(The following story by Bruce Edwards appeared on the Barre Montpelier Times Argus website on June 22.)
MONTPELIER, Vt. — The on-again, off-again, on-again purchase of state-of-the-art railcars for Amtrak’s Vermonter route, remains in limbo.
The Douglas administration has put the purchase on hold pending further review to determine whether the state can afford the estimated $18.2 million price tag.
The delay has frustrated Rep. Albert Audette, D-South Burlington, a member of the House Transportation Committee.
Once a skeptic of the rail car purchase, Audette said once the Legislature approved the deal there’s no reason for the Agency of Transportation drag its feet on the purchase.
“They’re using this as an excuse,” Audette said. “Why? I have no idea but they seem to be playing some games again.”
Last year, lawmakers authorized the $17.5 million purchase of five railcars from Colorado Railcar Manufacturing. The 60-passenger cars, known as diesel multiple units, are more fuel efficient, environmentally friendly, sleeker and more comfortable than Amtrak’ s traditional diesel engine and coach combination.
But the deal fell through when Colorado Railcar couldn’t guarantee to the state’s satisfaction that it would buy back the rail cars at 90 percent of the cost, if the savings from the three-year demonstration project aren’t realized.
Lawmakers revisited the purchase this year and reworked the language of the contract guarantee to the satisfaction of the state Treasurer.
The state currently pays Amtrak $3.7 million for the Vermonter that operates one roundtrip a day from St. Albans to Washington and the Ethan Allen that runs one roundtrip a day from Rutland to New York.
The proposed purchase includes three self-propelled cars that also serve as passenger coaches and two coaches. One engine/coach would serve as a backup when one of the other two self-propelled units is being serviced.
Purchasing its own rail cars for the Vermonter route and still have Amtrak operate the service, would save the state money over the long-term. It would also allow the state to run three roundtrips a day — one from St. Albans and two from White River Junction to New York and Washington.
With the new cars, passengers would change trains in New Haven, Conn., for New York, Boston and other destinations.
While saying the rail car purchase has merit, Agency of Transportation spokesman John Zicconi said the deal is on hold until the Capital Debt Affordability Committee reviews the state’s debt obligations. The committee reviews the state’s general obligation debt and makes a recommendation on how much overall debt the state can safely assume without jeopardizing its credit rating.
The rail cars aren’t the only capital project on AOT’s list. The agency is looking to bond $10 million for road and bridge projects for fiscal 2009.
Zicconi said Amtrak would like to see the demonstration project go forward, offering a $2 million grant that the state would use to pay for a maintenance facility in White River Junction where the train would stay overnight. He said the grant would also help pay for marketing the new service, automated ticket machines and possibly design costs so the coaches could accommodate bicycles.
State Treasurer Jeb Spaulding, who chairs the Capital Debt Affordability Committee, said any review of the state’s debt obligation, has no bearing on whether the rail cars are purchased. Spaulding said the committee does not review specific projects but only recommends a prudent debt level for the fiscal year. For fiscal year beginning July 1, the committee recommended a debt of $54.6 million.
“That process has no bearing on the decision whether we go forward with these cars,” said Spaulding, who was miffed that his committee is being blamed for the delay.
He said the Legislature authorized the purchase and it’s strictly up to the Douglas administration to follow through or not.
When first proposed a year ago, the price tag for the five rail cars was $17.5 million. Now the price is pegged at $18.2 million.
Spaulding said the state would pay for the rail cars with a loan from the Federal Railroad Administration with the deal structured to minimize the impact on the state’s debt. During the first year after the purchase, only 10 percent of the loan, or $1.8 million, would count against the state’s debt obligation — an impact that Spaulding called minimal. If the state decides to keep the cars following the three-year trial period, the remainder of the loan would go on the books incrementally after that over three years, he said.
“I’ve been writing letters for two years telling them what the impact would be in terms of our debt statement and our ability to issue bonding in subsequent years,” Spaulding said.
If the purchase was consummated, he said the $18.2 million would affect the state’s debt obligation and in so doing limit what the state could borrow for other projects in future years.
But Spaulding reiterated that the purchase is solely up to the Agency of Transportation. He, like Audette, questioned whether shifting the focus to the Capital Debt Affordability Committee was simply a convenient way to delay the purchase.
“I think the administration is trying to conclude whether this expenditure is a high enough priority for them to potentially displace other projects supported by bonding in future years,” he said.
Zicconi said AOT is simply doing its due diligence in making sure the state can afford the purchase. He said the economic landscape has changed from a year ago with the state and national economies now in a downturn. He said other factors include the increased cost of the rail cars, Amtrak’s future and the contract language with Colorado Railcar which still needs to be hammered out.
An added wrinkle from a year ago when the purchase was first proposed, is $10 million in fiscal 2009 for road and bridge projects. Zicconi said there’s also an additional $10 million in bonding for the four subsequent years, for a total of $50 million, “which now affects how much the state is bonding vis-à-vis transportation.” On top of that, he said is the approximately $18.2 million for the rail cars.
He said AOT has asked that the state’s bonding authority be raised to include the $10 million for road and bridge projects for the fiscal year that begins July 1. When the Capital Debt Affordability Committee meets in the fall, it will also take a look at the debt ceiling for fiscal year 2010, which will be helpful in determining the affordability of the rail cars, Zicconi said.
“We just don’t know yet if we can pull the trigger on the deal,” Zicconi said.
Audette, who also serves on the Vermont Rail Advisory Council, said the bonding for additional transportation projects shouldn’t be a factor in the purchase.
“We authorized the spending of that money,” he said.
If the state is going to keep subsidizing Amtrak service in the state, Audette said the rail car purchase is a way for the state to save money on the rail passenger service.
Audette added that the state has the means to fund both the road and bridge projects and the purchase of the rail cars.
Although lawmakers authorized the purchase, Zicconi said the state still has to make sure the deal makes sense financially.
“We need to make sure it all still works,” he said.
Zicconi pointed out that it was AOT that first proposed the purchase of the rail cars. He said once a contract is signed it would take 18 months for the new cars to be built and put into service.