The Michigan Department of Transportation, responding to criticism from lawmakers and taxpayers after the Free Press reported the state agency is paying more than $1 million a year to lease railcars it can’t even use, is finalizing an agreement to halt the payments on Sept. 30, according to the state’s top rail official.
Tim Hoeffner, director of MDOT’s Office of Rail, said details aren’t finalized, but this much is agreed between MDOT and the owner of the cars, Great Lakes Central Railroad: The state will stop the lease payments of $3,000 a day, but the railroad will still promise to make the railcars available to MDOT, should they be needed, for up to five years.
MDOT wants the double-decker passenger cars, formerly used by commuter train operator Metra around Chicago, for proposed commuter services between Detroit and Ann Arbor and between Howell and Ann Arbor. But neither service has been approved or funded, some of the tracks the trains would use are not ready and officials say start dates are likely about four years away.
Over the years, dreamers have recommended all sorts of schemes for the old Michigan Central Station, from casinos to vertical agriculture. But it may turn out that the best new use may be closer to the station’s original purpose — a transportation hub.
Matthew Moroun, son of depot owner Manuel (Matty) Moroun and the new public face of the Moroun business empire, told WWJ radio recently that it was possible the family might consider moving some of its operations into the train station.
The Morouns’ Warren-based CenTra (a shortening of Central Transport) is a North American trucking network employing thousands of employees. The family also owns and operates the Ambassador Bridge as well as a growing logistics network that operates in part from facilities at the I-94 Industrial Park on Detroit’s east side.
The Morouns’ umbrella CenTra organization today operates from a converted school building in Warren where they employ hundreds of workers and operate a mission-control center for their far-flung trucking network.
Moving even a portion of that into the old train station would recreate a transportation hub there even if it doesn’t replace the train service that once made the depot famous as a city landmark.
A spokeswoman for Matthew Moroun said Tuesday she couldn’t add anything to the speculation and that Matthew Moroun was concentrating on “doing right by the depot” by continuing renovations of the station. So far, the family’s Detroit International Bridge Co. has spent an estimated $12 million to reinstall electricity at the station, to put in a new elevator, and to install new windows.
Estimates of the cost of a total renovation of the train station generally start at $100 million, but the figures could vary considerably depending on what use to make of the station.
Steve Morris, managing principal for the Axis Advisors real estate consulting firm in Farmington Hills and an adjunct professor of real estate finance at the University of Michigan, said the train station will benefit from the revitalization taking place in the greater downtown.
“The location of the old Train Station has become significantly more valuable over the past three years given its proximity to the dynamism of (downtown) Detroit,” he said Tuesday, also citing the residential growth in the nearby Corktown district and the forthcoming new development on the former Tiger Stadium site near the depot.
Reusing the tower portion of the depot as either housing or office space could make sense given current economics, he said. One possibility not mentioned yet: that Wayne County might move its offices from the Guardian Building, which it owns but is considering selling to an investor like Quicken Loans Chairman Dan Gilbert, and move into the train station instead.
If something like that happened, Morris said, the Moroun family potentially could “receive a boat load of tax benefits” for their renovation of the historic structure.
Moreover, with the current push to develop residential apartments throughout the greater downtown area, the train station potentially could find a new use as that, he added.
Any new use for the train station is likely at least a few years away, as it would take that long at a minimum to complete the cleanup of the station and to plan for and complete a transition to a new use.
Now’s the time for companies that have expressed interest in running passenger rail service between Sault Ste. Marie and Hearst to put their plans in writing for evaluation.
Last Friday, the Algoma Central Railway passenger service stakeholders working group issued a request for proposal for a new operator. The service stopped in mid-July because third-party operator Railmark Canada couldn’t meet a precondition and get a line of credit of $550,000.
The group invited 25 companies in North America to submit their proposals.
Tom Dodds, interim chair, says he was fielding calls and emails from interested business before the RFP was sent out.
The request was also sent to Railway Association of Canada, electronic tendering service MERC, politicians in the Sault and area and a short-line railway operator association in the United States.
“I think we’ve done a pretty broad broadcast,” said Dodds. “I’m pretty confident the industry will know that we’ve sent this out.”
Applications, due Sept. 9, will be evaluated for ideas to increase passenger volume and “the value of the passenger experience,” by offering travel options running a day or more, said Dodds.
“You’d have a combination of increased enthusiasm for using the passenger service because it’s a nicer level of service, as well as different types of experiences that you could undertake on the railway,” he told The Sault Star.
