Gov. Jared Polis made a stop at the Marcia-Pullman Car in Craig on Wednesday, a fitting location for him to sign the Rail and Coal Transition Community Economic Measures bill.

Sponsored by Sen. Dylan Roberts, Rep. Meghan Lukens and Speaker of the House Julie McCluskie, the legislation aims to support both the realization of passenger rail and economic-diversification efforts in transitioning communities in Northwest Colorado.

“This bill is very important so that we can see rail here again serving Northwest Colorado,” Polis said.

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The bill seeks to make passenger rail in the mountains more sustainable by incentivizing businesses and operators to utilize freight lines at risk of inactivity due to the transition away from coal — particularly those in Craig and Hayden.

The legislation will do this by creating two income tax credits — one for businesses that use rail to transport freight into or out of a coal-transition community and another for rail carriers that utilize a line at risk of inactivity due to a lack of demand.

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At the same time, the bill will make more of the region eligible for economic support from the Colorado Office of Economic Development and International Trade in effort to create opportunities for economic diversification and support rail development in mountain communities.

Sponsors of the bill say a passenger rail line could lead to increased tourism in Northwest Colorado, create additional economic-growth opportunities, and allow locals to commute from Winter Park to Craig with stops in between.

“It makes sense to be in one of our tier-one coal transition communities to get this signed into law today,” said Lukens, calling the bill “one of the many pieces of the mountain rail puzzle.”

Lukens emphasized that she sees the legislation as “very much a workforce development and support bill.”

“From my perspective, mountain rail is really focused on supporting Craig’s workforce, whether that is maintaining good jobs and keeping good jobs in Craig, or supporting workforce that goes between Craig, Hayden and Steamboat,” Lukens said, adding that the bill represents a single, but important, step in the “larger multi-year mountain rail vision.”

The bill’s first income tax credit would incentivize taxpayers to use rail transportation for freight that either comes from or goes to a business in a coal-transition community as long as the Colorado Department of Transportation has determined the rail line is at risk of inactivity due to the transition away from coal.

The Colorado Office of Economic Development will administer the freight tax credit and may annually reserve up to $5 million from 2025 to 2036. After applying for the incentive, a taxpayer could receive a credit for up to 75% of their relevant costs.

The second income tax credit created by the bill will incentivize railroad operators to maintain rail line access in coal-transition communities by offering up to a 75% tax credit for direct operating and capital improvements to maintain or improve a qualified rail line.

CDOT can qualify a rail line if the agency determines it is at risk of inactivity and covered by an agreement for passenger-rail access, and the legislation allows the state to issue up to $5 million worth of those tax credits per year.

The bill would also provide up to $10 million in financial incentives for companies to locate along rail lines in the state’s “coal transition communities,” which are defined as communities that had coal mines, coal-fired power plants, or manufacturing or transportation related to such facilities as of 2017.

“We are talking about mountain rail in very robust and real terms,” McCluskie said.

She shared that the federal government has earmarked significant funds for rail expansion across the United States and noted that “Colorado is well-poised to take advantage of those dollars.”

The proposed mountain line could connect Denver to Winter Park, Steamboat Springs, Hayden and Craig, and allow for commuter transit between the towns. However, continued freight use of the rail line is viewed as key to the financial viability of a passenger-rail service.

Roberts called the bill’s passage “a true win-win-win opportunity for Craig, the entire Yampa Valley and the state of Colorado,” and thanked Polis for traveling to the region “to see Craig and the potential that this town and this community and this county has, particularly with the rail infrastructure that already exists here.”

Roberts said that in addition to helping make a passenger rail in the Yampa Valley “a real reality,” the bill would diversify use of the rail line to the benefit of residents.

“It is a way for us to invest in the economy in Craig and Moffat County, to find ways to create new jobs and bring in new industries and employers and make sure that we keep the vitality of this community alive — to make sure that the people that want to live here and work here can continue to do so.”

Roberts emphasized that the signing represented “one of the initial steps in what we expect to be a very vibrant freight and passenger rail line in Craig in Moffat County.”

The bill also includes provisions to protect rail lines for a proposed Denver-Craig service even if coal traffic drops below sustainable levels. The bill enhances the ability of the state to sell the Moffat Tunnel, which it has owned and leased since it was completed in 1928.

Union Pacific’s currently leases the tunnel for $12,000 per year, but the lease is set to expire in January.

The bill also caps the length of any future lease for use of the Moffat Tunnel at 99 years, but allows for the sale of all property owned by the state’s Moffat Tunnel Improvement District for “fair market value and for less than fair market value, if the department finds such a conveyance and transfer is in the public interest.”

The bill describes the Moffat Tunnel as “an essential economic link for freight and passenger rail service, connecting the east and west parts of the state, and the access it provides is essential to achieving a just transition in many coal transition communities.”

Craig mayor Chris Nichols expressed optimism about the bill’s incentives, sharing that he thinks the freight component will potentially be most meaningful.

“We have to repurpose those rail lines after the coal mines quit producing and decommission, so giving incentives to use the rail line for freight would be a big boost and help economic development.”

Polis already recently signed SB24-184, also sponsored by McCluskie, which gives Colorado the opportunity to bring passenger rail to Northwest Colorado and connect the region, as well as generate new economic opportunities for communities facing economic transition.

The federal government has already committed billions of dollars to rail development nationwide, and there is a growing coalition of support throughout Northwest Colorado.

City council member and RTA board representative Randy Looper believes that expanded rail service “would mean amazing things” for Craig and the Yampa Valley. He also believes time is of the essence.

“We need the passenger rail service and we need it in the next 2-3 years,” Looper said, sharing that the cost of repurposing the line prior to the completion of the coal transition would be minimal, compared to the potentially “astronomical” costs of waiting until after 2028.

“When the coal mine stops producing, (Union Pacific) has no reason to continue and maintain the line. If we don’t have passenger rail in place by that time, the line goes away.”

Looper noted that passenger rail between Craig and Steamboat would also help address safety issues on the increasingly congested Highway 40, a constant point of concern for Craig commuters.

“The train would really do amazing things for Craig and the whole of Northwest Colorado,” Looper said.

His enthusiasm was shared by sponsors and stakeholders at Wednesday’s event, with Polis anticipating his and others excitement “to celebrate the future contributions of rail to the vitality of Craig.”