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THE ROLE OF INNOVATIVE FINANCE IN INTERCITY 

PASSENGER RAIL 

(113–29) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

RAILROADS, PIPELINES, AND 

HAZARDOUS MATERIALS 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 9, 2013 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

JEFF DENHAM, California, Chairman 

JOHN J. DUNCAN, JR., Tennessee 

JOHN L. MICA, Florida 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

LOU BARLETTA, Pennsylvania 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York, Vice Chair 

DANIEL WEBSTER, Florida 

THOMAS MASSIE, Kentucky 

ROGER WILLIAMS, Texas 

TREY RADEL, Florida 

SCOTT PERRY, Pennsylvania 

BILL SHUSTER, Pennsylvania (Ex Officio) 

CORRINE BROWN, Florida 

DANIEL LIPINSKI, Illinois 

JERROLD NADLER, New York 

ELIJAH E. CUMMINGS, Maryland 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

TIMOTHY J. WALZ, Minnesota 

ALBIO SIRES, New Jersey 

ELIZABETH H. ESTY, Connecticut 

PETER A. DEFAZIO, Oregon 

MICHAEL E. CAPUANO, Massachusetts 

STEVE COHEN, Tennessee 

DINA TITUS, Nevada 

NICK J. RAHALL, II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... iv 

TESTIMONY 

PANEL 1 

Hon. John Porcari, Deputy Secretary, United States Department of Transportation ..................................................................................................................... 5 

PANEL 2 

Beverley K. Swaim-Staley, President and Chief Executive Officer, Union Station Redevelopment Corporation ........................................................................ 29 

Frank Chechile, Chief Executive Officer, Parallel Infrastructure ....................... 29 

John Robert Smith, Cochair, Transportation for America; President and Chief 

Executive Officer, Reconnecting America; and Former Mayor of Meridian, 

Mississippi ............................................................................................................ 29 

PREPARED STATEMENTS AND ANSWERS TO QUESTIONS FOR THE 

RECORD SUBMITTED BY WITNESSES 

Hon. John Porcari: 

Prepared statement .......................................................................................... 41 

Answers to questions from the following Representatives: 

Hon. Jeff Denham, of California .............................................................. 55 

Hon. Corrine Brown, of Florida ................................................................ 56 

Hon. Richard L. Hanna, of New York ..................................................... 58 

Hon. John L. Mica, of Florida .................................................................. 61 

Beverley K. Swaim-Staley: 

Prepared statement .......................................................................................... 62 

Answers to questions from Hon. Jeff Denham, of California ........................ 68 

Frank Chechile: 

Prepared statement .......................................................................................... 69 

Answers to questions from the following Representatives: 

Hon. Jeff Denham, of California .............................................................. 79 

Hon. Corrine Brown, of Florida ................................................................ 81 

John Robert Smith: 

Prepared statement .......................................................................................... 82 

Answers to questions from the following Representatives: 

Hon. Jeff Denham, of California .............................................................. 95 

Hon. Corrine Brown, of Florida, including supplementary information .......................................................................................................... 98 

iv 


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SUMMARY OF SUBJECT MATTER 

TO: 

FROM: 

RE: 

Members, Subcommittee on Railroads, Pipelines, and Hazardous Materials 

Staff, Subcommittee on Railroads, Pipelines, and Hazardous Materials 

Subcommittee Hearing on "The Role of Innovative Finance in Intercity Passenger 

PURPOSE 

The Subcommittee on Railroads, Pipelines, and Hazardous Materials will meet on 

Tuesday, July 9, 2013 at 10:00 a.m. in 2167 Rayburn House Office Building to receive testimony 

related to the role of innovative financing tools to advance intercity passenger rail projects. At 

this hearing, the Subcommittee will hear from the Deputy Secretary of the United States 

Department of Transportation (US DOT), John Poreari; the President and CEO of the Union 

Station Redevelopment Corporation, Beverly Swaim-Staley; the Chief Executive Officer of 

Parallel Infrastructure, Frank Chechile; and the President and CEO of Reconnecting America, 

John Robert Smith. 

BACKGROUND 

Innovative financing options have increasingly become an attractive vehicle to advance 

infrastlllcture projects in the United States. As federal and state budgets continue to tighten and 

municipal bonding costs rise, more and more states and localities are turning to federal credit 

programs, public-private partnerships, and value-capture methods to finance projects. While 

traditionally the majority of such projects have focused on tolled highways, transit and intercity 

passenger rail projects are considering iImovative approaches to finance railroad infrastructure 

needs as well. Recent U.S. Treasury estimates show $400 to $500 billion in available 

uncommitted capital in the U.S. investment community. The investment community has 

indicated strong interest in participating in intercity and high-speed passenger rail development, 

especially in the Northeast Corridor. . 

Successful public-private partnerships share financing between the public and private 

pariners. The private sector is incentivized to participate in financing a project when risk is 

minimized and there is a reliable federal or state partner. Incentives such as guaranteed loans, tax 

credits, and possibly deferring loan payments until profits are made may also make private 
v 


Insert offset folio 2 here 81825.002

financing more attractive. Advocates maintain that private sector financing could allow rail 

projects to be developed and constructed with less reliance on public funds, which in turn could 

speed up the process and result in lower-cost projects. In these arrangements, the public partner 

retains some contTol and management of the overall rail program to ensure that public 

requirements and government standards are met. 

The following are some of the major innovative financing tools available for intercity 

passenger rail: 

Railroad Rehabilitation and Improvement Financing (RRIF) Loans 

The RRIF program provides direct, low-interest federal loans and loan guarantees to 

finance the development of railroad infrastructure. The RRIF program allows up to a total of$35 

billion in loan authority, with $7 billion set aside for projects benefiting Class II and III freight 

railroads, commonly referred to as regional and short line railroads. These are small or mid-sized 

railroad companies that operate within a region or over a relatively short distance, with annual 

operating revenue of less than $401.4 million. 

Railroads, rail freight shippers, state and local governments, and government-sponsored 

authorities are eligible to apply for RRIF loans. The program was initially authorized under 

section 502 of the Railroad Revitalization and Regulatory Ref 01111 Act of 1976. It was 

reauthorized by the Transportation Equity Act for the 21 st Century (TEA-21) in 1998, and 

subsequently amended under the 2005 Safe, Accountable, Flexible and Efficient Transportation 

Equity Act: a Legacy for Users (SAFETEA-LU) and the Rail Safety Improvement Act of2008 

(RSIA). 

Loans provided under the RRIF program may be used to: (1) acquire, improve, or 

rehabilitate intermodal or rail equipment or facilities, including track, components of track, 

bridges, yards, buildings and shops; (2) refinance outstanding debt incurred for the purposes 

listed above; and (3) develop or establish new intennodal or railroad facilities. Direct loans can 

fund up to 100 percent of a railroad project with repayment periods of up to 35 years at interest 

rates equal to the cost ofboITowing to the government. 

Since its inception, the rOOF program has not been used extensively by the rqilroad 

industry. This is due to a number of factors, including the fact that many railroads have sufficient 

access to private credit markets, 311d the perception that the RRIF 10311 approval process is 

bureaucratic and cumbersome. However, recently commuter and intercity passenger rail 

providers have begun to explore leveraging RRIF for capital projects. In 2011, Amtrak received 

the largest RRIF loan to-date, a $563 million loan for the procurement of electric locomotives for 

the Northeast Corridor. 
vi 


Insert offset folio 3 here 81825.003

Allllroved R~IF loans Since 2010 

Year 'Borrower 

2012i\Iarn E!daCorridClr Traf]sllortation Authority 

2012 '~ansas CitySo~thern RaiIway Cornpany 

2011;NorthCoa~t_~ailroad Authority, 

2011,Arntr~,k 

:2011 iC&J Railroad 

@10 if)enver UniCln ,?t~tion Project Authority . 

2010 'Great lakes Central Railroa~, 

Transportation Infrastructure Finance and IImovation Act (TIFIA) 

Loan Amount 

'$ ,83,710,000 

$ 54,648! 000 

'$ 3,180,000 

: $, 562,900,000 

: $ ,56,204 

: ~ 155,000,000 

$ 17,000,000 

The Transportation Infrastructure Finance and Innovation Act (TIFIA) program provides 

states, localities, or public authorities, as well as private entities undertaking projects sponsored 

by public authorities, Federal credit assistance in the form of direct loans, loan guarantees, and 

standby lines of credit to finance up to 80 percent of eligible surface transportation projects of 

national and regional significance. Projects eligible to receive assistance include intercity 

passenger rail facilities and vehicles, including those pwned by Amtrak, and certain freight rail 

projects that, in turn, could improve passenger rail service. 

To receive TIFIA assistance, an eligible project must be included in the applicable State 

Transportation Improvement Program. Major requirements include a capital cost of at least $50 

million (or $25 million for rural projects and $15 million for intelligent transportation system 

projects); credit assistance is limited to a maximum of33 percent of the total eligible project 

costs for lines of credit and 49 percent for loans, or loans and lines of credit combined; and 

senior debt must be rated investment grade. The project also must be supported in whole or in 

part from user charges or other non-federal dedicated funding sources, such as tolls, other user 

fees, or payments received under a public-private partnership agreement. Repayment must begin 

by five years after the substantial completion of the project, and the loan must be fully repaid 

within 35 years after loan disbursal. 

A major difference between the RRlF and TIFIA programs highlighted by past witnesses 

is that TlFIA credit risk premiums may be funded with credit subsidy budget authority of the 

Highway Trust Fund, rather than the loan applicant. Under RRIF there is no subsidy budget 

authority for credit risk premiums, which are paid by the borrower based upon the level of risk 

associated with the loan. Some have cited this distinction between the programs as a reason for 

the comparative popularity of the TIFIA program. 

Station Development 

The benefits of public-private partnerships can be realized in a number of ways. New and 

redesigned stations can create economic development opportunities in urban centers along the 

line, while the use of value caplure strategies in relation to those stations can produce new 

revenue streams that, in turn, can be used to improve the corridor or support operating expenses. 
vii 


Insert offset folio 4 here 81825.004

Rail stations can leverage their accessibility to transform urban centers and catalyze 

transit-friendly development around them. Increasing accessibility by adding or improving 

intercity passenger rail service is not enough to achieve these goals, as economic incentives and 

public-private partnerships are necessary for a comprehensive development strategy. Wellplmmed and well-designed stations can then become destinations unto themselves. 

For example, even with the existing capacity constraints, Washington's Union Station has 

become the capital's most-visited tourist destination, with its 130 restaurants and shops and 

connection to commuter trains and local transit modes. In 2012, Amtrak and private developers 

released a Union Station Master Plan vision to significantly expm1d the capacity of Union 

Station, and construct a significant amount of commercial, residential, and retail buildings. With 

a price tag of $8 billion, pnblic-private partnerships may be essential to move the project. 

The value of these new or redesigned stations apply outside the station walls, and can be 

captured through a number of different strategies. The phrase "value capture" refers to strategies 

that allow governments or agencies to dedicate to a particular project a portion of the increased 

revenue generated through assessments or fees based on the value expected to accrue as a result 

of the project. Some examples of value capture strategies include joint development, special 

assessment districts, tax increment financing, and development impact fees. 

Joint development: Generally, real estate development projects involve a cooperative 

arrmlgement between public and private sector partners. Joint developments can take a 

variety of forms including lease of land, air rights, or space to a developer; sale of land 

for a particulm' type of development; and joint construction of a rail facility and private 

development. Depending upon the arrangement, the public and private partners can share 

costs, revenues, and the financial risks involved in the development. 

SDecial assessment districts: These are fOlmal districts where special taxes or fees are 

assessed because the propeliies are expected to see a projected benefit based on 

geographic proximity to the station development. The revenues collected frOll1 the 

districts are then used to fund the facility. 

Tax increment financing: This is a public financing technique used by governmental 

entities to encourage economic development. Typically, the public-sector entity issues a 

special bond to help finance the development and related costs. The incremental increase 

in propeliy values within the financing district from the development is then used to fund 

repayment of the bonds. 

o Development impact fees: These are one-time charges collected by local governments 

from developers. The fees are used to defray the costs of new and/or expanded 

infrastructure and services associated with the development. 

Denver Union Station is an exmnple of a redevelopment project that took advantage of 

several innovative financing tools to advance a major transpOliation improvement in the heart of 

Denver. The roughly half a billion dollar project includes the development of a commuter and 

intercity rail tClminal, a regional bus facility, new light rail platforms, and improved public 
viii 


Insert offset folio 5 here 81825.005

spaces. To finance the project, the Denver Union Station Project Authority combined federal and 

state grants with a $155 million RRIF loan, a $145 million TIFIA loan, and real estate sale 

proceeds. The loan repayment sources include regional tax revenue and revenue generated from 

a tax increment financing arrangement. 

Leveraging Right of Way 

Another potential opportunity for snccessful public-private partnerships to support 

intercity passenger rail is leveraging railroad right-of-way to generate revenue. Railroad right-ofway can be used to place telecommunication and other non-transportation infrastructure. Under 

such an arrangement, the railroad would be compensated a!11mally for the utilization of its rightof-way, which would provide a new annual source of revenue that could be leveraged for loans 

or bonding. In 2012, Amtrak generated $94 million in real estate-related revenue, of which the 

largest component ($26 million) utilized right-of-way in some fashion. 

Amt~~R..ea(Est~~e[)evelopl11ent Revenue 

Fiscal.Year 2012 - $ in thousands, 

NEe ,_ Other 

16,484 5,249 

11,103 5,920 

21,733 

17,023 

Description 

Retail 

Parking 

Right~of-Way 28,1?6_ !,~?~ 29,669 

Other 

Total 

25,546 543 

81,319 13,195 " 

INVITED WITNESSES 

The Honorable John Porcari 

Deputy Secretary 

United States Department of Transportation 

Ms. Beverley K. Swaim-Staley 

President and CEO 

Union Station Redevelopment Corporation 

Mr. Frank Chechile 

Chief Executive Officer 

Parallel Infrastructnre 

Mr. John Robert Smith 

Former Mayor of Meridian, Mississippi 

President and CEO, Reconnecting America 

26,089 

94,514 ' 
(1) 

THE ROLE OF INNOVATIVE FINANCE IN 

INTERCITY PASSENGER RAIL 

TUESDAY, JULY 9, 2013 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:05 a.m., in Room 

2167, Rayburn House Office Building, Hon. Jeff Denham (Chairman of the subcommittee) presiding. 

Mr. DENHAM. The committee will come to order. First let me welcome our distinguished witnesses and thank them for their testimony today. As I have said during every hearing we have held, I 

am committed to rail reauthorization this year. One area the next 

rail bill will likely need to address is the role innovative financing 

tools can play to advance intercity passenger rail projects. We all 

need to be creative in ways to stretch the Federal dollars and work 

with our partners in the States, with communities, and the private 

sector. 

I have consistently advocated for the need to leverage privatesector financing in my home State for the construction of highspeed rail. Without private-sector engagement in financing, the 

California project is doomed to repeat the mistakes of the past, and 

will require endless subsidies from Federal taxpayers. 

Innovative finance has been increasingly used in the United 

States for highway mass transit projects. And one of my goals for 

the upcoming reauthorization is to extend that trend to passenger 

rail. The Railroad Rehabilitation and Improvement Financing loan 

program is an example of a program I would like to leverage even 

more. Currently, RRIF is authorized to lend up to $35 billion in 

loans and loan guarantees for the development of railroad infrastructure. 

The program was created principally for short line and Class I 

freight railroads, though recently commuter and intercity passenger rail operators have expressed interest in the program. RRIF 

and other Federal credit programs can accelerate large infrastructure projects if stakeholders come together to identify repayment 

sources. For example, Denver is utilizing RRIF and TIFIA to complete a major expansion of Denver Union Station, which will improve intercity rail, commuter rail, and bus connections. The loans 

are being repaid with a combination of local revenue sources. This 

is an excellent example of States, the private sector, and the Federal Government partnering to build more infrastructure in new 

2 

and creative ways. We need to encourage more of this type of innovative thinking at the State and local levels so entities like the 

Altamont Commuter Express, ACE, in my area, can make the infrastructure upgrades they need for the future. 

Station development is another tool that can be leveraged to support expanded and improved passenger rail services. Rail stations 

are often located in desirable downtown locations and can become 

the focus around which significant residential, commercial, and retail development can occur. Value capture methods, such as the tax 

increment financing, can be a means to leverage that private-sector 

development to spur transportation improvements. 

Finally, railroads themselves can proactively use their own property to create additional funding sources. For instance, railroad 

right-of-way can be used to place telecommunication and other nontransportation infrastructure. In 2012, Amtrak generated $94 million in real estate-related revenue. And I would like to work to see 

them grow that number even further. 

Again, I thank the witnesses for being here today. 

I would now like to recognize Mr. Nadler for 5 minutes to make 

any opening statement he may have. 

Mr. NADLER. Thank you, Mr. Chairman. 

I want to begin by thanking Chairman Denham for holding today’s hearing on the role of innovative financing in intercity passenger rail. 

Unfortunately, Congresswoman Brown has an unavoidable conflict this morning, but I will do my best to fill in for her today as 

ranking member. 

In 2009, Congress passed the Passenger Rail Investment and Improvement Act, PRIIA, which expires at the end of this fiscal year. 

As the committee prepares to reauthorize PRIIA, it is important 

that we take time to explore the role that innovative finance can 

play in the development of intercity passenger rail. But we must 

also not lose sight of the bigger picture. Under PRIIA, we authorized a total of $9.8 billion for Amtrak for fiscal year years 2009 

through 2013. However, actual annual appropriations for Amtrak 

over this period were significantly lower, only $7.3 billion, or $2.5 

billion lower than the authorized amount. Funding for Amtrak 

pales in comparison to those investments we make as a Nation in 

our highways and airports. 

Today, Federal spending on highway construction exceeds $42 

billion annually. We have not spent that kind of money on passenger rail service over the entire course of Amtrak’s 43-year existence. Looking back, the figures are no different. From 1947 to 

1970, when Amtrak was created, the Federal Government spent 

$11.3 billion in aviation, and $52.4 billion on the development of 

the Interstate Highway System and obviously nothing on Amtrak. 

There is no question we need to invest more in our railroads. A 

working group for the National Surface Transportation Policy and 

Revenue Study Commission reported that the total capital cost estimate of establishing a national intercity passenger rail network 

between now and 2050 is about $357 billion, or $8.1 billion annually. We are nowhere near that. And the House is currently moving 

in the wrong direction. The Federal budget is being cut to 

3 

unsustainable levels under the Budget Control Act and sequestration. 

The transportation appropriations bill for fiscal year 2014 that 

was just reported out of committee slashes Amtrak’s capital program by $352 million, or 37 percent below the fiscal year 2013 enacted level. And it slashes Amtrak operations by $119 million, 25 

percent below the fiscal year 2013 enacted level. Many of us will 

continue to fight these cuts. But given the current fiscal climate, 

I can understand why many would turn to the private sector. We 

should explore innovative financing options, but they should supplement Federal investments in Amtrak. We should reject any illusion that private financing tools alone can fill the gap. They cannot 

replace them. We need to ensure that there is a strong Federal role 

to help guide and support the railroads to grow and succeed. 

In fact, only with a strong Federal role will we be able to properly leverage the private sector. Despite this lack of investment at 

the Federal level, the demand for intercity passenger rail service 

is growing. Amtrak continues to set new ridership and revenue 

records each year. And it is doing all of this while facing budget 

cuts and uncertainty. We should build upon Amtrak’s success and 

give Amtrak the tools it needs to truly implement a national strategic vision for intercity rail. 

There are several existing programs and options that could be 

part of the solution. The FRA’s Railroad Rehabilitation and Improvement Financing, RRIF loans program, is one tool that has the 

potential to help railroads, shippers, and States meet these rail infrastructure investment needs. Unfortunately, we are not taking 

full advantage of this program. We often hear that the application 

process is difficult, time consuming, expensive, and cumbersome. 

There has been bipartisan support for reforming the RRIF loan 

program, so I am hopeful that we will agree on improvements. As 

we draft the PRIIA reauthorization bill, it is the perfect time to 

look at the current RRIF program and other financing tools that 

we can create or improve to see what we can do to help this Nation’s intercity passenger rail system succeed. 

Given the difficult economic climate, more and more States and 

localities are turning to Federal credit programs and public-private 

partnerships. We have an opportunity, as we write the reauthorization bill, to find new creative ways to help incentivize continued investment in intercity passenger rail from both public and private 

partners. 

But again, these innovative private financing options must be 

incentivized, they should be utilized better, we should reform them, 

but they cannot replace budget cuts or lack of adequate Federal investment. They are a supplement, they are not a replacement. 

Most of us here want to invest in and develop safe, efficient, convenient, and affordable transportation options like high-speed 

intercity passenger rail. But if we want to see actual results and 

improvements in the Nation’s passenger rail system, we need a 

permanent solution. We need to show the public and the private 

sector that we support passenger rail, and give our States, communities, and the private sector the confidence they need to plan and 

invest. To do that, we must increase the use of innovative financing, but we must increase substantially increase the Federal inVerDate Aug 31 2005 14:13 Jan 02, 2014 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\7-9-13~1\81825.TXT JEAN
4 

vestment of direct Federal appropriations in intercity passenger 

rail. 

Thank you, and I look forward to hearing our panelists’ thoughts 

and ideas this morning. I yield back. 

Mr. DENHAM. Thank you. I now call on Chairman Shuster for 

any opening statement he may have. 

Mr. SHUSTER. I thank the gentleman. And I appreciate you holding this hearing today. As I have said previously, I think we have 

got to figure out ways to make sure the investments are made in 

intercity passenger rail. And I think that it is not only money, but 

it is reforming how we go about it. 

Mr. Secretary, I would like to welcome you here today. I should 

have started off with that. Thank you for being here. We need passenger rail in this country. We have got to take a hard look at it 

and figure out where we are going in the future. The number I constantly remind myself of is that this Nation is going to go from 300 

million to 400 million people. The projection in 2005 was it was 

going to take 32 years. We are already 8 years into it, we are headed towards 400 million, and we are going to have to figure out how 

to get people between our major cities. You take the I–95 corridor. 

It is impossible to build another lane of highway there. So we have 

got to figure out how to improve moving people without moving 

them on the highways. 

I also believe that the partner out there is the private sector. 

There is countries around the world that have shown that privatesector involvement can be successful, and it is a way to get those 

additional funds and investments made. Programs like the RRIF 

program and TIFIA have shown us that we can leverage those 

scarce Federal resources to make sure we are making those investments that we need to. And we also need to, and we are talking 

about reform, is leverage the railroad assets, like stations and 

right-of-ways to make sure that we are developing and being able 

to capture that investment that is there. And again, we look 

around the world, there are places that have done that successfully. 

So again, I appreciate the chairman holding this hearing and for 

the chairman’s hard work traveling the country. I know he has 

been around talking to stakeholders and making sure they are 

heard. So, again, Chairman Denham, appreciate all your hard 

work, and thanks for the hearing today. 

Mr. DENHAM. Thank you. 

I would now like to welcome Mr. Porcari as our first witness 

today, our first panel. Then we will go into a second panel. We will 

most likely have time for two rounds of questioning. We know that 

this is a very important topic. And we look forward to working with 

you on improving America’s railroad. 

Amtrak, I agree with Mr. Nadler, has been improving. But we 

obviously have some safety concerns. We have got some infrastructure concerns. We have got some opportunities to really invest in 

continuing those improvements. And we look forward to working 

with you on that. I would ask unanimous consent that our witnesses’ full statements be included in the record. 

Without objection, so ordered. 

5 

Since your written testimony has been made part of the record, 

the subcommittee would request that your oral testimony be limited to 5 minutes. 

Mr. Porcari, welcome. 

TESTIMONY OF HON. JOHN PORCARI, DEPUTY SECRETARY, 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

Mr. PORCARI. Thank you. 

Chairman Shuster, Chairman Denham, Mr. Nadler, members of 

the committee, thanks for this opportunity. 

When President Obama took office, he laid out his vision for the 

21st-century American rail, a vision that aims to connect 80 percent of the Nation’s population to a high-performance rail network 

within the next 25 years. Since 2009, the U.S. Department of 

Transportation has made unprecedented investments in America’s 

rail infrastructure to help make this vision a reality. And every 

step of the way, we have put people to work and generated economic growth in communities across America. 

Today, 6,000 corridor miles are being improved, 40 stations are 

being upgraded, 260 next-generation passenger rail cars, and 105 

locomotives are being procured. Our High-Speed and Intercity Passenger Rail Program is investing more than $10 billion in strategic 

market-based projects in 32 States. Our successful TIGER grant 

program has awarded over $750 million to more than 45 rail 

projects, from station upgrades to large-scale freight initiatives. 

Our Railroad Rehabilitation and Improvement Financing program, 

better known as RRIF, continues to support major rail projects. 

And it is a great example of how our investments are able to attract private capital. 

One loan we issued through RRIF allowed Amtrak to buy 70 new 

locomotives to modernize its fleet in the Northeast Corridor. These 

locomotives are being manufactured as we speak at a Siemens 

plant in California that employs about 750 people, with suppliers 

in 23 States building component parts. We have also issued 29 

RRIF loans to freight railroads, helping to upgrade our rail infrastructure and improve the movement of goods across America. 

Our innovative TIFIA program is another tool we are using to 

stretch our rail dollars further. TIFIA, that is the Transportation 

Infrastructure Finance and Innovation Act, provides direct loans, 

loan guarantees, and standby letters of credit for major infrastructure projects throughout the Nation. It is a powerful resource on 

its own, but when TIFIA is combined with RRIF the benefits are 

truly inspiring. 

For example, as you mentioned, Mr. Chairman, in Denver at 

Union Station Denver, both a RRIF loan and a TIFIA loan are 

being used together to leverage more than half of the total project 

funding for the redevelopment of Denver Union Station. More than 

2 million square feet of mixed-use space development is now being 

built around the station, spurred by the revitalization of the station 

itself. And it is estimated that public sector investments will create 

7,000 jobs during the construction of that project. As you can see, 

in cities and towns across the country, rail investments lead to 

more jobs, increase private-sector buy-in, and better infrastructure 

for everyone. It is a true win-win-win situation. 

6 

To fully realize the potential for rail in America, we have to continue investing Federal resources and leveraging them with our 

public and private-sector partners. The President’s 2014 budget request proposes a 5-year, $40 billion rail reauthorization. And we 

are proposing to fund this reauthorization by creating a new rail 

account as part of our broader transportation trust fund, providing 

much needed funding predictability and consistency for both our 

public and private-sector partners. 

Our current authorizations, passed in 2008 in true bipartisan 

fashion, were game changing. Since they were passed, Amtrak’s 

ridership, its on time performance, and its revenues have reached 

all time highs. The freight rail industry has invested in its infrastructure at a pace not seen since the 19th century. And last year 

was the safest in railroading history. 

Now, imagine what we could do together if we treated rail like 

our highways and other forms of transportation and provided it 

with a sustained source of funding. Our highways and airports are 

already stretched to their limits and facing congestion that will 

only get worse with time. By 2050, we will need to move up to— 

we will have an additional up to 100 million people in America, 

and 8 billion tons more freight per year. 

The demand for rail is at an all time high. In the last 10 years, 

Amtrak’s ridership has increased by 40 percent. This is the time 

to put rail funding on par with our other modes of transportation. 

Making large-scale investments on a year-to-year basis we realize 

is both difficult and inefficient. No rail system in the world has 

ever been successfully planned and developed on that basis. Predictability in Federal funding is a necessity. It is what States, local 

governments, and private-sector investors are looking for. It is 

what will move America forward. And it is what will ultimately 

support the public-private rail partnerships that are needed to realize the President’s vision for a national passenger rail network that 

is the envy of the world. 

Thank you, Mr. Chairman, for the opportunity to testify. I look 

forward to taking your questions. 

Mr. DENHAM. Thank you, Mr. Porcari. 

Let me first start by clarifying something that you said in your 

statement. I agree that there should be dedicated funding. I think 

if you are going to improve passenger rail across the Nation, there 

needs to be that dedicated funding stream. So what are your ideas? 

Is it an infrastructure bank? Is it some type of new tax? What does 

that dedicated revenue stream look like? 

Mr. PORCARI. There are a number of ways this can be done. And 

if you look at the ways in the past that Congress and the executive 

branch have worked together in a true bipartisan way to identify 

revenue sources, the entire spectrum of potential revenues would 

be out there. 

What is true, Mr. Chairman, is that any major infrastructure investments, whether it is our highway system or aviation, has required core public funding on a multiyear basis to be effective. So 

we look forward to working with you and members of the committee and Congress on identifying those revenue sources. 

Mr. DENHAM. Thank you. 

7 

And I would agree we need a 5- or 10-year plan to be able to plan 

any long-term project. There is no plan that the administration has 

out there in print today that I haven’t seen, is there? 

Mr. PORCARI. The President’s fiscal year 2014 budget does identify pay-fors for the rail portion of the plan from the Overseas Contingency Operations Accounts. And we think of it as some Nation 

building right here at home. 

Mr. DENHAM. OK. I think we have scored the downsizing of the 

war in many different funding scenarios. But we nevertheless, we 

look forward to working with you on that because we do agree that 

a long-term funding source, like the Highway Trust Fund—only a 

Highway Trust Fund that actually is fully funded, as well. We have 

some big infrastructure challenges that I think we can work on, on 

a bipartisan level. 

But let me start with a question about the RRIF loan. In 2011, the Department of Transportation approved to Amtrak a $563 million RRIF loan for the procurement of 70 electric locomotives. The 

loan will be repaid with revenue generated from Amtrak’s Northeast Corridor services. In your view, are there further opportunities 

to leverage Amtrak’s Northeast Corridor profits to accelerate the 

state of good repairs along the whole Northeast Corridor both on 

safety as well as creating better efficiencies? I have taken that 

train a few times now to see how many challenges there are and 

the number of projects that are in dire need of funding. 

Mr. PORCARI. Yes, Mr. Chairman. The short answer is yes, we 

believe there are further opportunities, whether it is through the 

RRIF loan program, through, as you point out, station development 

opportunities, and other value capture opportunities, and baseline 

funding to restore some of the Northeast infrastructure. Despite 

the historic disinvestment in the Northeast Corridor, as you know, 

ridership growth has been steady and very impressive. The rolling 

stock, in particular, these new locomotives, will be very helpful. 

But I think it is worth noting that the Acela trains, the newest rolling stock in the Northeast Corridor, are now 20 years old. 

Mr. DENHAM. And would it be helpful, as we are putting together 

the PRIIA reauthorization, to separate Amtrak’s lines of business 

to make sure we are making loans to Amtrak that are not being 

paid for with a Federal subsidy so that we have directed funding 

just on infrastructure improvements? 

Mr. PORCARI. Yes, Mr. Chairman. We have been supportive of 

having transparency into Amtrak’s lines of businesses to better 

support investment decisions, but also from a national perspective, 

especially when it—because it is important to serve rural areas 

throughout America on cross-country service as well, to understand 

what it will take to support that service in the long term. 