With Canadian National Railway Co., charging a track access fee that “is not insignificant,” the chosen firm “has to see this as way beyond just simply a passenger service,” said Dodds.
“The passenger service and the support provided by the federal government has to be a means to an end,” he said. “You can organize a number of different types of tourism products, or activities or experiences, along the line and get revenue generated. Something like that happens in many other jurisdictions.”
Transport Canada agreed to fund $5.3 million in bridge financing over three years based on Railmark Canada’s business case. Federal support is assured for the new operator. That wasn’t guaranteed when an earlier search that eventually led to Railmark being selected by CN was done.
“We think that’s critical,” said Dodds.
An annual subsidy of $2.2 million from Transport Canada to offer passenger service was cut in 2014, then extended a year to help the working group find another operator after CN stopped running the train. CN wouldn’t operate the passenger line without the subsidy.
The co-chair of Coalition for Algoma Passenger Trains is “very optimistic” a new operator will be found even after Railmark’s short run. The difference, says Linda Savory-Gordon, is firm federal funding.
“That could make the big difference right there,” she said. “People know that if they follow the guidelines of Transport Canada that they will be able to be reimbursed for the eligible expenses. I think that it’s a very good chance that we’ll find a very good operator.”
She, and other working group members, reviewed the RFP last week before it was sent out to interested businesses.
“We’re glad that things are progressing,” said Savory-Gordon. “I’m very pleased that it’s a short turnaround too. Last time was a little longer process.”
A new operator is expected to be in place between October and December.
The Agawa Canyon Tour Train is still run by CN. It’s not affected by the suspension of passenger rail service north of the Sault.
Ann Arbor officials said back in May the Ann Arbor Station study was nearing the final stretch and a recommendation was expected in the next month or so on a preferred location for a new Amtrak station in the city.
More than three months later, nothing has been announced, but city officials say there should be news sometime in September.
Eli Cooper, the city’s transportation program manager, said a final draft analysis of alternative locations for a new train station was to be delivered to the Michigan Department of Transportation on Wednesday afternoon.
He said the draft report includes a comprehensive review of options for a new train station both on Fuller Road and Depot Street, as well as a no-build option.
“The report also discusses a recommendation to preferred location,” Cooper said in an email on Wednesday, declining to disclose the preferred location.
“Recognizing this is a draft document and subject to agency review, comments and amendments, it is best to wait until the final version is available,” he said.
The Ann Arbor News has filed a Freedom of Information Act request for a copy of the draft report and is awaiting a response from the city.
City officials have been talking about building a new Amtrak station for several years, and the current study has been ongoing since early 2014.
It’s the city’s position that the existing station on Depot Street is inadequate and will become increasingly inadequate in the years ahead in terms of passenger demand, quality and comfort, access, intermodal connectivity, and integration within the city.
Assuming MDOT’s review indicates the draft report is responsive to previous input from MDOT and the Federal Railroad Administration, Cooper said it will be forwarded to the FRA for final review, and a final report could be released in September.
“I’m thinking we’re into early- to mid-September if all goes well,” Cooper said, noting public meetings to discuss the recommendations will be scheduled after that.
Cooper said late last month the city was leaning toward holding off on the public engagement until after Labor Day to avoid summer vacation issues and to maximize the opportunity for public engagement and comment.
When asked for an update in early July, Cooper said the city’s project team was working through the FRA’s comments on an earlier draft report.
The city has given serious consideration to demolishing the existing Amtrak station on Depot Street and building a new station at that location, as well as another option that would involve building on the footprint of a city-owned parking lot along Fuller Road in Fuller Park in front of the University of Michigan Hospital.
As for the idea of returning the historic Michigan Central Railroad Depot on Depot Street to use as a train station, something the federal government asked the city to explore as part of the Depot Street alternative, the city’s project consultant laid out a list of reasons in May why that wouldn’t be a very good option.
If the city decided to stick with the existing Amtrak location on Depot Street, the city’s project team has concluded the city would need a portion of the DTE-owned MichCon site north of the station to build a new station and parking facilities there. DTE has agreed to collaborate with the city to make that work if that option is chosen.
The project team has evaluated options for Depot Street that include a new station either at ground level or elevated.
The project team is working with assumptions that ridership along the Detroit-to-Chicago corridor will increase significantly in the coming decades, with daily roundtrips by Amtrak increasing from three to 10, along with new commuter rail service between Ann Arbor and Detroit that’s expected to start within a few years.
City voters will have the final say before a new station can be built.
The city hired URS Corp. for $824,875 to lead the train station study. A little less than $165,000 came from funds the city previously budgeted, with the rest covered by a federal rail grant the city accepted in 2012.
