Amtrak FY2014 Appropriations - $1.39 billion, $600 million f

[Nathanael]

Edit: PS. The $20 million for NEC planning is the from Maglev development program funded in a 2005 bill Public Law 109-58, Sec. 1307. Found the bill which authorized $15 million each in FY06 and FY07, $30 million in FY08 and FY09. This may indeed be Schumer (well his staff and others) scouring the budget to find money for NEC Gateway engineering.

Wow. That definitely looks like digging deep to find unused money for passenger train service. Good work whoever did it. And congratuations on figuring it out.

 

[jis]

2. Can you please send a link from NARP (or wherever you got this information from)?

Unfortunately I can't do that since I picked up those numbers from a private email, which contains other stuff that is really private and not shareable in a public forum. So I cannot share the whole email. However, if you look at the NARP site those numbers may have appeared in a NARP hotline by now.

 

[WoodyinNYC]

Help me with the overtime thing.

I'm guessing maybe Amtrak could run up huge OT maintaining obsolete

electric locomotives currently being replaced and maintaining obsolete

diners currently being replaced. AmIright?

[Otherwise], more B.S. from the B.S.ers.

Why would the OT restriction have anything to do with the electric locomotives

or Heritage fleet or rolling stock maintenance staffing?

Relax. I was just thinking when this kind of (high-maintenance)

equipment goes out of order, it has to be repaired ASAP, and

never mind what the OT costs might be.

At least, if I were managing the thing and realized that it was

"fix it or cancel the train", I'd authorize "Fix it" and damn the OT,

even if it put some guys over $35,000.

My point was merely that if this actually ever is a problem, then

it's gonna fade away as the new equipment comes on line in

the next couple of years. Let Congress micromanage the past,

not much harm in that. LOL.

 

[WoodyinNYC]

Here is a quick summary of the proposed Amtrak appropriations for 2014 (taken from NARP supplied figures):

This may be picky, but the FY2013 allocations in the table are incorrect, although the total of $1,344 million is correct . . .

In the final FY13 budget document dated May 2013 (yes, 8 months into the FY), the amounts are: Operating subsidy = $422 million, Capital grants = $642 million, ADA = $47 million, NEC Gateway = $14 million, debt service = $199 million. So the FY14 jump in General Capital or Grants is not quite as large.

. . .

Edit: PS. The $20 million for NEC planning is the from Maglev development program funded in a 2005 bill Public Law 109-59, Sec. 1307. Found the bill which authorized $15 million each in FY06 and FY07, $30 million in FY08 and FY09. This may indeed be Schumer (well his staff and others) scouring the budget to find money for NEC Gateway engineering.

Either way it looks good, considering how much worse

if the haters had their way.

Grave-robbing Maglev development, I'm cool with that, too.

Guess there was only $20 in the accounts left unsquandered.

LOL.

Anyway, it sure helps in planning to have a budget.

On capital equipment needs, going by Boardman's remarks in

his Railway Age interview, in a month or two we'll see a RFP

on the new-and-improved Acelas. With any luck that will move

to selection of a builder and a contract, to finalize the costs.

But I expect Amtrak has heard a range of figures already,

and Boardman could probably predict today within $100 million,

plus or minus, what these new trans sets will cost.

So there's a budget, and the biggest new order in the fiscal

year is almost in hand.

So I'm thinking we're much closer to seeing what's next. The order

for NextGen diesels for the Midwest and West Coast corridors

has to move fast, because that's Stimulus money with a Sept 30,

2017 deadline. But at least it is funded.

Small and cheap then is the option for more Viewliners from CAF,

to be financed out of loose change remaining after more urgent

matters are well taken care of. So I'm thinking we're getting

pretty close to that desired point.

Not sure there's a hurry to order the NextGen diesels for LD service,

because they will likely come from the same assembly plant as the

corridor locomotives, and it will be busy for a couple of years ahead.

Same for the new additions to/replacements for the Superliners.

Again I'm assuming the builder of the bi-level corridor coaches will

win the order for the LD version -- tho bidding will be open and another

builder could muscle in. But if it's gonna be Nippon Sharyo, then

I'd say they are booked into 2018, or later. But maybe another

assembly line could be added.