Mr. DENHAM. And the RRIF, the whole overall RRIF program 

has not been fully utilized. There is obviously a great deal of money 

that is sitting out there that could be loaned out. And recently the 

RRIF loan program has garnered interest for advancing new intercity passenger rail projects. Does DOT believe that the RRIF program can be used successfully to support passenger rail projects as 

well? 

Mr. PORCARI. Yes, we do believe the RRIF program has a part 

in both freight and passenger rail. There are some very interesting 

8 

both applications and potential proposals out there. As you know, 

the RRIF program is our one underutilized financial resource for 

both freight and passenger rail. We look forward to working with 

the committee and the users to find more effective ways to implement the RRIF program. 

Mr. DENHAM. And I know that there are high-speed rail opportunities to loan RRIF dollars. What role, if any, do you think RRIF 

can play in the California high-speed rail project, which, as you 

know, will require billions of dollars in grant funding that is unlikely to materialize without a dedicated source? 

Mr. PORCARI. The RRIF program is a potential source of a portion of the financing for the California program. That will have to 

stand on its own legs financially. Like every other RRIF application, it would have to make financial sense in its own terms. But 

it is a potential tool, as are other State and Federal revenue 

sources. 

Mr. DENHAM. Thank you. 

We certainly agree on that. I think that they will have to prove 

their business plan to be worthy before they could apply for a loan. 

But we are certainly looking at other opportunities. 

Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

I just want to, before you answer my questions, I want to follow 

up on that. Do you believe that a high-speed rail system or any 

transportation system has to stand on its own in terms of turning 

a profit or at least breaking even, as opposed to being subsidized 

from the outside? 

Mr. PORCARI. Mr. Nadler, we don’t have any portion of the transportation system that stands totally on its own legs financially. 

Mr. NADLER. Exactly. 

Mr. PORCARI. What I was referring to is a specific RRIF loan proposal, if we get one from the California High-Speed Rail Authority, 

would have to make financial sense. 

Mr. NADLER. Yeah, obviously. But we have to understand, I assume, that loan programs, and any other innovative financing systems that I haven’t heard talked about—I have heard PRIIA and 

RRIF—are loan programs. They have to be paid back. They have 

to be paid back out of revenues. And you are not going to build or 

maintain major systems out of their own revenues, even if you use 

part of that—especially if you use a larger and larger part of that 

for debt service. You have to have an outside subsidy from somewhere, correct? 

Mr. PORCARI. That is correct. Mr. Nadler, we wouldn’t have an 

Interstate Highway System, we wouldn’t have the aviation system 

that is the envy of the world if we didn’t have trust funds with 

dedicated revenue sources that year after year provided the baseline funding. 

Mr. NADLER. So we have to find some revenue source from outside in addition to creative use of PRIIA and RRIF and anything 

else we can come up with and PPP, we have to find some source 

which we don’t have now of large-scale annualized public funding 

for passenger rail? 

Mr. PORCARI. We do. 

9 

Mr. NADLER. And there is no proposal on the table at the moment. 

Mr. PORCARI. Apart from the President’s proposal in the fiscal 

year 2014 budget. We look forward to working with the committee 

and Congress on a multiyear proposal. 

Mr. NADLER. Thank you. The President proposed in the fiscal 

year 2014 budget, and I think this may have been what you were 

just referring to, $300 million. Why is that necessary? I am sorry, 

for State corridors, $300 million for State corridors. 

Mr. PORCARI. We have historically as a Nation underinvested in 

these corridors. There is great demand for—grade ridership demand that individual State corridors, and regionally and nationally, we have not been able to fulfill. The idea is to jump-start the 

infrastructure investment process with some critically needed investments. Overall, the fiscal year 2014 proposal has a number of 

different categories which we are proposing to fund both passenger 

and freight rail needs. And I mention those in the same sentence 

because, with limited exceptions of true high-speed rail, we will 

have a mixed system in the United States. 

Mr. NADLER. And these are grants, not loans, correct? 

Mr. PORCARI. Primarily they would be grants. 

Mr. NADLER. Good. Thank you. Now, you mentioned that the administration proposes to fund Amtrak—or actually you were talking with the chairman, and you mentioned that the administration 

proposes to fund Amtrak through business lines rather than the 

traditional operating and capital debt service grants. Last week, 

the FRA, the Federal Railroad Administrator, testified that financing along business lines would not make sense with the low appropriations levels proposed by the Appropriations Committee in the 

House for Amtrak. Why is this so? And what do you believe would 

occur in the short term and long term with such low Federal financing levels? And do you think the private sector would come in 

to take up the slack? 

Mr. PORCARI. Basically, providing transparency along the lines of 

business will highlight, as the Administrator pointed out, the 

underfunding and the problem. It will show very specifically by line 

of business where more investment is needed. There is certainly a 

role for public-private partnerships, and we want to encourage 

those and maximize those to the extent possible. There is a large 

part of the system that is simply a public good that is not going 

to fit the profile of what the private sector would co-invest in. So 

the bottom line is a better, more consistent, and higher baseline 

level of public funding is needed, along with better and more public-private partnerships. 

Mr. NADLER. That makes sense. But the Federal Railroad Administrator testified that financing along business lines would not 

make sense with the low appropriations levels. Now, did he mean 

or would you say that what doesn’t make sense are the low appropriations levels? And with those low appropriations levels that 

don’t make sense, if you had financing along business lines that 

would make it more transparent and show more—how much it 

doesn’t make sense? Or instituting such a system doesn’t make 

sense with inadequate financing levels? 

10 

Mr. PORCARI. What the President’s budget is proposing is transparency by lines of business and higher levels of funding. If you 

look at the current funding and the House proposal for funding, 

there would be some very difficult choices that the House would 

need to make on actually cutting back service. 

Mr. NADLER. But if you had a very inadequate level of funding, 

would it still make sense to fund through business lines to make 

it more transparent, or is there some reason that wouldn’t make 

sense if you were having senseless inadequate levels of funding? 

Mr. PORCARI. We have been promoting transparency across the 

transportation network, along with performance measures, as a 

way to restore public confidence and show the transportation investments on a business case basis make sense. So we would propose to do that. 

Mr. NADLER. Even if you had inadequate levels of financing? 

Mr. PORCARI. That is right. 

Mr. NADLER. My time has expired. I yield back. Thank you. 

Mr. DENHAM. Mr. Shuster. 

Mr. SHUSTER. To follow along the line of questioning that the 

gentleman of New York, senseless underfunding, putting into a system that is not operating well or inefficiently, the whole system is 

senseless. And so that is why I believe we have got to start with 

reforming it how we move forward and then try to figure out how 

to get those funds. 

I think everybody agrees that there has to be some level of investment from Federal to State, from the Government. As the Secretary said, none of our transportation modes goes along by themselves without some assistance. But again, going back to the investments that are made and not being properly invested, not 

being done in a way that we can maximize the return I think is 

wrong. 

But I look at Amtrak, and the ridership has gone up significantly. We use all the time the Keystone corridor from Harrisburg 

to Pittsburgh, which has gone up I think now about 70 percent in 

the last 5 years. Pennsylvania and Amtrak made that investment. 

I think that is senseless sitting in traffic. Every time I get on there 

and I do the back of the envelope, and I did one right here to make 

the calculation, there is three prices basically, $19, $29 and $39. 

That might have gone up a little bit. But when you take that $29 

or $39, which is what the typical business traveler is going to pay, 

$58 or $78 round trip, if you take the tax, the gasoline you used, 

the parking you are going to have to take into consideration and 

the toll, it is $62 to $72. So as I tell the Governor of the State of 

Pennsylvania—who is in control over the price in that line—the 

price needs to be higher. Nobody wants to pay more, but as a business traveler, as somebody that values my time, the calculation 

needs to be made how much more productive can I be? Because I 

think that that is a problem. That goes to the point of the management of it is not like a private-sector company would look at it, look 

at price elasticity, and they would say, hey, we can get $100 or 

$110 round trip and increase our revenues. We are not doing that. 

My son traveled from Harrisburg to New York City round trip. 

Good for me it was $108. I couldn’t believe it was $108. I probably 

would have paid $208 easily to make sure that he didn’t have to 

11 

take his car into New York City and deal with all the headaches 

and hassles. 

So that is the core to the problem I think is we have got to figure 

out how to reform Amtrak, to manage it the way a private-sector 

company does. And when we are talking about separating business 

lines, it makes a lot of sense to me. Now, as I said, below the rail, 

that is where the investment is going to have to be coming from 

help from the Federal Government. But above the rail, by putting 

private-sector practices, or by bringing the private sector into the 

process, I think we can look at these things, these different lines 

as standalone businesses. 

And that long, lengthy statement brings me to my question to 

you, Mr. Secretary. The President has talked a lot about it, but I 

don’t think his actions have put the focus where they need to be. 

Dribs and drabs everywhere. I am not a fan of the California highspeed investments being made there because I don’t think they can 

afford it. But do you agree we need to really focus on the corridors 

that make the most sense? For instance, the Northeast Corridor, 

or a heavily traveled corridor, Chicago to St. Louis, those places 

like that. Do you think we need to focus on those corridors and not 

try to spread our money so thin we are not going to have any kind 

of impact? 

Mr. PORCARI. Mr. Chairman, much the same way that the interstate system was built, the passenger rail corridors are starting off 

as city pairs. You mentioned St. Louis-Chicago as a great example, 

where that investment of Federal public dollars has now resulted 

in 110-mile-an-hour service for a portion of it. Likewise, Detroit to 

Chicago, most of that will be 110-mile-an-hour service in the next 

few years. As the city pairs start connecting with each other, you 

are building a network from the ground up. 

This is not a Federal Government master plan map of the country imposed from the top down. It is really demand starting with 

city pairs and emerging corridors building up. And again, I would 

point out that that is the way, whether it is highway or aviation 

or any other part of the transportation system, that is the way 

most of our system has been built, from the ground up. 

Mr. SHUSTER. Except when you look at the New Orleans to Los 

Angeles, the Sunset Limited, that is the biggest loser I believe we 

have. What are your thoughts on that? 

Mr. PORCARI. Some of the cross-country service is very important 

for the rural areas that it serves. Part of the conversation should 

be those communities along the way and connected to a nationwide 

network through Amtrak. As we are losing intercity passenger bus 

service, for example, Amtrak is becoming more and more important 

for those rural areas that simply don’t have transportation options 

otherwise. 

Mr. SHUSTER. We are losing those intercity bus travel? 

Mr. PORCARI. Yeah, well, the bus industry is changing rapidly, 

and a number of towns and areas that had been served with scheduled service don’t have that anymore. 

Mr. SHUSTER. Right. Right. If the chairman will indulge me for 

another 20 seconds, just a statement. I agree with you, we need to 

figure out how to improve RRIF loans, get them out there. Thirtyfive billion dollars that is available, and we are not even close to 

12 

that. We tried, Chairman Mica and myself tried to in MAP–21, 

tried to reform that but we were unable to. So I look forward to 

working with him improving RRIF. 

Thank you, Mr. Chairman. 

Mr. DENHAM. Thank you. 

Mr. Michaud. 

Mr. MICHAUD. Thank you very much, Mr. Chairman. 

And thank you for being here this morning. I want to follow up, 

you mentioned that there is some collaboration between freight and 

passenger rail, particularly in rural areas that make sense to do 

that. How many areas, number one, is that collaboration going on? 

And do you envision, do you have any plans to increase that collaboration to include more passenger and freight rail? 

My second question is, as you look at trying to hold down the 

costs, have you, the department, thought of utilizing the National 

Guard to use that as a training project so when they can use the 

man-hours and equipment to actually build passenger rail, help 

hold down the costs? 

And my third question is since the United States is negotiating 

with the EU for a trade deal, and if you look at the shipping lanes 

for that trade deal, it makes a lot of sense to actually have it 

shipped on the east coast. And once it gets on the east coast, I will 

just use Maine for an example, Eastport is the deepest water port 

on the east coast, doesn’t have to be dredged. How would you get 

that product from say Maine to California using rail? Have you 

looked at that as well? 

Mr. PORCARI. Let me try to take those questions in turn. First, 

in terms of shared tracks, it is important to state that we have the 

best freight rail system in the world. It is the envy of the world. 

And one of the reasons that our economy is strong is because over 

the last 25 or 30 years, the freight rail system has come back very 

strongly. And in the vast majority of cases where we have passenger rail service, it is on shared tracks where it is serving both 

freight and passenger rail needs. That will continue to be true 

under almost any scenario. 

So we focus on the safety of the interaction between passenger 

and freight, but we are very mindful from an economic development point of view that we want to promote the freight side of it 

as much as passenger. And we try to make sure we have that balance there. As far as the National Guard, to my knowledge, we 

have not looked at that as an option. We have focused very much 

on the safety of the system. And that in part has been from the 

rigorous training requirements and safety management systems 

and other safety cultural issues that we have worked on together 

with the various railroads for a steady increase in safety. 

On the shipping lanes and the ports, it is a great point, because 

what we have not been able to do much in the past is focus on the 

seams in the transportation system. We may have great ports that 

have a 50-foot channel and a 50-foot berth, but if we don’t have 

great rail and highway access to that port we haven’t done anything. By category, one of the single biggest winners in our TIGER 

grants over the various rounds has actually been freight rail and 

ports. And it is because we have been able to take very specific, relatively small targeted investments and eliminate bottlenecks. And 

13 

there is great examples all over the country where taking a systems approach, we have been able to eliminate some of those bottlenecks. Through the RRIF program, through a continued TIGER 

program, and through base funding at an adequate level for a passenger rail system, we believe that we can actually keep working 

on those bottlenecks and build a system that serves both the 

freight and passenger rail needs. Mindful also that there are other 

development opportunities and value capture opportunities for that 

right-of-way and the stations as well. 

Mr. MICHAUD. Thank you. 

I think it is very important that when you look at passenger, 

freight, and what is being negotiated like with the EU, that you 

also look outside the box. My biggest concern, without getting the 

wrath of my friends from New York, is my understanding that they 

are going to have to spend about a billion dollars raising a bridge. 

They are going to have to spend a ton of money dredging, which 

is costly, so here is to me anyway, is a waste of taxpayers’ dollars 

when there are more economical ways of probably looking at ways 

how things go. And I would be willing to talk to Ranking Member 

Nadler about that as well. 

But my next question is, and I heard Chairman Shuster mention 

it, about how businesses can afford more as far as the costs. Have 

you done an analysis, maybe businesses can, but on your ridership? 

Where is that return rates going to be? So if you do raise the rate, 

are you going to be losing customers because they can no longer afford the higher rate. 

Mr. PORCARI. As a general principle, Amtrak, commuter railroads, other operators are looking at that the elasticity. They do it 

on different schedules and in different ways. On the Keystone service, I am not certain of where that point is. But I think the chairman’s point is a good one, when the service started, the point was 

to build ridership. Now that ridership has been built and the base 

ridership is there and it is still growing, there may be pricing opportunities. I am not sure. 

Mr. MICHAUD. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. DENHAM. Thank you. Mr. Williams. 

Mr. WILLIAMS. Yes. Mr. Secretary, thanks for being here. I appreciate it. I am a business guy. I am from Texas. So I am a big 

private-sector guy, believe in the private sector. 

My experience has been that big government and regulations and 

processes choke the heck out of opportunities for the private sector 

to get engaged. I guess my first part of my question would be, what 

do you propose? I mean, we haven’t talked too much about regulations and how hard it is for the private sector to get involved with 

the Federal Government on a private partner relationship. What do 

you propose do about some of these regulations that seem to go on 

and on and on? 

Mr. PORCARI. Yeah. First, sir, on the public and private investment, there is great example I wanted to mention in Texas of 

Tower 55, which is a truly a national bottleneck. 

Mr. WILLIAMS. Right in my backyard. 

Mr. PORCARI. Absolutely. And a joint investment from the Class 

I railroads and the Federal Government is eliminating one of the 

14 

worst bottlenecks in America. And I think that is a great illustration of the approach we are trying to take to eliminate regional and 

national bottlenecks through joint public-private investments. On 

the regulation side, we are working very closely with industry on 

the implementation of, for example, positive train control, as mandated by Congress. We have made modifications to that program 

that we think make sense. And we have done that working closely 

with the industry. That is one example. 

I would say that there is a strong shared sense of safety and 

building a safety culture that, with or without regulations, cuts 

across the railroad industry. And it is one that we share with both 

our freight and passenger railroads. 

Mr. WILLIAMS. Sometimes the process is pretty cumbersome, and 

there are ways, hopefully you will find ways to make it easier to 

be a partner. 

Mr. PORCARI. And I believe positive train control is an example 

of that, where the regulations that were mandated by Congress 

have actually been modified in response to legitimate points 

brought up by industry. 

Mr. WILLIAMS. The other thing is of course we all talk about 

where the cash flow is, don’t we? And the public sector has got 

their cash flow, the Government has got their cash flow. You know, 

as mentioned earlier, where is the—where do you propose the Government’s money comes from? Are you talking about more taxes? 

Are you talking about tax increases? I heard you say earlier we are 

talking about also money that the President is planning on from 

the withdrawal from the wars. It seems everybody has got their 

hand in that. Where is the money going to come from? Are we 

going to tax? Are we going to have higher taxes? More taxes? 

Mr. PORCARI. Well, first, the specific discussion about the fiscal 

year 2014 President’s budget does have that pay-for, the Overseas 

Contingency Operations Account. And again, we think of it as Nation building right here at home and investments that will pay off 

for generations. We look forward to working with Congress on a 

larger discussion on a bipartisan basis of the levels of funding that 

will actually rebuild our infrastructure and turn over to the next 

generation what we inherited, which was a transportation system 

that drives the Nation’s economy and builds a better standard of 

living. 

Mr. WILLIAMS. But you are not ready to commit for tax increases 

right now. 

Mr. PORCARI. I am not proposing anything. 

Mr. WILLIAMS. I yield back, Mr. Chairman. 

Mr. SHUSTER [presiding]. Thank the gentleman. 

And with that, Mrs. Napolitano is recognized for 5 minutes. 

Mrs. NAPOLITANO. Thank you, Mr. Chairman. 

And I am glad that we have an opportunity to go over some of 

the issues that are very important to my district and for California. 

Secretary Porcari, there have been very some potential successful 

RRIF applicants in the program that raised some questions to me 

and to some of my colleagues because of the length of time of the 

review, the inefficiencies in the process, the lack of staff authority, 

the lack of communications, and other processes. In 2012, 

$83,710,000 were loaned to the Alameda Corridor Transportation 

15 

Authority, ACTA, in California. It took them 33 months to get that 

loan. When they applied, it was during the recession, and there 

were problems with being able to pay the loan because the ridership was down, and apparently, they were requesting some relief 

to be able to refi their loan. 

Do you believe there have been problems with the program? 

What are you doing to fix them? The statute gives DOT 90 days, 

but it doesn’t begin to count until the application is deemed complete. Thereby, it took 6 months for their application to be deemed 

complete, even though there were no additional information requests to the ACTA. Are we working on being able to expedite, cut 

the timeframes? Do we have enough trained and experienced personnel to do it in your staff? And what should be the time limitation between the submission of an application and then of course 

the deemed complete portion of it? Because one barrier for some 

applicants may be the costs also for the transaction. And if you 

would explain also, if you can, in the short frame time what they 

are, what those costs are, and why they may change during the 

RRIF approval and negotiation process. 

Mr. PORCARI. Thank you, Ms. Napolitano. I will try to unpack 

that series of questions. 

First, as you know, the Alameda County Transportation Authority refinancing was, as you point out, through a very difficult economic time. Every one of our RRIF loans, as I mentioned, has to 

stand on its own legs financially. It is an incredibly important corridor for national trade. But it is one where the refinancing as first 

proposed did not make sense and from my perspective was not approvable because of some of the financial issues. It took some time 

to work through that given the size and scope of the project, and 

again, the national importance of that corridor to domestic and 

international trade. 

We clearly understand that there are process improvements that 

make sense and that we can do. Thirty-three months is not the 

norm. But that is a project that, as originally submitted, needed 

substantial work together to get to an approvable state. Now, there 

are specific steps within the RRIF loan application process. I will 

be happy to go through those. But maybe the most important one 

is the independent financial adviser, who on an independent basis 

is evaluating the creditworthiness of that specific application. And 

that creditworthiness review often takes a number of back and 

forth rounds and modifications to the proposal before we can get 

to a point where it is approved. We have been—tried to be very 

good stewards of the public trust in only approving RRIF loans that 

make sense. We have a lot more capacity to approve RRIF loans. 

We do think that we can front load the process better than it has 

been done in the past, where we can get to a complete application 

faster. And I think that is really the key to having a better process. 

Mrs. NAPOLITANO. Should there be a time limitation between the 

submission of the app and the deem of complete? 

Mr. PORCARI. Well, before the application is deemed complete, I 

can think of several examples of RRIF loans that simply didn’t 

have enough information to act on. And if we were required to 

deem them complete before the applicant supplemented that information, those loans would have been denied. So I think that there 

16 

is a balancing act there in how quickly we can get to deemed complete. It is in our interest to do that, too. 

Mrs. NAPOLITANO. Can you quickly address the barrier for some 

applicants for the costs issue? 

Mr. PORCARI. Sure. Especially for the smaller RRIF applicants, 

I believe the smallest RRIF loan we did was on the order of about 

$85,000. So the transaction costs are very important, but especially 

important in the smallest ones. There is an investigation fee, which 

is one-half of 1 percent. That is what pays for the independent financial adviser. There is the credit risk premium, which is required by the enabling legislation. We don’t have appropriated 

funds for RRIF. So the applicants have to pay that in the RRIF 

program. And basically, the less creditworthy the higher the premium. So that can be a substantial barrier. 

Mrs. NAPOLITANO. Is there any way to be able to help the smaller 

entities? Because this could be one of the problems for the small 

entity being able to be successful. 

Mr. PORCARI. Well, we do recognize, the RRIF program was originally set up, as you know, to help the short line railroads. And it 

is an incredibly powerful economic development tool for a railroad 

siding, a little bit of rolling stock for smaller businesses in particular. 

We can focus on ways to minimize the transaction costs. But the 

things like payment for the independent financial adviser, payment 

of the credit risk premium, really aren’t negotiable. And then of 

course the interest rate itself doesn’t vary widely, but it does float 

based on I believe the Treasury bill. 

Mrs. NAPOLITANO. Mr. Secretary, I would love to have—and Mr. 

Chair—any information to this committee on how we can help reduce those costs for smaller entities. 

Mr. SHUSTER. Certainly. Thank you. 

Mr. Webster from Florida is recognized for 5 minutes. 

Mr. WEBSTER. Thank you, Mr. Chairman. 

Thank you for this meeting. And I had a question about something local to Florida. There is an innovative, groundbreaking private-sector project underway called All Aboard Florida. And it will 

bring not only modern passenger travel rail from Miami to my 

hometown of Orlando, but also be great for economic development 

and also just great employment opportunities as well. Are you 

aware of that project? 

Mr. PORCARI. Yes, I am. 

Mr. WEBSTER. I think it is probably the only green filled passenger rail project that will be completed here in the next few 

years. Is there anything that you believe DOT could do in order to 

help that project along and move it forward quickly and also without unnecessary delays? 

Mr. PORCARI. Well, it is one of the RRIF loan applications that 

we are looking at right now. I would say it comes in with some natural advantages in the sense that for the most part it is existing 

right-of-way, and has, for at least a portion of the line, the environmental clearances that are required. So those are big pluses. I 

know, and you will hear more about it I suspect on the second 

panel—but there are more—there are some right-of-way and other 

issues to be worked out. But overall, there is a real need. This is 

17 

a great example of, for the most part, what would be continue to 

be a shared use corridor, where both freight and passenger activity 

can co-exist very well. I don’t know of any show stoppers for the 

proposal. But I don’t know enough of the details at this point to 

know that there might be some. But in general, we welcome the 

proposal. We know the need is great. And for a system that could 

serve in phases or all at once, Miami to Orlando would be a big 

boon to the State. 

Mr. WEBSTER. Just as a side note, I am familiar with TIFIA. I 

am not as familiar with RRIF as I am with TIFIA. But people seem 

to like TIFIA. People don’t like RRIF. Is there a way to come up 

with a hybrid program that would be more modeled after the 

TIFIA program? 

Mr. PORCARI. One of the reasons that people like TIFIA is because they are not paying the credit risk premium. In RRIF they 

are. And again—— 

Mr. WEBSTER. This is more also there is just some objections to 

the—it is kind of cumbersome in the way it is set up. 

Mr. PORCARI. I think the point is well taken. And we know that 

in terms of re-engineering the process that we can make it both an 

appropriately scrutinized process that includes the independent financial review, but we can also make it a better process. And as 

I mentioned, front loading—everything else being equal, doing 

more work together with the applicant upfront rather than having 

a consecutive process where you are asking them questions or 

sending them requests for information and then providing it—— 

Mr. WEBSTER. That is what I heard, there is like this back and 

forth that seems unending. 

Mr. PORCARI. We are not interested in turning this into the consultants full employment act. What we would like to do is make it 

both a responsive and responsible process. 

Mr. WEBSTER. Thank you. Yield back. 

Mr. SHUSTER. Thank the gentleman. 

And the gentleman from Minnesota is recognized for 5 minutes, 

Mr. Walz. 

Mr. WALZ. Thank you, Mr. Chairman. 

And thank you, Mr. Porcari, for being here. 

I represent a small city of about 110,000 people in southern Minnesota. It also happens to be the world’s premier medical destination, Rochester, Minnesota, and the Mayo Clinic. They have 2.75 

million visitors a year, generating $10 billion of economic activity. 

They employ 40,000 people, which is more than Chrysler’s entire 

workforce in the United States. They are fed by two highways that 

are at one point within 20 miles of the city two lanes that are on 

there. That is the situation. There has been a concerted effort of 

local, State, private partners to build intercity rail to obviously the 

destination of the Twin Cities and the airport, where the bulk of 

those 2.75 million people fly into. My question as we go forward on 

this, and I often hear it appears like when we talk about these 

things that some of my colleagues believe our best days are behind 

us. We have economic engines that are outpacing anything in the 

world. We have innovation that is out-innovating anybody else in 

the world. What is holding us back is an outdated, outmoded transportation system that is going to take creative thinking. My quesVerDate Aug 31 2005 14:13 Jan 02, 2014 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\7-9-13~1\81825.TXT JEAN
18 

tion to you is, and I hear it, is, how does a city of 110,000 compete 

with a Miami, a Los Angeles, a Denver, the Eastern corridor here? 

How do we make those investments there, where I can guarantee 

you your return on the dollar is going to be higher than any place 

else you get? How do the programs, and I am glad to see the budget sets aside money, but how do regional planning authorities compete with the metropolitan planning authorities? And how are you 

envisioning that to make sure that multimodal intercity rail transport is available to the people in southern Minnesota? 

Mr. PORCARI. Excellent question, Mr. Walz. First of all, the clinic 

is a great example of an anchor institution that is a major employment node that our transportation system, whether you are talking 

about highway or rail or aviation for that matter, really hasn’t kept 

up with. And transportation is economic development. At the end 

of the day, this country was built on tough investment decisions in 

transportation infrastructure that our parents and grandparents 

and great grandparents made. And I think what you are pointing 

out is, as new employment nodes emerge, we have an obligation to 

serve them as well. I am familiar with the discussion about passenger rail service to the facility. It is a great example of what may 

be an emerging node that would later be part of a larger regional 

and national connection. And I mentioned city pairs is one way 

that it works. Major employment nodes is another. We don’t see 

this as a zero sum game in the sense that with adequate baseline 

funding, there are emerging rail markets all over America that 

really can be served and can be served very well. And for families, 

for patients, for others that want transportation choices and don’t 

want to have to drive, it would give them those choices. So we see 

that as a great example of how an intercity passenger rail program 

that operates on various levels, regional, local, and true highspeed—— 

Mr. WALZ. How do we get away from the chicken and the egg 

scenario that our local private partners are waiting for the commitment and the investment, and then we keep hearing we need to see 

that local commitment going? How do we get started and break 

this logjam? Because the Chamber is all in. Labor is all in. I mean 

people are all in on this thing. But we are caught in this dilemma 

that, well, how do we know the Federal Government is going to be 

there to do it? This is the case of you can take your ideology and 

throw it out the window on this one. This is going to be a publicprivate partnership. Without the Federal Government and the 

State government, it won’t happen. Without the private sector, it 

won’t happen. How do we get there? What is the catalyst? 

Mr. PORCARI. Well, we will be happy to be the convening group 

for that. But as you point out, that is a very likely candidate for 

a public-private partnership, where there are private investment 

opportunities, private redevelopment value capture opportunities. 

It will take some substantial level of public investment, most likely 

at both the State and Federal level, to make that happen. So if you 

think about three parties, private sector, State, and Federal, it will 

likely take all three of those parties for that service. 

Mr. WALZ. I look forward to working with you. I think it is an 

incredible opportunity to make it happen. Thank you. 

Mr. SHUSTER. Thank the gentleman. 

19 

Mr. Hanna is it recognized for 5 minutes. 

Mr. HANNA. Thank you, Mr. Chairman. 

You said that you believe in RRIF loans. You think it is a good 

process for the most part, problematic in many ways. And you have 

identified ways that you think it should be changed. Things go concurrently, not consecutively. But yet in your 2014 budget, you have 

made no changes in the process. Perhaps that is not a relevant way 

to go about it. But specifically, what would you do differently than 

you are doing? Because there is no indication that there are any 

changes being made. 

Mr. PORCARI. Some of the same principles and practices that we 

have applied to the President’s dashboard process—if you are familiar with that, we have taken Projects of National and Regional 

Significance and greatly reduced the timeframe, in some cases from 

a 5-year environmental document to 14 months, for example. 

The principles are things like concurrency. You don’t need to do 

everything consecutively. If you can chart it out and do the processes concurrently—— 

Mr. HANNA. Right. But you have not made any changes in the 

program, but you intend to make changes in the program, or you 

just think that it is something you can do with the process? 

Mr. PORCARI. The program is a work in process. And I would 

point out one other part, that I don’t think we have done the job 

we need to do with the RRIF program, and that is reaching out to 

potential users of it. You know, we talk to the railroad industry, 

and we talk to railroad users. That is fine. But State and local economic development officials are actually the ones that could probably best use it. It has been a little bit of an eye opener to see that, 

for the most part, they don’t even know about the program. 

Mr. HANNA. Let me ask you about another point that Chairman 

Shuster brought up, and that is the elasticity of demand for the 

product that you provide through, for example, Amtrak. And you 

indicated you weren’t aware of when they go back and check demand versus pricing and how that is all done. But—and I think 

there is wide agreement here that the public has a large role to 

play in financing these things that are generally a public good and 

couldn’t survive without public money. Everybody gets that. 

But how, on the other hand, can you justify additional public 

money without constantly looking at the demand-supply equation 

that exists out there? And clearly, there is—demand and supply 

are mismatched here, since we know that ridership is increasing, 

and yet it would seem as though that we are not getting the advantage of the elasticity of demand, which allows the individual using 

the service to pay more and I would argue a fairer share of the 

benefit. 