The $2.8 million federal rail planning grant also is expected to cover some additional future expenses as the project moves forward.
Final design of a new Amtrak station is identified as a $2.6 million expense in 2016-17 in the city’s Capital Improvement Plan. The actual construction of the new station is shown as a separate $44.5 million line item in 2017-18.
City officials expect 80 percent of the funding to come from the federal government with other local partners potentially contributing funds.
Wisconsin taxpayers will end up paying $9.7 million more for two state of the art train sets — for a total of roughly $50 million — but leave the trains with their Spanish manufacturer, under the settlement of a nearly 3-year-old lawsuit.
The settlement, which still needs to be approved in court, ends a political saga going back half a decade.
The bizarre and expensive outcome for Wisconsin — paying for a product but not keeping it or ever using it — reflects the depth of the political disagreement in which Democratic Gov. Jim Doyle signed, and then GOP presidential candidate and Gov. Scott Walker nixed, a no-bid contract with Talgo Inc. for trains from Madison to Milwaukee and then on to Chicago
The manufacturer ended up suing Walker and Transportation Secretary Mark Gottlieb seeking a clean title to the trains — and also sought an additional $10 million as a final payment on them — and has reached a settlement that largely achieves that, said Lester Pines, an attorney for Talgo. If the manufacturer is able to sell the trains, it will return 30% of the net proceeds of the sale, up to a limit of $9.7 million, to Wisconsin.
Spokespersons for the Walker administration and the state Department of Justice did not respond to requests for comment late Wednesday. But Pines confirmed details of the settlement and provided a copy of a stipulation in the case that was signed Wednesday by both sides and that will be filed in Dane County Circuit Court on Thursday.
“(Talgo) didn’t like this litigation and it’s happy it’s over,” Pines said. “They’re not in the business of suing people.”
Under Doyle and a Democratically held Legislature, the state agreed in 2009 to a no-bid contract to buy two new train sets from Talgo Inc. for Amtrak’s Hiawatha line, which runs from Milwaukee to Chicago, for $47.5 million as well as additional trains for a proposed Madison to Milwaukee line.
Talgo, a Spanish company with U.S. headquarters in Seattle, was paid $42.2 million for the trains before the lawsuit, according to the state Department of Transportation. The state expended millions of dollars more for a temporary maintenance base and planning for a permanent base, spare parts and consulting fees.
The payments were made using bonds, with taxpayers ultimately on the hook for those expenditures.
Wisconsin won an $810 million federal stimulus grant to build a high-speed rail from Milwaukee to Madison, but the federal government revoked the award after Walker won election in 2010 on a promise to stop the train.
The lawsuit, however, centers on the trains for the Milwaukee-Chicago line and is not related to the abandoned Milwaukee-Madison line, since the state canceled its order for those Talgo trains before work on them started. The State of Wisconsin has sovereign immunity, meaning it can only be sued for failing to pay up on a contract in cases in which the agreed item has been delivered or had work started, Pines said.
The problem with the trains for the Hiawatha was exacerbated for two reasons, Pines said.
First, Talgo had priced the train sets lower to account for a 20-year maintenance contract on the trains that the state also broke. Second, the Walker administration and GOP lawmakers waited more than a year to go back on the state’s order with Talgo for the Milwaukee-Chicago train sets, allowing the company’s work on the trains to progress even further, Pines said.
“The state signed contracts with Talgo and then absolutely walked away from that,” Pines said.
In March 2012, Republicans on the Legislature’s Joint Finance Committee ignored the objections of the Walker administration and voted 12-4 on party lines to reject borrowing $2.5 million for additional planning to replace a maintenance base for the Talgo trains. At the time, Walker’s Department of Transportation said that vote meant the state would not be able to put the trains into service. GOP lawmakers rejected the maintenance base anyway, saying they believed the state could save money by sticking with the existing Hiawatha trains.
Assembly Speaker Robin Vos (R-Rochester), a co-chairman of the Joint Finance Committee at the time, said Wednesday that he hadn’t seen the settlement or talked with GOP Attorney General Brad Schimel about it. Vos said that he believed at the time that the state had protections against legal action and that the blame for the outcome ultimately rested on actions by Doyle and the previous Legislature.
“This is just another reminder of the dark days of Jim Doyle,” Vos said.
At the time, however, then state Rep. Jon Richards (D-Milwaukee), an attorney and budget committee member, said the Joint Finance action was inviting a lawsuit for breach of contract and was “completely foolhardy and irresponsible.”