Attracting private-sector investment is a key element to building a high-speed rail system in the Northeast, witnesses and Congress members said Thursday at a hearing in New York City.
Rep. John Mica, R-Fla., who chairs the House Committee on Transportation and Infrastructure, said development of high-speed rail in the Northeast will benefit the entire nation but that the undertaking is too large and complex for Amtrak.
“It can only be addressed with the help of private sector expertise — those who have done this before and those who can do it in the future,” Mica said, noting that public-private partnerships could potentially reduce the amount of money taxpayers put into the project.
“Entering into public-private partnerships to assist in the financing of high-speed rail development on the corridor I believe can get the project done much faster and dramatically bring down costs,” Mica said.
P3s have different flavors, including long-term concessions in which a private company leases an asset and pays government an up-front fee. Another flavor is design-build-operate schemes in which a private company builds the asset and operates it for a length of time before turning it over to a government entity. Mica said all P3 possibilities were being explored.
The hearing, which was held in Grand Central Terminal, followed the State of the Union speech on Tuesday in which President Obama established a goal of providing 80% of Americans with access to high-speed rail in the next 25 years.
The densely populated Northeast region accounts for 18% of the population of the United States, according to committee materials. Amtrak estimated last year that it would need to invest $52 billion in the Northeast corridor to improve existing service, maintain the system in a state of good repair, and fund plans to integrate various intercity, commuter, and freight rail into existing rail systems.
Amtrak also released a separate proposal for a 220-mile-per-hour train system that would connect Washington D.C., New York City, and Boston at a cost of $117 billion over 30 years.
Former Pennsylvania Gov. Ed Rendell said that timeframe is too slow to make the U.S. competitive with China, which is investing $300 billion in high-speed rail over 10 years.
“We need to get real,” he said. “The way we are doing high-speed rail right now in America will amount to nothing.”
Last year, the federal government awarded $8 billion of competitive grants for high-speed rail projects under the American Recovery and Reinvestment Act. The big winners of those grants were California, Florida, and two dozen projects in the Midwest that accounted for $6.12 billion. The Northeast corridor received just $112 million under that program. Several witnesses said the Northeast missed out because it had not completed an environmental impact statement.
Rendell and others at the hearing indicated those awards were too scattered.
Rep. Jerrold Nadler, D-N.Y., said the private sector needs a long-term commitment from the public sector that is not subject to dramatic funding changes due to politics to feel comfortable investing in high speed rail.
“You’re not going to get private-sector investment on a long-term project if you have a very uneven public-sector involvement,” Nadler said. “We must have some certainty in the public sector. We must have some guaranteed funding source.”
Rendell responded that the country needs an infrastructure bank with bonding capacity to finance high-speed rail.
“Congress would control the amount of its capacity [and] the criteria,” Rendell said. “But that’s going to be there administration after administration, and it’s going to make a bonding commitment for a long term.”
Whatever public subsidy government provided through the bond bank would be matched by the private sector, according to Rendell.
New York City Mayor Michael Bloomberg stressed the importance of transportation in the Northeast, which he said has the nation’s largest regional economy and is home to 162 Fortune 500 companies and seven of the world’s top 20 research universities.
“What is America waiting for?” Bloomberg said. “I don’t want to spend money we don’t have. I’m sympathetic to the cost of debt, I’m sympathetic to encumbering our descendants with the cost of building things, but this is not wasting money — infrastructure is one of those things that gives us a future.”