That gets me to new single-level cars. Aren't we back to CAF making

more Viewliners -- and even Viewliner coaches? Even a lot more?

I'm thinking that the fastest way we'll see more bi-level equipment

added to the long distance trains is to convert the Capitol Limited

and the City of New Orleans to all single-level cars, and move their

bi-level cars out West, until a new line building bi-level LD cars starts

putting them out the door. I know this thought pains some folks, but

there you are.

It's hard to predict, especially about the future, but the Cardinal and

the Sunset Limited are far and away the biggest problem trains in the

LD network, with loss per passenger figures that make the haters drool.

But taking these three-day-a-week trains daily, which would slash their

per-passenger losses, would require a good bit of added equipment.

The fastest way to get the needed cars will be from the CAF plant making

Viewliners. Paying for that's gonna take some serious scrounging, but

now it's looking a lot more possible to do.

 

[afigg]

Either way it looks good, considering how much worse if the haters had their way.

Grave-robbing Maglev development, I'm cool with that, too. Guess there was only $20 in the accounts left unsquandered.

LOL.

...

Small and cheap then is the option for more Viewliners from CAF,

to be financed out of loose change remaining after more urgent

matters are well taken care of. So I'm thinking we're getting

pretty close to that desired point.

Not sure there's a hurry to order the NextGen diesels for LD service,

because they will likely come from the same assembly plant as the

corridor locomotives, and it will be busy for a couple of years ahead.

Same for the new additions to/replacements for the Superliners.

Again I'm assuming the builder of the bi-level corridor coaches will

win the order for the LD version -- tho bidding will be open and another

builder could muscle in. But if it's gonna be Nippon Sharyo, then

I'd say they are booked into 2018, or later. But maybe another

assembly line could be added.

You are too optimistic on when Amtrak might be able to place additional equipment orders. Amtrak got a nice bump in Capital funding to $801 million plus $50 million for ADA. But it is far short of what Amtrak needs to start ordering more rolling stock beyond financing, by hook or crook, an HSR trainset order. The additional capital funds may go entirely to the NEC for starting Portal bridge replacement, track maintenance, power system replacements.

Take a look at all the proposed capital funding outlays starting on page 27 in the FY14 Budget Request Justification (72 page PDF), dated May 2013. There is $139.4 million budgeted for payments on the Viewliner II order (which may be getting stretched into FY15 by events). There is $299 million requested for fleet overhauls. and so on. The good news is that Amtrak will be able to access the $81 million in Sandy relief funds for NYP station and tunnel flood protection and got $185 million for the tunnel box to protect the access for the 2 new Hudson tunnels. The NEC Gateway PE and Environmental review appears to be covered by unused Maglev funds with at least $20 million provided, but it might be more than that. Amtrak But the $801 million won't cover the rest of the proposed capital project items, so Amtrak management will have to pick what gets funded now, what gets postponed, and search for other sources for funds (Sandy relief mitigation, other federal programs, PANYNJ, the NEC state DOTs and transit agencies)..

When the formal FY14 budget is posted, compare it to the budget request justification to see what Amtrak choose to fund.

 

[NE933]

Well, I think the only big mistake with that budget is cutting the debt service. Amtrak can probably get by with the reduced operations with new equipment, and more of such that we all hope will be ordered tomorrow. But debt service should be increased so that we can come out of some of the financial cages that trap us.

And I just had a thought about the tri-weekly Cardinal and Sunset Limited, namely that such makes sense only if the routes connect, so that they can use the same trainsets that work the route on days not working on the other.

So: more Viewliner II's and new Superliner III's and new diesels????? And some new and better Acela II's?

 

[jphjaxfl]

One of the maintenance problems Amtrak faces is having to turn the trains so quickly is that full maintenance is often not accomplished. Amtrak needs new equipment with older refurbished equipment as backup. I realize this will never happen.

 

[Paulus]

One of the maintenance problems Amtrak faces is having to turn the trains so quickly is that full maintenance is often not accomplished. Amtrak needs new equipment with older refurbished equipment as backup. I realize this will never happen.

Amtrak isn't exactly trying to set records for how quickly they turn equipment. More the opposite actually.

