Amtrak — Unfairly judged by a double standard

Here's an interesting article on Amtrak from 2002 – nine years old, but still relevant in today's whacko political environment...

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Extra! July/August 2002

The Railroading of Amtrak
Trains, planes and automobiles held to different standards

By Christopher Ott

Coverage of Amtrak contains two surprises: the details reported about the 31-year-old railroad, and the details that aren’t reported about its competition.

Despite the introduction of successful high-speed trains in the Northeast, as well as increased ridership both before and after September 11’s airborne attacks, coverage of Amtrak is surprisingly negative. "You don’t read much in the way of good news," says Ross Capon, executive director of the National Association of Railroad Passengers (NARP). Instead, typical reporting singles out Amtrak for criticism and glosses over the advantages enjoyed by rail's competitors.

Most coverage focuses on the rail network's financial situation. "Amtrak is in disarray," reported USA Today (5/2/02). "The nation's passenger railroad faces a projected $1.1 billion deficit this fiscal year--its biggest ever." The Associated Press (4/12/02) reported that Amtrak is "a chronic money-loser for the government." The Arizona Daily Star (4/18/02) editorialized that Congress "should relegate Amtrak to the dustbin of failed efforts to overturn the law of supply and demand."

The implication that Amtrak is exceptional in the transportation industry in its reliance on government subsidies, however, is troublesome--and ironic, given the recent well-publicized bailout for U.S. airlines. On top of $13 billion in federal aviation spending for fiscal year 2002, Congress approved a $15 billion package of airline aid within two weeks of September 11. Intercity passenger rail, by comparison, received half a billion in federal funds for the current fiscal year, and Amtrak is asking for $1.2 billion in the next to avoid service cuts.

Subsidies for automotive transport also dwarf support for "federally subsidized" Amtrak (Reuters, 4/10/02). The Worldwatch Institute, in a paper on "The Global Rail Revival" (4/94), pointed out:

Although government support of rail is necessary--since passenger fares seldom cover the full cost of train service--this subsidy pales in comparison to the hidden costs of road travel. For example, in the United States, few people realize that direct taxes on automobiles and gasoline barely cover two thirds of the cost of road building, maintenance, administration and safety.

Additional social costs of car and air travel--including accidents, lost time, and loss of quality of life--are obvious to planners and economists, and are increasingly counted as a real drag on the economy. The social costs of car travel in 11 countries studied is nearly twice that of air travel and seven times that of trains.


Stephen Goddard, in his 1994 book Getting There: The Epic Struggle Between Road and Rail in the American Century, found that hidden subsidies for drivers amount to well over $2 for every gallon of gasoline sold.

A double standard

The NARP's Capon says "a tremendous double standard" is at work. Government support for Amtrak is deemed a "subsidy," while spending on aviation and highways is thought of as "investment" and decoupled from a need to break even. "They never talk about the money-losing highway system," says Capon.

One reason is that it’s easy to see the costs of rail "on a single balance sheet," Capon says. Subsidies for highway travel in particular come from a wider array of local, state and government agencies.

The aviation and highway industries are also powerful lobbies. As the New York Times reported (10/10/01), lobbyists for the airline industry were instrumental in winning quick passage of last year’s airline aid package.

Another missing element in Amtrak coverage is international context. Successful railroads in other countries get much greater levels of government support. Canada has passenger-rail service that is "flush with a new infusion of federal government funding, new locomotives and rolling stock, improved railbed infrastructure and burgeoning ridership" (Windsor Star, 4/15/02). According to figures from the European Conference of Ministers of Transport, Germany spends 22 percent of its total transportation capital spending on rail, while France spends 21 percent. The United States spends 0.4 percent.

The real issue in most coverage of Amtrak is not whether the railroad pays its own way. Instead, it’s whether rail receives a share of government support that is appropriate to its advantages over other forms of transportation and the options that rail provides. The most important things that journalists covering Amtrak can do, according to Capon, is "not be seduced by talk about how we can have the trains without paying for them."

Christopher Ott’s work on rail issues has appeared in publications including Salon.com, E: The Environmental Magazine and the Baltimore Sun.

Norfolk Light Rail Opening Next Week

A Tide Light Rail Train Leaves the MacArthur Square Station in Downtown Norfolk
Source: Steve Earley The Virginian-Pilot, 21 June 2011

On August 19th, Hampton Roads Transit (HRT) will open a 7.4-mile (11.9-km) light rail line through downtown Norfolk, Virginia. The line, called the Tide, will run west-east from the Eastern Virginia Medical Center at Colley and Brambleton Avenues through downtown and then along an abandoned Norfolk Southern Railroad right-of-way parallel to I-264 to the eastern terminus at the Norfolk/Virginia Beach city line at Newtown Road. The Tide will have 11 stations and semi-exclusive in-street guideway (cross-traffic allowed) with signal prioritization at most downtown intersections. It will run through the central business district and past trip generators including Norfolk State University, Tidewater Community College (Norfolk Campus), Harbor Park minor league baseball stadium, City Hall, MacArthur Center and Sentara Norfolk General Hospital. Norfolk will be the smallest city in the country, population 243,000, with a light rail line. In 2013, a transit hub will be completed at Harbor Park that will allow connections between light rail and new passenger rail service, and riders will be able to get from Norfolk to Richmond, Virginia, Washington, D.C., and the Northeast corridor.

