This Week in Amtrak

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This Week at Amtrak; June 29, 2009



A weekly digest of events, opinions, and forecasts from



United Rail Passenger Alliance, Inc.

America’s foremost passenger rail policy institute



1526 University Boulevard, West, PMB 203 • Jacksonville, Florida 32217-2006 USA

Telephone 904-636-7739, Electronic Mail info@unitedrail.org • http://www.unitedrail.org





Volume 6, Number 20



Founded over three decades ago in 1976, URPA is a nationally known policy institute which focuses on solutions and plans for passenger rail systems in North America. Headquartered in Jacksonville, Florida, URPA has professional associates in Minnesota, California, Arizona, New Mexico, the District of Columbia, Texas, New York, and other cities. For more detailed information, along with a variety of position papers and other documents, visit the URPA web site at http://www.unitedrail.org.



URPA is not a membership organization, and does not accept funding from any outside sources.



1) There has been so much going on these past couple of weeks that needs to go on the record, we’re producing a third This Week at Amtrak in less than a week. We have read about the sudden departure of Amtrak former Inspector General Fred Weiderhold, Jr. and the follow-up to that departure by Senator Chuck Grassley of Iowa. Also making a buzz in the past 10 days was the presentation of a report by the United States General Accountability Office entitled “High Speed Passenger Rail: Effectively Using Recovery Act Funds for High Speed Rail Projects.” Reading all the way through it could prove to be a snoozer for some, but this report by the GAO’s director of physical infrastructure issues raises some important points about the need for clarity and focus in government, particularly relating to the subject of passenger rail. That report is presented at the end of today’s TWA.



2) First, some good news from here in Florida. We’ve been following the saga of Tri-Rail, South Florida’s commuter rail system which operates in three counties, Palm Beach, Broward (Ft. Lauderdale), and Miami-Dade. (Note, if you’re like this writer and wondered how Dade County suddenly got to be Miami-Dade County in recent years, you are not alone. It seems the county fathers decided since Miami pretty much completely dominates Dade County, the county should officially be renamed Miami-Dade County. Which, if you’re a map printer, created some headaches for you. One interesting note: further north, in Central Florida is Seminole County, which is adjacent to Orange County the home of Orlando and partially to Walt Disney World. Originally, Seminole County was named Mosquito County, and the name was changed sometime prior to the Florida Land Boom. It would be tough to draw tourists to a location named Mosquito County.)

Tri-Rail has been publicly struggling with its upcoming annual budget since once again, no permanent funding source was declared for the commuter system by the gutless, do-nothing Florida legislature this year. Tri-Rail officials have been publicly wringing their hands, hoping for a government miracle to save having to slash all weekend and holiday service, and cut huge amounts out of daily service, effectively creating a revised system which would meet very few needs of its total ridership, and drive passengers away. Add to all of that the feds telling Tri-Rail if it didn’t run a full complement of service, the United States Government would demand all sorts of money be repaid in full for infrastructure improvements made (Double tracking the system, and more.) with signed contracts saying Tri-Rail would operate a certain size schedule, no matter what.



Suddenly, it was a miracle. Well, no, not really. What it was amounted to was transit officials accustomed to lots and lots of funding from other sources (Mainly, the county governments.) and never having to say you’re sorry for anything “finding” some money for operations.



So, what happened? Gosh, golly, gee, wow, it turns out the money for next year’s full operations was there all of the time, just sitting unused and unloved in another account. Yes, you guessed it, Tri-Rail bosses figured out money could be borrowed from accounts to improve parking and some other equipment upgrades to keep the system operating while a final solution is found for a permanent source of funding.



The transit-riding public, and all of the businesses in the Tri-Rail area which support the system with paid subsidies for employees and other programs read account after account in the news media saying Tri-Rail was in crisis. Yes, it was – a crisis of its own making. It would have been wonderful if the gutless, do-nothing Florida legislature had done something this year about solving the funding problem for Tri-Rail on a permanent basis. But, keeping true to form, they punted and said it was someone else’s problem.



What the various denizens of Florida’s legislative branch of government fail to recognize in a huge state such as Florida (Fourth in the nation for population.) is what brings prosperity to one corner of the state brings prosperity to all of the state. Transit is not a regional issue for Florida; it is a state issue. It’s a given in state government highways and other infrastructure will be built and maintained; why isn’t it a given commuter rail should be built and maintained, too, as long as it’s a viable system like Tri-Rail?