 

[Anderson]

One of the maintenance problems Amtrak faces is having to turn the trains so quickly is that full maintenance is often not accomplished. Amtrak needs new equipment with older refurbished equipment as backup. I realize this will never happen.

Amtrak isn't exactly trying to set records for how quickly they turn equipment. More the opposite actually.

No, but they get stuck trying a lot anyway with the meltdown(s) out West when the weather goes bad.

The one issue with having old equipment on standby is that if the car configurations differ significantly, you end up having to switch folks' accommodations or run a bunch of semi-empty equipment.

 

[jphjaxfl]

One of the maintenance problems Amtrak faces is having to turn the trains so quickly is that full maintenance is often not accomplished. Amtrak needs new equipment with older refurbished equipment as backup. I realize this will never happen.

Amtrak isn't exactly trying to set records for how quickly they turn equipment. More the opposite actually.

No, but they get stuck trying a lot anyway with the meltdown(s) out West when the weather goes bad.

The one issue with having old equipment on standby is that if the car configurations differ significantly, you end up having to switch folks' accommodations or run a bunch of semi-empty equipment.

The private railroads had plenty of older equipment that was used as back-up or for peak periods to use as second sections of trains. The accommodations were not always exactly the same but they were usually as good or better than what they were replacing. I once rode a old B&O Parlor car with swivel chairs that had run on the Royal Blue that was subbing for a coach on the National Limited between Cincinnati and Baltimore in the summer of 1964 when the New York World's fair was happening and the eastern trains were crowded. Also rode in some Pullman cars with open sections that were subbing for 10/6s or 14/4s. Most of the railroads that had significant passenger service kept cars they didn't assign on a regular basis, at least in operating order so they their railroad could put together a train in fairly short order or lease them to another railroad that had a temporary shortage. If Amtrak was given proper funding over the last near 43 years, they could be doing the same thing.

 

[Anderson]

For that matter, if Amtrak hadn't gone on a couple of scrapping sprees over the years, this also wouldn't be an issue. Then again, in the 1990s ridership was "stuck" and Amtrak was largely covering demand with a notably smaller fleet.

 

[Ryan]

Also, wasn't most of the equipment scrapped lacking in retention toilets? The fact that you were going to have to spend some serious bucks to rebuild them make that a much more likely course of action.

 

[jphjaxfl]

Congress passed a law requiring retention toilets which was a death knell for Amtrak's Heritage Equipment. At that point, Congress needed to fund some new equipment. Only the diners and the PPCs survived because no toilets.

 

[Anderson]

Also, wasn't most of the equipment scrapped lacking in retention toilets? The fact that you were going to have to spend some serious bucks to rebuild them make that a much more likely course of action.

That was a major part of it, yes. However:

(1) Retrofitting was an option; and

(2) Setting coaches aside, you could have switched a 10-6 sleeper into a 9-6 sleeper with a pair of bathrooms to cut down on the retention tank costs.

The question of how many Heritage sleepers one could have converted for the cost of 50 new ones is a good one. I suspect the answer is "more than 50".

 

[Jackson Whole]

Congress passed a law requiring retention toilets which was a death knell for Amtrak's Heritage Equipment. At that point, Congress needed to fund some new equipment. Only the diners and the PPCs survived because no toilets.

When it comes to slinging poo and leaving a mess in its wake, Congress wanted no outside competition. ;-)

 

[Nathanael]

First there was the HEP conversion. The elimination of steam engines meant that the cars which depended on steam generators all had to be converted. Amtrak did this to all the Heritage cars. Most of the Heritage cars were already 20 years old at that point. So we're looking at a bunch of old cars which had been patched and chopped up once already.

Doing retention toilet conversion was a second, major, invasive conversion on cars which had already had all their systems converted once -- and these were cars which Amtrak couldn't get spare parts for. So it made no sense.

I've heard arguments in favor of retaining the bare carshells from Heritage cars, but that's frankly all you could practically retain. You want to replace the trucks and wheels and running gear, you want to replace the heating, you want to replace the lighting, you have to replace the plumbing, and at that point you have to replace the rest of the interior too. Even the carshells are probably corroded in some cases.