Mr. PORCARI. Mr. Hanna, I would be happy to get the committee 

specific information on how and how frequently and by what process Amtrak evaluates their fares. I can tell you as a frequent Amtrak user, it seems to me that they are taking advantage of pricing 

opportunities wherever possible. 

Mr. HANNA. But yet you don’t know when they do it or—— 

Mr. PORCARI. I don’t offhand, but we would be happy to get that 

information for you. 

Mr. HANNA. Thank you very much. I yield back. 

20 

Mr. DENHAM [presiding]. Thank you. Mr. Sires. 

Mr. SIRES. Thank you, Mr. Chairman. 

You know I ride the Northeast Corridor just about every week. 

And the other day we had a bunch—a group of Members ride the 

corridor. And they pointed out to us some of the areas that we 

could work on to make it faster. But one of the things that I 

thought of as we were speaking is we are going to be making hundreds of millions of dollars of investment to save 4 minutes or 5 

minutes on some of these turns. It just seems to me that it is very 

difficult to make a decision to spend that kind of money to save 4 

or 5 minutes. Yet, you know we keep growing. 

I know I have been involved with light rail and so forth in many 

areas for many years. People don’t want an increase in trains going 

by in their tracks, because people have moved in. Some of the old 

track, you cannot activate the abandoned tracks. So I don’t know 

what you are going to do by the year 2050 to move all of these people, the 100 million people and the freight and everything else, because it seems the communities are part of the problem. And obviously, in our area, as being so congested, the investment to save 

3 or 4 minutes is very hard because I can see some of the other 

Members saying, why should they spend $300 million to save 4 

minutes? And I understand it. 

And my friend from Maine he wants to take away the bridge in 

New Jersey, which has 260,000 people work because of those ports 

that come through there because of the ships. 

So I don’t know how you are going to do this. And we are not 

making an investment. The President makes—he creates the transportation trust fund, and it seems like it is a one-shot deal. There 

is no real long-term vision for this. So, you know, I don’t want to 

be in your shoes in 2050. 

Mr. PORCARI. A couple of things, if I may. One, time savings is 

important. And you generally shave off a couple of minutes at a 

time. It is not a quantum leap. 

But what you get with that is even more important, which is 

first of all reliability and on-time performance, which in turn drives 

more ridership. And you also tend to get new capacity as part of 

that, too. So while the attention may be on the time savings, it is 

at reliability in terms of on-time performance and the capacity that 

is the big payoff. 

I would also point out in your Northeast Corridor example, the 

Northeast Corridor commission, which is the State DOTs and the 

other stakeholders, there is a long-term master plan process going 

on right now looking at that very issue of greatly increased capacity, how you get down to the specifics of providing that capacity, 

and it is a very collaborative effort of all the participating States. 

So while we have one eye on today and on-time performance and 

maintaining the system that we have, we are also paying attention 

to the future knowing that these major investment decisions sometimes take decades to do, and we need to tee those up and make 

sure they are appropriately scrutinized. 

Mr. SIRES. Do you look at abandoned lines in terms of maybe it 

is easier to go activate the abandoned lines of trains, tracks? 

Mr. PORCARI. Using the Northeast Corridor as an example, there 

are no abandoned lines that I am aware of that would have adeVerDate Aug 31 2005 14:13 Jan 02, 2014 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\RR\7-9-13~1\81825.TXT JEAN
21 

quate capacity, that don’t have at-grade crossings, that wouldn’t be 

going through established residential neighborhoods or some kind 

of fatal flaw. 

There are opportunities for both passenger and freight rail and 

abandoned crossings. Many of them that have been converted to 

trails, for example, can support both rails-to-trails and rail service. 

But for the kind of capacity you are talking about for mainline 

service, I am not aware of any right-of-way that is magically out 

there. 

Mr. SIRES. OK. Thank you very much. 

Mr. DENHAM. Mr. Duncan. 

Mr. DUNCAN. Thank you, Mr. Chairman. 

And Mr. Secretary, thank you for being here with us and the job 

that you do. Let me just ask you this. There seems to be pretty 

widespread agreement that the RRIF loan process is too cumbersome, too bureaucratic. And I wasn’t here for most of your testimony, but I think I heard you say that you agree that it needs to 

be improved, speed it up, whatever. 

I notice that there are only seven RRIF loans that have been 

made since 2010, and how many applications are pending? Maybe 

you testified to that already. 

Mr. PORCARI. I have not; it is a good question, Mr. Duncan. 

There are eight applications pending, ranging from the high end of 

about $3 billion to about $4.5 million. So kind of running the spectrum of different projects. 

Beyond that, we know that there is interest in additional projects 

as well, ranging from very small ones like a potential port project 

to much larger ones. So while there are these eight under review 

right now, there are other potential ones as well. 

We do agree that this is the one program where we have more 

official capacity than applications and it is a little bit frustrating 

for all of us that we know that we could be out there building more 

infrastructure. 

Mr. DUNCAN. Let me ask you this. I noticed that of those seven 

loans since 2010, they totaled a little over $800 million and that 

two-thirds of it, $563 million I think went to Amtrak. And I am 

told that the current Amtrak subsidy this year is about $1.4 billion 

and that that is a little less than half of the total operation. Is that 

roughly accurate? 

Mr. PORCARI. I would have to go back and check that. 

Mr. DUNCAN. And I also am told that Amtrak does get some subsidies, although much smaller, but some from various State governments. Would you happen to know how much they get from the 

various States? 

Mr. PORCARI. The States for rail service provided in the States 

are paying Amtrak. There are standalone separate deals for those. 

One of the provisions of the PRIIA legislation was actually to rationalize those and have the States pay a proportionate share. 

Under that, some States will be paying more than they are now; 

some States will remain relatively the same. 

But, yes, there are multiple examples where States are paying 

for service, and that service would not be there without the State 

support. 

22 

Mr. DUNCAN. Apparently, there is a private-sector group, the 

Florida East Coast Rail Group, that sees some real opportunities 

or possibilities for the route from Orlando to Miami. And many 

years ago, when Graham Claytor headed Amtrak, he told me that 

they had a study at that point that if they were able to add another 

route, that the next their most preferred route that they thought 

would be the most used would be from Harrisburg, Pennsylvania, 

down through Washington, Baltimore, Roanoke and all down 

through my hometown of Knoxville into Atlanta. 

Have there been any studies or any updates or have you just— 

in recent years as to what lines might show some potential if Amtrak could get some assistance from the various State governments 

and so forth? 

Mr. PORCARI. Yes, one of the things that high-speed rail funding 

over the last few years has funded has actually been corridor studies and corridor environmental work. So extensions of existing corridors, for example Richmond to Charlotte being one example, but 

other corridors as well. Using Atlanta as kind of a hub, there is a 

lot of interest and activity and some level of planning taking place 

on larger connecting corridors in and through Atlanta. 

Mr. DUNCAN. Before my time runs out, you said there is no segment of the transportation world that operates on its own, yet the 

story—the difference between Amtrak and the story of freight rail 

is dramatically different. And freight rail, for instance, they have 

told us that they have spent $25.5 billion just last year alone updating their own—privately updating their own infrastructure. 

What subsidies do you consider that freight rail is receiving at this 

time? 

Mr. PORCARI. First, freight rail has been a great success and 

great example of private investment. And as I mentioned, I think 

that our private freight rail system is the envy of the world. Some 

of the public investments in it, recently through TIGER grants for 

example, have been co-funding the National Gateway Project with 

CSX that cuts through—goes through five or six States. I mentioned Tower 55 as an example in Texas. Colton Crossing in California. Those are just a couple of public investments where national bottlenecks would not have been eliminated without both 

private and public funding. 

Mr. DUNCAN. All right. Thank you very much. 

Mr. DENHAM. Thank you. 

Ms. Esty. 

Ms. ESTY. Thank you, Mr. Chairman. 

Thank you for holding this very important hearing. 

Thank you, Deputy Secretary Porcari. I appreciate your testimony. Before I get to my questions, I want to just flag for subcommittee members something that is happening in Connecticut 

where these issues are tremendously important. And the State of 

Connecticut has launched a Web site called Transform Connecticut, 

and it is accessible to all users. I have gone on it. We are getting 

wonderful suggestions from all sorts of members of the public, 

stakeholders, and it is an easy access portal and something that we 

might want to look at more broadly in our—as we do this planning 

and innovation for improved passenger rail service. 

23 

Last week I had the opportunity to meet with the Connecticut 

Metro-North Commuter Council, which has been very useful in 

doing surveys of users and giving us input which I will certainly 

send along to you. 

We all know that there is crying need and demand for this service. The question is, how are we going to pay for it? And I support 

the concept of innovative financing. I am a fan of and cosponsor of 

the infrastructure bank, but we need to figure out how to make 

this actually happen. 

In Connecticut, as we know, we had quite recently a derailment 

that shut down the entire system. And I would like to point out 

that over the last 10 years, Connecticut has invested $3.2 billion 

in this line, because Connecticut owns this portion of the line, not 

Amtrak. But our Transportation Commissioner Jim Redeker, who 

is also the current chair of the Northeast Corridor Commission, estimates an additional $4.5 billion is needed to improve just our 

State’s portion of that line to bring it to a good state of repair. 

I want to thank you, Commissioner—Deputy Secretary, for an- nouncing last fall the $120 million high-speed rail portion. But, unfortunately, our chairman was stranded on that portion and saw 

how much that is in need of still being upgraded as he was stranded about a month ago on that line. I have to tell you, however, that 

our are State folks from DOT say they still do not have approval 

to spend those funds. It is my understanding that they are trying 

to coordinate and take three different grants and combine them 

into a single project. When can we anticipate receiving approval? 

Mr. PORCARI. First, Governor Malloy and Commissioner Redeker 

have been great partners in this, and we appreciate the vision that 

Connecticut has as part of a larger system. 

We cannot simply take three grants and combine them. If you 

are familiar with grant procedures and the audit requirements, 

while projects can dovetail with each other, we need, from an accounting point of view, to separate the grants and keep them separate. We have been very scrupulous and careful in doing that. 

We do think—Connecticut is probably a good example of a State 

where a higher level of interaction and perhaps some training and 

maybe even shared services or loaned personnel would probably 

benefit that process. 

Ms. ESTY. Well, that leads to my next question. Our State folks 

are pointing out that the Northeast is the only region with FRA 

does not have a PMO overseeing these projects, and our State staff 

is worried about their capacity to do this oversight. And I think you 

just flagged that as part of the issue. What sort of support might 

be available for States like mine for project management and oversight to help us in this process? 

Mr. PORCARI. To be honest about it, the project management 

oversight capacity of the Federal Railroad Administration is 

strained right now. It is a program that we take very seriously. We 

have tried to work closely with Connecticut on the implementation 

of these grants. But given the financial pressures, including sequester, on our FRA staff, we need to husband those resources 

pretty carefully. 

I don’t want to make a promise that we may not be able to fulfill. 

What I will commit to is, I will talk to Commissioner Redeker and 

24 

explore ways that we can make this work faster. I know the will 

is there is both sides, and these are not will always easy projects. 

But we need to get them done and on time and on budget. 

Ms. ESTY. I appreciate that. Given the large amount of upfront 

capital that is needed for these rail and infrastructure projects, can 

you project for us what a percentage of the financing that we 

should expect from the private sector if we are going to have a successful innovative project, what would that look like in your mind? 

Mr. PORCARI. I can’t give you a set percentage. It certainly varies 

from project to project. For example, projects that have good station 

development and redevelopment possibilities would typically have 

a much higher percentage of private investment. If there are other 

uses of the right-of-way along the route, that too would tend to 

drive more private investment. 

So it is so project specific that I really can’t give you a percentage. But I will tell you we are highly incentivized to maximize the 

private interest and investment in projects. First of all, it is a good 

sign that it is a healthy project. But beyond that, it helps us deliver 

a better project that serves the public better. 

Ms. ESTY. Thank you very much. 

Mr. DENHAM. Thank you, Mr. Porcari. 

That wraps up our first panel. 

Mr. PORCARI. Thank you, Mr. Chairman. 

Mr. DENHAM. Mr. Mica I think has one final question. 

Mr. MICA. Good try. Good try. So many questions; so little time. 

Welcome back, Mr. Secretary. And I enjoyed our working relationship. We have had some great successes. I would have actually 

spoken for you to be Secretary, but I thought it would have hurt 

your chances. I guess it didn’t work out either way. Maybe I should 

have spoken against you. I will have to reconsider. But we look forward to having a new Secretary and new leadership. 

First of all, the productivity of the RRIF process, I heard Ms. 

Napolitano talk about 33 months. You said you had eight—let’s 

see, you have eight pending applications? 

Mr. PORCARI. Yes. 

Mr. MICA. How many people work there at RRIF? Five, I am 

told? Five, six? Half a dozen? 

Mr. PORCARI. Approximately that. 

Mr. MICA. Three quarters of a million dollars a year expenditure 

in processing? In 2012, they did two loans; in 2011, three loans; 

2010, two loans; 2009, three loans. It doesn’t sound like a very productive shop. And eight pending? 

Mr. PORCARI. In addition to the pending loans, I would point out 

that an important part of the workload is the previously approved 

RRIF loans, where in some cases, we have had to rework and refinance. 

Mr. MICA. If this was the private sector, you would be out of a 

job in an hour. You ought to look at the private sector maybe processing some of these. This is unbelievable. When she told me 33 

months on that loan, it is just not very productive. And then Mr. 

Duncan pointed out—what did you say at the beginning? You had 

29 loans, 29 RRIF loans you spoke to in your opening statement? 

Mr. PORCARI. Yes, I believe. 

25 

Mr. MICA. In what period? Well, I have got back a decade about 

30. So it doesn’t sound, again, like a very productive shop. It took 

60 loans just to get to the amount of the one Amtrak loan, the $562 

million. And I am not sure that I would have loaned them any 

money. Was that for equipment? 

Mr. PORCARI. It was for equipment—— 

Mr. MICA. Did you check their past history of buying equipment? 

Their Acela trains? That they misdesigned them? And then they 

had their tilt trains to go faster. 

Mr. PORCARI. I am very familiar with that. 

Mr. MICA. They improperly designed them. I am sure you corrected that. Because if they went too fast, they would hit the other 

trains, so they put metal wedges in. So we now have trains that 

now work. Is this, I hope, a better purchase? 

Mr. PORCARI. Mr. Mica, I am sure you would be pleased to know 

that the operating profit on the Northeast Corridor made for actually a very solid RRIF loan for the locomotives. 

Mr. MICA. Just for the record, too, I want to put in the list of 

FRA Administrators that doesn’t quite equal the number of RRIF 

loans, but they did for about two RRIF loans per FRA Administrator. A question was asked of a witness of a previous panel for 

that. 

So, Mr. Chairman, I would like that made part of the record. And 

also the record of not processing loans and the inactivity of the 

RRIF process. 

Mr. NADLER. Would the gentleman yield for a question? 

Mr. MICA. Not right now, but if he gives me time at the end, I 

will go into that. 

The other thing, too, we are talking about financing. When is the 

administration—when are we prepared to open up the Amtrak monopoly on passenger rail service and let the private sector compete 

in some of these routes? Are you ready? 

Mr. PORCARI. We have not, to my knowledge, seen any specific 

proposals for that corridor. 

Mr. MICA. Well, first of all, folks came in at the high-speed rail 

time. They wanted to do the Northeast Corridor. They were summarily rejected with their proposals, and I would be glad to give 

you folks—the Northeast Corridor, this Member here from Connecticut—it is an embarrassment; 68 miles an hour from New York 

to Boston. The chairman who just left—he didn’t want any mud 

splattered on him today—he just told me he was stuck an hour and 

a half going up to Connecticut to visit John Larson. Here is one I 

got: 261 passengers Sunday were delayed 14 hours. This is 14 

hours trying to get from New York to Richmond. It took them almost a half a day to get there. 

I mean, this just the other day. I am telling you, we have a Soviet style train operation. The private sector will invest if they are 

given some incentive. That incentive is a return on their investment, and you are not prepared to do that. The long-distance services are a joke. Here is the long-distance services. These are the 

money losers. This is what Amtrak is involved in; right? 

Mr. PORCARI. Are there specific cross-country routes that you 

would propose to eliminate? 

Mr. MICA. Pardon? 

26 

Mr. PORCARI. Are there specific cross-country routes that you 

would propose to eliminate? 

Mr. MICA. First of all to get the private sector to compete for 

them, and I would look at redoing the schedules. They don’t have 

to fly like planes every day. Airlines adjust their schedule. Amtrak 

can’t. They bring in a conclave of chefs to cook up a more expensive 

menu to lose more money on their food service, which is mostly on 

the long-distance services. 

The top three all increased their losses in the last year, including 

in addition to that, autotrain to Florida, which serves my district. 

But they are all big money losers. When the private sector comes 

in, they can make money. If you work with them and give their 

some incentives and they have an opportunity to return. But the 

Soviet style thinking and operation of Amtrak prohibits us from 

moving forward into the 21st century. 

Some of the others went over. Can I get a minute of grace? Just 

one more question. We worked very carefully together, and he did 

a great job—I will give him a compliment—the biggest carrier of 

people in the United States is not airlines and certainly not passenger rails. It is private passenger bus service, intercity, mostly. 

They run about 750 million people a year. 

After much work Secretary Porcari did, the private carriers located at Union Station over there on the second floor all co-located. 

So the Greyhound riders and other people didn’t have to meet in 

Chinatown or some place else. They could have an intermodal connection to the facilities. They were not second-class citizens. We 

need to get people to use public transport if it connects. 

I heard from folks from Birmingham that they are building an 

intermodal facility there. I would like you to check and see it if 

there are Federal funds going into that, because they are excluding 

the private carriers. The private carriers are our biggest carrier. 

They make money. They pay taxes, and they move more people 

than any other mode. They are good citizens, and they shouldn’t be 

denied access to a Federal facility, whether it is in Orlando—we 

have an issue there—Birmingham or any other city; right? Right? 

My question was: Right? 

Mr. PORCARI. I missed the question—the lead up to the question. 

I will being happy to answer any specific question. 

Mr. MICA. I thought it was fairly simple. You have an intermodal 

facility. Private carriers should be able to access—— 

Mr. PORCARI. I will be happy to look at the Birmingham facility. 

I am not familiar—— 

Mr. MICA. Shouldn’t that be a Federal policy? 

Mr. PORCARI. I don’t know. I would be happy—— 

Mr. MICA. You don’t know? They are paying taxes. They are 

making money. They are providing the biggest connection of transportation for passengers in the United States, and you don’t know 

whether we should let them in a Federal facility? 

Mr. PORCARI. What I am saying is I am not familiar with the 

Birmingham facility, and I would like to actually know the circumstances before I answer. I just don’t know. 

Mr. DENHAM. We look forward to getting that information. 

Mr. Nadler. 

27 

Mr. NADLER. Thank you. I just had a follow up to some of the 

comments by our distinguished former chairman. Number one, on 

the private sector taking over the long-range routes, isn’t it a fact 

that Amtrak has those routes because the private railroads all gave 

them up because they were losing money on them hand over fist? 

Mr. PORCARI. Yes. 

Mr. NADLER. And I am not aware of any company that thinks 

they could make money running those long-range routes. Maybe on 

the Northeast Corridor, but certainly on some of these long-range 

routes there is much smaller ridership. 

The second thing I wanted to ask you is, we talked about on the 

Northeast Corridor the average speed between Boston and New 

York is 68 miles an hour, which is a lot less than between New 

York and Washington. But isn’t one the reasons for that that in a 

large portion of the route from New York to Boston, the track is 

owned by Metro-North, that is a commuter railroad, and the Amtrak train has to chug along behind a slower commuter rail because of the ownership priorities? 

Mr. PORCARI. That is true. 

Mr. NADLER. So, aside from building a new line or maybe expropriating it from the commuter railroad, is there anything we can 

do about it that? 

Mr. PORCARI. The basic answer is no. What we can do is make 

infrastructure instruments to maximize the capacity that is out 

there. 

Mr. NADLER. Adding an additional line in effect. Thank you. 

Mr. MICA. Will the gentleman yield? 

Mr. NADLER. Sure. 

Mr. MICA. Well, again, I think when we took over passenger rail 

service in 1971, there was a need for it. We have also taken over 

freight, and they have done fairly well with the private sector. I 

think some of these routes do need to be opened, if the administration was willing or Congress was willing, to give some private opportunity for private-sector competition. And you have to look at 

the schedule of service. You know, you don’t want them just to 

cherry pick. We would have to look at the subsidization, look at 

what it is costing us now. I think that would be a fair route. I 

would be willing to work with the gentleman on something like 

that. 

But the Northeast Corridor, and I never did get to this, has incredible potential. In a report that was handed out to the committee—did you see this, Jerry? They give back about $94 million. 

Well, that is overall in revenue from real estate. I am told—I had 

some private-sector folks look at this and the value of your real estate, you should be getting about a billion dollars a year return, a 

billion dollars. That is what they are leaving on the table. That 

could finance a lot of improvements in the Northeast Corridor. 

That is one of the most incredibly valuable assets in the United 

States of America. I would be willing to work with the gentleman—— 

Mr. NADLER. That we ought to look at. And I would be interested 

to know where that revenue would come from. 

Mr. MICA. From the utilization of the right-of-way. They get $24 

million from the utilization of the right-of-way. That is peanuts. If 

28 

I had a trillion-dollar asset and I was getting $24 million return, 

I should be put in the nuthouse. 

Mr. NADLER. Mr. Mica, we should certainly look at that in the 

Northeast Corridor and anywhere else where it is doable. But I 

was just expressing my doubt that on most of these long-range 

routes, you have a potential or that any private company could 

make a go of it. The Northeast Corridor is quite different. And 

there may be some other corridors. 

Mr. MICA. The Northeast Corridor, too—if the gentleman would 

yield—you could take an operation like the route in England that 

Branson picked up. It went from $300 million a year Federal UK 

subsidy to a $100 million profit plus paying dividends to investors. 

The ridership went from 14 million to 28 million on that one northsouth route. That is almost equal to the entire ridership of Amtrak 

last year, which it is about 31 million. Are you aware of that? 

Mr. NADLER. Yes. 

Mr. MICA. Thank you. 

Mr. DENHAM. Seeing all debate has ceased, Mr. Porcari, I just 

wanted to clarify one final point before we go to the second panel. 

It is true that Amtrak has above the rail on the Northeast Corridor 

profitability of around above $300 million. 

Mr. PORCARI. Right. 

Mr. DENHAM. Isn’t it also true that over 95 percent of the Northeast Corridor or Amtrak-owned infrastructure 95 percent is on the 

Northeast Corridor. 

Mr. PORCARI. That is about right. 

Mr. DENHAM. It is also possible, we could use that above the rail 

profit as a dedicated funding source for the Northeast Corridor? 

Mr. PORCARI. Yes, Mr. Chairman, it would cover a portion of the 

needs. 

Mr. DENHAM. And as we look across the Nation, other opportunities, we would be looking at intercity rail, we would be looking at 

passenger rail, and in some areas, even high-speed rail, where you 

have significant profits that would guarantee a return for the investor to be able to pay back those loans. 

Mr. PORCARI. Over the long term, there is a likelihood that other 

corridors would have the kind of ridership that would generate that 

operating profit. You would be building up that ridership over a 

substantial period of time. 

Mr. DENHAM. In an area where you have—I will use my area, for 

example—proven ridership, where we have above-the-rail profitability on the ACE train in the Altamont corridor, if they were 

going to expand and have dedicated track, they could actually 

apply for a RRIF loan utilizing that above-the-rail profit as security 

for—— 

Mr. PORCARI. That is right. And if the independent financial advisor believed it made business sense, that would be a good RRIF 

loan. 

Mr. DENHAM. Thank you. Well, we appreciate your testimony. 

Mr. MICA. Mr. Chairman, just one thing on that. That is above 

the rail, but the record should reflect also I believe that most of the 

$1.4 billion does go to the Northeast Corridor. The $562 million 

RRIF loan also went to the Northeast Corridor equipment. So there 

29 

has to be some calculation of the math and what is in the rail in 

addition to what is above the rail. 

Mr. DENHAM. Thank you. We thank you for your testimony here 

today. 

Mr. PORCARI. Thank you, Mr. Chairman. 

Mr. DENHAM. At this time, we will go to our second panel. I 

would like to welcome our second panel, Ms. Beverley SwaimStaley, president and chief executive officer of the Union Station 

Redevelopment Corporation; Mr. Frank Chechile, CEO, Parallel Infrastructure; and Mr. John Robert Smith, former mayor of Meridian, Mississippi, and president and CEO of Reconnecting America. 

I ask unanimous consent that our witnesses’ full statements be 

included in the record. 

Without objection, so ordered. 

Since your written testimony has been made a part of the record, 

the subcommittee would request that you limit your oral testimony 

to 5 minutes. 

Ms. Swaim-Staley, you may proceed. 

TESTIMONY OF BEVERLEY K. SWAIM-STALEY, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, UNION STATION REDEVELOPMENT CORPORATION; FRANK CHECHILE, CHIEF EXECUTIVE 

OFFICER, PARALLEL INFRASTRUCTURE; AND JOHN ROBERT 

SMITH, COCHAIR, TRANSPORTATION FOR AMERICA; PRESIDENT AND CHIEF EXECUTIVE OFFICER, RECONNECTING 

AMERICA; AND FORMER MAYOR OF MERIDIAN, MISSISSIPPI 

Ms. SWAIM-STALEY. Mr. Chairman, I appreciate the opportunity 

to be here this morning. My name is Beverley Swaim-Staley, and 

I am the new president and CEO of Union Station Redevelopment 

Corporation, or USRC. Union Station, of course, was its own public-private partnership when it was redeveloped back in the 1980s. 

Congress passed a law and requested that the Secretary of Transportation in 1983 establish USRC to manage Washington’s Union 

Station through the redevelopment in such a manner that would 

protect the historic character of the building, maintain it as an 

intermodal transportation facility, and permit it to operate as a 

commercial entity without subsidy from the Federal Government. 

So I have had the privilege of being the president and CEO for 

just 10 months, but I have been asked to be here talk about my 

experience in Maryland where I served as the CFO and deputy secretary and secretary of transportation for the past 3 years. I had 

the pleasure there of doing some innovative financing projects, and 

I will share a few of my observations with you here today. 

One of our projects you may be familiar with. It is a highway 

built very close to here, the Intercounty Connector in Montgomery 

County. It was one of the most expensive and largest highway 

projects built in the last 5 years, and it was an innovative financing project. We used seven different sources of funding for that 

project. Three financial tools that were available to us from the 

Federal Government and four different State tools that were available to us at the time. That project has been completed and is underway. 

We had two other very large projects that we needed to fund. 

One was at the Port of Baltimore. The port, obviously, is a major 

30 

economic engine in the State of Maryland. We needed to rehabilitate our container terminal in order to be able to handle the larger 

ships that would be available as a result of the Panama Canal expansion. We did not have the money to do that. So we entered into 

a public-private partnership 3 years ago with Highstar Capital and 

Ports America. We leased the port for 50 years. They not only came 

in and within about 21⁄2 years were able to rehabilitate the port, 

bring in the additional cranes. They are now open and operating 

2 years ahead of the schedule. 

A second innovative financing project that I had the privilege of 

executing was with regard to travel facilities that were on I–95 in 

the northern part of Maryland. Those facilities also were a major 

economic generator to the State of Maryland, but they were over 

40 to 50 years old and in bad need of repair. What we were able 

to do was lease those to a private entity for 35 years, and they 

came in and were willing to invest and are currently investing over 

$200 million to rehabilitate those facilities. So, with those two 

projects together, we were able to bring in almost $2.5 billion of 

private investment, long-term investment into the State of Maryland. 

So those were some of the examples that I am familiar with in 

terms of what we can do through innovative financing. The observations that I learned as a result of that that I would like to share 

with the committee today. First, every project is different. There is 

no one-size-fits-all approach. Each project must be custom fit based 

upon the financing components of the projects and the benefits to 

the users. 

Second, all the financing, public or private, must have a creditworthy repayment stream. There is no free money. The money 

must be paid back. The private investor, as it has been mentioned 

several times here today, also expects a return on their investment. 

Third, funding is the final solution. Before the financial equation 

can be solved, you have really have to know what the parameters 

are of the project. The first two questions to be answered are: Is 

the project viable from an engineering and constructability standpoint, and is there someone that wants the project badly enough 

to pay for the benefits? 

Fourth, define the elements of the project for which there is a direct connection between benefits and cost. For example, in private, 

in many transit-oriented elements, you start with the parking garage as the first vehicle for financing. 

And fifth, can the revenues and benefits from single assets such 

as a parking garage be leveraged to finance all or other portions 

of the project? 

I guess I will have the opportunity to learn from these experiences hopefully in my new position as the president and CEO of 

Union Station. As I am sure you are aware, we are about to embark on another redevelopment of the station. That station has 

functioned very successfully through the past 30 years, but we are 

currently at capacity. We service not only Amtrak but commuter 

rail and also the largest subway in the system. 

So we are undertaking right now the latest in the master plan 

redevelopment. And as I just said, the first thing we need to do before looking at financing there will be looking at exactly what the 

31 

project is. But we will be looking at all the tools in the toolbox, 

many of which have been mentioned here today. Not only the Federal and State funding. We have many partners, but obviously 

value capture, tax increment financing, and whatever vehicles are 

available to us at that time. 

I thank you for the opportunity to testify, and I invite you to visit 

Union Station and hear more about our plans. 

Mr. DENHAM. Thank you. 

Mr. Chechile. 

Mr. CHECHILE. Good afternoon and thank you for this opportunity. 

Chairman Denham, Mr. Nadler, and members of the subcommittee, I appreciate the opportunity to participate in this hearing, and I am pleased to share with you a private industry perspective on innovative financing approaches that can benefit the passenger rail industry. 

My name is Frank Chechile, I am the chief executive officer of 

Parallel Infrastructure, which is an asset development and rightof-way management firm based in Jacksonville, Florida, and I am 

pleased to note the home city of our distinguished ranking member, 

Congresswoman Brown, who I understand can’t be here this afternoon. 

Parallel Infrastructure is a wholly owned subsidiary of Florida 

East Coast Industries and together with our sister company, Florida East Coast Railway, our heritage was established more than 

100 years ago by Mr. Henry Flagler. 

Although operated independently from one another, our companies are all focused on creating value from transportation opportunities, including associated real estate and right-of-ways. Together, 

we want to maximize the value of our own 351-mile rail corridor, 

which traverses through areas whose total population is just under 

9 million people and stretches from Jacksonville to Miami and connects to three major seaports. 

I believe that the lessons we have learned can be employed to 

provide a new source of financing for intercity passenger rail systems in our country. Parallel Infrastructure was established just 2 

years ago and has quickly become a national player. By entering 

into innovative revenue-share agreements with right-of-way property owners, we help to monetize their underutilized real estate 

without interrupting their core operations. The result is increased 

revenue for a right-of-way property owner with little to no risk. In 

collaboration with our clients, and using our own capital, we take 

the lead in proactively leasing right-of-way land, deploying communications facilities, creating energy distribution systems, such as 

pipelines, and building advertising, parking, and storage structures. 

