Legislation to Provide Permanent Funding for Amtrak

[jimdex]

Seems to me there are two different things here: coach service, which can be viewed as an essential public service warranting a government subsidy, and sleeper ("first class," if you prefer), which probably doesn't warrant a subsidy, but hopefully justifies itself by bringing in more revenue than expenses.

 

[TheCrescent]

1. I think that would be good but I don't think Amtrak owns much real estate around its building; probably dosn't own many of its buildings (often owned by the railroads); or its buildings outside of a few are not in nice areas or are surrounded by railroad property which Amtrak doesn't own. Given they had the money, they could use eminent domain to take land for the site of a new station plus the land around it and then partner with someone or develop it themselves with private help. However, Amtrak is a company known for its Amshacks so that idea looks bleak.

...

4. As to services, this might also be a possibility if they could write a good contract but Amtrak seems to not want cooperation with third parties. Witness I.P. who apparently wanted a Chicago-NYP tie-in to get riders who would likely be willing to pay for higher level of amenities and Amtrak's crushing of Private Varnish.
...
If only it were a real possibility instead of a fancy.

Thanks. All of the things that I list are things that either Amtrak or other railroads have done.

For 1, you're right; however, surely there are some opportunities to explore. For example, how has Amtrak monetized Penn Station, which it owns? Even the tiny dinky Amtrak station in Greenville, SC is right next to a booming downtown; what have Amtrak and Norfolk Southern done with the land?

For 4, if Amtrak won't cooperate with third parties, then it's time to make it cooperate. EU railroads didn't want to have to cooperate with private operators either but the EU made them.

 

[me_little_me]

Thanks. All of the things that I list are things that either Amtrak or other railroads have done.

For 1, you're right; however, surely there are some opportunities to explore. For example, how has Amtrak monetized Penn Station, which it owns? Even the tiny dinky Amtrak station in Greenville, SC is right next to a booming downtown; what have Amtrak and Norfolk Southern done with the land?

For 4, if Amtrak won't cooperate with third parties, then it's time to make it cooperate. EU railroads didn't want to have to cooperate with private operators either but the EU made them.

While it is true Amtrak owns Penn Station, it's less clear to me what that means. The Metropolitan Transportation Authority is planning new tracks. The City of NY leases Madison Square Garden (the valuable part at ground level) out and will decide if and under what conditions it can be re-leased and the Governor has his plans. The people of NYC also have their ideas. If someone can explain all that and what Amtrak really owns and controls, I'm open to it. Were this a private building that was not also a historic one, the private Amtrak Corporation could issue corporate bonds or gather other investors to put up a 50 story or so building on top and lease out that space, raking in the money even if it needed to assure its favorite politicians from both parties in the city and state of generous campaign donations.

As to Greenville, my "home station", that building is owned by NS which uses the other half of it. Amtrak has no rights to sell the parking lot or put up buildings on top of it or on top of the NS owned tracks and yard. It is an example of Amtrak just being a user of the tracks and a tenant in the building.

As to making Amtrak cooperate, when one side says "Don't touch Amtrak" and the other side says "Dump it completely, there is little chance of anything really changinq unless one or the other gets total control and either expands it to be a meaningful force with executives who want to grow it or, with the other side, dumps the whole idea of government run passenger rail and destroys it by giving it away to private industry who will make money off the property and then dump the service as the previous owners did.

Just think of all that airspace above the NEC!

 

[TheCrescent]

While it is true Amtrak owns Penn Station, it's less clear to me what that means. The Metropolitan Transportation Authority is planning new tracks. The City of NY leases Madison Square Garden (the valuable part at ground level) out and will decide if and under what conditions it can be re-leased and the Governor has his plans. The people of NYC also have their ideas. If someone can explain all that and what Amtrak really owns and controls, I'm open to it. Were this a private building that was not also a historic one, the private Amtrak Corporation could issue corporate bonds or gather other investors to put up a 50 story or so building on top and lease out that space, raking in the money even if it needed to assure its favorite politicians from both parties in the city and state of generous campaign donations.

