June 26, 2001
The Amtrak Reform Council (the Council) held its business meeting at the Hilton Newark Gateway Hotel, Raymond Avenue, Newark, NJ, on June 26, 2001. The meeting started at 8:45 a.m. and adjourned at 10:00 a.m.
Council Members present: Gil Carmichael, Chair; Nancy Rutledge Connery, James Coston, Lee Kling, and Mayor John Norquist. Also present was Chuck Mundy, a labor representative from the American Train Dispatchers, who represented Council Member Charles Moneypenny in a non-voting capacity.
chaired the meeting and Deirdre O'Sullivan served as secretary.
Remarks by Gil Carmichael and Executive Director's Report
Mr. Carmichael called the meeting to order. Mr. Carmichael stated that there would not be any votes because there was not a quorum present. Mr. Carmichael welcomed Mr. Mundy to the Council meeting, and asked Mr. Thomas Till, Executive Director to give his report on the activities of the staff.
Mr. Till stated
that the staff, at the direction of the Council, had prepared
a letter to the President of the United States recommending
qualifications desirable for the person to be appointed
to the current vacancy on Amtrak's Board of Directors. Prior
to the June 26th business meeting, the letter was approved
by a majority of the Council (including votes by notation)
and sent to the President. The Secretary of Transportation
received a copy of the letter.
Mr. Till then
summarized the June 7, 2001 Roundtable Discussion, which
was sponsored by Rutgers University, regarding the Council's
proposal to "appropriately separate" Amtrak's
infrastructure from its national train operations. Mr. Till
began by thanking Martin Robins for organizing and acting
as moderator for the Roundtable. He stated that most of
the states along the Northeast Corridor (NEC) and the commuter
agencies that operate on the NEC were present for the discussion.
He stated it was a very good discussion, and he was looking
forward to continuing that dialogue today.
Mr. Till then
stated that the staff was working on a letter of recommendation
for improvements to Amtrak. He stated that he would like
the consent of the Council to send the letter of recommendation
to the Council for its review. Mr. Carmichael stated that
he would like the Council members to comment on the letter.
Mr. Till also
stated that the staff had made several requests for financial
information from Amtrak, including information regarding
the Amtrak-owned Northeast Corridor infrastructure. He further
noted that the Council staff had been experiencing difficulties
in getting the information from Amtrak, even though the
Reform Act (1)
mandates that Amtrak give the Council the information. Mr.
Kling asked for more specifics regarding what information
was requested and why it has not been given to the Council.
Mr. Till referred the question to Mr. Michael Mates, Senior
Financial Analyst, Amtrak Reform Council. Mr. Mates stated
the Council staff has made repeated requests for information
at meetings, through formal letters, and e-mail correspondence.
These information requests include: basic information such
as quarterly financial statements and more specific information
such as the Northeast Corridor infrastructure financial
statements and financing documents. While some information
has been sent to the Council by Amtrak, the Council is still
awaiting vital information including financial information
on the Northeast Corridor. To facilitate delivery of information
and to minimize the administrative efforts needed to gather
information, the Council staff has stated that it will take
the information in whatever form it is collected by Amtrak
to reduce the administrative burden for Amtrak.
Report on High-Speed Rail Bonds
noted that when one is talking about Amtrak's problem, that
there are two problems: what to do about trains operations
and the infrastructure, and how are both of them to be funded?
He further stated that an option that is currently being
discussed is the proposed High-Speed Rail Investment Bonds.
He requested that Mr. Kenneth Kolson, Legal Counsel, Amtrak
Reform Council explain the difference between the Senate
and House versions of the bonds bills.
Mr. Kolson provided
a summary of the Senate version of the proposed legislation
(S.250) authorizing high-speed rail bonds, which would give
Amtrak authority to issue $1.2 billion every year for 10
years (with a 20% match provided by the states), and then
explained the differences between the draft House and Senate
versions of the bill. After Mr. Kolson finished his briefing,
Mr. Carmichael asked about the provision which would allow
Amtrak to use some of the money for projects other than
building infrastructure. Mr. Kolson stated that the proposed
legislation would allow Amtrak to temporarily borrow against
the bond money for projects other than high-speed rail and
to use it for equipment expenditures and to refinance certain
At the request
of Mr. Carmichael, Mr. Mates described two alternative bond
proposals to the proposed Amtrak bonds. The Council staff's
proposals are intended to address the concerns about the
Amtrak bond proposal and to make it more attractive for
the states (rather than Amtrak) to be issuer of the bonds.
One alternative bond would have the same federal income
tax credits in lieu of cash interest and escrow fund structure
proposed by S.250, however, the state match would be 35%-38%
rather than 20%. Such a structure would allow states to
be the issuers of the bonds by eliminating the financial
risk that the escrow fund may not grow sufficiently to redeem
the bonds at par value in 20 years. Mr. Kling stated that
the states are counting on not spending any more than 20%.
Mr. Mates agreed that this is a problem to be addressed.
Mr. Carmichael suggested an alternate proposal of 20% from
the states and 15% from the freight railroads. A second
alternative bond discussed briefly was a private activity,
tax-exempt bond not subject to Treasury Department per capita
limitations ($75 per state resident per year) for such private
activity bonds. The credit underlying these bonds would
be the pledge of trackage rights fees to fund debt service
(rather than an escrow fund). As a result, these bonds may
be more appropriate on facilities which have high levels
of predictable freight and commuter rail traffic.
At the end of
the meeting to sum up because time was running out, Mr.
Till indicated that would be seeking the approval of a quorum
to move ahead on the bonds, and he would like to discuss
this issue with the states, with the financial community,
and with freight railroads. The Council members had no objections.
then asked if there were any additional comments from the
Council members. There being none, the Council agreed to
adjourned at approximately 10:00 a.m.
Business Meeting, the Council held a Northeast Corridor
Hearing regarding the Council's proposal to "appropriately
separate" the Northeast Corridor infrastructure from
Amtrak's national train operations.
The Amtrak Reform and Accountability Act of 1997