In our short history, we have established asset development 

agreements with 28 freight railroads managing more than 5,000 

leasing contracts over roughly 1,800 miles of railway. 

Our business model is straightforward. We provide both the capital and resources to develop revenue-generating assets on a rightof-way property and share returns with the property owner. This 

frees the property owner to use their capital and the new revenue 

streams that we generate to improve their infrastructure. With 

32 

more than 1 million miles of transportation corridors in the United 

States, the opportunity to earn revenues from this right-of-way real 

estate is significant. For example, assuming earnings of just $1,000 

per mile from the activities I have described, a million miles of corridor would generate a billion dollars. While that number may 

sound ambitious, I will tell you that our own 351-mile corridor is 

generating about $50,000 per mile. 

Proactive and aggressive right-of-way management, whether in 

the public or private sector, maximizes the value earned from real 

estate assets, provides additional recurring revenues for the owner, 

and allows an owner to access new capital by collateralizing predictable revenue streams. 

For example, if a transit agency generates $10 million of annual 

revenue from their right-of-way, it can easily use that as collateral 

to secure $100 million in capital through financing transactions. So 

by unlocking the value of underutilized real estate and using a 

third party’s capital, an agency is in position to leverage annuities 

to take on new projects. 

Another benefit of these types of arrangements is for landowners 

to obtain access to these new assets to fill their own operating 

needs. For instance, Parallel Infrastructure recently leased space in 

our corridor to a leading telecommunications company who is building an advanced network for its own customers. Through our arrangement, our All Aboard Florida and Florida East Coast Railway 

sister companies can also access these assets for their own needs, 

such as deployment of positive train control and offering uninterrupted WiFi service to the passengers of our All Aboard Florida 

intercity rail service. 

These examples—using existing assets to generate new sources 

of revenue—are one innovative way to finance passenger rail in the 

United States. When you look at intercity passenger rail systems, 

even in the well-utilized Northeast Corridor, Amtrak’s passenger 

revenue and congressional subsidies combined do not adequately 

meet operating and capital expenditure requirements within the 

corridor. Amtrak’s own estimates state that it will take up to 15 

years to bring the Northeast Corridor to a state of good repair even 

if they received all their requested annual funding from Congress. 

I believe that innovative private-sector partnerships can close the 

funding gap and help shorten this timeframe. The 2008 PRIIA Act 

sought to enhance the relationship between the States and Amtrak. 

PRIIA’s successor should seek to strengthen those provisions and 

provide incentives that take advantage of private-sector expertise, 

where appropriate, particularly if they generate dependable revenue streams. 

By aggressively monetizing ancillary assets through proactive 

right-of-way management and asset development, intercity passenger systems will be financially stronger, more viable, and better 

positioned to leverage steady revenue streams, revive dormant assets, and ultimately thrive in ways that have not been accomplished in the last 50 years. 

I want to thank you for the opportunity to speak with you today, 

and I will be delighted to answer any questions or address any 

comments you may have. 

Mr. DENHAM. Thank you. 

33 

Mr. Smith. 

Mr. SMITH. Chairman Denham, Congressman Nadler and especially the two young folks that have joined us here at the podium, 

I served as the Republican mayor of my home town of Meridian, 

Mississippi, for 16 years and served as chairman of the board of 

Amtrak. I want to thank you for giving me the opportunity to share 

our thoughts about a subject that has occupied a good bit of my 

adult life, and that is how we take transportation systems—passenger rail in particular—and leverage the economic impact to our 

hometowns, whether they are large metropolitan areas or small 

urban places in rural America. 

I think that conversations should be framed by three guiding 

principles. The first of those is that a national passenger rail system provides significant economic value. When we talk about a National Highway System or a National Aviation System, we speak 

in terms of the economic development impact that comes to the cities and regions that they serve. We should use the same lens when 

we look at a national passenger rail system. 

More and more, people are using passenger rail to be connected 

to jobs, to health care, to education, and to tourism, which is the 

second or third largest industry in most States. Passenger rail connects senior citizens and college students alike. I have a letter from 

the president of Grinnell College in Iowa. He states that lacking 

the passenger rail connection to Chicago greatly hampers the 

growth and recruitment of that college and indeed the entire region. 

I have a letter from the mayors from New Orleans to Tallahassee, Florida, seeking restoration of the passenger rail service they 

lost due to Katrina. They believe that the right passenger rail service along that corridor promises great economic impact to that 

growing, developing, thriving linear region along the southern gulf. 

They recognize that the value is being part of a national system. 

That is why you see exciting projects like Union Station here in 

DC. It is not just Northeast Corridor trains that stop there. It is 

long-distance trains. It is corridor and State-supported trains as 

well. And when you cut service, you undermine the value of the entire system. When you expand service, you grow the value of the 

entire system. That value is sustained by investments in service 

and infrastructure to achieve a state of good repair. When infrastructure of passenger rail is not in a state of good repair, privatesector dollars remain on the sidelines. 

That brings me to my second point. If you want a national passenger rail system in a state of good repair, you must have dedicated stable Federal funding. Rail is part of an intermodal network 

of roads, bridges, transit, aviation and rail. None of those modes 

cover their costs, and at full allocation, they all lose money. But all 

of those modes receive dedicated stable Federal support except for 

passenger rail. And that makes it nigh to impossible for the operator, in this case Amtrak, to make the long-term investment decisions it needs when it doesn’t know it will be funded from one year 

to the next at any level. That level of future funding uncertainty 

means that the private sector will not be there at the table. So the 

dedicated stable Federal funding of passenger rail is a first step towards the innovative funding that you seek. 

34 

The third point is that investment in passenger rail stations and 

the property around them is ripe for innovative financing, and 

brings value to the entire rail system. I see it all over the country. 

Mayors who are Republican and Democrat are working with the 

private sector to invest in those rail stations and the surrounding 

property. 

We did that in my hometown of Meridian, Mississippi, 20 years 

ago, when we built the South’s first multimodal transportation center. The city invested $1 million, which leveraged an additional $5 

million in Federal, State and private-sector investment. That 

project has leveraged today $135 million of additional public/private-sector investment within 3 blocks of that facility. 

And it is not just happening in Meridian, Mississippi. It is happening in Normal, Illinois. It is happening in Lincoln, Nebraska, 

and in San Bernardino, California, and in Memphis, Tennessee. 

I agree with members of this committee that the cumbersome 

RRIF loan program—from which the Florida East Coast Railway 

has submitted a request for a loan—must be retooled. If only 5 percent of the $35 billion of RRIF loan funds available has been 

accessed, it tells me it is entirely too complicated for the private 

sector to use. 

TIFIA can be altered as well to bring in more private-sector dollars. So innovative financing is an important piece, but it supplements, it does not supplant dedicated, stable Federal funding. That 

is why I will provide a letter signed by mayors from all over the 

United States to this committee seeking a commitment to dedicated 

Federal funding to support a national passenger rail system. They 

understand the economic development that commitment of this 

committee and Congress would bring. And with your commitment, 

the private-sector dollars will follow your lead. Thank you. 

Mr. DENHAM. Thank you. We look forward to seeing that letter. First, Mr. Chechile, in 2012, Amtrak generated about $30 million 

in revenue from right-of-way-related activities. In your view, how 

does that compare to your experience in right-of-way management 

around the entire country? And additionally, what additional revenue potential do you see, if any, for Amtrak? 

Mr. CHECHILE. That is a great question. Thank you. I think the 

best data point I could offer is that in our own corridor in Florida, 

we are generating approximately $50,000 per mile, which is very 

likely the best metric to use for evaluating how effective an organization is in its returns from real estate. That corridor goes through 

a population that totals roughly 9 million people. If we took that 

$50,000 number and applied it against Amtrak’s more than 500 

miles of corridor and made some adjustment for population—the 

population through which the Amtrak corridor traverses is four to 

five times the size of the population that our corridor traverses in 

Florida—you arrive at a value, just using a two to three times multiple instead of a four to five times multiple for the population, of 

roughly $50 million to $100 million as opposed to the $20 million 

or $30 million they are currently generating. 

Mr. DENHAM. And what type of right-of-way-related activities 

would you foresee? 

Mr. CHECHILE. Well, the activities that typically take place in a 

right-of-way are somewhat standard. And in fact, they oftentimes 

35 

are already occurring. And indeed, the fact that Amtrak generates 

the revenues that it does is certainly admirable and a demonstration of the fact that the opportunities are already there. The opportunities are varied. And sometimes they are just using the real estate and leasing that space to adjacent landowners. But where the 

value really exists, and where the benefit of the private sector I 

think is greatest, is if there is the actual creation of assets, which 

in turn generate even greater returns. 

So, for instance, the installation of telecommunications facilities, 

be they fiber optic conduits or cellular towers, or be they storage 

structures, car parking facilities, things that oftentimes are already 

present along the corridor but are not proactively pursued. Crossings in the corridor. Again, very likely do exist in the Amtrak corridor, are not likely proactively pursued. Pipelines are another popular infrastructure asset that you find deployed in a right-of-way 

corridor. And these are examples that we have in our own corridor 

in Florida. These are examples of opportunities we are working 

with other right-of-way clients around the country, and I think examples that all railroads already have in place. 

And again, the distinction really is about effectiveness and 

whether the organization itself sees the real estate as that asset 

and proactively works to seek a return from it or instead is just 

reactive to any inquiry they receive and defers to—defers its use 

to the rail operations exclusively. 

Mr. DENHAM. Thank you. 

And Ms. Swaim-Staley, you know, these rail stations often become the focal point of a community. Great opportunities for private real estate development. How can Union Station and other 

stations around the country utilize private investment in expanding, redeveloping? 

Ms. SWAIM-STALEY. Well, as I said, with regard to Union Station, 

we have not yet gotten to the stage, but certainly the first thing 

that you look at are the elements within the station development. 

So, for example, parking garages, whether it is at airports or any 

other facilities. And many transit-oriented development around the 

country, it is the first thing you look at because it is a great opportunity to not only pay for the parking garage, but to flex those dollars to use for greater, larger portions of the development. So you 

look at each and every activity that you have within a station. So, 

as I mentioned, at Union Station in particular, we have, as has already been referenced, we are the intermodal bus facility. We are 

the largest subway station. We also have the commuter rail. We 

have actually more commuter rail passengers than we have Amtrak passengers coming into the station. We have partnerships 

with Maryland, Virginia, and the District. We have two private developers that are involved, one which purchased the air rights and 

a second one running the current station. So we will be working 

with all of our partners, both public and private, to determine what 

both financing tools are out there that are available, what opportunities, as I said, we have to leverage from the additional economic 

benefit that we are going to generate. I am sure we are going to 

be looking at value capture, tax increment financing with our partners, really the broad spectrum of the tools. And depending upon 

what is really available at the time, whether TIFIA, you know, is 

36 

still out there, if RRIF is still out there, we would probably be looking into whether those worked for our purposes or not as well. 

So it is really about figuring out what elements you have within 

the project, what opportunities you can leverage, what elements 

would the private sector be interested in investing? Typically, in 

parking garages, things where there is going to be an immediate 

return, they will be very interested. In other places, you may have 

to rely more on public financing because you are not generating a 

benefit that is as attractive to the private sector. 

Mr. DENHAM. Thank you. And specifically for Union Station, Am- trak is looking at $8 billion. Do you have specific financing that you 

are looking at for Union Station? 

Ms. SWAIM-STALEY. Well, Amtrak announced their plan. That 

was for their portion of the plan. But as I said, the Union Station 

redevelopment would also then include development around the 

station; the air rights developer is also looking at financing. And 

at this point, we are trying to take the vision that was articulated 

that you are familiar with and really determine exactly what a revitalized Union Station would look like, what the components 

would be, where they would be within the air rights development 

and the other new development and the Amtrak redevelopment 

that is taking place. So we are not yet looking at the financing 

piece. 

Mr. DENHAM. Thank you. 

Mr. Nadler. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Chechile, in your testimony, you mentioned you were selected by Allegheny County to build facilities on county property, 

which you will lease and then share revenue earned from the facilities with the county. This will create a long-term revenue stream 

for the county and for your company. Is this relationship typical 

when you work with the public sector to leverage railroad right-ofway? 

Mr. CHECHILE. It is. In fact, some of the arrangements that we 

have with railroads are actually with public authority right-of-way 

owners. So that arrangement, although with Allegheny County, it 

relates specifically to real estate parcels; there are similar arrangements that we have with authorities. 

Mr. NADLER. OK. Let me ask you the following question. So a 

railroad owns right-of-way. Let’s assume that it decides that a good 

use of that right-of-way for ancillary revenue would be a telecommunications line, fiber optic. Why would it contract with a company like yours? Why would it not go directly to Verizon or AT&T 

or Sprint or whoever and have them make a deal with them? In 

other words, how does a company like yours fit into it? 

Mr. CHECHILE. Understood. A very good question. And in fact 

very likely much of the revenue, if not all of the revenue—— 

Mr. NADLER. I can’t hear you, sir. 

Mr. CHECHILE. I would say that in fact all—much, if not all of 

the revenue Amtrak derives today are very likely from the arrangement that your example cites, where it is between Amtrak and potentially an infrastructure provider. I think where our arrangement 

is different is that firms like that are typically looking for a way 

of deploying their assets in a right-of-way that allow them to serve 

37 

their customers. And oftentimes they find that right-of-way owners 

are difficult to do business with. Our heritage with respect to working with railroads means that we have an understanding of how to, 

A, make those connections, and then B, willing to invest our own 

capital. 

Mr. NADLER. So you would be hired initially by AT&T and not 

by the railroad? 

Mr. CHECHILE. If we are the ones building an asset, then we in 

turn would be the one leasing the asset. 

Mr. NADLER. No, no, no. But I am saying it wouldn’t be the railroad that would go to you; it would be the guy who wants to use— 

the company who wants to use the right-of-way? 

Mr. CHECHILE. The people—the way the commercial arrangement would work and has worked, for instance, with Allegheny 

County and others, is we sign an agreement to build the assets, the 

communications facilities in particular, and then it is our responsibility to go out and to identify tenants for those facilities. And we 

share the revenue. 

Mr. NADLER. You sign the original agreement with the railroad, 

not with AT&T. 

Mr. CHECHILE. Our agreement is with the railroad to share the 

revenues that we earn. 

Mr. NADLER. OK. Now, you said $50,000 a mile, or maybe $50 million to $100 million. For what length of track did you say? 

Mr. CHECHILE. We are earning $50,000 per mile along our 350- 

mile corridor. Amtrak has approximately 525 miles of corridor. 

Mr. NADLER. OK. So it would be $50 million to a $100 million 

dollars over that. 

Mr. CHECHILE. That itself is $25 million. And then making some 

adjustment for four to five times the population count, which 

should imply—— 

Mr. NADLER. OK. I thought I heard a few minutes ago someone 

estimate that that right-of-way in the Northeast Corridor could be 

worth a billion dollars. 

Mr. MICA. A trillion. 

Mr. NADLER. A trillion dollars. Is that realistic? 

Mr. CHECHILE. I am speaking specifically to the right-of-way. 

And I think the Amtrak system includes many more real estate assets than just the right-of-way. So with respect to—— 

Mr. NADLER. OK. So we are talking about apples and oranges. 

Mr. CHECHILE. I am talking about specifically the dirt the track 

runs along as opposed to maybe the stations and other opportunities. 

Mr. NADLER. OK. Let me ask you a different question. Thank 

you. In your testimony, you state that the time is now for the public sector to take the step towards actively managing rights of way 

by leveraging the private sector’s experience and capital. Is there 

any way that the public sector can leverage railroad right-of-way 

to generate revenue without hiring an intermediary firm? And I 

suppose your answer would be, from what you said before, if it is 

dealing with a very large vendor like AT&T or somebody, but not 

otherwise. 

Mr. CHECHILE. I think there is a difference in terms of effectiveness. So theoretically what can be achieved by a right-of-way owner 

38 

on its own would be the same. In practice, our experience has 

shown that that is not the case. 

Mr. NADLER. OK. Thank you. 

Ms. Swaim-Staley, in order to attract private support for the 

public-private partnerships that you talked about, how important 

is it to have strong political and financial backing for the project 

at the Federal and State level? 

Ms. SWAIM-STALEY. Well, it is obviously very important to have 

support from not only Federal and State, but your local, and in station redevelopment the neighborhoods as well, and the political 

support from all. 

Mr. NADLER. Thank you. 

My last question. Mr. Smith, you mentioned that a national passenger rail system has significant economic value, and that if any 

set of connections is eliminated, that is through reductions in service, the value to the entire network is diminished. That was your 

statement. Can you talk about why long-distance service is important and what it contributes to the economy? And what do you 

think will happen to the service if States are forced to pick up the 

tab for them? And do it in the context, please, of my understanding, or if I am wrong, please, tell me so in your opinion, that 

it is very rare for someone to take a long-distance route from let’s 

say Chicago to L.A. by rail, but that the intermediate steps are 

what is really important, to go from Chicago to this place or from 

this place to that place is why you need those routes. 

Mr. SMITH. You are exactly right, Congressman. 

Mr. DENHAM. Mr. Smith, I will give you 30 seconds. 

Mr. SMITH. If you were to fly from one point to the other, you 

would not have those mid-point connections. When I take the Crescent home from DC to Meridian, there are segments that are joined 

together that make one continuous route. People can be on and off, 

and access it from State to State or city to city. So that is what 

you are talking about, linking those pairs of cities through a corridor that serves a region of the country that wouldn’t be served 

otherwise. 

Mr. NADLER. That is economically important because? 

Mr. SMITH. That is economically important because where that 

train stops in those cities is the opportunity for investment and 

leveraging that station and the property around it. You can see it 

up and down long-distance train routes and other passenger rail 

service all over this country. 

Mr. NADLER. Thank you. My time has expired. 

Mr. DENHAM. Mr. Mica. 

Mr. MICA. Thank you, Mr. Chairman. 

Mr. Smith, are you aware of what the Federal debt is approaching, what figure? 

Mr. SMITH. I couldn’t give you a specific number. 

Mr. MICA. More than $16 trillion, heading towards $17 trillion. 

Would you say that is about right? 

Mr. SMITH. If you say so, sir. 

Mr. MICA. I say so, and that is the fact. And right now, with deficit spending under this administration, we have been borrowing 

about 40 cents on every dollar that we are spending. That is the 

way we are financing things right now. Are you aware of that? 

39 

Mr. SMITH. Yes, sir, we are financing lots of choices with that. 

Mr. MICA. For example, I had a mother contact me, and they are 

cutting out hot meals, I guess warm breakfasts for our troops that 

are serving overseas. Were you aware of that cutback? 

Mr. SMITH. No, sir. My focus is transportation. 

Mr. MICA. Yeah. And have you heard about the chef conclave to 

cook up new exotic dishes on the Amtrak money losing routes? 

Mr. SMITH. I actually ride those trains, and the dishes are not 

exotic aboard that service. And I think that ignores the larger 

issue. 

Mr. MICA. Are you aware the Crescent, we lost $48 million, 

which we had to borrow? 

Mr. SMITH. Yes, sir. But ridership is up on all of those long-distance routes. 

Mr. MICA. All the top three, it is actually down, and the losses 

have actually increased. So $40 million. And I have to make choices 

here, is it hot meals for my service or a gourmet meal? 

Now particularly—now let me ask you about your little memo 

that you sent to my mayor and other folks as a former mayor. You 

sent this to my mayor: House of Representatives is slashing Amtrak’s funding, putting the future of national rail system in jeopardy. I think we went from $1.4 billion to $950 million. And that 

is going to put us in jeopardy? This is your—— 

Mr. SMITH. Yes, sir, it is. That is my statement. 

Mr. MICA. Did you coordinate this with anybody at Amtrak? 

Mr. SMITH. No, sir. 

Mr. MICA. No one? You didn’t talk to anyone? 

Mr. SMITH. No, sir. That is our letter. I lived it and breathed it. 

Mr. MICA. That is your letter as former chairman. And you basically said that our passenger rail is under threat. Don’t you think 

the United States is under threat when you are in debt up to your 

eyeballs, when you are borrowing 40 cents on a dollar to underwrite your service? You are aware that every ticket on Amtrak last 

year was underwritten more than $40 per passenger ticket. You 

are aware of that? 

Mr. SMITH. I am aware that Amtrak is recovering 88 cents on 

every dollar. 

Mr. MICA. But you are aware that we subsidized every ticket on Amtrak over $40. And including these long-distance tickets, some 

of them more than $400? And we can’t cut back, sir? 

Mr. SMITH. We subsidize, or invest, depending on the verb you 

want to choose, in every transportation system—if I may answer. 

Mr. MICA. Go ahead. 

Mr. SMITH. Every transportation system in this country, whether 

that is highway, aviation, transit, or rail. That is a fact. There is 

no passenger rail system in the world that pays for itself out of the 

fare box. 

Mr. MICA. That is not true. That is not true. 

Mr. SMITH. No, sir, that is true. 

Mr. MICA. That is not true. Again, I beg to differ with you, and 

I can cite you examples. I just cited one line that has more passengers with a bigger return than Amtrak has. It has doubled the 

passenger ridership in the last 10 years, and actually gone from a 

deficit, one line, of $300 million to $100 million in profit. 

40 

Mr. SMITH. That example ignores the capital costs. 

Mr. MICA. That is not true. Don’t tell me that. Please, don’t tell 

me that, because I have been there, looked at it, met with the people. They put 5 billion pounds—$10 billion in private money into 

the route. They will put money into a route, the Northeast Corridor, if they get a return and a piece of the action. If Amtrak continues its Soviet-style operations, whether it is to Meridian, Mississippi, or to New York, Boston, and Washington, you will continue to lose money. Are you aware how much Amtrak loses in food 

service? 

Mr. SMITH. Not at the current moment. 

Mr. MICA. Well, you know, it is going to approach, the last 12 

years, a billion dollars. Did you know, a billion dollars in losses on 

food service? Last year, according to testimony, we had the guy sitting in the chair next to you a few weeks ago, it was $72 million 

lost last year. And I think they cooked the books on that. So you 

don’t think we should cut back, that I should make the choices and 

have my—go back and tell that mother, you know, we need to put 

this money into Amtrak. We can’t take any cuts out of Amtrak. 

Can you name any positions they have eliminated or anything they 

have done to cut back in Amtrak? 

Mr. SMITH. That is a false choice, Congressman. 

Mr. MICA. Oh, it is not a false choice. These are choices I have 

to make. And I am not happy about Amtrak’s performance. And I 

am not happy about your communication to my mayor. Thank you. 

I yield back. 

Mr. SMITH. Thankfully, as a former mayor, I still have the ability 

to contact my colleagues across the Nation, and most respond and 

respond favorably because they live in the same environment that 

I lived in for 16 years. 

And I would just say on the subject of the long-distance trains, 

when my Senator, Trent Lott, got to see the Mississippians who 

use that system and saw it as vitally important to them, the retired couples who use that system to visit their dispersed families 

across the country, the single mothers with children, for whom the 

only way they could get to visit their grandparents affordably was 

through the use of that train, the disabled vets that were onboard 

that train, when he got to see the Mississippians impacted and affected he understood the importance of that train and that service. 

Mr. DENHAM. Thank you, Mr. Smith. 

And let me thank each of you for your testimony today. 

If there are no further questions, I ask unanimous consent that 

the record of today’s hearing remain open until such time as our 

witnesses have provided answers to any questions that have been 

submitted to them in writing, and unanimous consent that the 

record remain open for 15 days for any additional comments and 

information submitted by Members or witnesses to be included in 

the record of today’s hearing. 

Without objection, so ordered. 

I would like to thank our witnesses again for their testimony 

today. If no Members have anything to add, the subcommittee 

stands adjourned. 

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.] 

41 


Insert offset folio 6 here 81825.006

STATEMENT OF 

JOHN PORCARI 

DEPUTY SECRETARY 

U.S. DEPARTMENT OF TRANSPORTATION 

BEFORE THE 

SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

U.S. HOUSE OF REPRESENTATIVES 

The Role of Innovative Finance in Intercity Passenger Rail 

July 9,2013 

Chainnan Denham, Ranking Member Brown, and Members of the Committee, thank you for 

inviting me to appear before you today to discuss innovative financing for rail projects. 

I thank the Committee for its interest in getting rail projects completed using a variety of tools 

and funding sources. This is a high priority for me and for this Administration. Like all of you, 

at the Department of Transportation (DOT) we are keen on making the best use of the tools 

available to us to create and add to public value. 

Since 2009, we have improved or are improving 6,000 corridor miles of track and 40 intercity 

rail stations and begun the procurement process to acquire 260 next generation passenger rail 

cars and 106 lighter, faster rail locomotives. We have leveraged Federal resources with our 

grantee partners and loan recipients to lay a sustainable foundation for a rail network that will be 

safer, more reliable and more efficient. 

Today, we have an $18 billion portfolio of grants and loans to help fuel the development of 

America's passenger and freight rail network. Although this level of Federal investment in rail is 

impressive and unprecedented, it is only a starting point. We must continue to invest Federal 

resources and leverage those with other public sector and private partners to fully realize the 

potential of rail. 

Today's discussion is appropriate leading up to the legislative work necessary to reauthorize both 

the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) and the Rail Safety 

Improvement Act of2008 (RSIA) this year. In my testimony, I will explain why rail 

infrastructure and service is so important; highlight our selective achievements in innovative 

financing at DOT; and describe some of our proposals for dedicated rail funding to improve 

those financing options in the future. 

Rail is a critical piece of our nation's infrastructure, and its importance is only going to grow as 

Americans continue to choose it as the mode of opportunity for moving people and goods. 
42 


Insert offset folio 7 here 81825.007

The American People Want Rail Investment 

Americans are choosing rail in record numbers-Demand for passenger rail is surging across 

the United States. Ridership levels have set new records in nine of the past ten years. In Fiscal 

Year (FY) 2012, Amtrak carried a record 31.2 million passengers-a 3.5 percent increase from 

the year before-and also achieved its highest on-time performance in 12 years (83 percent). I 

These ridership levels are being achieved even before the substantial service improvements 

funded in recent years begin to come online. Once Amtrak adds new trains and reduces trip 

times and delays, it will attract even higher levels of ridership. 

Americans' travel habits are changing-Reports show that since 2004, the average American 

has been driving fewer miles each year. In 2011, the average American drove six percent fewer 

miles than in 2004. What's even more significant is that studies show the trend away from 

driving is being led by younger Americans. Between 2001 and 2009, Americans ages 16 to 34 

decreased their average number of vehicle-miles traveled by 23 percent and increased their 

passenger miles traveled on trains and buses by 40 percent. Factors causing these changes may 

include new communication technology, shifts in driving laws, and higher fuel prices. And while 

the Great Recession had some role in influencing habits, research indicates that travelers will 

continue to look for transportation altematives even as the economy continues to recover. 2 

Rail is a vital part of a multimodal transportation network-The American Road & 

Transportation Builders Association (ARTBA) has written: "The U.S. public transportation, rail 

transit, intercity passenger rail, and freight rail systems are integral and vital components of the 

nation's intermodal transportation network ... These systems must be expanded to meet public 

demand, and continue to be integrated into the overall surface transportation planning process.,,3 

Communities across the nation are competing for rail investmeut dollars-Almost every 

region in the U.S. has demonstrated demand for investments in passenger rail services. Between 

August 2009 and April20J J, the Federal Railroad Administration (FRA) evaluated nearly 500 

applications submitted by 39 states, the District of Columbia, and Amtrak, requesting more than 

$75 billion for rail projects. Over five rounds, the Transportation Investment Generating 

Economic Recovery (TIGER) discretionary grant program has received more than I 15 

applications requesting over $4. J billion for intercity passenger rail projects, and more than $4.7 

billion in funding has been requested for freight rail-related projects. 

Public support for infrastructure investment is high-A 201 J Harris Poll survey revealed that 

nearly two-thirds of Americans (62 percent) support using Federal funds to develop high-speed 

rail. 4 The National Association of Realtors' 2009 Growth and Transportation study showed 

only 20 percent of Americans favored building new roads to deal with congestion, while 

47 percent believe that improvements in public transportation would better mitigate congestion 

and accommodate future U.S. population growth. 5 Additionally, polls show that almost 19 of 20 

I Amtrak, Amtrak Sets New Ridership Record, October 10,2012. 

2 U.S. Public Interest Research Group and Frontier Group, Transportation and the New Generation: Whv Young 

People Are Driving Less and What It Means for Transportation Policy. AprilS, 2012. 

} American Road & Transportation Builders Association (ARTBA). Railroad/Transit Policy, June 2010 

4 Harris Poll survey conducted between January 17,20 I J, and January 24, 2011. 

5 National Association of Realtors and Transportation for America, 2009 Growth and Transportation Survey. Hart 

Research Associates, Jan. 5 to 7, 2009. 

2 
43 


Insert offset folio 8 here 81825.008

people are concerned with the state of America's infrastructure, and approximately 84 percent 

support infrastructure investments, 6 

Rail has demonstrated public benefits, domestically and internationally-Strengthening 

passenger rail services can help balance the Nation's transportation network, as demonstrated on 

the Northeast Corridor (NEC). Since the introduction of the Acela service 10 years ago, Amtrak 

has almost tripled its air/rail market share on the NEC, carrying 75 percent of travelers between 

New York and Washington. 7 These changing travel patterns can free airport capacity for more 

cost-efficient long-distance flights. 

Accomplishments in Innovative Finance for Rail 

Federal funding has been and continues to be a catalyst for private investment and growth 

of the Nation's rail network. 

Today, the FRA has more than $18 billion invested in rail throughout the country. All of these 

investments are market-based rail improvements, including: grants for rail line relocations and 

disaster assistance; the High-Speed and Intercity Passenger Rail Program (HSIPR); the Railroad 

Rehabilitation and Improvement Financing Program; the TIGER program; research and 

development and operating and capital programs for Amtrak. Each of these grant and loan 

programs are designed to enable the safe, reliable and efficient movement of people and goods 

for a strong America now, and in the future. 

Rail transportation is intrinsically linked with the private sector 

The HSIPR program is like few others in the Federal government, in that much of the underlying 

infrastructure for the U.S. passenger rail system is owned by private corporations. While the rail 

industry's ownership structure is unique, FRA was able to draw lessons from established grant 

management best practices, apply them with ingenuity and creativity, and create innovative 

mechanisms to safeguard project benefits. 

As part of this process, FRA has helped facilitate critical multi-party, performance-based 

agreements with host railroads that are effective and enforceable. These agreements ensure that 

HSIPR projects will protect taxpayer investments by delivering real and lasting public benefits 

while also recognizing the core business needs of the freight railroads. 

In prioritizing these stakeholder agreements as a critical pre-requisite to obligating major HSIPR 

grants, FRA relied heavily on recommendations from the Government Accountability Office 

(GAO) and the U.S. Department of Transportation's Office of the Inspector General (OIG) from 

previous studies. GAO and OIG have repeatedly emphasized performance metrics and 

accountability as an essential element of grant program success. FRA embraced this perspective 

as it implemented HSIPR and used it to shape and focus its activities. 