I know VIA did do the retrofit for retention toilets with its Budd cars, but VIA had some advantages. First of all, it had a large and relatively uniform fleet of cars mostly from CP (some from CN), which provided enough spare parts -- especially since VIA services kept shrinking. Amtrak had a motley collection of non-matching cars from many different railroads. Secondly, VIA's Budd fleet were, on average, something like a decade newer than the Amtrak Heritage fleet. And I don't think VIA made a good decision, on the whole -- even with the constant service cuts, VIA's getting into a serious hole with equipment.

 

[NE933]

Yes, the md-90's, the time of massive cuts that took the Dessert Wind, Broadway Limited, and Pioneer. It also took at least 150 Viewliners, shaving a decent sized aquisition to an anemic, watered down fleet responsible for th capacity shortages and severely curtailed ability to recover from equipment availability problems and timely positioning. It also ushered in Mercer's vision of triweekly. Money was so tight that even if retrofitting some of the Heritage cars was decided, there was no funding. Converting some of the rooms to the upcoming V2 format, removing and sealing the straight toilets and making four rooms have retentions is a BIG capital expendiure. Each sleeper needs specialized plumbing and, pardon my blunt, a sh**grinder to liquify the waste, wih a NASA inspired vacuum flush on each unit. If it were my call and we had a little more money, I would've done retrofit work on 15 Heritage sleepers, maybe 20.

 

[NE933]

For that matter, if Amtrak hadn't gone on a couple of scrapping sprees over the years, this also wouldn't be an issue. Then again, in the 1990s ridership was "stuck" and Amtrak was largely covering demand with a notably smaller fleet.

The express freight stuff makes me want to slap my forehead, so expensive and resulted in slower schedules, operating difficulties, strained relations with the other railroads...

 

[Andrew]

How much longer until Amtrak releases a FY 2014 Plan?

 

[afigg]

Well, I think the only big mistake with that budget is cutting the debt service. Amtrak can probably get by with the reduced operations with new equipment, and more of such that we all hope will be ordered tomorrow. But debt service should be increased so that we can come out of some of the financial cages that trap us.

Having lower debt service amounts is a good thing. With the Treasury transfers allowed by the 2008 PRIIA act, Amtrak has been able to pay off leases from the Warrington era with Early Buyouts to reduce the total debt load. By reducing the annual debt service subsidy, they have been able to move more funding to capital projects . In FY2011, Amtrak received $922 million for total capital of which $264 million was for debt service, leaving $658 million for general capital; the operating subsidy was $562 million. Now, in FY14, with $1,050 million for total capital, $199 million is for debt service leaving $801 million for general capital and $50 million for ADA compliance. More funds available for capital projects for badly needed maintenance, repair, replacement, and upgrades.

Amtrak may be bottoming out on debt service funding as the FY14 request was $199 million, same as FY13. We will see in future budgets whether they will seek to have new debt for rolling stock purchases covered by debt service funding.

 

[afigg]

How much longer until Amtrak releases a FY 2014 Plan?

The FY14 omnibus appropriations bill was just passed by Congress. Now Amtrak management has to figure out what they can afford to do with the funding they received. Not going to be overnight.

 

[Anderson]

I want to say that the debt service line includes the sale-leasebacks, which has been a declining line item. Amtrak's debt load has been steadily sliding over the last few years, and taking with it the level of payments. The 'cuts' aren't so much cuts as they are declining bills.

 

[Nathanael]

At this point, Amtrak wants to get rid of high-interest debt (which includes the old leasebacks), but would kind of like to get low-interest debt (such as the RRIF loans) while interest rates are low. The Penn Station mortgage is also at an uncomfortably high interest rate, but it doesn't have an early buyout option...

 

[NE933]

Well, I think the only big mistake with that budget is cutting the debt service. Amtrak can probably get by with the reduced operations with new equipment, and more of such that we all hope will be ordered tomorrow. But debt service should be increased so that we can come out of some of the financial cages that trap us.

