How Far Can $1.3 Billion Take Amtrak?

Amtrak's list of projects that will get stimulus funding is just about finalized, but this financial boost is just the beginning. Three rail experts weigh in on how the initial $1.3 billion in grants will get spent, and how else the agency can use the money to achieve self-reliance.

In the past, railroads have faced a stigma of antiquity, especially among non-riders-a throwback to a dustier, more untamed America. Now, with the signing of the American Recovery and Reinvestment Act into law last month, The Obama administration has essentially highlighted an often overlooked component of transportation infrastructure. Through the ARRA, high-speed and passenger rail systems will be more generously funded since before the automobile came onto the scene.

In particular, Amtrak, the country's intercity rail network, came one step closer to its own, long-awaited leg up on March 13, when Vice President Biden, along with acting Federal Railroad Deputy Administrator Jo Strang and members of Congress, announced funding plans for Amtrak under the Recovery Act. The FRA, banker to the nation's rail systems, is doling out $8 billion in grant funds, $1.3 billion of which is Amtrak-specific. Most of the $1.3 billion will go to maintaining and repairing equipment, tracks, and other structures, while the $450 million that isn't goes to security and safety upgrades.

As for the rest of the $8 billion in capital grants, projects involving (1) intercity passenger rail services, (2) high-speed rail corridors, and (3) congestion mitigation improvements will all get a shake at the money, according to the FRA. Amtrak is eligible for funds in only the last two categories: projects for improving the equipment, tracks, and facilities of high-speed rail corridors; and congestion management, as long as the agency is partnered with a state.

Not to mention the final criterion for funding eligibility-shovel-readiness. Operating expenses and planning aren't part of the deal, so this money is strictly for creating jobs, and building and upgrading equipment.


Photo courtesy Planetizen Flickr Pool member Michael Patrick.

While the country awaits a more detailed announcement on funding, Amtrak spokesperson Marc Magliari said Amtrak has been, and still is, eager to get to work. "Sometimes I see things that need work," he said of his observations of Amtrak stations across the country, "and sometimes I see things that need applause. St. Louis went from ramshackles to a multi-modal facility. Of all places, Missouri. Milwaukee, too."

"We have hundreds of millions of dollars of capital projects we couldn't do for lack of funding," he said. "We're going to be putting out-of-service cars back in service." Indeed, according to the Vice President's press release, exactly 68 stored or damaged cars will be returned to service and 125 men and women will be hired to do it as part of the plan.

Where the Money Goes

The money slated for Amtrak is a gold mine by some standards. Whether or not the money is spent wisely is a different matter, however. Magliari stressed the spending cap placed on the Northeast Corridor in the legislation, which ensures that no more than 60% of funding for "non-security activities may be used for capital projects along the corridor." This despite the fact that the Northeast Corridor is the busiest rail line in the United States. Every day, the heavily used corridor takes more than an estimate 700,000 passengers on both Amtrak and seven other commuter lines up and down coastal cities of Northeast United States at up to 150 miles an hour, from the line's southernmost stop in Washington, D.C. to Boston. The largest Amtrak project funded by the ARRA involves replacing a 102-year-old movable bridge over the Niantic River in Connecticut, a project two decades in the making.


Estimates courtesy of Amtrak.

And Amtrak has many more shovel-ready projects just waiting for funding. Great American Stations, Amtrak's network of community partnerships dedicated to revitalizing passenger rail stations across the country, has "redevelopment standards that predate the stimulus." According to Magliari, there is no frenzied rush for ideas, no scenarios involving rail officials rolling around in wads of cash. The long-time-coming stimulus money will go where it was intended to-a backlog of money-poor projects that never got a chance until now. "Funding those improvements would gain momentum," he added.

Still, Bruce Richardson, president of the Florida-based United Rail Passenger Alliance, remains concerned that too much will be wasted on the Northeast Corridor. "Of anywhere in the country," said Richardson, "they have the least transportation output, in terms of bang for the buck." At a transportation output rate of one-tenth of one percent of the national transportation marketplace, a figure this small makes Amtrak "statistically irrelevant."

