New billions for capital improvements

Spending could top pre-recession levels, though operating deficits linger. Rail transit operators in the United States—regional/commuter, heavy rail (metro), and light rail—are expected this year to invest in capital improvements at a level approaching the $12.67 billion they spent in 2008, before the full impact of a calamitous recession was felt. 

When the limits of the rail transit universe are expanded to include intercity trains, there emerges the picture of a growth industry that will grow even faster as nearly $10 billion begins to stream into the marketplace in stimulus funds granted to 13 states to start carrying out President Obama’s mission to create fast train corridors. These funds are in addition to Amtrak’s sizeable capital program for its own intercity system.

Make no mistake: the road ahead for the passenger rail industry will continue to have its jolts. Many urban and suburban agencies will still struggle in 2011 with operating deficits that caused many of them to raise fares and cut service last year. Some, like the Chicago Transit Authority, even borrowed from capital funds to meet payrolls and keep the trains running. More of this may be expected this year.

But partly because sizable injections of stimulus dollars helped fill budget gaps, many otherwise strapped operators will be able to push ahead with long range, big-ticket capital items like expansions, fleet acquisitions, and new signaling. Nearly $8 billion from the transportation stimulus pool went to transit agencies. FTA Administrator Peter Rogoff told the American Public Transportation Association at its annual meeting in San Antonio in October: “The FTA’s share of Recovery Act dollars was a whopping 80% funding boost above our usual annual finding level—nearly two years of funding rolled into one!”

A number of major system expansions, which add up to the multi-billions in the New York City area alone, are seeing engineering and construction phases stretched out. Some projects that are well under way, like Denver’s FasTracks program with its plans for 122 miles of new commuter and light rail, may to be at least temporarily truncated. But the pluses outweigh the minuses, and the universe of passenger rail is expanding.

Even in its narrower definition of urban and suburban operations, rail transit will invest in capital improvements this year at a rate exceeding that of the entire Class I freight railroad industry.

Where will the dollars go? The emphasis shifts from year to year in a capital-intensive industry where a single railcar order or one new rail start can make averages useless. In the most recent year (2008) for which APTA has done the modal arithmetic, the pie was divided this way:

• Total capital expenditures added up to $17.65 billion, with 71.6% ($12.64 billion) going to various forms of rail, 23% to buses, 4.7% to paratransit, and 1.6% to trolleybuses.

• The heavy rail (metro) share was $6.16 billion; light rail, $3.67 billion; and commuter rail, $2.74 billion.

• Rolling stock expenditures came to $2.33 billion: for heavy rail systems, $1.21 billion; for commuter rail, $608.4 million; and for light rail, $514 million.

• Infrastructure accounted for $5.7 billion of transit capital investment: $2.14 billion for heavy rail, $2.51 billion for light rail, and $1.04 billion for commuter rail.

• For maintenance of equipment and facilities, heavy rail spent $827.1 million; commuter rail, $313.1 million; and light rail, $129.0 million.

• Communications and information systems absorbed $736.4 million of capital budgets: heavy rail, $623.8 million; light rail, $112.9 million; and commuter rail, $106.7 million.

• The fare collection market came to $118.9 million: heavy rail, $92 million; light rail, $14.8 million; and commuter rail, $14.8 million.

Where will the spending emphasis lie in 2011—and how will wave of fiscal piety sweeping Washington affect the broad picture?

Much has been said and written about the threat of a Tea Party revolt against federal spending on passenger trains, and in two or three cases, grants have already been turned down. (“What’s the point of throwing money at a problem if they throw it right back to you?” one passenger train partisan grumbled.)

Actually, any such rebellion is probably directed more at President Obama’s fast-train plan (see following story, p. 57) than to the Amtrak, commuter/regional, metro, and light rail trains that have escaped the curse of his endorsement.

Even in the after-gloom of the recession, evidence abounds that the passenger train industry continues in a growth mode. One key measure of the ongoing health of the industry is the level of passenger railcar purchases, and they have continued to be strong.

Railway Age Managing Editor Douglas John Bowen’s annual railcar survey, based on information received directly from passenger rail operators in the U.S. and Canada, shows that 1,129 passenger railcars of all types were delivered in 2010, compared with 1,141 in 2009, which was higher than in any of the six years immediately preceding the recession. When rebuilds are added in (they represent at least half or more of the price of new cars), total deliveries came to 4,366 last year vs. 2,904 in 2009.

Carbuilders went into the New Year with a backlog of 3,488 new railcars on order and undelivered, and the prospect of orders for an additional 1,599 new cars developing in 2011. The longer-range outlook shows that operating agencies already have plans for ordering up to 4,266 new cars in the following five-year period, 2012-2016.

The need for a rising flow of new rolling stock is evident when you examine the “new starts” picture. The FTA on Dec. 27 awarded advance grants to seven ongoing new rail transit projects to allow them to collect matching local grants earlier than would otherwise have been possible. In the rarefied atmosphere of passenger rail investment, these grants were small, adding up to around $165 million, but they went to new subway tunnels and light and commuter rail expansions estimated to cost $21.3 billion.

Now that’s what a growth industry looks like.