Having lower debt service amounts is a good thing. With the Treasury transfers allowed by the 2008 PRIIA act, Amtrak has been able to pay off leases from the Warrington era with Early Buyouts to reduce the total debt load. By reducing the annual debt service subsidy, they have been able to move more funding to capital projects . In FY2011, Amtrak received $922 million for total capital of which $264 million was for debt service, leaving $658 million for general capital; the operating subsidy was $562 million. Now, in FY14, with $1,050 million for total capital, $199 million is for debt service leaving $801 million for general capital and $50 million for ADA compliance. More funds available for capital projects for badly needed maintenance, repair, replacement, and upgrades.
Amtrak may be bottoming out on debt service funding as the FY14 request was $199 million, same as FY13. We will see in future budgets whether they will seek to have new debt for rolling stock purchases covered by debt service funding.

I should have clarified: i mean cutting the debt by allocating more money to pay it down is what's needed. My wording appeared as if I advocated for less payments towards debt, when in fact i mean less debt by more/higher payoffs to knock off the principal.

 

[jis]

Just for my edification, being the sort of guy that needs to understand things just for the sake of understanding I dug in a bit on this business of how leasebacks are accounted for in financial statements. Here is in short what I discovered. I thought this might help shed some light on this discussion.

There are two kinds of lease contracts (a) Operational Lease and (b) Capital Lease.

Here are the FASB rules in summary that differentiates between capital lease and operational lease (quoted from the Wikipedia article on Accounting for leases in the United States)

The basic criteria for capitalization of a lease by lessee are as follows:

• The lessor transfers ownership of the asset to the lessee at the end of the lease term.
• A bargain purchase option is given to the lessee. This is an option that allows the lessee, upon termination of the lease, to purchase the leased asset at a price significantly lower than the expected fair market value of the asset.
• The life of the lease is equal to or greater than 75% of the economic life of the asset.
• The present value of the minimum lease payments (MLP) is equal to or greater than 90% of the fair market value of leased property. To understand and apply this criterion, you need familiarize yourself with what is included in the minimum lease payments and how the present value is calculated. The minimum lease payments include the minimum rental payments minus any executory cost, the guaranteed residual value, the bargain purchase option, and any penalty for failure to renew or extend the lease. The amount calculated is then discounted using the lessee’s incremental borrowing rate. However, if the lessee knows the implicit rate used by the lessor and the rate is less than the lessee’s rate, the lessee should use the lessor’s rate to discount the minimum lease payment.

These are called the 7(a)-7(d) tests, named for the paragraphs of FAS 13 in which they are found.
If any of the above are met, the lease would be considered a capital or financing lease and must be disclosed on the lessee's balance sheet. Conversely, if none of the criteria are met, the contract is an operating lease, and the lessee will have a footnote in its balance sheet to that effect. Both parties (lessor and lessee) must review these criteria at the outset and determine independently the classification as it is possible to classify them differently (it is quite common, in fact, for a single lease to be considered a capital lease by lessors and an operating lease by lessees).

According to the same article, these are some of the salient elements in the financial report of each kind of lease:

Under an operating lease, the lessee records rent expense (debit) over the lease term, and a credit to either cash or rent payable. If an operating lease has scheduled changes in rent, normally the rent must be expensed on a straight-line basis over its life, with a deferred liability or asset reported on the balance sheet for the difference between expense and cash outlay.

Under a capital lease, the lessee does not record rent as an expense. Instead, the rent is reclassified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). At the same time, the asset is depreciated. If the lease has an ownership transfer or bargain purchase option, the depreciable life is the asset's economic life; otherwise, the depreciable life is the lease term. Over the life of the lease, the interest and depreciation combined will be equal to the rent payments.

For both capital and operating leases, a separate footnote to the financial statements discloses the future minimum rental commitments, by year for the next five years, then all remaining years as a group.

From all this it appears that the Amtrak leasbacks are accounted for as capital lease, though some of the details in accounting statements from Amtrak appear to be missing.

To come back to Anderson's conjecture above, I think it is safe to assume that these leasebacks are characterized as capital lease and accounted for essentially as debt in Amtrak accounts, and as required the equipment is also depreciated (since they appear as capital assets - I know somewhat confusing at least for me). What Amtrak has been exercising are the bargain purchase options that were in the original lease contract.