rail from Craig to Hayden, Steamboat, Grand County and on to Denver feasible by the end of the decade," said Sen. Roberts.

"By investing in the utilization of our rail line, we set the stage for business activity to grow on the Western Slope. When businesses utilize the rail line to haul freight, this increase in rail revenue will allow for mountain passenger rail to be more affordable to all, bringing more business to the western Colorado," said Rep. Lukens.

The program announced today is part of an ongoing effort by the Polis Administration, OEDIT and the Office of Just Transition (OJT) to help communities that have relied on coal mines and coal-fired power plants for employment find new sources of jobs and property tax income. To date, OEDIT and OJT have awarded $11.38 million in coal transition funding statewide, including $7.9 million in northwest Colorado.

About Colorado Office of Economic Development and International Trade

The Colorado Office of Economic Development and International Trade (OEDIT) works to empower all to thrive in Colorado's economy. Under the leadership of the Governor and in collaboration with economic development partners across the state, we foster a thriving business environment through funding and financial programs, training, consulting and informational resources across industries and regions. We promote economic growth and long-term job creation by recruiting, retaining, and expanding Colorado businesses and providing programs that support entrepreneurs and businesses of all sizes at every stage of growth. Our goal is to protect what makes our state a great place to live, work, start a business, raise a family, visit and retire—and make it accessible to everyone. Learn more on the OEDIT website.

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