"Amtrak needs to help itself by immediately upgrading its long-distance fleet," he said. By doing so, it can quickly buff up its current, skeletal image. "[Amtrak's] $500 million deficit is relatively small," he conceded, but the agency has stood by for too long without taking action. "All three passenger systems in Japan make money. Germany is making money. The French are making money. [When it doesn't], Amtrak throws up its hands and gives up." He explained, for example, that a typical long-distance train is comprised of about 18 passenger cars. By adding just a few more cars to each train, Amtrak could potentially eliminate 40% of its deficit.

"And trust me," Richardson side-noted, "There are plenty of people willing to lease equipment to Amtrak." Aircraft are commonly leased from one airline to another, typically when the lessee is underequipped for heavy travel or maintenance. Similarly, Amtrak has cars potentially within its grasp, minus the agonizing trip to Congress to beg for them. "And all that equipment is self-sustaining. It pays for itself," he said.

"The New Economy" of Rail

Gil Carmichael, Senior Chairman of the Intermodal Transportation Institute at the University of Denver, is also on board with the idea. "What Amtrak needs to do," he said, "is order 100 new train sets, as fast as they can. If they dont, they'll jumpstart an economy to make them." Carmichael also agrees that the benefits of such an arrangement are hard to miss. Not only is it financially reasonable, it's also fast. "If [Amtrak CEO] Joe Boardman leased them, the cars would be good to go in 25 to 30 months." And if that doesn't pan out, then he asks that you envision with him two new factories, where people would be put to work to build new trains. "It's the new economy," he said.

Carmichael, who is also a former Federal Railroad Administrator appointed by George H. W. Bush, thinks this is a remarkable time for rail projects, including Amtrak's. "There's much more money than that," he said of the $8 billion and $1.3 billion allotted to high speed rail and Amtrak, respectively. "States have more than $40 billion for highways; they can flex the money and it can go to rail projects."

To sweeten the deal, President Obama is asking Congress for an extra billion dollars for rail over the next five years. In doing so, he is essentially accomplishing something that Carmichael was unable to get either former Presidents Bush to do. "What's happening is phase one of a beautiful vision for high-speed passenger trains. Obama is the Eisenhower of this century, the author of the Interstate II," he said in reference to his own published vision of high-speed travel.

Ultimately, despite the optimism and speculation among rail enthusiasts, Amtrak and the FRA are the only ones who will decide where the money goes. But Bruce Richardson, the president of URPA, has one last tip: "Whatever the endeavor is, Amtrak should be doing the best it can to be self-reliant."

Comments

Comments

Advice for Amtrak

Interesting, but where on earth does this Florida dude get the idea that the typical Amtrak trainset has 18 cars?? Is he maybe thinking of Autotrain? (Amtrak HEP generators can provide electrical service a maximum of 14 cars, a consist which is rare in practice. Even the Empire Builder has only 11 (bag, transition sleeper, 2 Seattle sleepers, 2 Seattle coaches, diner, lounge, 2 Portland coaches (one a coach-bag), Portland sleeper)).

And what's all this talk about leasing equipment? From whom? Like, the world is awash in underemployed Superliners? Surely the reference to airline leasing practices is (a) inappropriate and (b) ignorant? Airlines have surplus equipment, and much of their "leasing" has to do with who puts up the capital to buy the machinery, and is exactly like the way much freight railroading operates: you see "leased from XXX" stenciled on the sides of freight equipment all the time. There might be some advantage to Amtrak to persuade Citicorp (hah) or some other moneybags to buy 100 trainsets, but no matter who placed the order, it would take a minimum of three years before the first car was delivered. (Bombardier owns the jigs and plans and so on for both Superliner and Amfleet equipment but is understood to have no interest in manufacturing "obsolete" equipment, and probably wouldn't bid on an Amtrak project anyway.)