As to Greenville, my "home station", that building is owned by NS which uses the other half of it. Amtrak has no rights to sell the parking lot or put up buildings on top of it or on top of the NS owned tracks and yard. It is an example of Amtrak just being a user of the tracks and a tenant in the building.

As to making Amtrak cooperate, when one side says "Don't touch Amtrak" and the other side says "Dump it completely, there is little chance of anything really changinq unless one or the other gets total control and either expands it to be a meaningful force with executives who want to grow it or, with the other side, dumps the whole idea of government run passenger rail and destroys it by giving it away to private industry who will make money off the property and then dump the service as the previous owners did.

Just think of all that airspace above the NEC!

Great points, thanks.

For "making Amtrak cooperate": if I recall correctly, Amtrak didn't want to cooperate with Iowa Pacific in Indiana and hasn't wanted to cooperate with other private operators. I'd need to look more into how the EU made the SNCF and other state-owned railroads cooperate with private operators; I understand that similar issues happened in EU. It's only natural for one enterprise to want to protect its turf, but it shouldn't be able to engage in anti-competitive behavior to block a market entrant (whether it's Amtrak, Microsoft, Google or anyone else).

For Greenville: fair point. Perhaps Norfolk Southern also isn't as innovative with real estate as it could be.

 

[Chatter163]

I'm not anti-government.

Your difficulty in referring to Congress without using words such as morons and crazies, literally almost every single time, strongly suggests otherwise.

 

[Ryan]

Thanks, that's a good list to start from.

On #1, there may be some more to be had there, but perhaps not as much as one would think based on what Amtrak actually owns.

#2 was done when Amtrak literally had no other way of paying for rolling stock, and paying the leases ended up being a massive financial drain. With subsequent purchases, Amtrak was able to obtain better terms on their own.

#3. If Amtrak can pay a private company $9.5M to operate, that means the private company is doing it for less (unless they're going to go out of business). Instead of paying someone else's profit, just do what that company would have done and pocket the profit for yourself.

Similar with #4, with the added caveat that if there's a market for higher end service that can turn a profit, someone should be welcomed in to doing so. Based on the fate of everyone that has tried, I doubt this market exists.

 

[TheCrescent]

Thanks, that's a good list to start from.

On #1, there may be some more to be had there, but perhaps not as much as one would think based on what Amtrak actually owns.

#2 was done when Amtrak literally had no other way of paying for rolling stock, and paying the leases ended up being a massive financial drain. With subsequent purchases, Amtrak was able to obtain better terms on their own.

#3. If Amtrak can pay a private company $9.5M to operate, that means the private company is doing it for less (unless they're going to go out of business). Instead of paying someone else's profit, just do what that company would have done and pocket the profit for yourself.

Similar with #4, with the added caveat that if there's a market for higher end service that can turn a profit, someone should be welcomed in to doing so. Based on the fate of everyone that has tried, I doubt this market exists.

Thanks.

For #2, I thought that the Acela or the HHP locomotives (or both) were leased. So Amtrak is still doing it, or at least did it recently.

For #3, private companies or other operators may have efficiencies that simply allow them to perform the relevant service at lower cost. Running 1 train per day in each direction over much of the country means that stations, perhaps crew base costs, etc. all are all spent just to support one train, instead of supporting multiple trains. If there is another provider who is already providing services that Amtrak needs for its 1 train per day, it may be more cost-effective to contract out the work. There's no "profit"; contracting out may reduce losses, though.

For example, in Greenville, SC, the Amtrak station is inside a Norfolk Southern building. If Amtrak handles its own maintenance on that station for example, that's crazy when NS already may have someone who handles that for the rest of the building, so Amtrak could probably farm out the work to NS for less.