6 U.S. Department of the Treasury and Council of Economic Advisers, An Economic Analysis oflnfrastructure 

Investments, October 11,2010, quoting survey from The Building America's Future National Survey, Luntz et 

aI.,2009. 

7 Amtrak, "State-Supported Corridor Trains. FY20 11-11," April 2012. 
44 


Insert offset folio 9 here 81825.009

It is difficult to overstate just how critical these agreements were to meeting Congress' objectives 

in PRIIA and the American Recovery and Reinvestment Act (ARRA). These agreements 

established an entirely new set of relationships and commitments among States, freight railroads, 

Amtrak, and the federal government, and as such needed to be done carefully and in a way that 

allowed for adequate discussion among all stakeholders on a variety of complex topics. 

HSIPR investments leverage market-based improvements 

The HSIPR Program is a collaborative, competitive, grant program meant to transform 

America's transportation system through the creation of a national network of high-speed rail 

corridors. Established by Congress in 2008, the program began with an initial appropriation of 

$8 billion through ARRA. Congress continued to build upon that progress by making available 

an additional $2.1 billion through annual appropriations for FY 2009 and FY 2010, using the 

framework initially established by the PRIIA, bringing the total program funding to $10.1 

billion. 

The HSIPR Program was created to address Nation's transportation challenges by making 

strategic investments in passenger rail corridors across the Nation. The program has three key 

objectives: 

I. Build new high-speed rail corridors that expand and fundamentally improve passenger 

transportation in the geographic regions they serve; 

2. Upgrade existing intercity passenger rail corridors to improve reliability, speed, and 

frequency of existing services; and 

3. Lay the groundwork for future high-speed rail services through corridor and state 

planning efforts. 

Implementing these corridor projects and programs will serve as a catalyst for growth in regional 

economic productivity and expansion by stimulating domestic manufacturing, promoting local 

tourism, and driving commercial and residential development. The program increases mobility 

by creating new choices for travelers in addition to flying or driving while reducing our national 

dependence on oil and fostering livable urban and rural commnnities. 

Through HSIPR, the FRA has partnered with 32 states to invest in more than 150 high-speed and 

higher-performing intercity passenger rail projects. One hundred percent of ARRA-funded 

HSIPR projects have been obligated and 52 projects worth $3.6 billion in funding are currently 

completed, under construction, or will soon start construction in 19 states and the District of 

Columbia. 

CREATE in Illinois - A public-private partnership designed to bolster reliability and 

performance 

Chicago is the largest rail hub in the country with more than 1,200 trains passing through the city 

daily, carrying 75 percent of the Nation's freight rail, worth approximately $350 billion. Moving 

this freight through Chicago creates a host of conflicts on the freight rail system and between 

freight and commuter trains, intercity passenger rail, automobiles, bicycles, and pedestrians. 

4 
45 


Insert offset folio 10 here 81825.010

The Chicago Region Environmental and Transportation Efficiency Program, known as 

"CREATE", is a first-of-its-kind partnership among DOT, the State of Illinois, the City of 

Chicago, Metra, Amtrak, and the Nation's largest freight railroads. The approximately $1.5 

billion program includes 70 projects that will restructure, modernize and expand existing rail 

facilities to improve freight and passenger mobility in and through Chicago while reducing 

negative environmental and social impacts. 

DOT has awarded CREATE $110 million TIGER funds to complete top priority projects. The 

federal funding leveraged $14 million in State and local funding and $48 million in funding from 

the private railroads. Collectively, the projects will add capacity and reduce delays for freight 

and commuter trains, reduce delays to motorists using at-grade crossings, as well as improve 

roadways, sidewalks, and curbs under railroad viaducts to enhance safety and security for 

motorists, bicyclists, and pedestrians. 

The FRA, through the HSIPR Program and in cooperation with the Illinois Department of 

Transportation, funded the Englewood Flyover Project, also a part ofthe CREATE 

Program. The $132.6 million federal investment will fund the design and construction of a grade 

separation between the Metra Rock Island District Line and the Norfolk Southern Chicago Line. 

The project will raise the existing two-track Metra Line approximately 29 feet to fly over the 

existing three-track Norfolk Southern alignment. 

The existing at-grade crossing of these two rail lines is one of the Chicago area's major rail 

junctions and is a significant cause of current congestion in the Chicago area rail network. The 

project will eliminate significant delays between Metra trains, Amtrak passenger trains, and 

Norfolk Southern freight trains, and will ultimately result in improved schedule reliability for 

current Amtrak and Metra trains as well as provide needed capacity for future Midwest Regional 

Rail System passenger trains. 

While the Englewood project was funded entirely through public investment, the larger 

CREATE program is a first-of-its-kind partnership expected to lead to billions of dollars in 

private investment. When the project is completed, FRA expects those investments to enhance 

the quality of life for Chicago-area residents and have a marked impact on the national rail 

network since six of the seven major railroads operating in North America pass through Chicago. 

Rail Line Relocation partnerships drive efficiency and community mitigation 

In order to assist State and local governments in mitigating the adverse effects created by the 

presence of rail infrastructure, Congress authorized the Rail Line Relocation and Improvement 

Capital Grant Program in 2005 through the Safe, Accountable, Flexible, Efficient Transportation 

Equity Act: A Legacy for Users (SAFEfEA-UJ). However, Congress first appropriated funding 

for the program FY2008. SAFEfEA-LU also directed the FRA to issue regulations to establish and 

implement the program. That final rule was published in the Federal Register on July 11,2008. 

Only States, political subdivisions of States (such as a city or county), and the District of 

Columbia are eligible for grants under the program. Grants may only be awarded for 

construction projects that improve the route or structure of a rail line and (I) are carried out for 
46 


Insert offset folio 11 here 81825.011

the purpose of mitigating the adverse effects of rail traffic on safety, motor vehicle traffic flow, 

community quality of life, or economic development; or (2) involve a lateral or vertical 

relocation of any portion of the rail line. 

From FY 2008 through FY 2011, Congress appropriated a total of$90,104,200 for the program. 

Funding has been provided to grantees through both Congressionally-directed spending and 

competitive grant opportunities. Congress did not appropriate any funding for the Rail Line 

Relocation program in FY 2012 or 2013 and all available funding has been awarded. There was 

no competition in FY 2012. 

Railroad Rehabilitation and Improvement Financing Program 

The Railroad Rehabilitation and Improvement Financing (RRIF) program provides direct federal 

loans and loan guarantees to finance the development of railroad infrastructure. To date, FRA 

has awarded nearly $1.73 billion in more than 30 RRIF loans, for projects in 26 states across the 

country. While most RRIF loans have been awarded to Class II and III railroads, RRIF plays a 

role in larger projects as well. As one example Amtrak will acquire 70 new American-made 

electric locomotives and upgrade maintenance facilities for Northeast Corridor services, all 

possible due to a recent RRIF loan. 

In July of 20 I 0, the Denver Union Station Project Authority (DUSPA) received just over $300 

million in federal loans through a financing arrangement using the Department's RRIF program 

and the Transportation Infrastructure Finance and Innovation Act (TIFIA). 

The loans financed new intermodal transportation facilities which include an underground bus 

terminal with 22 bays, a light rail terminal consisting of three tracks and two platforms for 

existing and planned routes and an intercity and commuter rail facility consisting of eight 

passenger tracks, platforms and service and storage improvements. Also included are the 

extension of the 16th Street Mal! and the Shuttle service, accommodation of the Downtown 

Circulator service, as well as the pedestrian improvements and improved street and replacement 

parking and utility infrastructure. Integration of these services will provide travelers seamless 

connections and access to public spaces. The project is expected to be complete next year. 

Preceding the loan issuance, Downtown Denver had averaged 6.6 percent annual growth. Once 

complete, the project will have an immediate positive benefit on the economy and it is estimated 

that the Denver Union Station public sector investments have or will create over 7,000 new jobs 

during construction. Together, the TIFIA and RRIF loans constituted approximately 58 percent 

of all funding sources for the project. Under the financing plan, a Regional Transportation 

District bond as well as a tax increment revenues pledged to DUSP A will be used to repay the 

debt. The financing arrangement was historic and innovative given that the project was the first 

to combine credit assistance from both programs and for the RRIF program, it was the first to use 

tax increment financing. 

The FY 2014 Budget does not propose changes to the RRIF program. However, as FRA looks 

forward to reauthorization, the agency is exploring ways to improve project and program 

administration, as well as to better integrate the program with the goals and objectives of the 

NHPRS program. FRA works to ensure that all fInancial assistance programs (both grants and 

loans) work together in a cohesive and comprehensive manner to improve the Nation's passenger 

6 
47 


Insert offset folio 12 here 81825.012

and freight rail networks through an integrated investment portfolio. FRA is ensuring borrowers 

can more readily take advantage of the RRIF program by reviewing eligibility requirements, 

application processes, administrative provisions, technical assistance, or other program elements, 

consistent with the priorities set forth in Section 502( c) of Title V of the Railroad Revitalization 

and Regulatory Reform Act of 1976, as amended. 

TIGER 

RRIF and TIFIA, as well as other Departmental programs such as Private Activity Bonds, 

constitute an enormous opportunity to partner with the private sector to invest in our rail system. 

These tools are greatly enhanced when matched with merit-based, competitive grant dollars, such 

as we have seen with TIGER. Not coincidentally, all of these programs also form the backbone 

of the President's Partnership to Rebuild America. The future of federal rail infrastructure 

investment will be a blend of public and private dollars targeted at those projects which 

demonstrably produce the most benefits, both public and private. 

Thanks to the flexibility permitted by Congress, TIGER was designed with some unique 

features. When we began the program in 2009, we instituted a mode-neutral, merit-based 

selection process to evaluate projects on a number of factors, including our departmental goals 

such as economic competitiveness, safety, state of good repair, and environmental sustainability. 

We also looked at project readiness, economic analysis of benefits and costs, innovation, 

partnership and ability to bring non-Federal dollars to the table. And while the vast majority of 

federal transportation funding can only be accessed by states and transit agencies, the TIGER 

application process is open to any public project sponsor. 

Four rounds ofthe TIGER program have provided $3.1 billion to 218 projects in all 50 states, the 

District of Columbia and Puerto Rico, and we are currently evaluating proposals for the 20 I 3 

round. We wanted TIGER to be multi-modal and focus on project outcomes, but we came with 

no palticular vision for exactly how the funds would be awarded. Once again we are seeing 

strong demand for passenger and freight rail projects. Out of the nearly 600 applications we 

have received requesting more than $9 billion in funding, 85 applications requesting more than 

$1.3 billion are focused on rail infrastructure improvements. 

As we evaluated project proposals, we discovered that rail projects competed extremely well. 

Across four rounds we've awarded over $750 million to more than 45 projects primarily 

addressing passenger and freight rail mobility. Although the use of benefit-cost analysis is still 

wildly uneven in the U.S. transportation field, it became obvious to us through TIGER that many 

rail projects scored off the charts, especially multi-state freight rail networks like CREATE, 

National Gateway, and the Crescent Corridor, which leveraged significant private investment. 

TIGER helps us fill the gaps in the national transportation system that traditional formula 

funding does not always reach. We are making significant upgrades to major intercity passenger 

rail nodes through TIGER, including Moynihan Station, St. Paul Union Depot, Raleigh Union 

Station, Sacramento Valley Station, and the Minneapolis Interchange. 

And with the encouragement of multimodal and other non-traditional project scopes and 

applicant coalitions through TIGER, we have convened FRA and the Maritime Administration to 

work together implementing intermodal rail improvements at major ports around the country, 

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48 


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including the Ports of Los Angeles, Long Beach, Miami, Vancouver, Oakland, and New Orleans. 

These complex projects require complex analysis of public and private benefits and costs, and 

we have appreciated the opportunity to work with transportation agencies around the Nation on 

advancing the practice. 

As we look towards the next authorization, we feel that TIGER offers an important model for not 

only data-driven and merit-based project selection in a no earmark era, but also for better 

leveraging federal dollars in a difficult budget climate by ensuring a maximum return on federal 

funds. 

However, at current funding levels TIGER is a drop in the bucket when compared to the need for 

predictable, sustainable, federal investment in our national rail infrastructure network. 

Research and Development 

Since 2007, 114 rail accidents were caused by joint bar failures due, in part, to difficulties with 

manual inspection. These manual inspections were time intensive, somewhat cumbersome, and 

SUbject to human error. 

To address this critical safety concern, FRA's Office of Research and Development program 

invested $1.3 million in the development of a technology for automatically inspecting rail joint 

bars. FRA initially contracted with a private engineering company for the initial stages of this 

project. As the technology began to demonstrate potential and the freight railroads started to 

show interest, the private company invested its own funds to convert the prototype to a 

production system. FRA does not know how much was invested, but is certain that those funds 

were not available from its own budget. The successful implementation of the automatic joint 

bar inspection system would not have been possible without FRA funding the initial, high-risk 

stages and private industry commercializing the final product. 

Following a feasibility study and proof of concept, a prototype system was manufactured and 

tested. Since 2008, the system has been commercialized and several have been bought and 

operated by the freight railroads. There has been a 65 percent reduction in annual accidents 

caused by joint bar failures since the first commercial system was sold. 

Grants to Amtrak 

In October 2011, Amtrak began a multi-year project to fully replace the track in all four tunnels 

under the East River connecting New York City to New England and Long Island along the 

Northeast Corridor (NEC). 

When completed, the project will provide a significant infrastructure improvement that affects 

the whole NEe, Amtrak operations, Metropolitan Transportation Authority (MTA)-Long Island 

Railroad (LIRR) operations, and New Jersey Transit (NJT) operations. The total track renewal 

will provide enhanced reliability, allow for increased train speed and efficiency, permit increased 

operations, provide greatly needed drainage improvements, and bring the track into a state of 

good repair. 
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The program is slated to take 5 years at a total cost of approximately $72 million. The cost of 

the program is shared by Amtrak, the MTA, and NJT with the approximate cost sharing at 35 

percent Amtrak funded through the FRA-administered Annual General Capital Program with the 

remaining costs covered by NJT, and MTA-LIRR. Although MTA-LIRR, NJT, and Amtrak 

have agreements that dictate maintenance and operation cost sharing, this program is based on a 

unique cost sharing agreement to fully renew the track infrastructure. Without a renewal, the 

state of the infrastructure would continue to decline resulting in increased maintenance costs and 

negative impacts to operational performance. Amtrak would not be able to cover the full cost of 

a track renewal by itself and continued deterioration would have strained Amtrak's resources 

into the future. 

A Proposal for Predictable, Sustainable Funding 

The Administration's FY 2014 Budget request lays out a detailed blueprint for a five-year 

reauthorization proposal. That is the kind of predictable, sustainable funding that the risk-averse 

private sector desires prior to investment. 

National High-Performance Rail System 

The National High-Performance Rail System (NHPRS) proposes a new, coordinated approach to 

rail investments. The NHPRS would replace and consolidate existing rail programs (including 

the Amtrak grants and capital assistance for high-speed rail, among others) with two interlinked 

programs: the Current Passenger Rail Service-focused on maintaining the current rail network 

serviced by Amtrak-and the Rail Service Improvement Program-focused on expanding and 

improving the passenger and freight rail networks to accommodate growing travel demand. 

Additionally, the Research, Development, and Technology program will invest in people, 

businesses, and technology, ensuring that America's rail industry is the world's most innovative 

and state-of-the-art. The NHPRS is the centerpiece of this reauthorization vision. 

The President's FY 2014 Budget requests $6.4 billion-and $40 billion over the next five 

years-for the NHPRS program. The Administration proposes Congress fund the program 

through mandatory authorizations from a new rail account of a broader Transportation Trust 

Fund. The trust fund would initially be funded through the General Fund transfers that are 

offset from savings generated by capping Overseas Contingency Operations activities and 

would not require new taxes or fees. 

9 
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National High-Performance Rail System 

FY 2014 to FY 2018 Investment Proposal ($M) 

Current Passenger Rail Service: The objective ofthis program area is to maintain public rail 

assets in a state of good repair so that they continue producing public benefits for generations 

to come, while continuing to support the Nation's long-distance passenger rail services. The 

program will be organized according to the primary "business lines" of current passenger 

services: 

• Northeast Corridor: bring Northeast Corridor infrastructure and equipment into a state 

of good repair to enable future gro\V1h and service improvements. 

• State Corridors: facilitate efficient transition to financial control to States for shortdistance State-supported corridors, as required by PRlIA. This program will be phased 

out within the five year period once States are transitioned. 

• Long-Distance Routes: continue operations of the Nation's important long-distance 

routes. 

• National Assets: improve efficiency of the Nation's "backbone" rail facilities, further 

implement positive train control (PTC) on Amtrak routes, and bring stations into 

compliance with requirements of the Americans with Disabilities Act (ADA). 

This approach is a major policy change from how Federal support for current service is 

provided today, which is through separate Operating and CapitallDebt Service grants to 

Amtrak. This new structure increases transparency and better aligns Federal resources to the 

public benefits and services in which we are investing. 

10 
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$675 million 

State Corridors 

(transitional) 

$925 million 

Notes: 

Objectives Eligible Activities 

Bring infrastructure and • Ongoing state of good repair capital needs. Amtrak" 

equipment into a state of good. Backlog of state of good repair capital needs. ' 

repair to enable future growth Replacement of legacy/obsolete equipment. * 

and service improvements. 

Transitional capital and operating assistance to States 

support phase-in ofPRlIA Section 209. * 

Replacement of legacy/obsolete equipment. * 

• Long-distance route capital- equipment 

overhauls and rcplacement, stations, 

maintenance facilities, etc. 

• Long-distance route operations. 

Amtrak 

• Operating and capital needs for national Amtrak 

reservations system; security and policing; 

rolling stock/infrastructure engineering, design 

services, and support facilities; training centers; 

and other national backbone systems. 

Support implementation ofPTC on Amtrak 

routes. * 

Capital to upgrade Amtrak-served stations to be 

ADA compliant.' 

Legacy debt service and principal.' 

* Temporary activities that Wlll phase-out upon completion. 

**Funding provided through this program WIll be based on a five-year Northeast Corridor capital a')set plan. This plan will be prepared by 

Amtrak in coordination with the Northeast Corridor Infrastructure and Operations Advisory Commission, which includes States and other NEe 

infra::.tructure owners and users, and will be approved by FRA For specific capital projects, this plan may identity other appropriate lead 

agencies or recipients for these funds, sllch as States, in which case grants could be directed to those entities 

Rail Service Improvement Program: The objective of this program is to substantially 

improve the Nation's passenger and freight rail systems to accommodate population groviTth 

and the increasing demand for rail transportation across the country. This program will 

comprehensively address the investment needs of both passenger and freight rail systems, 

which are tightly interwoven. The program will make competitive, discretionary investments 

based on analyses of the business and public investment cases for each proposal- no projects 

are "pre-designated" to receive any of these funds. The program will also address the needs of 

local communities, through funding for station areas, mitigation of the local safety, 

environmental, and noise impacts generated by the presence of rail, and for rail line relocation 

activities. 

The program will have four main areas offocus: 

• Passenger Corridors: develop high-performance passenger rail networks through 

construction of new corridors or substantial improvements to existing corridors, and to 

implement positive train control systems on commuter railroads. 

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• Congestion Mitigation: address major bottlenecks and congestion issues that reduce 

freight and passenger train reliability on shared-use infrastructure. 

• Freight Capacity: improve the competitiveness of the Nation's interrnodal freight rail by 

upgrading facilities, adding capacity, and implementing community mitigation strategies. 

• Planning: develop comprehensive plans that will guide future investments. 

$3,250 million 

$150 million 

oj< Temporary activities that will phase-out upon completion. 

** For PTC implementation only. 

± For rail line relocation only 

Eligible Activities 

Environmental studies 

Right-of·wayacquisition 

Preliminary engineering 

Design and construction 

Rolling stock acquisition 

• Support implementation ofPTC 

on commuter railroads* 

• Capital for addressing 

congestion projects identified by 

the Surface Transportation 

Board or DOT 

• Capital for improving 

infrastructure in shared-use 

terminal areas 

Capital upgrades to intermodal 

freight corridors and connection 

points 

• Capital upgrades to short-line 

freight railroads 

• Rail line relocation and 

community mitigation 

National, multi-state, and state 

rail planning 

Corridor and tenninal area 

planning/environmental analyses 

Northeast Corridor FUTuRE' 

Eligible Recipients 

• States and multi-State 

entities 

• Amtrak 

• Equipment entity 

Commuter railroads** 

States and multi-State 

entities 

• Amtrak 

• Freight railroads 

• Rail term inal 

companies 

States and multi-State 

entities 

Freight railroads 

Rail terminal 

companies 

• Ports 

Local governments 

• States and multi-State 

entities 

Metropolitan planning 

organizations 

FRA 

In recognition of America's transportation needs and the demand for rail nationwide, DOT 

submitted a transforrnative budget proposal for FY 2014. That proposal encourages innovative 

funding solutions to our Nation's infrastructure challenges through predictable and sustainable 

federal funding levels drawn from a broader Transportation Trust Fund, which would add a rail 

account to its existing highway and transit accounts putting rail on par with other modes. This is 

a key component in leveraging private dollars, enabling taxpayer dollars to create greater public 

value. 

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Other Important Policy Considerations for Rail Projects in Reauthorization: 

• Northeast Corridor governance--The NEC is one of the most important transportation 

assets in the nation, carrying more than 250 million people per year and an average of 50 

freight trains per day. As the backbone to the highest concentration of population and 

economic activity in the country, there is naturally a large number of stakeholders with a 

vested interest in the future of the corridor, including the states, Amtrak, local commuter 

authorities, freight railroads, local governments, business, and others. Through the 

Northeast Corridor Infrastructure and Operations Advisory Commission established 

under PRIIA, the FRA has worked with these varied stakeholders to develop an inclusive 

planning process to establish the framework for future investment in the 

corridor. Moving forward, FRA will continue working with all stakeholders to develop 

policy ideas for addressing NEC governance issues. 

• Next generation rail equipment-With FRA's participation, the Next Generation 

Equipment Committee has developed and approved specifications for single- and bi-Ievel 

passenger cars, diesel locomotives, train sets and diesel multiple units. In tum, these 

specifications have been or will be used in several procurements by States and Amtrak 

that will result in increased interoperability and lower unit costs. FRA is committed to 

continuing to explore options to pool equipment in order to improve flexibility and 

perfol1llance of passenger rail services, further lower costs, and ultimately stimulate 

domestic manufacturing and supply industries. 

• Multi-state rail development-The Administration's goal for a modem passenger rail 

system that connects communities within America's "megaregions" will inevitably 

require corridors to cross several state boundaries. Development and implementation of 

these corridors can be a challenge due to the number of state and local jurisdictions 

involved in the process. FRA, in consultation with key stakeholders, is exploring various 

institutional options for efficiently planning and coordinating the implementation of 

multi-state corridors. Additionally, FRA will encourage groups of States to develop 

unified plans for rail networks that connect and integrate their regions. 

• Other planning analyses-FRA is undertaking a variety of analytical studies and 

evaluations that will help states and industry stakeholders better integrate passenger and 

freight rail projects into regional transportation networks. For example, FRA has been 

leading an intensive multi-state rail study in the Southwest that is yielding important tools 

and best practices for regional rail development plans. This study is developing ways to 

analyze market potential for various classifications of rail investments, as well as 

assessing different institutional models for planning and developing multi-state rail 

networks. 

Conclusion 

The Administration remains fully committed to providing the improved rail transportation that 

the American people want and need. DOT looks forward to working with Congress and all 

stakeholders to ensure we find the most innovative, cost-effective, and practical policies for 

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building a world-class rail network. Rail deserves the predictable and sustainable funding 

offered to other modes so it can reach its potential for the American public. 

Thank you again for the opportunity to testify, and I will be happy to answer any of your 

questions. 

# 

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55 


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DENHAM 

Deputy Secretary Porcari 

Questions for the Record 

Hearing on 

The Role of Innovative Finance in Intercity Passenger Rail 

July9,2013 

1. Northeast corridor is one of the busiest rail corridors in the world, with 2,000 daily 

commuter and intercity trains. How can we take this proven ridership and revenue 

and use it with innovative finance to jump-start the large list of state of good repair 

projects? 

As part of the Service Development Plan, NEC FUTURE will evaluate options for 

funding and operating the NEC, including the participation of the private sector in: 

• Financing and development ofNEC facilities and improvements; and 

• Management of operation of the NEC assets. 

Section 502 ofPRlIA looked at restructuring the NEC through a private/public 

partnership. No proposals for NEC restructuring were received in the PRIIA-mandated 

initial solicitation. 

Nonetheless, DOT and FRA are open to private sector investment and participation in all 

high-speed rail corridors and projects. 

2. Many in the railroad industry believe that the RRIF loan process is cumbersome 

and slow. What changes to the application process would help DOT expedite its 

processes, while still ensuring the necessary credit worthiness? 

The RRIF program office is developing additional guidance to assist applicants. This will 

improve the transparency of the process for applicants and lead to applications with a 

higher level of readiness that can advance through the review process faster. As an 

example, FRA will review and comment on pre-application materials to ensure the 

submitted application is substantially complete and can move through review without 

having to go through a repetitive clarification process. 

3. What has DOT's experience been utilizing value capture methods to finance 

transportation projects? 

DOT's innovative financing programs are designed to help leverage both existing and 

future funding flows associated with infrastructure projects, and DOT welcomes the 

opportunity to work with applicants who've been able to structure value capture-related 
56 


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revenues into the repayment streams included in their loan packages. The Denver Union 

Station Project (DUSP) received just over $300 million in federal loans through an 

unprecedented and historic innovative financing arrangement using the Department's 

RRIF and Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. 

The redevelopment project, which included new intennodal transportation facilities, was 

funded through a unique structure and for the first time combined credit assistance from 

both programs. Together the TIFIA and RRIF loans constitute approximately 58% of all 

funding sources for the project. Under the financing plan, a Regional Transportation 

District (RTD) bond as well as tax increment revenues pledged to DUSPA will be used to 

repay the debt. 

The Transbay Transit Center project in San Francisco is another example of the 

successful use of value capture to partially finance transportation projects. A $171 million 

TIFIA loan for Phase 1 of the project will be repaid using local revenue from a property 

tax increment in the surrounding area of the station. The total cost of Phase I is 

approximately S 1.6 billion, with othcr sources including bridge tolls, sales tax revenue, 

transit capital funding. and state and federal grants. 

BROWN 

1. What does the Administration believe is the proper role of the federal government 

in financing intercity passenger rail? What lessons from other countries show us 

with respect to financing passengcr rail? 

No country has successfully set up a passenger rail system without a substantial 

commitment and investment from the national government. The Administration believes 

that a similar commitment is necessary from the United States government if passenger 

rail is to succeed in America. 

The Administration's FY2014 Budget Proposal includes a bold plan for funding a fiveyear $40 billion reauthorization from a new Rail Account of the Transportation Trust 

Fund. That includes a $6.4 billion investment in the National High Perfonnance Rail 

System (NHPRS) to maintain and improve the performance ofthe Nation's rail services, 

in addition to focusing on innovative research efforts aimed at improving safety. 

2. You quoted the road builders in your statement: "The U.S. public transportation, 

rail transit, intercity passenger rail, and freight rail systems are integral and vital 

components of the nation's intermodal transportation network." Some Members 

believe that we should eliminate long distance routes or make the states pay for 

them. What are your views on that? 

Amtrak created and is currently implementing Performance Improvement Plans for each 

long distance route, as required by PRIIA Section 210. Incremental improvements have 
57 


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already been made and more efficiencies are expected with the implementation of 

pending initiatives (targeting enhanced reliability, customer service, connectivity, and 

financial performance). 

One such initiative is the introduction of 130 ncw passenger cars to the long distance fleet 

between the end of2013 and 2015, which will improve financial and on time 

performance. Furthermore, FRA increased its Amtrak oversight efforts in FY 2013 by 

hiring a Long Distance Passenger Train Oversight Manager. The agency believes that 

increased ovcrsight coupled with continued implementation of Amtrak's Performance 

Improvement Plans will result in greater efficiencies and reduced loses for the current 

long distance system. 

3. You mention Rail Line Relocation grants in your written testimony. That program 

has expired. Do you believe it should be reauthorized? Can you talk about some of 

the projects that have been funded through the program? 

The Administration's FY 2014 budget request included funding for a program of capital 

improvements to mitigate the impact of freight rail operations on local communities. 

This new program would fund activities previously supported under the Rail Line 

Relocation Prol,'fam, while making thc program scope more robust through eliminating 

at-grade crossings with roads, building sound walls, or other measures. FRA believes 

that boosting the share of goods moved by rail is a substantial benefit to the public, but 

acknowledges that increascd freight operations can have adverse impacts on local 

communities. 

FRA currently manages several active Rail Line Relocation grants to projects intended to 

reduce the risk of train derailments through track rehabilitation and/or to avcrt highwayrail grade crossing collisions by moving tracks to less densely populated areas. 

In North Carolina, the Department of Transportation has just completed, on time and 

under budgct, a project on the Abcrdeen & Rockfish line to upgrade approximately five 

miles of track, install a 700 foot siding, and reconstruct 11 unpaved crossings. 

In New York, Schuyler County completed, on budget, the Watkins Glen Track 

Relocation project, which moved a rail line running through downtown with direct track 

to salt plants outside of town. 

4. You mentioned that the Administrator proposes to fund Amtrak through business 

lines rather than traditional operating and capital/debt service grants. Last week, 

the Federal Railroad Administrator testified that financing along business lines 

would not make sense with the low appropriations levels proposed by the House 

Appropriations Committee for Amtrak. Why? 
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FRA's FY 2014 budget request provides the full funding needed to effectively deliver 

passcnger rail services in each business line, plus additional funding to clear the 

substantial backlog of infrastructure repair and equipment replacement needs. At this 

funding level, managers within each business line would have the necessary flexibility 

and accountability to make investment decisions based on long-term planning and 

strategic service objectives. 

However, current funding levels are not sufficient to fully meet the needs of each 

business line, requiring Amtrak to make trade-offs and essentially fund the most critical 

needs each year. If Amtrak was locked-into business line-based appropriations at currcnt 

funding levcls, managers would not have sufficient flexibility to make these decisions, or 

to adequately respond to natural disasters or other unanticipated cvcnts which may 

disproportionately affect certain business lines over others. 

5. In light of the recent court decision regarding metrics and standards ruling them 

unconstitutional, what are FRA's next steps? Do you need Congress to do 

anything? 

USDOTiFRA is reviewing the decision by the U.S. Court of Appeals for the DC Circuit 

in order to determine the best path forward in implementing metries and standards for 

passcngcr rail. Thc DC Circuit's decision held that Section 207 ofPRIIA was 

unconstitutional because it impermissibly delegated regulatory authority to Amtrak. If 

that decision stands, Conl,'1'css could correct the Section 207 delegation with legislation. 

HANNA 

1. How often does Amtrak review its ticket fares, and the models used to derive those 

fares? 