Trains will run 6 am to 11 pm Monday to Thursday, until midnight Friday and Saturday, and 11am to 9pm on Sunday. The travel time will be less than a half hour one way, and headways will be 10 minutes during peak hours, and 15 to 30 minutes off-peak. Fares will be $1.50 per trip and $3.50 for a day pass.

Source: HamptonRoads.com

Average weekday ridership is projected to be 2,900 at opening and 7,200 in 2030.Free parking will be available at three stations, but the city passed an ordinance in October 2005 that will limit the availability of parking downtown; and that was a key assumption in HRT’s travel forecasts for the project. [1]

HRT purchased nine Siemens S70 vehicles, 93.6 ft by 8.7 ft (28.5 m by 2.6 m), with capacity of 160-180 passengers. The vehicles cost $3 million each and were purchased through a contract Charlotte, N.C. had for its system. The cars are wired for positive train control, but HRT decided not to use it to reduce the budget by $10 million. [2] The vehicle maintenance facility is near the Norfolk State University football stadium.

Cost Overruns and Delays

The initial start date for the line was 1 January 2010, but it was delayed because of budget and management problems at HRT. It was initially rescheduled for May 2011, but was delayed until August because of safety issues including concerns about the crossing gates and power spikes from electric wires near the light rail power lines, and delays in delivery of some safety equipment. [3]

The final project cost is $338 million, which is $106 million above the original estimate. In 2007, the Federal Transit Administration (FTA) awarded a New Starts Full Funding Grant Agreement (FFGA) of $128 million to the project, which is 55% of the original estimate. Other funding came from the 5307 Urban Area Formula Surface Transportation Program (STP), $71 million from the state, and $71 million from the city. Operating costs will be $6 to $9 million annually for the first five years for the Tide and feeder buses, and HRT authorized the issuance of bonds to cover those costs. [4]

HRT was responsible for constructing the line and is the designated agency for receiving federal funds, but the city of Norfolk provided the local funding. Three top officials at HRT, including the former President and CEO, Michael Townes, were asked to resign because of the cost overruns and incomplete reporting of them. An investigation by the Virginia Department of Rail and Public Transportation (DRPT) Inspector General completed in December 2010 found that HRT withheld information about the cost overruns from city, state and federal officials. In addition, the investigation found that HRT failed to seek competitive bids in 16 of 24 contracts and did not follow standard procedures for most of the contracts that were competitively bid, and that Mr. Townes may have violated procurement procedures by recommending against one firm for the Virginia Beach study and increasing contract limits without board approval. The investigation also found that there may have been embezzlement of an estimated $189,000 from bus fares as a result of poor management oversight. The report produced 31 recommendations, which the new HRT CEO, Philip Shucet, pledged to respond to within 90 days. The FTA is conducting a separate review of HRT's financial management oversight and consultant selection process over the past two years. [5]

The primary sources of the cost overruns were flaws in the early cost estimates and significant increases in the costs of utility relocations, traction power substations, safety systems, design of stations and other facilities, and real estate purchases. The delays led to further increases because material costs went up 10% to 15% from the time that the project was bid. Soft costs, professional services and administration, increased 101% from the initial budget and as a result were almost twice as much as the standard for this type of project. [6]

Another source of the cost increases was $10 million in changes to the line required by the former President of Norfolk State University (NSU), Carolyn Meyers. The university required that the station be moved across the street from the university, which cost almost $7 million; and they required changes to the design of the maintenance building on the campus, which cost about $3 million. In exchange, NSU allowed HRT to take some of its land for a park-and-ride lot and other easements. Initially, the university asked the city to purchase the president's house because the yard would be visible to passengers on the line; but they settled for $15,000 to landscape the backyard and an option for a retractable fence. These revisions delayed the project and so contributed to the other cost overruns. [7]

Shucet implemented some changes to reduce costs including consolidating the two biggest construction contracts, saving $7.5 million; ending the practice of open-ended task orders with no defined costs; implementing double work shifts downtown; and adding incentives and penalties in construction contracts. [8]

The final cost is about 46% more than the original estimate, a total of about $46 million per route mile, which is well within the range of costs for other light rail projects. Unfortunately, the prior mismanagement at HRT and the cost overruns have resulted in reduced public support for the light rail line and its potential expansion.

Stayed tuned for another post on future extensions of the line and TOD.

References

1. HRT Website, The Tide, accessed 2 June 2011, and FTA, Norfolk LRT, FFGA, Nov. 2007.

2. HRT Website, The Tide, accessed 2 June 2011, 13NEWS / WVEC.com.

3. WAVY T.V., 5 Jan. 2011.

4. FTA, Norfolk LRT, FFGA, Nov. 2007; The Virginian-Pilot, 21 June 2011 and HRT Meeting Minutes, 27 Jan. 2011.

5. The Virginian-Pilot, 14 19 and 23 Dec. 2010 and 5 April 2011; and WAVY T.V., 5 Jan. 2011.

6. The Virginian-Pilot, 10 Feb. 2010; and Memo from HRT President & CEO Philip A. Shucet to the Transportation District Commission of Hampton Roads Re: Cost to Complete, 18 Feb. 2010.

7. WVEC Television, 29 Oct. 2010; and The Virginian-Pilot, 13 Nov. 2010.

8. The Virginian-Pilot, 10 Feb. 2010.