Amtrak Reform Council

Minutes
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.

Mr. Carmichael chaired the meeting and Deirdre O'Sullivan served as secretary.

I. Opening 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.

II. Staff Report on High-Speed Rail Bonds

Mr. Carmichael 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 Amtrak obligations.

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.

Mr. Carmichael then asked if there were any additional comments from the Council members. There being none, the Council agreed to adjourn.

III. Adjournment

The Council adjourned at approximately 10:00 a.m.

Northeast Corridor Hearing

Following the 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.

 

(1) The Amtrak Reform and Accountability Act of 1997