Amtrak has three primary tools it uses in the market place to adjust fares: (1) ticket prices 

(fares) for a given city pair - Amtrak may have up to 6 available for use at any given 

time, (2) inventory settings - through whieh Amtrak can change the share of seats 

available at any given fare, and (3) promotional fares short-term special offers. 

Performance is reported and adjustments to fares are made on a daily, monthly, and 

annual basis. Additional review may take place on an ad hoc basis per market conditions. 

Dai(V: Amtrak's revenue managers review inventory settings (the share of seats at a given 

price) daily and may make adjustments in response to actual market demand. In practice, 

inventory settings are entered II months prior to departure and thcn rcvicwed with 

increasing frequency to ensure the train is selling as planned as the departure date nears. 
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Month(y: Monthly performancc reviews seek to identify how well Amtrak's pricing 

strategy is working in the market. Inventory settings and fare adjustments are then 

considered based on individual route and/or market situations. For price, this may extend 

to either (a) an acceleration ofa planned fare increase, (b) delaying a planned increase, (c) 

implementing a fare action off cycle, or (d) implementing a short-term promotional fare. 

Annual Route Review: Each year, a subset of routes are identified for a complete fare 

structure re-evaluation. This is important because competitive changes, such as the 

introduction of new bus competition, can alter the relative success of a given fare 

structure along a train's route. The purpose of this review is to ensure the integrity of the 

fare structure along the entire route, and make adjustments as appropriate. 

Annual Budget Planning: All routes are examined each year as part of the budgeting 

process, and fare increases are planned. The planncd fare actions build to ticket revenue 

forecasts, which form the basis of the annual ticket revenue budget. 

2. Could DOT give some recent examples of routes on which Amtrak adjusted fares, 

based on ridership trends? 

There are a number of examples of this. As noted above, thc primary short-tcrm method 

is through inventory settings, where changes are made regularly. These changcs affect the 

shares of fares available for a given departure. Beyond changes to inventory settings, 

Amtrak has reported the following examples: 

Summer of2012 to present: Northeast Regional and Cascades have each been affected by 

the entry of low-cost bus competition on certain city pairs. Entry of new viable 

competitors will naturally cause an initial market share shift to the new competitor. In 

both these situations, Amtrak created a new promotional fare that is in the market only 

briefly, requires advance purchase, and is limited to off-peak departures. These fares, 

coupled with corresponding advertising, target the price-sensitive leisure passenger to 

ensure continued awareness and trial of Amtrak's product in the faee of bus competition 

whose primary competitive asset is generally pricc. 

Winter of2012: Strong Acela ridership trends resulted in many sold-out departurcs. 

Consequently, an additional, unplanned fare increase (increasing all price points) was 

released in order to capitalize on stronger demand and drive increased ticket revenue. 

Summer 2011 - Spring 2012: Amtrak's Pacific Surfliner is an "unreserved" train. 

Unreserved trains are not revenue managed, but instead, in the absence of the multiple 

price points available to a reserved, revenue-managed train, revenues are controlled 

through fares alone. In 2011, it was experiencing strong ridcrship on many dcpartures. 

The pricing team conducted extensive analysis to determine potential fare change 

opportunities for revenue growth. The result was a multi-stage fare action plan 
60 


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implemented through the Spring of2012 that included eliminating seasonal fares that no 

longer worked effectively, followed by fare increases. These eombined to deliver revenue 

improvements. Additional optional actions were identified that remain under 

eonsideration today. 

3. Does DOT believe that Amtrak has adequately captured the pricing power of its 

fares? If so, please provide some evidence, by line of business (Northeast corridor, 

State-Supported Routes, and Long Distance Routes). If not, how does DOT believe 

Amtrak could take better advantage of pricing opportunities? 

Amtrak retains control over prieing and revenue management and manages both price 

and inventory, monitoring its yield (revenue per passenger mile), load factor (percent of 

seats sold), and ticket revenue per available seat-mile on an on-going basis by route for 

all three lines of business. This infonnation is shared with DOT. 

In certain cases, where states have authority by contract agreement, some states have 

elected to operate unreserved services or to make pricing decisions based on their 

understanding of the local market. These decisions may be made in a broader public 

interest, sueh as to support commuter travel in a developing commuter market. Doing so 

may sub-optimize revenues in favor of public transportation, but this is the states' 

prerogative by contract. 

4. Does DOT monitor Amtrak's pricing policies and models, as part of its Amtrak 

grant oversight responsibilities? If so, how often does the Department do such 

reviews? 

The U.S. DOT, through the Federal Railroad Administration, does monitor Amtrak's 

prieing and tieket revenue perfonnance. This is done through examination of its monthly 

reports on revenue management perfonnance as well as its partieipation on the Amtrak 

Board of Directors, at whose meetings ticket revenue perfonnance is reviewed. 

Periodically, the FRA also meets with Amtrak personnel to diseuss ticket revenue (and 

overall financial) perfonnance in detail. 

5. What role, if any, do states play in setting Amtrak fares for the State-Supported 

Routes? 

States and Amtrak often eollaborate on development and promotion of pricing strategies, 

as was the case in the work deseribed above for the Pacific Surfliner with Caltrans (the 

Department of Transportation for the State of California). In those eases, Amtrak 

generally starts with a detailed examination of reeent revenue and ridership perfonnance 

against prieing (and inventory settings, where appropriate), identifies opportunities for 

improvement, and works with the state representatives to select a preferred option. In 
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some cases, states also defer to Amtrak for pricing review and decision-making. In all 

cases, Amtrak is responsible for implementing the final agreed recommcndations, 

including publishing and communicating the fares. 

MICA 

1. How many employees work in the RRIF program office to process RRIF loan 

applications? 

RRIF is managed through the Credit Pro!,'fams Division within the Office of Passenger 

and Freight Programs. There are 5 full-time employees and one employee dedicated half 

time to working for the RRIF pro!,'fam, which includes analysts and one Division Chief. 

Approximately half of the team workload involves processing pending loan applications 

and conducting pre-application meetings. Thc other half of the workload involves 

managing the substantial, existing loan portfolio. This includes monitoring and reporting 

on the portfolio, as well as processing payments and contract change requests. The 

Credit Programs Division also receives support from engineering and environmental staff 

within the Office of Passenger and Freight Programs, as well as assistance from legal 

staff in FRA's Office of Chief Counsel and subject-matter support from the Office of 

Safety and the Office of Financial Management. 

2. What is the annual budget for the RRIF program office for FY 2012? 

There is no federal appropriation spccifically for the RRIF program. FRA pays for its 

RRIF program costs out of the Safcty and Operations account. Costs of RRIF activities 

paid out of the Safety and Operations account include contracting support, payroll for 

3.75 FTEs, and travel expenditures. 

3. How many loans does the program office review per year, on average? 

Over the last three years, the RRIF program office has reviewed an average of91oan 

applications per calendar year. In addition, the program office frequently conducts preapplication meetings and subsequent follow-up meetings during which FRA staff meet 

with potential applicants and review proposed projects. In FY 2012, the RRIF program 

office held 19 pre-application meetings with potential RRIF applicants in which staff 

provided an overview of the RRIF process and provided guidance on project specific 

questions. Additionally, RRIF program staff continue to manage the ongoing portfolio of 

loans. 
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UNION STATION REDEVELOPMENT CORPORATION 

10 G Street NE . Suite 504 . Washington, DC 20002 

(202) 222·0271 . usrc@usrcdc.com 

WRITIEN STATEMENT OF BEVERLEY SWAIM-STALEY 

PRESIDENT AND CEO, UNION STATION REDEVELOPMENT CORPORATION 

BEFORE THE SUBCOMMITIEE ON RAILROADS, PIPELINES, 

AND HAZARDOUS MATERIALS 

COMMITIEE ON TRANSPORTATION AND INFRASTRUCTURE 

U.S. HOUSE OF REPRESENTATIVES 

JULY 9,2013 

Chairman Denham, Ranking Member Brown and Members of the Subcommittee, I am very 

pleased to be here today to share my experience on innovative financing. My name is Beverley 

Swaim-Staley and I am the President and CEO of the Union Station Redevelopment 

Corporation (USRC), a non-profit corporation established in 1983 by the Secretary of 

Transportation to manage Washington's Union Station through its redevelopment and protect 

the Federal Government's interest in the building which is owned by the United States 

Department of Transportation. By law, Washington's Union Station is to be operated in a 

manner that protects the historic building, continues its usage as a multi modal transportation 

facility and ensures it as a commercially viable entity which does not require ongoing funds from 

the federal government. 

Washington's Union Station was the largest rail station in the world when it was built in 1907. 

Designed by Daniel H. Burnham, it is considered to be one of the finest examples of the BeauxArts style of architecture in the United States. In 1969 the station was added to the national 

register of historic places, although the building had fallen into major disrepair. In 1981, 

Congress passed legislation to protect the historic building, transform it into an intermodal 

transportation center and establish the building as a commercial complex. The public-private 

partnership formed to redevelop the station resulted from the Federal Government's desire to 

restore and preserve the historic station as a transportation center while limiting its exposure to 

future federal maintenance requirements. The redevelopment of Union Station in the 1980s 

created a vibrant transportation center and a successful commercial enterprise which proved 

transformative to the neighborhoods adjacent to the station. 

The short term goals for redevelopment were to renovate the historic building after years of 

neglect and to find a commercial partner willing to enter into a long term lease for commercial 

development and operation of the station. The station was leased to Union Station Venture 

(USV) and the commercial redevelopment began in 1986. USV group comprised LaSalle 

Partners, a full service commercial real estate company, and two firms with expertise in urban 

specialty projects - William Jackson Ewing, a retail development and leasing firm, and Benjamin 

Thompson and Associates, an architectural firm. The District of Columbia completed the 

parking garage and built the shell for the new train concourse. The station opened in 1988 with 

over 200,000 square feet of leasable retail space. Today the station serves over 100,000 

visitors daily. While still preserving its historic character, the station is a transportation hub of 
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To: The Subcommittee on Railroads, Pipelines and Hazardous Materials 

Committee on Transportation and Infrastructure 

July 9, 2013 

pg.2 

the District of Columbia. Not only is the station the second largest Amtrak station, it is a 

connection for commuter rail serving Maryland and Virginia, the busiest station in the WMATA 

subway system and the new station for intercity bus services. It will also be the terminus for the 

new District of Columbia Streetcar serving H Street within the next year. 

Experience in Maryland 

I am the third CEO in 25 years, having been in the position for 10 months now. My prior 

experience was at the Maryland Department of Transportation (MOOT) where I served as CFO, 

Deputy Secretary and finally Secretary of Transportation for three years. In my testimony today, 

I was asked to convey some of my experience at MOOT with regard to innovative financing and 

Public-Private Partnerships (P3). 

Like many states around the country, Maryland was hit very hard by the recession. We had to 

look at expanding the tools in our toolbox to secure more financial resources for transportation. 

Maryland has never shied away from innovative financing for transportation. You could say that 

the very creation of the Maryland Department of Transportation was, in part, an innovative 

approach to financing transportation. Like the federal model, all state-level transportation 

functions were assembled under one umbrella funded by the Transportation Trust Fund that 

stands separate from the State's General Fund. The Maryland Transportation Authority was 

also created as an entity of the Maryland Department of Transportation. The Authority oversees 

Maryland's toll facilities and has a trust fund and financing program independent of the MOOT 

trust fund. The combination of dedicated transportation revenues and the ability to issue debt 

backed solely by that tax revenue and revenues from department-wide operations, has been an 

effective model for Maryland for over 40 years. 

One of the best recent examples of pulling together several innovative financing techniques to 

develop a project financial plan is the Intercounty Connector (ICC). The ICC (MD 200) is an 

18.8-mile, limited access, six-lane, tolled highway connecting the 1-270/1-370 corridor in 

Montgomery County with the 195/US 1 corridor in Prince George's County. The project had 

been the subject of decades of planning. 

The ICC is essentially completed and now open to traffic. The total cost of the project was 

$2.425 Billion. The financial plan included: 

GARVEE Bonds - $750 Million 

Transportation Authority Revenue Bonds - $571 Million 

TIFIA Loan - $516 Million 

General Funds - $265 Million 

• Transportation Trust Fund - $180 Million 

• Transportation Authority Cash - $124 Million 

• Federal Funds - $19 Million 
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To: The Subcommittee on Railroads, Pipelines and Hazardous Materials 

Committee on Transportation and Infrastructure 

July 9,2013 

pg.3 

This financial plan marked the first time that Maryland ever used GARVEE Bonds and a TIFIA 

loan for a project. Even a portion of the Transportation Authority Revenue Bonds had an 

innovative twist in that approximately $375 million of those bonds were issued as Build America 

Bonds created pursuant to the American Recovery and Reinvestment Act of 2009. Some of the 

financing tools were restricted for certain purposes while other sources could be applied to all 

aspects of the construction. 

In 2009 we needed to rebuild two significant revenue generating facilities, our largest container 

terminal in the Port of Baltimore and our travel centers on our heavily traveled Interstate 95 

north of Baltimore. We simply did not have the funding. We found ourselves asking if there 

were any businesses that would view certain transportation investments more effective for them 

than we viewed that investment for us. That thought process led us directly to Public-Private 

Partnerships (P3). 

Maryland now has two excellent examples of what are proving to be successful partnerships 

with the private sector-the Seagirt Marine Terminal at the Port of Baltimore and the Travel 

Plazas along the 1-95 Corridor. 

The Seagirt Marine Terminal is the primary container facility in the Port of Baltimore. The 

terminal was 20 years old with only three berths served by cranes that were nearing the end of 

their useful life and becoming functionally obsolete as wider container ships visited the port. 

While the main channel in the Chesapeake Bay is maintained to a depth of 50 feet, none of the 

Seagirt berths were deep enough to accommodate larger ships expected after the expansion of 

the Panama Canal. If the Port of Baltimore was going to maintain and expand its market share 

in the next ten years, new shipping berths and cranes were needed. 

The Maryland Department of Transportation, the Maryland Port Administration (operator of 

Seagirt), and the Maryland Transportation Authority (owner of Seagirt) began a search for a 

private sector partner willing and able to undertake a long-term lease of the facility. The goals 

for the P3 were clear and concise. 

Fund the construction of a new 50-foot berth to be operational before the expansion of 

the Panama Canal is completed. 

• Repay the Maryland Transportation Authority for its initial investment in the terminal. 

Provide an on-going revenue stream to the Maryland Port Administration (MPA). 
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To: The Subcommittee on Railroads, Pipelines and Hazardous Materials 

Committee on Transportation and Infrastructure 

July 9, 2013 

pg.4 

The effort resulted in the formation of a strong partnership between Maryland, Highstar Capital, 

and Ports America. The agreement, which began in January 2010, covers a period of 50 years. 

Over that term, the total investment and revenue has the potential of reaching $1.8 Billion. 

Some of the specific components of the deal include: 

• $140 Million up-front payment to the Maryland Transportation Authority that will be used 

for highway and bridge improvements; 

$105 Million investment in the 50-foot berth and cranes; 

• $378 Million of fixed annual payments to MPA over the term of the agreement; and 

$699 Million of variable payments to MPA over the term of the agreement. 

It was also estimated that the project would create 5,700 new jobs and generate $15 million in 

new tax revenues. 

Maryland is 3 % years into the agreement. Container volumes have increased by 129,000 

between FY 2009 and FY 2012, an increase of 50 percent. The new berth is complete and the 

new cranes are on-site and functioning-two years before deadlines established in the 

agreement. 

The 1-95 travel plazas are owned and operated by the Maryland Transportation Authority. The 

two travel facilities which serve over a million visitors per year are called the Maryland House 

and the Chesapeake House. The Maryland House is almost 50 years old and the Chesapeake 

House is almost 40 years old. Both facilities had exceeded their life expectancy. The project 

appeared to be the perfect P3 candidate. 

The effort to secure a P3 arrangement for the travel plazas was driven by three core goals. 

Obtain new or like-new facilities to replace the current Chesapeake and Maryland 

Houses. 

• Ensure that the facility design and operation will provide a positive customer experience. 

Provide a fair return to the State, and provide for transfer of the facilities in satisfactory 

condition at the end of the term. 

In the end, a 35-year lease agreement was reached with Areas USA. The parent company of 

Areas USA, Areas SA, has been in the travel services industry for more than 40 years in 

locations all around the world. The total value of this partnership to the State is estimated to be 

$577 - $662 million over the 35-year term of the agreement. The significant components of the 

deal include: 

• $56 Million to replace both travel plazas; 

$442 - $488 Million in revenue payments; and 

• $41.5 - $45.5 Million in capital reinvestments in the facilities. 

Construction is underway with the expectation that both new plazas will be open by September 

2014. 
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To: The Subcommittee on Railroads, Pipelines and Hazardous Materials 

Committee on Transportation and Infrastructure 

July 9, 2013 

pg.5 

My Observations from Maryland Projects 

From my experience in Maryland trying to create innovative financing structures to solve long 

term infrastructure problems, I have several observations. 

First, every project is different, there is no one size fits all approach. Each project must be 

custom fit based upon the financeable components of the project and the benefits to the users. 

Second, all financing - public or private must have a credit-worthy repayment stream. There is 

no free money. In my experience, the public frequently has the erroneous perception that in a 

public-private partnership, the user's cost will be transferred to the private sector. This is not 

typically the case. The investor must ultimately be paid back with an incentive for providing the 

original investment. 

Third, funding is the final solution. Before the financial equation can be solved, the project must 

be clearly defined with its goals and benefits. The first two questions to be answered are: 1. Is 

the project viable from an engineering and constructability standpoint? and 2. Does someone 

want this project enough to pay for its benefits? 

Fourth, define the elements of the projects for which there is a direct connection between 

benefit and costs. For example, in many transit oriented developments the building of a parking 

garage is the first step because people are willing to pay for parking due to its direct benefit to a 

service they want. 

Fifth, can the revenues and benefits from single assets, like a parking garage, be used to 

leverage financing for all or portions of the project? 

Plans for Union Station 

Just five blocks from the U.S. Capitol, Union Station provides an unparalleled opportunity to 

demonstrate this country's commitment to developing the best intermodal transportation centers 

in the world. A victim of its own success, Union Station has seen passenger volumes triple 

since its restoration and redevelopment in 1988. Ashkenazy Acquisition Corporation is the 

current developer leasing Union Station. Akridge, a local developer, owns the air rights over the 

rail yard north to K Street. Currently stretched to capacity, intercity and commuter rail passenger 

volumes are predicted to once again triple in the next 20 to 30 years. USRC, along with Amtrak 

and the developers are now planning a transformation of the station which will increase the 

capacity and improve the passenger experience for travelers by rail, subway, streetcar, taxi, 

bus, bicycle, walking, rental car and private car. The plans also call for a three million square 

foot commercial center with parks, plazas and civic spaces atop the rail yard. 
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To: The Subcommittee on Railroads, Pipelines and Hazardous Materials 

Committee on Transportation and Infrastructure 

July 9, 2013 

pg.6 

The expansion of the intermodal center will catalyze job creation and economic development 

throughout the National Capital Region in the coming decades. Increased passenger capacity 

will facilitate housing (market rate and affordable) and job growth (at all levels of the income 

spectrum) through enhanced mobility within and to and from the region. Increased intercity 

travel and access to regional airports will drive hospitality and tourism growth. The new 

commercial center at the station will reknit neighborhoods long separated by train tracks and 

bolster recent proximate neighborhood growth, without displacing any current occupants. 

Beyond providing a model for sustainable economic growth and leveraging existing transit 

assets, the transformation of Union Station can demonstrate high-priority regional and national 

priorities. The plans call for celebrating, enhancing and preserving the historic character of one 

of our country's most celebrated buildings. The grand public spaces and structures will signal 

the importance we assign to intermodal facilities. Finally, this redevelopment will highlight the 

principles of sustainable design and enhanced safety and security. 

Through regional cooperation and the full engagement of local and federal stakeholders, we 

plan to partner with and leverage the private sector's access to broader capital markets and 

ability to take on greater risk. While we are still in the concept planning stage, the project 

elements provide a promising list of ingredients which are conducive to a wide range of funding 

and financing techniques. Increased ridership, sales and real estate taxes, development rights, 

parking operations and other revenue increments present ideal opportunities for securitization, 

risk-sharing, public private partnerships and other financing techniques. As our planning 

process begins to solidify the project's many uses and beneficiaries, we will seek to optimize 

and integrate as many funding sources as possible to minimize public investment and 

risk. While we will continue to study successful models from other cities, we are confident that 

as with similar projects, Union Station's expansion will require its own tailored financing 

solutions. 

During our planning and design process we hope to learn from other urban transportation center 

development around the country. I would like to invite you all to visit the station and hear more 

about our plans. Thank you. I will be pleased to answer any questions you have. 
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Committee on Transportation and Infrastructure 

Subcommittee on Railroads, Pipelines, and Hazardous Materials 

Hearing on "The Role of Innovative Finance in Intercity Passenger Rail" 

July 9, 2013 

TO: Rep. Jeff Denham 

FROM: Beverley Swaim-Staley 

Question #1: Are there other rail stations in the country that are contemplating public-private 

partnerships to advance capital projects? 

There are stations in various stages of development around the country. I have reached out to nine 

other developers in hopes of creating a communication network where we can keep track of each 

other's progress and learn from each other. Two projects which seem to be progressing well are Denver 

and Los Angeles. Denver is well underway and expected to open next summer. Los Angeles has just 

hired a Master Architect. 

Question #2: Putting aside funding, there any Federal policies for the next rail authorization that 

would help stations enter into public-private partnerships? 

In my experience, the key to public private partnerships is flexibility. Every deal is different, in structure, 

ownership, stakeholder relationships, governance and financing opportunities. Stations may be 

owned by Amtrak, the state, a municipality or leased by a non-profit corporation as in the case of 

Washington's Union Station. In some cases, more than one railroad may have rights-of-way. 

Oftentimes, freight and passenger rail are forced to compete for the same track usage. Federal policy 

should encourage partnerships among the railroads. Federal policies for funding mechanisms, (direct or 

indirect), should be inclusive to a variety of public or private sponsors. The processes for Environmental 

Reviews and approvals should be efficient and compatible with a complex number of project 

stakeholders. Federal policy should encourage transit oriented development which rebuilds and 

connects communities, creates jobs, and provides long term economic benefit. 
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Testimony of 

Frank Chechile 

Chief Executive Officer 

Parallel Infrastructure 

Before 

House Transportation and Infrastructure 

Subcommittee on Railroads, Pipelines and Hazardous 

Materials 

On 

"The Role of Innovative Finance in Intercity Passenger RaW' 

Submitted by 

4601 Touchton Road East 

300, Suite 3200 

FL 

T 904.996.2807 

F 904.565.4144 

July 9,2013 
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Introduction 

Chairman Denham, Ranking Member Brown, and Members of the Subcommittee, thank you for 

the invitation to participate in this hearing. I am grateful for the opportunity to share some of 

private industry's perspectives on innovative financing approaches that can benefit the 

passenger rail industry. 

My name is Frank Chechile and I am the Chief Executive Officer of Parallel Infrastructure, an 

asset development and right-of-way management firm based in Jacksonville, Florida. 

Before providing you with a description of Parallel Infrastructure, I would like to offer context 

and describe Parallel's association with our parent and sister companies. I think this 

information is helpful, giving insights into our experience with building, evolving and sustaining 

large-scale, transportation-related businesses. 

Parallel Infrastructure is a wholly owned subsidiary of Florida East Coast Industries (FECI). 

FECI has a rich history dating back over a century, when a predecessor company was 

established by Mr. Henry Flagler. Mr. Flagler was a pioneer in the development of Florida's east 

coast, and today FECI continues to transform Florida in the areas of real estate, transportation 

and infrastructure. 

FECI is comprised of four wholly owned subsidiaries, of which Parallel is one. The other three 

are: Flagler Development, a full-service commercial real estate company; All Aboard Florida, an 

interCity passenger rail system that will be privately owned and operated; and South Florida 

Logistics Services, an integrated logistics company. FECI and its four subsidiaries work closely 

with our sister company, Florida East Coast Railway (FEC), a freight rail system stretching from 

Jacksonville, Florida to Miami, Florida. 

Although operated independently from one another, all of the FECI companies are focused on 

creating value from transportation opportunities, and related areas such as real estate and 

right-of-ways, just as our founder did over a century ago. Through a focus on unlocking 

opportunities to generate value for our stakeholders, including our customers, we have 

maintained our vitality and relevance, and built successful businesses. By doing so, we have 

fostered economic development and created jobs, while ensuring safety and respecting the 

environment. 

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Together, we have worked to maximize the value of our rail corridor, which is 100 feet wide, 

and stretches 351 miles, beginning in downtown Jacksonville, Florida, and continuing through 

the cities of Daytona Beach, West Palm Beach, Fort Lauderdale, and Miami. The corridor 

traverses through areas whose total population is just under 9 million people, and also connects 

to three major seaports: Port of Palm Beach, Port Everglades and Port Miami. 

Figure 1. Florida East Coast Railway (FEC) Corridor 

Although each entity is distinct in purpose and organization, in many ways, the lessons we've 

learned from collaborating with one another to fulfill a broader mission can be employed by 

public-private partnerships (P3). It's my belief that collaboration between the public and private 

sector would provide a material new source of financing for intercity passenger rail systems in 

our country. 

For example, we have learned that joint problem-solving among organizations with a diverse 

set of objectives, sometimes conflicting, is hard work, but doable when the end game is welldefined, clearly understood, and has buy-in at multiple levels. This is enabled by building 

consensus on the key metrics that guide decision making, implementing workable governance 

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models to keep stakeholders aligned and informed, and developing constructs to share financial 

gain. 

These are among some of the disciplines and best practices that we bring to the table. I also 

believe that this gives us unique perspectives on getting complex things done and getting them 

right - at scale. 

About Parallel Infrastructure 

Now, some background on the company I have the privilege of leading, Parallel Infrastructure. 

Our firm was created from our decades-long heritage as a right-of-way management 

organization for FEe Railway. Launched as a separate company just two years ago, we have 

become a national player with expertise in maximizing the value of right-of-ways and other 

similar and related real estate through proactive management and focused asset development. 

By entering into innovative revenue-share agreements with right-of-way property owners, we 

help to monetize their underutilized real estate without interrupting core operations. The result 

is increased revenue for a right-of-way property owner with little to no risk, and plenty of 

upside for incremental revenue generation. 

In collaboration with our right-of-way clients, and using our own capital, we take the lead in: 

Proactively leasing right-of-way land, 

Deploying communications infrastructure facilities, 

• Creating energy distribution systems, such as pipelines, and 

Building facilities that lend themselves to right-of-way property, including advertising 

(e.g., billboards), parking and storage structures. 

In our short history, we have established asset development agreements with 28 freight 

railroad property owners and have roughly 1,800 miles under contract. We manage over 5,100 

individual leasing contracts the agreements between a railroad and lessees along the right-ofway. In addition, we manage hundreds of separate land parcels, including some with existing 

buildings or structures, sized from 1 to over 300 acres that are mostly adjacent to or near the 

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right-of-way. We also enjoy relationships with public sector clients who have looked to Parallel 

Infrastructure to identify asset development and revenue generation opportunities, and are 

actively engaged with Class I railroads, as we build on our success with regional and short line 

railroads. 

Our value proposition is straightforward: We provide both the capital and resources to develop 

revenue-generating assets on a right-of-way owner's property, and share the returns with the 

property owner. This allows the right-of-way owner to use their capital on improving their 

transportation infrastructure, while participating in the financial returns earned from someone 

else's investment in other types of assets. In fact, in many instances, such as state 

Departments of Transportation, a public sector entity must use its funds to maintain or expand 

transportation infrastructure, not on communications, utility, or other assets that can generate 

new revenue streams. 

For our private and public sector clients alike, the ability to partner with a firm such as ours 

allows them to focus on their core operations, knowing that our own railroad heritage and rightof-way expertise ensures we understand what that entails. Indeed, working with Parallel 

Infrastructure provides ease of mind given our unique institutional expertise, built over decades 

of right-of-way management experience. Furthermore, many appreCiate the perspectives that 

we offer and highly value the insights and best practices we share with them. We are not only 

right-of-way monetization experts; we are right-of-way operational specialists. 

Our view of the opportunity 

The opportunity to fully earn revenues from right-of-way real estate in our country is vast. 

There are over one million miles of transportation corridors in the United States. These 

corridors are owned principally by state Departments of Transportation, local governments and 

private railroads. In addition, utility companies operate hundreds of thousands of miles of 

transmission lines in the United States, often on right-of-way land that they own. Parallel 

Infrastructure is targeting these entities to provide right-of-way real estate management 

services, and to generate significantly more value for them by building infrastructure assets that 

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are well suited for those types of properties, such as communications facilities, energy 

distribution systems, and so on. 

Our market research shows that less than 50,000 miles, or 5%, of transportation right-of-way 

are co-managed with or partially outsourced to third-party providers. The remaining almost 1 

million miles of right-of-way are managed internally by their owner. Given our successful track 

record with the FEC Railway corridor and our growing list of client accomplishments, we believe 

that there is a significant market for our services. To provide a sense of scale, assuming that 

right-of-way owners could earn just $1,000 per mile from the types of activities we undertake, 

the million miles of transportation corridor in the U.s. would generate $1 billion. While that 

number might sound ambitious, you should note that Parallel Infrastructure is generating 

approximately $50,000 per mile in our own 351-mile long FEC Railway corridor just from 

telecommunications, pipe and wire, and land leases. 

Parallel Infrastructure's services help any right-of-way owner, either in the public or private 

sector, achieve an important objective: maximize the value earned from its real estate assets. 

In addition to the direct benefit of providing additional recurring revenues for a right-of-way 

owner, these arrangements can also allow a right-of-way owner to obtain access to capital to 

support large-scale funding needs. More specifically, since Parallel is focused on developing 

assets whose demands are expected to continue growing, such as communications faCilities, 

and its contracts are with creditworthy tenants for long periods of time, they offer predictable 

revenue streams for a right-of-way owner that could be collateralized. 

For example, if a transit agency generates $10 million of annual revenue from the sort of rightof-way management opportunities that I'm describing, it could easily use that as collateral to 

secure $100 million in capital through a financing transaction. So by first unlocking the value of 

underutilized real estate by leveraging a third-party's capital and, in turn, leveraging the value 

of the annuities, an agency is positioned to take on previously unfunded or underfunded capital 

projects. 

Economic conditions in our country remain fragile, at best, and we all know that transportation 

funding is woefully inadequate to meet our future needs. With respect to using traditional 

methods to reduce costs, or to increase revenues, much of the proverbial lOW-hanging fruit has 

been picked. I believe it's for these reasons that Parallel Infrastructure is finding right-of-way 

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owners, both in the private and public sectors, accelerating efforts to forge partnerships and 

monetize underutilized real estate. 

In the public sector, more specifically, where property values and property tax receipts have 

declined, and where slow economic activity has reduced tax receipts, we are seeing local 

governments making efforts to capture additional revenue by focusing on unlocking the value of 

their real estate. 