And from whom should Amtrak (or anybody else) order 100 trainsets? (A trainset of seven or eight Superliners would cost between $14 million and $24 million, cars costing between $2 million and $3 million a pop, thus between $1.4 billion and $2.4 billion total.) That said, it's absolutely true that almost any good idea about changing Amtrak operations runs up against the brick wall of equipment limits. It's been sensibly suggested that maybe Amtrak should (have) set up a deal to take delivery on, say, one Superliner a month, or maybe two. Even with Amtrak's cash problems, that should be budgetable in a way that a billion-dollar order isn't....

Also note that the foreign lines mentioned "make money" in the same sense that the NEC "makes money": i.e., the farebox take more than covers operating costs, by a small amount. But the immense initial infrastructure costs will never be repaid in this geological era, and maintenance costs to equipment and infrastructure greatly exceeds the surplus from operations. Translation: the central governments are still putting plenty of money into passenger rail in Japan, Germany, and France (and, in the case of Britain, far more than they did before privatization, since the private operators take the operating surplus.)
As for why Amtrak's long hauls aren't able to cover operating costs, I'm unsure. The routes of course quite a bit longer than any in Germany, France, or Japan. The lack of more than daily service (at most) may have something to do with it--economies of scale, if any, can't be taken advantage of. Any daily long-haul is going to stop at places in the middle of the night, which discourages ridership. And of course the employing entities don't pay health insurance.

It's more than slightly irritating that the routine attitude toward Amtrak operations seems to boil down to "if they aren't profitable, they must be doing something wrong", a reproach that is most frequently found on the lips of people who know nothing about passenger rail (or transportation of any kind) and quite likely have never taken a trip on Amtrak.

Good comment

Trains magazine had a similar stance in their 2009 issue with Amtrak on the cover.

Transportation doesn't really make money. All transportation takes energy, therefore it costs money.

rail funding

Indeed, I never hear people complain about highways, airlines, or airports failing to make profits. I recall right after 9/11 we gave $40B to the airlines while Bush and McCain were trying to defund Amtrak. What we need is a dedicated federal funding source for passenger rail (VMT tax? highway tolls?) and a shift in federal transportation funding policy to favor rail and transit over car and plane travel. Any notion that Amtrak should have to make a profit or be "self-sustaining", or that that should even be a criterion for measuring their performance, is ludicrous. Moreover, while Amtrak and the Postal Service were long in the schizophrenic position of being mandated to both provide universal service and be self-funding, USPS was significantly reformed in recent years. Amtrak hasn't been. Perhaps it's time to do that in the SAFETY-LU reauthorization.

60% NEC cap

"Magliari stressed the spending cap placed on the Northeast Corridor in the legislation, which ensures that no more than 60% of funding for "non-security activities may be used for capital projects along the corridor." This despite the fact that the Northeast Corridor is the busiest rail line in the United States."

I'm quite sensitive to "subarea equity" and artificial political service allocation as we have a lot of problems with that in the Puget Sound region. However, responding to the 60% funding cap on Northeast Corridor service by noting it's our busiest rail line misses the mark. The relevant question would be whether the NE Corridor carries 60% of Amtrak's ridership. And even if it does, there may be a broader political strategy behind this; building political buy-in for intercity passenger rail in many states, and showing voters around the country that passenger rail works. Washington state has done a lot of work and funding over the past 15 years on the Vancouver-Seattle-Portland Cascades line, and it should be a strong contender for stimulus money to buy more trainsets and improve speed and reliability.

Of course, there's a debate to be had between putting all our eggs in the NE Corridor basket to make it much more like a real high speed rail corridor emulating Europe and Japan, to show people what rail investment can do and then build support to expand it nationwide; and spreading the money much more evenly so many people and places benefit, we get broader (if shallower?) political support sooner, and move more gradually toward high speed rail. Perhaps the ARRA funding is a hybrid of these.

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