The proposed RailTech intermodal railport near Silvis received first-round approval Wednesday for up to $8.5 million in bond financing that developers hope to use to complete the project's first phase.

The Quad Cities Regional Economic Development Authority approved a preliminary inducement resolution for RailTech LLC for construction on a 900-acre site north of Silvis's 1st Avenue. RailTech LLC bought an abandoned rail yard previously owned by the Rock Island Lines.

The first phase of the $26 million project will include completing the Quad City Railport, which will be on 360 acres west of Illinois 5.

The railport will include concrete loading docks next to railroad tracks. Cranes will be used to lift containers to and from trucks and trains for shipment.

RailTech LLC hopes to develop the remaining acreage into a multiuse industrial park during the later phases.

The unanimous vote, which came during QCREDA's monthly board of director's meeting in Galesburg, clears the way for up to $8.5 million in moral obligation bonds to be issued in support of the project.

Under the vote, QCREDA agrees to apply for state moral obligation backing on the tax-exempt bonds if the project qualifies, which would further reduce interest costs on the project.

Moral obligation is a financial credit enhancement, based on the state's bond-rating, that would save the borrower thousands of dollars in interest payments.

The financial tool also obligates QCREDA, as the bond issuer, to ask the state legislature to pay off bond-holders with state taxes if the borrower defaults.

The governor's staff generally approves such an enhancement only on economically sound projects by financially strong companies.

"This project cannot fly on private financing alone," said Frank Coyle, RailTech's attorney. "There just isn't enough margin there."

An independent financial adviser will be hired to complete an advisory report before QCREDA make a final decision on the bond recommendation.

"The advisory report should be completed within the next 30 to 60 days," said QCREDA executive director Andrew Hamilton. "There is no timetable for approval by the governor's office."

Mr. Hamilton said that appears that the project has ample support from state officials.

If the moral obligation bonds are approved, the funds could in essence be used to back a tax-increment-financing district established by Silvis last year for the site.

Mr. Coyle told the board the TIF bonds are ready to be sold, but first they need to be made marketable.

"The moral obligation of the state is needed to make this project fly," he said. "Once that is secured, it should create a domino effect that will help everything else fall into line."

Developers had hoped to have the initial phase of the railport project completed nearly two years ago. However, a solid contamination removal and containment project, started after the Illinois Environmental Protection Agency found manganese on the sit, has delayed construction.

Frank Coyle, RailTech LLC attorney, said it expects to receive word soon from IEPA that no additional work is needed.

Once completed, the $26 million project is expected to bring more than 300 new jobs to the area.