Parallel Infrastructure success stories 

For instance, Parallel Infrastructure was recently selected by Allegheny County, in western 

Pennsylvania, as one firm to help it maximize its income in this manner. Through a competitive 

bidding process, we were selected to build communications facilities on property the County 

identified as suitable for those purposes. We will use our capabilities and our capital to build, 

maintain, and lease facilities to communications service operators, which in turn, will provide 

the County with a long-term revenue stream without having to spend any of their money. In 

addition, by selecting several awardees, the County ensured that it obtains maximum value for 

the long term. While sharing revenue earned from communications facilities with a land owner 

is not a new concept, doing so in a comprehensive manner with a public sector land owner is 

the type of public-private arrangement that public sector entities like Allegheny County are 

using to institutionalize revenue capture opportunities. 

As states grapple with a shortfall in needed transportation infrastructure funding, they are also 

recognizing the opportunity to access new sources of revenue from their right-of-way real 

estate assets, often using P3 arrangements. Parallel Infrastructure is in a unique position to 

assist these entities in doing so given our real estate focus, our transportation affiliation, and 

our railroad heritage. Indeed, a combination of proactive right-of-way real estate management, 

asset development, and passenger and freight railroad experience is a formidable experience 

set that brings intriguing P3 possibilities. 

Another benefit of these types of arrangements is for land owners to obtain access to the 

assets that are built in their right-of-way to help fulfill their own operational needs, in a more 

cost-effective manner. For instance, Parallel Infrastructure recently partnered with a leading 

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fiber optic network company to allow it to build its advanced technology network using the FEC 

Railway right-of-way. While the fiber network company will market this network to a multitude 

of potential customers who have growing needs for these technologies, our All Aboard Florida 

and FEC Railway sister companies will be able to access them for their own operating needs, 

such as assisting with the deployment of Positive Train Control, and for offering intercity 

passengers with superior amenities, including uninterrupted Wi-Fi service. 

While maximizing the value of real estate is a straightforward and uncomplicated idea, 

achieving superior results requires the expertise of a firm with experience in doing so, that 

possesses people with a passion for maximizing the value of real estate, that understand the 

operating requirements of a railroad or utility or a local government, and with the capital 

needed to build the assets that ultimately generate the revenue. At Parallel Infrastructure, we 

possess all those things, as well as our methodology for obtaining results - the ValueMaxsM 

Right-of-Way Revenue Creation Model. This approach enables us to identify, evaluate and act 

on tangible revenue capture possibilities together with our right-of-way clients. 

Personally, I am very proud of the effort that went into creating the model and am absolutely 

delighted to witness our team apply the requisite rigor and discipline to each client 

engagement. All of our intellectual capital, taken together, allows us to make the opportunities 

visible and actionable. When there is sharpened focus on and knowledge about monetizing 

right-of-way assets, it is quite literally a win-win situation. 

Connection to innovative financing and passenger rail 

These sort of experiences that right-of-way land owners have had with using their existing 

assets to generate new sources of revenue, many of them with Parallel Infrastructure's help, 

have demonstrated one innovative and substantial way to finance passenger rail in the United 

States. 

Certainly, there are many approaches to close funding gaps, and to increase investment in our 

nation's transportation infrastructure and facilities. The holes are significant and the numbers 

are big, and a combination of approaches and solutions will be needed. One approach is to do 

what a leading consulting firm recently recommended when it suggested that, "one of the most 

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powerful ways to reduce the overall cost of infrastructure is to optimize infrastructure portfolios 

- that is, simply to select the right combination of projects."! Another approach is to continue 

streamlining and reducing the cost of building infrastructure; while yet another is to increase 

fees paid by infrastructure users. But, what I'm proposing today is the easiest means of 

generating funding for transportation: simply focus on monetizing and maximizing the value of 

existing assets that lay underutilized. 

At the state and local government level, the marketplace is clearly telling us that proactive 

right-of-way management and asset development are parts of the financing solution. With the 

scale of real estate assets maintained in the public sector, there is rich potential to use annuity 

streams generated from right-of-way real estate as collateral and to secure financing for capital 

projects. When one looks at companies like Parallel Infrastructure, particularly with our 

heritage and track record, you see an attractive option for forging a strong public-private 

partnership. We are a firm with the ability and willingness to use our capital to build 

infrastructure assets and to share the financial gains with right-of-way owners; and, I believe 

models such as these should be applied at the federal level as a supplemental means to provide 

funding for intercity passenger rail. 

After years of stagnant or slow growth in passenger volumes, Amtrak has finally begun to see 

significant increases in ridership, reaching record numbers in the past year. Yet Amtrak's 

revenue still covers only a portion of its operating costs, and its capital needs far exceed annual 

congressional appropriations. 

When you look at intercity passenger rail systems operating at distances of less than 400 miles, 

revenues generally exceed operating costs and therefore demonstrate viable business models. 

Amtrak's own operations within the Northeast Corridor show a positive balance when separated 

from its long-distance operations. However, passenger revenue and congressional subsidies 

combined do not adequately meet long-term depreciation costs within the corridor. 

Amtrak's own estimates state that it will take up to 15 years to bring the Northeast Corridor to a 

state of good repair even if they received all their requested annual funding from Congress. We 

1 "Infrastructure productivity: How to save $1 trillion a year". McKinsey Global Institute and McKinsey 

Infrastructure Practice. McKinsey & Company, January 2013. 

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believe that innovative private-sector partnerships can close the funding gap for our federally 

operated intercity passenger rail system and help shorten this time frame. 

The 2008 PRIIA Act sought to enhance the relationship between the states and Amtrak, calling 

for more state participation, developing state rail plans and public-private partnerships. PRIIA's 

successor should seek to strengthen those provisions and provide the kind of incentives that 

take advantage of private sector expertise where appropriate, particularly if they generate 

dependable revenue streams that attract investment by the capital markets. 

By aggressively monetizing ancillary assets through proactive right-of-way management and 

asset development, and by capturing land-value from station investments, private and public 

intercity passenger systems will be financially stronger, more viable, and better positioned to 

leverage steady revenue streams, revive dormant assets, and ultimately thrive in ways that 

have not been accomplished in the last 50 years. 

Closing remarks 

Let me close by saying that public-private partnership is more than a trendy buzzword. It truly 

is an opportunity to reach new levels of collaboration between business and government. In 

the case of financing intercity passenger rail, it offers a straightforward opportunity to take 

advantage of existing real estate assets to generate greater revenue. 

For Parallel Infrastructure, and for me personally, being part of this transformation is 

invigorating. There are obstacles to overcome and business models will mature over time as 

lessons are learned from practical experience. But, taking the initial steps is always the hardest 

part. I am certain, though, that each subsequent step is worth taking. And the time is now for 

the public sector to take the step towards actively managing right-of-ways by leveraging the 

private sector's experience and capital. 

Again, let me express my gratitude for the opportunity to partiCipate today. 

Thank you. I would be delighted to answer any questions or address any comments you might 

have on my testimony. 

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Committee on Transportation and Infrastructure 

Hearing on "The Role of Innovative Finance in Intercity Passenger Rail" 

Questions and Answers for the Record 

August 6, 2013 

Ouestions from Rep. Denham 

Question 1: 

Please provide some examples of successful leveraging of rights of way that have occurred 

here and intemationally, and how much revenue can be unlocked from a right-of-way 

asset? 

Answer: 

I can cite several examples from within the United States, and offer insight on revenue 

potential. Note, however, that several factors influence right-of-way (ROW) monetization 

potential: rail safety and operations considerations (always front and center); population 

density; right-of-way span; concentration of existing rail and non-rail assets; and long-term 

rail development plans. 

Example 1: Telecommunications infrastructure 

The development and operation of wireless communications towers is a proven revenuegenerating opportunity within and along rights-of-way. Our experience shows that a ROW 

owner - with no capital investment requirements and no operating expenses - can earn 

approximately $1.5 million over a lO-year period from a portfolio of just 10 towers. If a 

ROW owner chose to leverage this revenue stream, It could expect to receive $150-225 

million (applying a 1o-15x multiple) from financial markets. 

An extension of this example is to place communications fadlities on passenger rail cars, 

and allow wireless operators to access these fadlities in order to improve their customers' 

service experience. This represents an additional source of revenue, as the carriers would 

pay rent to the passenger rail service provider for this access. As well, ridership would likely 

increase due to the improved passenger experience. This opportunity could generate 

apprOximately $5 million over ten years for an intercity line carrying 10 million passengers. 

Longitudinal fiber optic lines are another type of communications fadlity that can generate 

revenue for a ROW owner. A 500 mile corridor between major dties could generate as 

much as $10 million per year from fiber optic network owners/operators. 

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Example #2: Proactive land Leasing 

Many railroads generate revenue from leasing property on or alongside rights-of-way. 

Based on our experience, many understaffed railway real estate departments are typically 

reactive when it comes to creating demand for leasing property. Considering both lease 

originations and higher renewal rates for existing leases, with the right focus and expertise, 

the revenue potential might be up to $3,000 or more of incremental revenue per ROW mile. 

Business process improvements, analysis of application fees, and pipe and wire crossings 

can add to this per-mile metric. 

Example 3: Outdoor Advertisina 

Advertising structures are a proven revenue-generating opportunity within and alongside 

right of ways. The economic dynamics for a ROW owner are Similar to those of a wireless 

communications tower, with the ROW owner investing no capital and having no operating 

expenses, while earning approximately $1.7 million over a 10-year period from a portfolio of 

just 10 billboards. A ROW owner could also choose to leverage this revenue stream given 

the credit worthiness of its tenant operators. 

Other Opportunities 

Certain parts of a corridor offer the opportunity for development of other types of 

infrastructure facilities, including parking, storage, and pipelines. In a densely populated 

corridor of 150 miles or so, revenue potential can be several million dollars per year more. 

Question 2: 

Are there federal polities that would be useful to make it easier for public-private 

partnerships to leverage railroad rights of way? 

Answer: 

The 2008 PRIIA does not prohibit Amtrak from contracting with third party providers to 

manage right of way assets or perform other non-operational functions. This type of publicprivate partnership is currently utilized to allow leasing and management of retail outlets at 

Amtrak stations such as Union Station and Penn Station. However, Congress may provide 

additional authority through legislation directing all federal agencies that own or manage 

real estate assets, including right of way, to engage the private sector to ensure they are 

earning maximum value for taxpayers. 

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Question 3: 

What kinds of return are necessary for private companies to invest in projects along railroad 

rights of way, and how do we ensure that the railroads benefit from such investments? 

Answer: 

The investment returns that private companies expect and require are dependent on many 

factors unique to their industries and circumstances. 

For a right of way (ROW) owner to partiapate and benefit in the sort of opportunities 

discussed here, it must be a competitive and reliable supplier to the companies making 

investments. More spedfically, as a supplier of real estate assets to a firm that builds and 

operates wireless communications towers, fiber optic networks, pipelines, etc., it must be: 

pro-active at helping to realize opportunities, easy to do business with, and offer fair terms 

for access to its real estate. 

As noted in our earlier responses, railroads benefit by having no capital or operational 

funding requirements, yet earn a predictable revenue stream. These, in tum, could be 

aggregated and leveraged to generate access to significant capital. 

In addition, as part of the license terms between a ROW owner and a private company 

seeking to build and operate faalities In the ROW, the ROW owner can acquire access to the 

facilities to support its own operations, thereby eliminating capital and operating 

expenditures it would otherwise have had to make. 

Rep. Corrine Brown 

Question 4: 

Your sister company, Rorida East Coast Railway, has some recent experience with the RRIF 

loan program. Do you have any recommendations for improving the loan program? 

Answer: 

All Aboard Rorida has a pending RRIF loan with the Federal Railroad Administration. While 

All Aboard Rorida is a sister company of Parallel Infrastructure, it is operated independently 

of Parallel Infrastructure, with a different set of executives running that company. Hence, I 

ask that you contact that company's executive team directly with this question. Please note 

that Rorida East Coast Railway is another affiliate company, also managed by a separate 

executive team. 

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-

--

"II! 

! !I 

Testimony of John Robert Smith 

Co-Chair, Transportation for America 

and President & CEO, Reconnecting America 

to the 

U.S. House of Representatives 

Committee on Transportation and Infrastructure 

Subcommittee on Railroads, Pipelines, and Hazardous Malerials 

July 9, 2013 
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Testimony of John RobCli Smith 

Co-Chair, TranspOliation for America and 

President & CEO, Reconnecting America 

U.S. House of Representatives Committee on TranspOliation and Infrastructure 

Subcommittee on Railroads, Pipelines, and Hazardous Materials 

July 9,2013 

Chainnan Denham, Ranking Member Brown, and mcmbcrs of the Subcommittee, thank you for 

the 0ppOIiunity to testify today. I am John Roberi Smith, Co-Chair of TranspOJiation for 

America, the country's broadest and most diverse transpOIiation coalition. Our members hail 

fi'om the fields of transportation, housing, environment, public health, real estate, safety, and 

social equity, representing more than 500 different organizations. I am also the President and 

CEO of Reconnecting America, a national nonprofit that integrates transpOliation and 

community development. Reconnecting America is the managing partner of the Center for 

Transit-Oriented Development, which conducts research and promotes best practices in 

development along transit lines. 

1 would like to thank the Subcommittee for holding this hearing on the role of innovative finance 

in intercity passenger rail. Functional, safe, and efficient tranSpOIiation systems are one of the 

comerstones upon which tbis country was built. Passenger rail was an integral pari oftha! 

national network long before our interstate highway system and aviation industry came into 

being. Today, the future of America's economic growth, energy security, and the health of our 

citizens depend on our ability to affordably connect people with jobs, education, health care, and 

oppOliunity. A well-funded, well-maintained national passenger rail system is more important to 

that goal than ever. With the Passenger Rail Investment and Improvement Act of 2008 (PRIlA) 
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set to expire on September 30, 2013, now is the time for the members of this Subcommittee to 

work with your colleagues throughout the Congress and in the Administration to set policies in 

place to help passenger rail realize its potential as a modem, efficient transportation mode that 

strengthens our national economy and provides transportation choices for all Americans. 

As Mayor of Meridian, Mississippi for sixteen years and as a member of the Amtrak Board of 

Directors from 1998-2003 (Chainnan from 2002-2003), I have spent much of my career finding 

innovative ways to fund and support transportation improvements, including building the first 

multimodal transportation center in the South. Based on this experience, I would like to provide 

the Subcommittee with three core principles to keep in mind as you draft the next authorizing 

legislation for passenger rail: (1) a national passenger rail system has significant economic value; 

(2) maximizing the value of our passenger rail system requires increased, stable, and dedicated 

federal funding; and (3) station area development is a promising area for utilizing innovative 

financing mechanisms. 

I. A National Passenger Rail System Has Significant Economic Value 

Americans today are using intercity passenger rail in record numbers. Amtrak, the nation's 

intercity passenger rail provider, carried 31.2 million passengers last year, breaking all previous 

ridership records. This feat is unsurprising when one considers the effects of rising gas prices, 

multiplying airline fees, increasing congestion on roads and in air travel, and improved 

perfornlance of Amtrak in many corridors. Rail provides an affordable, convenient alternative 

for many trips. What is more, in our increasingly interconnected economy, a region's ability to 

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compete relies in part on its ability to provide the transportation choices people need to be 

connected to the larger region and indeed, to the nation as a whole. 

That is why mayors and other local elected officials are so deeply engaged on transportation 

issues. Even after I left office in Meridian, I have stayed in contact with local leaders around the 

country, who understand that in order to remain competitive their city has to offer connectivity 

and mobility not just for goods and materials, but for people as well. Passenger rail provides that 

connectivity. In some places, passenger rail means that workers can be connected to jobs, as is 

the case in the Northeast Corridor, along the West Coast, in the Midwest, and in several corridors 

in between. In others, rail service means that people can travel for recreation, supporting the 

tourism industry, which in some states is among the leading industries. In some of our northem 

and western states, rail service means that commerce and activity can continue even when 

highways are impassible due to heavy snows. In many communities, rail service means that 

seniors - a growing segment of the population· can afford to visit their families without having 

to brave crowded airports or congested highways. In smaller college towns, rail provides an 

essential connection for students seeking to enhance their education with the opportunities of a 

big city. 

For example, the college town of Grinnell is located in a sparsely populated part of central Iowa. 

Grinnell is only 285 miles from Chicago, but is no longer served by passenger rail, which used to 

connect the two cities in only a few hours. According to Jim Reische, Vice President of 

Communications for Grinnell College, "Grinnell is having an increasingly hard time recruiting 

the world-class faculty, staff and students we need to sustain our reputation and support our 

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community, because of the impression that we're geographically isolated." Reische believes that 

restoring the rail connection to Chicago is necessary for "attracting people who have competing 

educational or employment options in locations they largely perceive as more desirable, typically 

because of easier access to metropolitan areas and the associated assumptions about diversity, 

cultural life, etc." 

Increasingly, businesses are seeking to locate in places that can provide both a high quality of 

life for executives and employees as well as seamless connections to the surrounding region. 

Young college graduates are looking for places to settle where they can have transportation 

options other than driving. Rural residents are looking to remain in their hometowns while still 

having access to regional centers for health care or other special services. The mayors and local 

leaders with whom I have spoken agree that these are the factors that lead to economic successresidents who want to remain, businesses and young people who want to move in. They further 

agree that rail service is a key component of their ability to retain and attract residents. 

As oftoday, thirteen mayors of cities along the Gulf Coast from New Orleans, LA to 

Jacksonville, FL have joined together to support passenger rail service along that corridor. 

Service along the Gulf Coast was suspended after Hurricane Katrina in 2005 and has not been 

restarted, despite the fact that this corridor is experiencing rapid growth. It is the fourth largest 

aerospace corridor in the country, an industry that needs rapid, efficient transportation for its 

products and people. These mayors who represent cities large and small along the Coast - are 

seeking the restoration of passenger rail service in order to allow their region to continue its 

strong economic growth without choking on highway and airport congestion. 

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Research into the economic effects of passenger rail supports the Gulf Coast mayors' conclusion 

about the economic potential of restored rail service. for example, three years after the 

Downeaster service fi'om Boston, MA to Portland, ME st31ied, researchers found more than $ I 5 

million in annual business sales in Maine and New Hampshire attributable to the rail service.] A 

study of the Empire Builder's impact on :vIontana found that direct spending in Montana by 

Amtrak and riders fi'om out of state totaled between SS.3 million and $5.7 million annually, and 

that the benefits for Montana residents of using Amtrak intercity service (in ten11S of automobile 

costs avoided, lower accident probability, reduced highway maintenance, etc.) totaled at least 

$7.6 million annually2 

While these examples focus on specific conidors, it is important to keep in mind that the value of 

our passenger rail system derives from the fact that it is a national system. Just as our interstate 

highway system includes shol1er segments, such as Interstate 97 whose entire length is located 

within Annc Arundel County, Maryland, and longer ones, such as Interstate 90 that runs from 

Boston to Seattle, our national passenger rail system is an interconnected set of cOlTidor-based 

and longer distance routes. As with any network, the 1l1ore connections that are madc, the larger 

and more valuable the network becomes. If any set of connections is eliminated, e.g., through 

reductions in service, the value of the entire network is diminished. Conversely, by expanding 

service to more communities, bringing the benefits of affordable, efficient travel choices and 

reduced need for automobile and roadway maintenance, the economic benefits of the entire 

network can be increased. 

1 "Economic Benefits of Amtrak Downeaster Service," Prepared for 1he Maine Department of Transportation by 

Development Research Group, lnc. and KKO and Associales. February 200S. 

"Analysis oflhe Economic Beneflls oflhe Amlrak Empire Builder 10 Monlana: 

of Transportation, Montana Depar1meJli of Commerce, and Montana Department 

Associates. ]nc« July 2003. 

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The value of the network is also diminished, however, ifthe equipment and infrastructure are not 

in a state of good repair. Amtrak is currently facing a backlog of capital needs, including an 

estimated $52 billion through 2030 to bring the Northeast Corridor into a state of good repair and 

keep it there. In part this situation stems from the age of the infrastructure in some places, 

trains are running through Civil War-era tunnels! - but in large part this is a result of years of 

underinvestment at the federalleve!' To ensure that our national passenger rail system achieves 

its maximum economic potential, we must not only improve and expand service to additional 

communities, we must also make the investments needed to ensure that the system is brought 

into a state of good repair. These threshold conditions must be met before passenger rail can 

become a strong candidate for innovative financing strategies. 

II. Stable, Dedicated Funding Is the Foundation for Innovative Finance 

Achieving the conditions discussed above requires a stable, dedicated federal funding source for 

intercity passenger rail's capital and operational needs. Even if innovative financing strategies 

ultimately do become a larger piece of the funding pie, federal support will still be necessary, as 

it is for every other mode of transportation in this country. 

rntercity passenger rail is part of a multimodal transportation network that also includes, among 

:Jther things, roads, bridges, local and regional rail and buses, and aviation. Not one of these 

modes fully covers its costs from its own revenues. All of them rely on public support. Amtrak 

1as made significant improvements to its operations -last year it covered 88% of its operating 

:osts from ticket revenues and other non-federal revenue sources. Highway user fees currently 

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pay for only about hal f of the cost of building and maintaining our road network). At the fcderal 

level, $41 billion of general revenues has been transferred to the Highway Trust Fund since 2008 

to keep highway funding level, with another $12.6 billion authOlized to be transferred in 2014. 

On the aviation side, federal funding supports airpOli infi'astructure and certain operations 

necessary for commercial aviation to function, including air traffic control and aviation security. 

No other transportation mode in this country is expected to be self-sufficient, and no passenger 

rail system in the world is self-suppOliing. All receive some form of government support. As 

soon as we walk out onto the sidewalk in fi'ont of our home, or back out of our driveways onto 

the street, we are using publicly-supPOlied infrastructure. 

While passenger rail is similar to other modes in that it receives federal support as they do, it 

differs in a very impoliant respect. While highways, public transit, and aviation all benefit fi'om 

dedicated revenue sources deposited into Trust Funds for their use ollly, passenger rail in this 

country is funded on an annual basis from the govcmment's general funds. As a result, rail must 

figbt for its funding every single year. Oftentimes, there is a real threat of rail funding being 

slashed. The House Appropriations Committee recently proposed a FYI4 Transportation-HUD 

bill that would cut Amtrak's funding by a third, a level that would significantly undenl1ine the 

railroad's ability to continue national operations. 

Although PRllA authorized consistent and stable funding for Amtrak, that funding was not 

guaranteed, as most highway and transit funding is, and as a result was not provided by Congress 

at the authorizeo levels. This situation 111akcs it extremely difficult for Amtrak to make longer3 Pew Charitable Tmsls, "SubsidyScope: Analysis Finds Shifting Trends in Highway Funding: User Fees Make Up 

Decreasing Share", updated 2S November 2009. ciled in "Do Roads Pay fc'r Themselves) Setling the Record 

Straight Oil Tran~porta(jon Funding". USPIRG Education Fund, January 2011. 

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term investment decisions and upgrade its current infrastructure and equipment to improve 

service. Imagine if your salary was up for debate at the beginning of every year. How could you 

ever purchase a new car to replace your old jalopy, given that payments would stretch out 

beyond the first year? How would you know if you could afford to fix your leaking roof next 

year before the hurricane season starts? 

Until Amtrak is provided with stable and dedicated funding, this situation will inhibit the 

utilization of innovative finance strategies. Private investors in infrastructure projects make 

long-term commitments, not promises that can be renegotiated every year. These private 

companies understand the concept of "appropriations risk" - the risk that the federal portion of a 

project's funding will not be forthcoming in a particular year and the higher the risk, the higher 

the return the private investor will require. If the risk is sufficiently high, the private partner will 

walk away altogether. As long as rail investment remains a political football in Congress each 

year, it is doubtful that private sector partners will be interested in making a long-term 

commitment to rail. 

Real-life examples demonstrate that for many public-private partnerships, the threshold 

requirement is committed public funding, more so than the existence of a private partner. An 

often cited example of a promising public-private partnership is the Capital Beltway 495 Express 

Lanes in Northern Virginia. This project has a total cost of$2 billion funded through a mix of 

grant funding, financing, and private equity. Of this total, close to $1.7 billion involved public 

sector contributions with the Commonwealth of Virginia contributing $495 million in grant 

funds and the federal government providing almost $1.2 billion in subsidized financing tools. 

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The private equity portion represented the smallest percentage. Without the significant public 

funds and publicly subsidized financing tools, it is questionable whether this project would have 

been constructed. 

If the Subcommittee's goal is to encourage innovative financing strategies for intercity passenger 

rail, a necessary first step is to develop a stable, dedicated federal funding source that can 

provide the resources needed both to operate and maintain a national system. We hope members 

ofthis Subcommittee and others in Congress will work expeditiously to find dedicated revenues 

for passenger rail as well as other surface transportation investments. The most promising neartenn opportunity for identifying these needed revenues is the comprehensive tax refonn 

legislation currently being developed. Congress should not let this opportunity pass by without 

addressing the need for dedicated investment in thc nation's multimodal transportation system. 

III. Station-Area Development Is A Promising Area for Innovative Financing 

As the Subcommittee considers the role of innovative financing in intercity passenger rail, it is 

important to understand the economic value that can be created by focusing development and 

increasing intennodal connections at rail stations. The concept of transit-oriented development 

(TOD), while most often seen around local or regional transit stops, can also be successful 

around intercity passenger rail stations. These stations can be focal points for economic 

development, creating value that can in tum be used to support passenger rail through various 

"value capture" mechanisms. 

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When public infrastructure funding can leverage significant private-sector investment in station 

areas, the result creates lasting value for communities, revitalized downtowns and neighborhood 

centers, and increased access to economic and social opportunity. These benefits can have a 

transformational effect in communities. I saw this firsthand in Meridian, MS. A public-private 

investment turned our historic train station into the South's first multimodal transportation center 

and proved to be a catalyst for transforming our main street, increasing public transportation 

ridership, and helping to generatc millions of dollars in private economic development in the 

surrounding neighborhoods. Historic buildings were renovated; people came back downtown to 

both live and work, and also for cntertainment. Our city center was revived, not only for 

residents but for those that lived in the surrounding II-county region. Thc city's investment of$1 

million leveraged an additional $5 million in federal, state, and private sector dollars, which 

resulted in $135 million in economic development. 

Meridian may have been among the first, but it is not the only community to have used its rail 

station as a focal point for economic development: 

• Normal, Illinois built a multimodal transportation center as the anchor for redevelopment of 

an entire neighborhood, Uptown Normal. Using a combination offcderal funding, local 

taxes, and tax-increment financing, the city built thc center to rcplace an aging Amtrak 

station, along with other infrastructure needed to attract private development. As a result, 

Uptown Normal is now a vibrant neighborhood with residential, commercial, and 

entertainment opportunities. 

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• The City of Lincoln, Nebraska partnered with the University of Nebraska to tum the area 

around its rail station into a vibrant, mixed-use neighborhood, with a renovated rail station 

and new sports arena. The public bonds issued by the City and university will be repaid by 

sales tax revenue from activity at the sports arena and nearby hotels. 

• In San Bernardino, California, the city partnered with thc San Bernardino Associated 

Governments to restore the city's historic Santa Fe Depot. The city's goal is for the Depot to 

servc as a catalyst for future redevelopment in the area. The city is now planning a "Depot 

District" around the station, with shops, restaurants, and public gathering spaces. 

• In Memphis, Tennessee, Central Station was the centerpiece of redevelopment in the 

neighborhood just south of the downtown business district. With connections both to Amtrak 

and to Memphis' trolley line, Central Station is now home to apartments on the upper floors 

and a banquet hall on the first floor. The station'S redevelopment was also a catalyst for 

nearby commercial and residential development. 

These examples demonstrate that there is significant economic development potential around rail 

stations when cities proactively plan and partner with the private sector. The federal government 

can help to encourage such activity by modifying its existing financing programs, including the 

Railroad Rehabilitation and Improvement Financing program (RRIF), to provide credit 

assistance for these activities. In exchange, the recipients of such assistance should ensure that a 

portion ofthe economic value created will be returned to help support capital projects or 

operating costs of the rail system. 

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The evidence to date from rail station area development as well as larger-scale transit station area 

development suggests that the amount of revenue such development typically returns to the 

transportation project is not enough to pay for all costs of constructing, maintaining, and 

operating that rail or transit line. In other words, capturing the value of station-area development 

to help defray the public infrastructure costs is an important tool in the tool box, but it does not 

replace the need for robust public investment. Innovative finance supplements - but does not 

supplant federal funding. 

Conclusion 

To conclude, let me reiterate my appreciation for the Subcommittee's interest in this topic. 

Innovative financing can be an important component of the investment strategies for meeting our 

nation's passenger rail needs, as long as it rests upon the foundation ofa national system with 

stable and dedicated federal funding. As I have said, mayors and local officials across the 

country with whom I have spoken support the development of dedicated funding for intercity 

passenger rail. I am working with them to provide a letter to the Subcommittee later this summer 

formally expressing their support. As the Subcommittee considers the upcoming passenger rail 

authorization, we stand ready to assist your efforts to ensure that our national passenger rail 

system can realize its full potential as a backbone of our multimodal transportation 

network. Again, thank you for inviting me to testify today. 

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Questions from Chairman Denham 

1. Under the current RRIF program, what can and can't be done to provide support for 

station development projects? 

Answer: The RRIF program is narrowly tailored to provide financing for rail 

infrastructure. Specifically, a RRIF loan may be used to acquire, improve, or rehabilitate 

intermodal or rail equipment or facilities, including track, components of track, bridges, 

yards, buildings, and shops (Le., the train station itself). The RRIF program may not be 

used for innovative concepts that can lead to both increased ridership and investments 

in passenger rail service. This limitation drives away millions of dollars in potential 

private sector development every year. 

Demand for mixed-use commercial and residential projects with direct access to transit, 

commuter, and passenger rail facilities is growing. Yet, these projects often fail to 

materialize because of barriers to financing. When real estate developers try to build 

around legacy stations, site preparation often includes significant upgrades to 

underlying infrastructure. Traditional banking institutions often will not authorize loans to 

cover these large upfront costs that are difficult or impossible to collateralize. 

One potential revision to the RRIF program to allow private developers (with formal 

approval from the applicable local and state authorities) to finance station area 

infrastructure could lead to valuable economic development that also significantly 

expands demand and ridership for passenger rail. 

Another potential option would be to promote increased public-private partnerships 

through the RRIF program that result in increased investment in capital or operating 

needs of passenger rail service. Under this concept, private developers in partnership 

with the local government would be allowed to apply to the RRIF program for financing 

to help pay for the cost of their development near a rail station. As a part of this 

agreement they would be obligated to make on-going contributions to capitol and/or 

operating needs of the passenger rail line on which the station area development is 

located. 

As with all loans, RRIF must be repaid with interest. Yet, expanding eligible activities to 

include station area development would provide a mechanism to attract private capital. 