 

[Deni]

To respond to some posts above, asking where private-sector dollars could be used:

1. Real estate: Amtrak already has partnered with private developers around 30th Street Station and Washington Union Station. Surely there is other real estate that could be redeveloped or otherwise commercialized with a private-sector developer. Perhaps this has already been fully explored; I don't know.

2. Fleet acquisition: could a private buyer buy new railcars for Amtrak and lease them to Amtrak? This has been done before (I believe).

3. Contracting out entire routes: legislation has provided for this, but to what extent has Amtrak aggressively pursued private operators? For example, if it costs Amtrak $10 million to run a route for a year, could Amtrak find a private operator who Amtrak could pay $9.5 million to take it over, saving Amtrak money? I may be wrong, but I understand that Amtrak has resisted contracting out its routes--but is that the best practice from a dollars-and-cents perspective?

4. Contracting out certain on-board services: if private railroads farmed out their sleeping and lounge cars to Pullman, has Amtrak looked at doing that? I know that Iowa Pacific has attached cars to Amtrak trains; that failed, but is it worth aggressively seeking partners to do that nationwide?

5. Contracting out infrastructure improvements: some highways are built or financed by private developers, which are repaid as the highways are used. Has Amtrak looked at having private partners fund track improvements, with Amtrak to pay them back over time as trains are run?

6. Total route re-dos: given how Brightline improved track and introduced new train services, linked to real estate development, why hasn't Amtrak done that?

All of these may have been looked at, and there may be other examples. So perhaps these are all stupid ideas, but given the range of private-sector participants who are taking part in passenger rail projects around the US, UK and EU, I'd think that there would be at least some things that Amtrak could do, but hasn't, to attract private capital IN ADDITION to financial support from government, which could lead to more and better service.

I'm late to the debate, but have been reading it all. I get what you're saying and why some people believe in some sort of public-private partnership, even though I think it's folly. My thoughts about your issue with micromanaging are these:

Dedicated permanent funding could actually cause that to stop. Most of the micromanaging happens as Senators are dangling the money Amtrak needs in front of them and saying they'll only vote to give it to them if Amtrak agrees to whatever such-and-such changes they think Amtrak should make. Without the yearly begging for cash the politicians don't have a platform to grandstand on.

Also, micromanaging is pretty damn prominent in the private sector. Squeezing out every last penny is the motive of private industry (yes, there are exceptions to the capitalists' greed that exist in this country, but there are more Amazons out there than Ben & Jerry's). Private companies are the ones that have left us with inhumane space on airplanes.

 

[sttom]

Dedicated permanent funding could actually cause that to stop. Most of the micromanaging happens as Senators are dangling the money Amtrak needs in front of them and saying they'll only vote to give it to them if Amtrak agrees to whatever such-and-such changes they think Amtrak should make. Without the yearly begging for cash the politicians don't have a platform to grandstand on.

I was also late to this. I personally don't think dedicated funds of ~$5 billion will forever free Amtrak from Congressional dependence and micromanaging. Amtrak has been capital starved for so long that it wouldn't take much for the ~$5 billion to not mean much to its operations. Just replacing the Superliners could easily eat up 1 year of funding for the national network. And depending on how this grant system works, Amtrak might be competing with the states for funding out of the "national" part of the pool. The devil is really in the details with this, but any number of issues could come up. Amtrak is noted to be over $33 billion behind in maintenance, that will need to be addressed. $28 billion of which is just the NEC, so its $2 billion cut would have to be devoted just to deferred maintenance for 14 years to just undo deferred maintenance. Add fleet replacement into that or more states wanting service and things can get real strained real quickly and Amtrak's leadership will be back in front of Congress getting reamed for asking for money.

 

[PaTrainFan]

Also, micromanaging is pretty damn prominent in the private sector. Squeezing out every last penny is the motive of private industry (yes, there are exceptions to the capitalists' greed that exist in this country, but there are more Amazons out there than Ben & Jerry's). Private companies are the ones that have left us with inhumane space on airplanes.