3) The plight of Tri-Rail is similar to the plight of Amtrak. There was a belief at Tri-Rail someone else would bail them out and keep the system running, while the real answer to the immediate problem was just sitting in a Tri-Rail bank account.



Much the same is true at Amtrak. As long as it’s business plan – a favorite of the fans of failure – continues to emphasize money from outside sources instead of first finding every possible way to generate revenues by full use of the company’s various assets, Amtrak will lurch from crisis to crisis.



Amtrak probably thinks the failed experiment of the heartstrings-pulling Heartland Flyer, funded by the State of Oklahoma for seven figures a year, is a good train. Harrumph. The Heartland Flyer is a waste of good Superliners and locomotives which could be producing far more revenue elsewhere, and could be replaced by a bus or two for the average of a total of 111 passengers per day the train hauls over its 206 mile, two-state route. Amtrak nationally only captures one tenth of one percent of domestic transportation output; the taxpayers of Oklahoma are taking a huge bath with the Heartland Flyer as on a statewide basis it falls far below Amtrak’s national average.



Rational people hope this more than decade-long operating junior train will one day grow into a real, productive, adult train if the consortium of states working together right now figures out a way to correctly stretch this route north of Oklahoma City and connect it with the route of the Southwest Chief in Kansas. When you consider the tiny consist of the Heartland Flyer still has only a 43% load factor, one has to wonder if anything at all is being done to bolster this train. While it does serve as a feeder to the Texas Eagle in Fort Worth, Texas, (And, the Eagle itself only has a 53% load factor, well below what it should be.) the Heartland Flyer is an example critics can point to and say, “Look at the millions of dollars Oklahoma has fed into this train, and the impact on the mobility of Oklahomans is near zero in the overall picture of state transportation output.” While a tiny, vocal, misinformed minority group of supporters of this train can boast and say Oklahoma has Amtrak service, the real question is, “at what price?”



Amtrak’s critics constantly point to the high cost of low return on many routes, and the Heartland Flyer is a prime example of when a real, gut-wrenching decision has to be made whether or not to provide a transportation alternative at an exorbitant price, or use those assets elsewhere. Having a train for the sole sake of having a train helps no one except those who like to stand by the side of the track and watch the train go by.



From the standpoint of Amtrak’s business plan, it doesn’t care where government money comes from, as long as it comes. The only states which have a viable train that can be pointed to by other states as a success story are North Carolina and the Carolinian, with a load factor of 77.9%, Pennsylvania’s Pennsylvanian with a load factor of 74.3%, and Michigan’s Pere marquette, with a load factor of 67.3% (But, as reported earlier this month in TWA, even the State of Michigan is looking cross-wise at continued funding for this train as ridership has slipped this fiscal year.). If North Carolina’s model can be followed, it would be easier for other states to justify the cost of state-funded passenger rail service.



While starter projects are important, the 11-year run of the Heartland Flyer has proven nothing more than a half of a blip on the transportation radar in Oklahoma, and realistic people have to seriously look at this train and how the assets to operate this train could create a better return on investment elsewhere. It’s notable North Carolina’s other state funded train, the Piedmont, with a load factor of 44.6%, operates solely with equipment owned and maintained by the State of North Carolina.



So, in summary, Tri-Rail found fiscal religion in its own bank account, and will live to fight another day for better state funding, perhaps in the form its has advocated for years, a small, local sales tax on rental cars only in the three tourist-laden counties Tri-Rail serves. Oklahoma has shelled out millions of dollars for a junior train (If there were any Rail Diesel Cars still available for intercity service, this train as it is today would be a good candidate for those.), and, unless a solution is found to extend the train to its logical endpoint further north in Kansas, will have to make some serious decisions about the worth of the Heartland Flyer.



Amtrak, as our national passenger rail provider, still lacking a long term vision, has got to make some decisions, too, before someone else makes them for it. Amtrak has to decide whether it is happy to drain money out of state bank accounts or develop its own plan for as much self-sufficiency as possible. As long as there are annual fights over money being paid to Amtrak to run these small routes, there will be anxiety and wonder every budget year. As one president of a state passenger rail association so eloquently said, “it’s not a matter of making 55% return at the farebox, it’s a matter of straining every muscle and ounce of energy and squeezing out every dime of assets to get to 56% that’s important.” Amtrak and its various fans of failure have been too happy for too long to never worry about reaching that extra point of self-reliant liberty.