The private sector developer in partnership with the local government would be 

responsible for repaying the loan over the amortization period while also generating new 

tax revenues that support rail service. 
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An amended RRIF program would create a win in three ways: (1) it would spur 

economic development currently held up by financing gaps; (2) generate new ridership 

for passenger rail, relieving highway congestion and strengthening the fiscal position of 

passenger rail operators; and (3) generating new tax revenues that could further 

enhance rail service. 

2. Question: Do rural train stations have any development potential or is leveraging station 

development mostly a financing tool for major cities? 

Answer: Development around intercity passenger rail stations is possible in rural areas, 

just as it is in urban areas. Rural rail station development tends to be of a smaller scale 

than that which occurs in larger metropolitan areas, and is often oriented toward 

supporting downtown redevelopment efforts or increasing tourism. Many small towns 

across America are home to historic depots, which can become the symbolic 

centerpiece of a community's revitalization efforts. 

As I mentioned in my testimony, the redevelopment of Union Station in Meridian, 

Mississippi, a small city of 40,000 people, led to both public and private development of 

$135 million in the surrounding area, including retail, restaurants, the Mississippi State 

University Riley Center for Education and the Performance Arts as well as numerous 

residential projects. Other rural areas have similarly capitalized on their passenger rail 

stations. In Connellsville, Pennsylvania, with a population of 7,600, rail service is 

primarily used by tourists accessing the Youghiogheny River Trail. City leaders plan to 

focus redevelopment efforts in the area surrounding their rail station, creating a place 

where tourists can stay, shop, and eat, rather than merely passing through. In 

Brunswick, Maine, a town of about 21,000, the new Maine Street Station - built in 

connection with the extension of the Downeaster service from Boston - was the focal 

point for economic development including retail and office space, an inn, a medical 

center, residential units, and a branch of the Bowdoin College bookstore. 

The smaller scale of the development in rural areas makes it unlikely that it will generate 

enough revenue to make a significant contribution toward the cost of rail operations and 

maintenance; public support will still be necessary. Still, the examples above and 

others from across the country demonstrate that rural rail stations can serve as a 

catalyst for economic development in small towns, creating greater economic 

opportunity for rural residents. 
97 


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3. Question: You mention in your testimony the expansion of Sunset Limited to 

Jacksonville. Do you know Amtrak's estimated cost for restarting that service? How do 

you propose we finance the capital/mobilization costs? 

In 2009, pursuant to a requirement in PRIIA, Amtrak estimated the cost of restarting the 

Sunset service east of New Orleans. Three options were considered: restoration of the 

tri-weekly Sunset Limited service, an extension of the daily Chicago-New Orleans 

service eastward, and a daily stand-alone train between New Orleans and Orlando. In 

2012, Amtrak updated the cost estimate for the daily stand-alone train, which is the 

locally-preferred altemative. The capital/mobilization costs are estimated to be between 

$68.5 million and $122 million (in 2012 dollars). Of that amount, $45 million - $76.5 

million is the cost of procuring new equipment to run the service, given Amtrak's current 

available equipment. However, starting in 2015, when Amtrak receives the new train 

cars currently being built, I am told they will have enough cars to run service along the 

Gulf Coast without needing to procure additional equipment, reducing that cost to zero. 

The other major uncertainty in the cost estimate has to do with the requirements and 

responsibility for implementing positive train control along that corridor. Holding PTC 

costs aside, and assuming equipment costs to be zero, the estimated 

capital/mobilization cost of starting service along the Gulf Coast is $23.5 million, which 

would primarily be for station restoration and ADA compliance costs. Congress could 

choose to provide that amount of funding as an addition to Amtrak's annual 

appropriation, or the communities involved could apply for funding from other grant 

programs, such as TIGER. 

4. Question: If Sunset East were restarted, have you estimated the amount that could be 

leveraged from station development including value capture strategies along that route? 

There has not yet been a formal study of development potential around passenger rail 

stations along the Gulf Coast corridor. Analysis of other corridors has found that 

development around station areas can have significant economic benefits. For 

example, a 2008 study of the proposed expansion of Downeaster service in New 

Hampshire and Maine projected that 42,199 new housing units would need to be built 

around Downeaster stations through 2030, as well as 1.7 million square feet of new 

office space and 5.1 million square feet of new retail space, leading to $75.3 million in 

additional state and local tax revenues annually.1 A study of passenger rail service in 

Michigan, where half of the stations see just one daily train, found interest in station 

area development in several cities, such as Troy, which is working to convert the current 

1 "Amtrak Downeaster: Overview of Projected Economic Impacts," Report to the Northern New England Passenger 

Rail Authority. by the Center for .Neighborhood Technology. March 2008. 
98 


Insert offset folio 74 here 81825.074

Amtrak station in neighboring Birmingham into a multimodal center in Troy2 The 

strategic plan for the new site estimates that the relocated station could help to generate 

as much as 300,000 square feet of retail development nearby, along with 290 new 

residential units. The study notes that development potential around rail stations 

depends upon numerous factors, including service levels and the specific location of the 

station. These examples suggest that with the proper planning and reliable service, 

station area development could occur in cities along the Gulf Coast route, in addition to 

other local economic benefits. 

Moreover, a sound economic analysis should identify the need for and benefit of 

connecting the many civic, business, and public assets along the route. Restoring 

service to Florida would connect multiple health facilities and military bases, including 

the major Veterans' Administration facility in Biloxi, MS, Kessler Air Force Base, Englin 

Air Force Base, and Naval Air Station all in Pensacola, FL. Eastern service would 

connect the ports of New Orleans, LA and Mobile, AL as well as provide a series of links 

to the fourth largest aerospace corridor in America (Airbus will soon open large-scale 

operations for the final assembly of the A320 in Mobile, AL). Finally, rail service would 

connect numerous tourist and sporting destinations such as the New Orleans Saints, 

Jacksonville Jaguars, and LSU Tigers to name only a few. 

Questions from Ranking Member Brown 

1. Question: You mentioned that "a national passenger rail system has significant 

economic value" and that "if any set of connections is eliminated, e.g., through 

reductions in service, the value ofthe entire network is diminished." Can you talk about 

why long distance service is important and what it contributes to the economy? What 

do you think will happen to the service if states are forced to pick up the tab for them? 

Answer: Long-distance rail service is a vital part of America's transportation network 

because it provides people with a choice in how they travel, connecting communities to 

economic opportunity. In addition, many long-distance routes and corridor services 

feed into the Northeast Corridor. The NEC is part of the larger network and its viability is 

inextricably linked to the full system. 

For some people, rail is the only way they can visit dispersed family members, come 

home from college, or access specialized health care. For others, rail is an affordable, 

, "Michigan Passengcr Rail Station Community Benefits Study," Prepared for the Michigan Department of 

Transportation, by Grand Valley State University, June 2009. Beyond the development potential for station areas, 

the study also identified S25.7 million in other economic benefits for Michigan communities, stemming from rail 

passenger expenditures for hotels, taxis, and shopping. 
99 


Insert offset folio 75 here 81825.075

convenient alternative to driving or flying. There are multiple economic benefits of the 

long-distance routes. For example, there is an economic benefit that stems from the 

expenditures made by the individuals who use those trains. Those dollars are spent on 

meals, shopping, tourist activities, and hotels in cities along the route, contributing to the 

local economy and providing increased tax revenue for local jurisdictions. In one study, 

expenditures made in Montana by riders on the Empire Builder route who are not 

Montana residents are estimated at $7.6 million annually3 Secondly, for smaller cities 

along the long-distance route, the train service provides them with options they would 

not otherwise have. Rail can be a recruitment tool to attract employers to those 

communities. It can help to retain young people who might otherwise leave for a big 

city. Rail stations can become a focal point for economic development in cities of all 

sizes. Other economic benefits of long-distance routes include cost savings on road 

maintenance and reduction in costs due to roadway accidents. 

If the federal government abandons the long-distance routes to the mercy of the states, 

our national network will become a patchwork of unconnected services. While many 

states will likely recognize the benefits of this service and contribute financially, some 

will not, leaving sections of this country without rail service and harming the continued 

economic vitality of communities in those locations. Moreover, those states that choose 

not to fund rail service will adversely impact surrounding states, as automobile traffic in 

those neighboring states will increase as people drive through them to access locations 

in states without rail service. Take, for example, the Crescent line, which connects New 

Orleans with New York City through eleven states and the District of Columbia. In the 

absence of a national program, there is little if any chance that these disparate states 

could agree on a formula for allocating the costs and benefits of this service. Invariably, 

some states would choose to abandon the line, leaving others with no choice but to do 

the same. In the end, the national network would suffer along with the countless number 

of residents who rely on this connection to meet their mobility needs. 

2. You mentioned that maximizing the value of our passenger rail system requires 

increased, stable, and dedicated federal funding. Do you know if this has broad support 

among the mayors? How should such a trust fund be financed? 

Congress is facing a difficult set of choices regarding fiscal policy. Yet within this 

challenge lies an opportunity. The push for comprehensive tax reform provides an 

opening to raise additional revenues and place all modes of surface transportation on 

equal footing. The Simpson-Bowles Commission called for increasing the gas tax by 

fifteen cents by 2015 with revenues supporting a multimodal transportation trust fund. 

3 "Analysis of the Economic Benefits of the Amtrak Empire Builder to Montana," A Report Prepared for the 

Montana Departments of Transportation, Commerce, and Agriculture. by R.L. Banks & Associates, Inc .. July 2003. 
100 


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In addition, Congress could impose a per barrel fee on oil (imported, domestically 

produced, or both). Over the longer term, Congress must take the lead and research 

the possible options for assessing a mileage-based user fee. Without new investments, 

the United States will fail to grow to its maximum potential. And without stable revenues, 

states, regions, cities, and towns cannot plan for the future. These investments have 

broad support from America's mayors who see the impacts of insufficient investment 

every day in their communities. As a former mayor of Meridian, Mississippi for 16 

years, I know first hand how important a robust, multi-modal system is to companies big 

and small and to families. 

3. Question: You mentioned a letter from the mayor that you wanted inserted in the 

record. Please provide that letter for inclusion in the record with the responses you 

provide to these questions. 

Answer: Enclosed with these responses please find two letters: one signed by 14 

mayors of cities along the Gulf Coast expressing support for restoration of passenger 

rail in that corridor, and one from the President of Grinnell College explaining the need 

for passenger rail service connecting Grinnell, Iowa with Chicago. These letters 

demonstrate the strong support for passenger rail that I encounter across the country 

from local leaders who recognize that rail service would strengthen their regions' 

economy. 

4. Do you believe innovative financing tools are suitable replacement for strong federal 

support? 

Answer: In a word: no. Passenger rail is a capital-intensive business that requires 

stable, predictable, and long-term funding. As I mentioned in my oral testimony, no 

transportation mode in the United States is self-sufficient and no rail system in the world 

exists without government investment. In short, all modes require investment from 

Congress. The question I believe the committee should ask is: what return on 

investment do the American people receive? With passenger rail investments, they 

receive critical service that connects every region of this nation, providing much-needed 

transportation options. In the more heavily populated Northeast Corridor, passenger rail 

provides mobility for millions every year. Without this service, already congested 

highways and airways would grind to a halt. Passenger rail is a key element of our 

national surface transportation system and it deserves to be placed on a sound fiscal 

footing as we have done with highways and public transportation systems. 
101 


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5. Question: As of today, 13 mayors of cities along the Gulf Coast from Now Orleans, 

Louisiana to Jacksonville, Florida have joined together in an effort to restart passenger 

rail service along that corridor. It was suspended after Hurricane Katrina in 2005. What 

can Congress do to help get that service off the ground? 

Answer: There are a number of steps Congress could take to help restart passenger 

rail service along the Gulf Coast. As an initial step, Congress could provide funding for 

an economic impact study along the route, which would demonstrate the return on 

investment. Additionally, Congress can continue to provide funding for grant programs 

to which this corridor can apply for capital funds, such as the TIGER program. Finally, 

Congress can add the operational costs of this line, estimated in 2012 to be 

approximately $15.2 million annually, to its annual appropriations for Amtrak. 
102 


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GRINNELL COLLEGE 

JulyS, 2013 

John Robert Smith, President and CEO 

Reconnecting America 

1707 L Street, N.W., Suite 210 

Washington, D.C. 20036 

Dear John Robert Smith, 

Office of the President 

Grinnell College 

Grinnell, Iowa 50112-1690 

641-269-3100 

fax 641-269-4284 

www.grinnell.edu 

On behalf of Grinnell College, I write to share my strongest support for the prospect of developing a 

passenger rail route from Omaha to Chicago, with a stop in Grinnell, Iowa. 

Grinnell is one of the nation's leading liberal arts colleges. We attract an academically excellent 

student body from across the country and around the world. Yet research has shown that many 

worthy students who would greatly benefit from a Grinnell education are choosing not to apply or 

attend because of concerns about our perceived remoteness. 

They are not wrong. Today, a Grinnell student who wants to travel to Chicago to conduct research, 

attend an internship or job interview, or visit family has few options. A Trailways bus stops on 

campus once per day at 4:30 PM and drops passengers in downtown Chicago at 10:00 PM-hardly 

a propitious or safe arrival time for young people unfamiliar with the city. 

At many of our peer schools, rail might not be a necessary component of the solution. A student 

wanting to travel four hours to a large city would simply drive. But Grinnell students do not all have 

that luxury. Our commitment to admitting the best and brightest regardless of their financial 

situation means that many of our 1600 students come from families with modest resources. Only 

about a quarter of students have cars on campus. Passenger rail thus becomes not just a matter of 

convenience, but of equity: Amtrak service through Grinnell will open new educational and career 

development possibilities for hundreds of academically committed and globally engaged young 

people. It would provide an affordable (and, not trivially, environmentally-responsible) way to 

broaden their educational experience. 

Passenger rail would also bring economic benefits. I know that you are personally well-acquainted 

with this fact in your former role as mayor of Meridian, MS. At Grinnell, one of the greatest benefits 

would come in our improved ability to recruit faculty and staff and persuade them to live in 

Grinnell. Grinnell competes for such candidates with schools from more populous and connected 

areas of the country. But these skilled professionals want to live and work in communities that are 

connected to the world beyond the prairie for work and family reasons. We lose at least some 

candidates on this basis. Among those who do accept our offers, some choose to live in Des Moines 
103 


Insert offset folio 79 here 81825.079

or Iowa City (each an hour away), because of the easier access to cultural amenities and national 

transportation hubs. 

Amtrak service to Grinnell would change this locality, attracting more professionals to live in 

Grinnell. In a town ofless than 10,000, changing the minds of even a few such individuals would 

measurably benefit our local economy. 

Creating passenger rail would provide economic benefits in another way, too, by helping bring daytrippers and overnight visitors to Grinnell's outstanding campus art gallery and sports facilities; 

attend performances or lectures by renowned visiting artists and opinion makers; frequent 

restaurants (including the Prairie Canary, recently featured in the New York Times), and more. 

Grinnell is known as "the Jewel of the Prairie" for good reason: it is a special place with a growing 

reputation, and more residents of Des Moines, Iowa City, and Chicago might make it a destination if 

they could get here by passenger rail. Rail might even have a safety benefit, allowing people to avoid 

driving on I-80, which has heavy truck traffic and can be extremely rlangerous during Iowa's winrly, 

icy winters. 

In closing. I see mUltiple potential benefits from introducing passenger rail in Iowa. Directly, of 

course, the College would benefit as we seek to attract students, faculty and staff from across the 

globe who want to enjoy an array of employment and lifestyle opportunities while still living in our 

small town. But, just as importantly, we believe that our town and community as a whole would 

benefit from a more vibrant local economy as it becomes easier for those from surrounding areas to 

visit and conduct business here in Grinnell. 

I am grateful for your work on behalf of this project and for your efforts before the House 

Committee on July 9. Monica Chavez-Silva and Jim Reische from my staff are ready to do anything 

we can to assist you, as you strive to make the important case for passenger rail service in Iowa. 

Thank you for your efforts on behalf of this important cause. 

Yours, 
104 


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June 28, 2013 

To Federallegisletivi!l r:"mrT.itl."" Membera 

Of"FJ.CEOFTHEMAYOR 

.. """"'" <;:UlEW"OfS'fAFf 

OONNA lIA'M1UNS Mrrcn!:U, ft;XKUnV£ ASSISTANT 

JtOID.'fO.BQSl'WlCK (;'tJt.;TtlRAL &: O\'lC MV£L01'MENT Df1tE~'TOR 

DARBAJ4A MAlJ\OV1\. wtN4NCE: nu~;tc:roJt 

IA~RARA RUMMQNI) ",nM.tl'ifS1"RAnVl\:~·nCUl,ltmt:cR)tI 

rail 

'GILt JiARKtNS (1n$tof"J\r~lNAl'{)1t 

to the issue of 

Re:Ge:illiMiO tile !S"ULlI'"'''' IU 

signatures hils laken considerable time due the logistics of relliew lind diSCIlstsiom!, 

local elections, and governanGe. It is now preoontad to Ihe leadership 

Federal Legislative responsible for rail appropriation funding. 

oogoing deliberations, please lake 

presented. 

We sland ready to continue this dialog. 

!,.I).IlOX 

1',o!lSi<iE!I1!1tlClnlhe slated level 
105 


Insert offset folio 81 here 81825.081

TO: LliliderslUp of 

JuriS<'iietillll 

FROM; 

DATE: April 2, 2013 

SUBJECT: Request for Action Supporting Restomlion of Gulf Com PllSsengi:l'RBiI Service 

...-_ •• """". service Iw been IIb1;ent from New Orleans to JliCkoonviUe, FL. 

Mellll1wibile, With 

to restore 

PIIIIIII!EiIl0I'RIIi! St<mee, with _venilmt timlDp for 

eOllinft,tllld lIud HniI!tllg UUI' pi! WllIst hm New 

8U/sl 

AlliiWkmlmts: US! 

COIIl1esy Copt&:: 
106 


Insert offset folio 82 here 81825.082

Leadership of Senate and House Committees and Subcommittees 

with Jurisdiction over Rail 

1131h Congress, l't Session 

Senate Committee on Commerce, Science and Transportation 

Jay Rockefeller (D-WV), Chair 

John Thune (R-ND), Ranking Member 

Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, 

and Security 

Frank R. Lautenberg (D-NJ), Chair 

Roy Blunt (R-MO), Ranking Member 

House Committee on Transportation and Infrastructure 

Bill Shuster (R-PA), Chair 

Nick J. Rahall II (D-WV), Ranking Member 

Subcommittee on Railroads, Pipelines and Hazardous Materials 

Jeff Denham (R-CA), Chair 

Corrine Brown (D-FL), Ranking Member 

Senate Committee on Appropriations 

Barbara A. Mikulski (D-MD), Chair 

Richard C. Shelby (R-AL), Ranking Member 

Subcommittee on Transportation, HUD and related agencies 

Patty Murray (D-WA), Chair 

Susan Collins (R-ME), Ranking Member 

House Committee on Appropriations 

Harold Rogers (R-KY), Chair 

Nita M. Lowey (D-NY), Ranking Member 

Subcommittee on Transportation, HUD and related agencies 

Tom Latham (R-IA), Chair 

Ed Pastor (D-AZ), Ranking Member 
107 


Insert offset folio 83 here 81825.083

SIGNATORIES 

il8Qllesl for Action 

Supporting Restoration ojGu/fCoas( Passenger Rail Service 
108 


Insert offset folio 84 here 81825.084

SIGNATORIES 

Request for Action 

Supporting Res/oration of Gulf Coast Pa.~sen!!er Rail Service 
109 


Insert offset folio 85 here 81825.085

"Dedicated to Excellence . .. 

People Serving People" 

Apri1 17,2013 

Dear Leaders, 

Please add Panama City. Florida to the list of cities that support and request the 

restoration of passenger rail service along the Gulf Coast. 

Since the devastation of Hurricane Katrina in 2005, this important economic 

"engine" has been absent from the Gulf Coast. Train travelers are smart and savvy 

and realize that train travel is one of the safest. most economical and 

environmentally friendly means of getting from point A to point B. For almost eight 

years traveling by train from Jacksonville to New Orleans has not been an option, 

this must change. 

Last year 1 was honored to join Mayor Samuel Jones in Mobile while this very 

subject was discussed, explored and considered among mayors from all along the 

Gulf Coast. Karen Hedlund. Deputy Administrator of the Federal Railroad 

Administration, was on hand to speak and answer questions. In my opinion, the consensus of this group is that passenger rail service needs to be restored 

immediately. 

I thank you for your attention to this issue and 1 am available to share my concerns 

and comments with you at anytime. Please feel free to contact me at 850-872-3001 or by email at brader@ocgov.org. 

Billy Rader, Commissioner Ward 1Il and Mayor Pro Tern 

City of Panama City • P.O. Box 1880 • Panama City. Florida 32402-1880 
110 


Insert offset folio 86 here 81825.086

Resolution 2013- :J,~1 

WHEREAS, the Okaloosa-Walton Transportation Planning Organization (TPO) is the 

organization designated by the Governors of Florida as being responsible, together with the State 

of Florida, for carrying out the continuing, cooperative and comprehensive tmnsportation 

planning process for the Okaloosa-Walton TPO Planning Area; and 

WHEREAS, before Hurricane Katrina, Amtrak's Sunset Limited passenger line served 

railroad trevelers as the only transcontinental passenger rail service from Los Angeles passing 

through New Orleans and Mobile to Jacksonville; and 

WHEREAS, Hurricane Katrina damaged a portion of the rail infrastructure along the 

Gulf Coast as well as caused the loss of other portions of the infrastructure, including the total 

loss of Mobile's passenger rail terminal facility; and 

WHEREAS, Amtrak suspended all service on the eastern pOltion of the Sunset Limited 

line from New Orleans through Mobile, Pensacola, Tallahassee, Jacksonville and Orlando; and 

WHEREAS, CSX, and Norfolk Southern (the freight railroad companies that own the 

tracks on which passenger rail serve on the Gulf Coast will operate) have both committed to 

cooperating with Amtrak in providing this vital service along the eastern Gulf Coast and to do so 

in a more efficient manner than prior to Hurricane Katrina; and 

WHEREAS, the population growth along the Gulf Coast is projected to continue, 

restoration of passenger rail service to the eastern Gulf Coast will facilitate job creation through 

development opportunities and alternative transportation options for commuters, enhance 

tourism, reduce environmental impacts due to personal automobile use, reduce roadway impacts 

due to personal vehicular use, thereby having a positive economic and environmental impact to 

the coastal states of Louisiana, Mississippi, Alabama, and Florida; and 

WHEREAS, such resumption of passenger rail service will also benefit the entire nation 

by providing a link to the Gulf Coast from the Midwest and West Coast; and 

WHEREAS, a Passenger Rail Investment and Improvement Act 0[2008 called for 

Amtrak to study the potential return of passenger rail service from New Orleans to Jacksonville. 

NOW THEREFORE BE IT RESOLVED by the Walton County Board of County 

Commissioners that the TPO recommends the return of the passenger rail service along the Gulf 

Coast. 
111 


Insert offset folio 87 here 81825.087

$ 

DULY ADOPTED THIS Mth day of May, 2013 by the Walton County Board of County 

Commissioners, Defuniak Springs, Florida. 

'I 

I 

"",i .:...l,/ 

APPROVED: l~IttL(l,U1J'1.", Keaneth Prldgerl, Chairman 
112 


Insert offset folio 88 here 81825.088

RESOLUTION 2012-13 

A RESOLUTION OF THE W ALTON COUNTY BOARD OF 

COUNTY COMMISSIONERS SUPPORTING JOINT 

RESOLUTION 2012-01-19-03 OF THE NORTHWEST FLORIDA 

LEAGUE OF CITIES AND THE SUWANNEE RIVER LEAGUE 

OF CITIES. 

Be it resolved by the Walton County Board of County 

Commissioners, as follows: 

The Board of County Commissioners realizes that rail passenger service is 

an important and vital mobility transportation mode for North Florida residents and 

for those that want to travel and visit North Florida destinations. The Board 

believes that it is in the best interest of the citizens of Walton County to have an 

Amtrak stop in Walton County. The Board wishes to join in Joint Resolution 2012-

01-19-03 with the Northwest Florida League of Cities and the Suwannee River 

League of Cities. 

Therefore, the Walton County Board of County Commissioners agree to 

jointly participate with the Northwest Florida League of Cities and the Suwannee 

River League of Cities in requesting Amtrak to restore the Sunset Rail Passenger 

Service and expand the number of municipal passenger stops across Northwest and 

North Central Florida. 

DULY ADOPTED this 28th day of February 2012 by the Walton County 

Board of County Commissioners. 
113 


Insert offset folio 89 here 81825.089

p,o, Box 11399' Pensacola, FL 32524 • P: 650,332,7916 • 1.800,225,8914 • F: 850,637,1932 ' www,wfrpc,org 

1,2013 

Mayor Samuel L. Jones 

Dear Mayor Jones: 

The resolutions are from the foUo\\ing Boards: 

Org:miz"tion (fIlO) 

Let us know if we can be of further assistance, We look furward 10 attending the next passenger rail 

summit 

Sincerely, 

---
114 


Insert offset folio 90 here 81825.090

;uu 

the 

RESOLUTION 2013-03 

A RESOLUTION OF THE WEST FLORIDA REGIONAL 

PLANNING COUNCIL SUPPORTING RESTORATION OF 

PASSENGER RAiL SERVICE BETWEEN NEW ORLEANS, 

IJOUlSJANA AND JACKSONVILLE, FLORIDA 

4Jlliii .; u &Ji# & ii;:;;; Z ; xu 

of the mil infrastructure along the Oulf Coast as well as caused 

loss of Mobile's passenger rallterminal tl!cility; 

WHEREAS, Amtmk 

through Mobile, Pensacola, 

line from New Orleans 

will also benefit the entire nation providing a link to the 

NOW, THEREFORE BE IT RESOLVEllllY WEST FLORlDA REGIONAL PLANNING COUNCIL THAT: 

The {JC,"'"tlUlJ,e, daily passenger rail service along lhe JaC'<S011vlll'e, FL and on 

passed 11m! adopted by the West Florltm Reglolllli PllIlIning Coullcil on this 15th day of 

April, 
115 


Insert offset folio 91 here 81825.091

RESOLUTION Fl-Al13-11 

A RESOLUTION OF THE FLORIDA-ALABAMA 

TRANSPORTATION PLANNING ORGANIZATION 

SUPPORTING RESTORATION OF PASSENGER 

RAIL SERVICE BETWEEN 

LOUISiANA AIllD JACKSONVILLE, FI_'''''''''' 

Florld.,-Alaba,ma Tfl!lr"",oo"lkm Planning Organization is lhe orclan,;z,,!;nn 

of Florida and as bel1l9 fIlsponsible, with Ihe of 

out the continUing, cooperative and comprehensive trensporlatioll 

fIOOOBi-AI'abamaTPO Planning Area; and 

WI1IEREA:S. befora Hurricane Katrina, Amtrak's SunS$1 Limited line served railrood 

!r''''~''rm!in",.n!,,1 passenger rail service from los passing through New 

WIiIIi:i'!EA1~, Hurricane Kalrina damaged a 

as well as loss of olher portions of 

pessenger raillerminal facility; and 

sus,pel~de:d all servica on the eastern of lhe Sunset Limited line from 

"''''1.''''''' •. Crestview, Chipley, Tailiahasi;oo, and JacksOfiville to Orlando; 

and Norfolk Southern (the 

0(\ the Gulf Coast will 

Ihis vital servica elong Ina eastern 

Katrina; and 

ral!road compenles Iha! own lhe traCKS on 

have both cornmilled to wi!h 

do so in iii more 

also benefil Ihe entire nation by 

and 

WHeREAS, the Passenger Rail Investment and !ml)ro,'em,en! 

study !he potential return of passenger rail service from 

THER'EF()R!:;. SI: IT RI:601..\I'1:0 ElY THe FLORIDA-ALABAMA TRANSPORTATION 

"'I-~\"""""" j)RGANIZATliON THAT: 

fLORIDA·ALABAMA TRANSPORTATION 
116 


Insert offset folio 92 here 81825.092

RESOLUTION O·W 13-04 

A RESOLUTION Of THE OKAlOOSA·WAl TON 

TRANSPORTATION PLANNING ORGANIZATION 

SlIPPORTING RESTORATION OF PASSENGER 

RAil SERVICE BETWEEN NEW V."~I:"''''''' LOUISIANA AND JACKSONVILLE, 

WHeREAS, lhe Okaloosa·WaliOl1 Transportation 

orgillnizalioo the Governor of Florida as being r,,,,,000,,,b1,,,. 

oooooflilive and ~flrrlnr"h'!f,,<i\l" iraflSOOrlllij'lfl 

Wl'IER.EA~S, before Hurricane Kallio"" Amtrak's Sunset Limit!Ki 

iransoontinel1!a1 passenger rail service from los end 

WI1If!Rf!A1S, Hurricane Katrina 

lOss of other 

facility; and 

line served railroad 

passing through New 

sm"'''",,'!Q all service on the aastem of the Sunset Limited line from 

provkling 

r"'!I~"i\'U'''. Crestview, Chipley, Tallaha~lea, sod Jacksonville to Orlando; 

and Norfolk Southern {the 

on the Gulf Coast will 

this vital service along the eastern 

Katrina; !lnd 

manner 

WHEREAS, Ih .. Passenge, Rail Investment and Irnl.ro>'eme,,! Act 01 200!l "ailed for Amtrak to 

lile polel1oo/ return of passenger rail sef\Iioe from Orlando; 

THIERIEI'IDRIE, BE IT RESOLVED BY THE OKAlOOSA·WALTON TRANSPORTATION 

t'l..ANlflllIIi"" O'RGAIIIIZATIO'lll THAT: 

adopted by the Okaloosa·Wal!on TraospOrlelioo Planning Organizalion on this 
117 


Insert offset folio 93 here 81825.093

RESOLUTION NWFl13-03 

Ii< RESOLUTION OF THE NORTHWEST FLORIDA 

REGIONAL TRANSPORTATION PLANNING 

ORGANIZATION SUPPORTiNG RESTORATION OF 

PASSENGER RAIL SERVICE BETWEEN NEW 

ORLEANS, LOUISIANA AND JACKSONVlU.E, 

flORIDA 

WHIlREAS, Hurricane Katrina of the rail inirastructure 

loss of olhe, portIOns of the inira.!!w;:!,"n., including the Ictal loss of 

Ihe Gulf Coast e. well as 

p ••• enger rail terminal 

!laS,sen",,,, mil service will also benefn the entire nation by proViding a fink ~n'" W ... ,"'n.;;" and 

adopted by 100 Northwesll'lorida Regional Transportation Planning Org.nlz.~()n on tills 
118 

Æ 


Insert offset folio 94 here 81825.094

New Orleans 

and 

RESOLUTION BAY 13-07 

A RESOLUTION Of THE BAY COUNTY 

TRANSPORTATION PLANNING ORGANIZATION 

SUPPORTING OF 

RAIL SERVICE NEW 

LOUISiANA AND JACKSONVILLE, FLORIDA 

BAY COUNTY TRANSPOIUATION 

for 

Gulf Coast 

of Mobile's