Just look at virtually every private equity takeover. They create havoc, choke every last cent out of the company, destroy careers and cultures, ignore customers and sell out in the end at a huge profit, leaving new owners to clean up the messes.

 

[keelhauled]

For #2, I thought that the Acela or the HHP locomotives (or both) were leased. So Amtrak is still doing it, or at least did it recently.

As of October 2019, Amtrak leased 19 of the Acela trainsets and 128 Superliner Is.

 

[Cal]

As of October 2019, Amtrak leased 19 of the Acela trainsets and 128 Superliner Is.

What are they leasing them from-

 

[pennyk]

MODERATOR NOTE: please avoid overly political and/or partisan comments and please keep your comments on topic. Several posts that were overly political have been removed and any responses to those posts were also removed. Thank you for your cooperation.

 

[west point]

Leasing has become a bad financial burden. It has actively bought out all that it could. The Superliners were the main lessees

 

[IndyLions]

I’m also late to the discussion - but despite some overheating in some sections some excellent discourse has resulted.

I think it all comes down to permanent funding. Without that, Amtrak can never truly be a valuable public service as it needs to be, nor can it effectively be run “as a business“ as some would prefer.

I think if Amtrak wasn’t groveling for basic operating funds every single year, they could spend more time being creative in ways to supplement their income – which certainly could include public/private partnerships. But if you’re fighting for survival every single year, how much time do you actually have to spend on 5 year plans and being innovative - like businesses do?

Let’s face it - they’re probably making decisions based on “how will this Congress react to this strategy?”. Could it be that Anderson’s actions were all driven by wanting to prove to a Republican controlled legislature that he could operate Amtrak to “break-even” and “to the law” ? More likely it was all about his ego – but who knows.

I think Flynn‘s open letter illustrates to me that he does understand the most critical issues for Amtrak. If these issues can finally be addressed after 50 years, a lot of the other things we are always arguing about will fall into place. Amtrak will become a more valuable public service, and they will naturally behave more like a business.

 

[Deni]

I was also late to this. I personally don't think dedicated funds of ~$5 billion will forever free Amtrak from Congressional dependence and micromanaging. Amtrak has been capital starved for so long that it wouldn't take much for the ~$5 billion to not mean much to its operations. Just replacing the Superliners could easily eat up 1 year of funding for the national network. And depending on how this grant system works, Amtrak might be competing with the states for funding out of the "national" part of the pool. The devil is really in the details with this, but any number of issues could come up. Amtrak is noted to be over $33 billion behind in maintenance, that will need to be addressed. $28 billion of which is just the NEC, so its $2 billion cut would have to be devoted just to deferred maintenance for 14 years to just undo deferred maintenance. Add fleet replacement into that or more states wanting service and things can get real strained real quickly and Amtrak's leadership will be back in front of Congress getting reamed for asking for money.

Fair point. Ideally this dedicated funding should also come with an upfront chunk of capital funding to catch up with lapsed maintenance and the ability to buy a ton more cars.

 

[Dakota 400]

I think it is important for communities that are now not served or are underserved support Amtrak's proposals for increased and improved service, such as for the corridor services. I am pleased to say that the leaders of Dayton, Ohio (both political as well in the economic and tourist development area) are supporting Amtrak's plans. Both of Ohio's Senators and our member of the House of Representatives have been informed of the passage of a Resolution by the Dayton City Commission supporting the 3C's plan.

It's well and good that we as individuals contact our representatives in Washington supporting Amtrak's proposals. Getting the economic and tourist development people in our communities supporting it may be even more important support.

 

[west point]

Do have the bill numbers for both Senate and house ? / That make it easier to write congress persons.

 

[MisterUptempo]

Do have the bill numbers for both Senate and house ? / That make it easier to write congress persons.

Listed as Senate Bill 899. Referred to the Commerce Committee. I haven't found a House Bill number yet.

Here is the full text of the bill.

A summary of the bill.