4) Something fun from half-way around the world: Fox News reported in mid-June many Japanese women choose to commute in female-only passenger rail coaches during rush hour to avoid being groped by men, and now men are requesting men-only coaches for fear of being accused of groping.



You can’t make this stuff up. Ten representatives of male commuters petitioned the commuter train operator for men-only coaches, noting there have many cases of groping, as well as false charges of groping, so, since the female-only coaches have been successful, in the spirit of gender-equality, men-only coaches should also be available.



No word on whether married couples would be allowed to ride in the same car.



5) Here is the GAO report mentioned above.



[Begin quote]



Testimony Before the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Committee on Commerce, Science and Transportation, U.S. Senate



HIGH SPEED PASSENGER RAIL

Effectively Using Recovery Act Funds for High Speed Rail Projects



Statement of Susan A. Fleming, Director Physical Infrastructure Issues



For Release on Delivery Expected at 2:30 p.m. EDT, Tuesday, June 23, 2009



Mr. Chairman, Ranking Member Thune, and Members of the Subcommittee:



I am pleased to be here today to discuss the implementation of high speed intercity passenger rail projects in the American Recovery and Reinvestment Act of 2009 (the Recovery Act). The $8 billion provided by the Recovery Act for high speed and other intercity passenger rail projects has focused more attention on and generated a great deal of anticipation about the possibility of developing high speed rail systems in the United States. These projects are seen by some as serving an important transportation role, by moving people quickly and safely, reducing highway and airport congestion, and being environmentally friendly. My statement today focuses on (1) the factors that we have identified that affect the economic viability of high speed rail projects and (2) how the Federal Railroad Administration’s (FRA) recent strategic plan incorporates those factors. 1 My testimony is based on our recent report on high speed rail, our review of FRA’s strategic plan, and discussions with FRA and selected transportation experts. 2





In summary, we found that while the potential benefits of high speed rail projects are many, these projects—both here and abroad—are costly, take years to develop and build, and require substantial up-front public investment, as well as potentially long-term operating subsidies. Determining which, if any, high speed rail projects may eventually be economically viable will rest on factors such as ridership potential, costs, and public benefits. FRA largely agrees with our March report. FRA’s strategic plan for high speed rail outlines, in very general terms, how the federal government may invest the $8 billion in Recovery Act funds for high speed rail development. However, this plan does not establish clear goals for the federal government in high speed rail—other than establishing a “longer term goal of developing a national high speed intercity passenger rail network of corridors”—and does not define a clear federal role for involvement in high speed rail projects other than providing Recovery Act funds. As such, in our view, it is more a vision than a strategic plan. As part of a discussion to prepare for this hearing, FRA told us that it sees its strategic plan as a first step and that it intends to seek structured input from stakeholders and the public to help develop strategies to implement its vision.



Factors That Affect the Economic Viability of High Speed Rail Projects



The factors affecting the economic viability of high speed rail projects include the level of expected ridership, costs, and public benefits (i.e., the benefits to non-riders and the nation as a whole from such things as reduced congestion), which depend on a project’s corridor and service characteristics. High speed rail is more likely to attract riders in densely and highly populated corridors, especially where there is congestion on existing transportation modes (such as highways or airports). Characteristics of the proposed service are also a key consideration because high speed rail is more likely to attract riders where it compares favorably to travel alternatives in terms of trip times, frequency of service, reliability, and safety. Costs largely hinge on the availability of rail right-of-way, and a corridor’s terrain. To stay within financial or other constraints, project sponsors typically make trade-offs between cost and service characteristics.



