House Panel Examines P3 Possibilities for Northeast Rail

WASHINGTON — The corridor between Washington, D.C. and Boston is ripe for public-private partnership rail development if the government gets behind it, transportation experts told members of the House Committee on Transportation and Infrastructure Thursday.

The hearing, the last one for Rep. John Mica, R-Fla. as chairman, stemmed from longtime Republican concerns about the U.S. government’s heavy subsidy of Amtrak, which they contend serves as the country’s de facto national rail service.

Mica held his first hearing as chairman two years ago at New York City’s Grand Central Terminal on the same subject. He and some other lawmakers are dissatisfied with Amtrak’s performance, especially on high-speed rail development, and want to see more private sector involvement.

“I’ve been one of the most vocal critics of Amtrak and its operations, but I consider myself one of the biggest proponents of high speed rail,” Mica said at Thursday’s hearing.

Perry Offutt, a managing director with Morgan Stanley, testified that the Northeast Corridor offers an attractive option for P3 rail development under which investors partner with state and federal governments to leverage money many times over.

“I believe there are numerous companies interested,” Offutt told the panel. “We’re in an environment where there is more and more capital being raised to invest in infrastructure globally than there are opportunities to invest.”

Morgan Stanley estimates there is over $200 billion of equity available to invest in infrastructure around the world. Offutt said potential partners are attracted to the Northeast Corridor because it is profitable already and could become even more so.

Del. Eleanor Holmes Norton, D-D.C, challenged Offutt as to why no private firms have submitted development proposals to the Department of Transportation, as they have in other states like Florida.

Offutt responded that private entities are hesitant to put their money down on projects that are merely conceptual. He said the government will need to show the private sector that it is serious about supporting P3s.

Richard Geddes, an adjunct scholar at the public policy research group American Enterprise Institute, highlighted the private sector’s greater efficiency and the ability of P3 agreements to shift the responsibility of maintenance and operation away from the public sector. P3 development is not a one size fits all, he told the committee.

“One of the hallmarks of the P3 approach is its inherent flexibility. The range of ways in which private participation can be incorporated on the Northeast Corridor appears to be limited only by the creativity of the contracting parties,” Geddes said.

Some lawmakers and labor leaders have expressed concern that privatizing rail along the nation’s busiest travel corridor could have the effect of bringing down wages or ignoring the public interest.

John Tolman, vice president and national legislative representative of the Brotherhood of Locomotive Engineers and Trainmen, told the committee that Amtrak’s 30-year, $151 billion vision for high-speed development in the northeast corridor provides a template for a P3 “worth discussing,” but warned any arrangement must not come at the expense of train workers or the public.

Work on this issue, including a new railroad funding bill, will fall to incoming committee chief Rep. Bill Shuster, R-Pa., who currently chairs the subcommittee on railroads, pipelines and hazardous materials.

For reprint and licensing requests for this article, click here.
Infrastructure Transportation industry
MORE FROM BOND BUYER