Once projects are deemed economically viable, project sponsors face the challenging tasks of securing the significant up-front investment for construction costs and of sustaining public and political support and stakeholder consensus. We found that in other countries (France, Japan, and Spain) with high speed intercity passenger rail systems, the central government generally funded the majority of the up-front costs of high speed rail lines. 3 The $8 billion in Recovery Act funds for high speed rail (and other intercity passenger rail) lines represents a significant increase in federal funds available to develop new or enhanced intercity passenger rail service. This amount, however, represents only a small fraction of the estimated costs for starting or enhancing service on the 11 federally authorized high speed rail corridors. For example, the San Francisco-Los Angeles portion of the California high speed rail corridor alone, which already has about $9 billion in state bonding authority, is estimated to cost about $33 billion dollars. 4 Furthermore, federal funds for high speed rail in the past (as with the Recovery Act) have been derived from general revenues, not trust funds or other dedicated funding sources. This makes ongoing capital support for high speed rail projects challenging, as they compete for funding with other national priorities such as health care, national defense, and support for ailing industries. In addition, the challenge of sustaining public-sector support and stakeholder consensus is compounded by long project lead times, the diverse interests of numerous stakeholders, and the absence of an established institutional framework for coordination and decision making.



FRA’s Strategic Plan Is a First Step



FRA’s strategic plan attempts to address the absence of an institutional framework for investments in high speed intercity passenger rail service. In our recent report and in 2005, 5 we discussed the need for:



1. Clear federal objectives and clear roles for all stakeholders (federal, regional, state, and local governments and freight, commuter, and passenger railroads).



2. Clear identification of outcomes expected.



3. Ensuring the reliability of ridership and other forecasts to determine the viability of high speed rail projects.



4. Including high speed rail with a reexamination of other federal surface transportation programs to clarify federal goals and roles, link funding to needs and performance, and reduce modal stovepipes that hinder financing transportation improvements that will lead to the greatest

improvements in mobility.



FRA’s plan, which the Recovery Act required the FRA to issue 60 days after the act was signed, outlines in very general terms how the FRA will allocate the Recovery Act high speed rail funds. It does not define goals for investing in high speed rail, how these investments will achieve them, how the federal government will determine which corridors it could invest in, or how high speed rail investments could be evaluated against possible alternative modes in those corridors. In our opinion—and as FRA recognizes—this strategic plan is a first step in planning federal involvement. FRA has emphasized that its approach is to involve the ultimate “owners” of high speed rail—the states and communities in which they will reside—to help flesh out the approach to developing high-speed rail that are under its control. FRA officials also told us that it plans to spend Recovery Act funds in ways that show success to help keep longterm political support for these projects at the local level.



Overall, FRA generally agrees with the issues that we raised in our March report, with the report’s recommendations, and with the observations that we are making today. Last week, FRA took its next step by issuing interim guidance for applying for Recovery Act funds. 6 The guidance lays out the evaluation criteria for grant funding, the weights to be applied to the criteria, and the selection criteria.



In conclusion, the infusion of up to $8 billion in Recovery Act funds is only a first step in developing potentially viable high speed passenger rail projects. The host of seemingly intractable issues that have hampered development of these projects remain as challenges, and these issues will need to be resolved to effectively spend Recovery Act funds. Surmounting these challenges will require federal, state, and other stakeholder leadership to champion the development of economically viable high speed corridors and the political will to carry them out. It will also require clear, specific policies and delineations of expected outcomes, and objective, realistic analysis of ridership, costs, and other factors to determine the viability of projects and their transportation impact.



Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you or other Members of the Subcommittee may have.



1 By economically viable, we mean that a project’s total social benefits offset or justify the project’s total social costs.



2 See GAO, High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role, GAO-09-317 (Washington D.C.: Mar. 19, 2009); and Federal Railroad Administration, Vision for High- Speed Rail in America (Washington D.C.: April 2009). We conducted this performance audit from May 2009 to June 2009 in accordance with generally accepted government auditing standards. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.



3 GAO-09-317.



4 The corridor would extend from Sacramento and San Francisco through Los Angeles to San Diego.



5 GAO-09-317 and GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP (Washington D.C.: February 2005).





Please contact Susan Fleming at (202) 512-2834 or Flemings@gao.gov about this statement. Contact points for our Offices of Congressional Relations and Public Relations can be found on the last page of this statement. Greg Hanna and James Ratzenberger made key contributions to this statement.



[End quote]





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J. Bruce Richardson

President

United Rail Passenger Alliance, Inc.

1526 University Boulevard, West, PMB 203

Jacksonville, Florida 32217-2006 USA

Telephone 904-636-7739

brucerichardson@unitedrail.org

http://www.unitedrail.org