Acela II RFP information announcement

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Another piece of info in the FY16 Budget and Five Year Financial Plan has to do the with expected RRIF loan and the increase in Amtrak's debt burden:

The current debt level of $1.3 billion outstanding will likely be the lowest point at which Amtrak debt will stand over the next decade; purchase of 28 NextGen Trainsets and related investments by Amtrak will require new debt to be incurred. This new debt, expected to amount to approximately $2.5 billion in total, will be sourced via the FRA’s RRIF loan program, and will likely permit at least a six-year deferral of repayment during the construction period and approximately twenty-three year mortgage-style repayment period, thereafter.
A few months ago I expressed some concern about the impact of higher interest rates. Well, thanks to the economic slow-down in China and other countries, collapse in oil prices and some other commodities, there has been a flight of capital to US Treasuries, pushing down long term Treasury rates. Not sure exactly how the RRIF loans are structured, but if Amtrak can lock in the entire $2.5 billion loan at current 20 and 30 year Treasury rates with a small premium and then defer initial payments for up 6 years after the Notice To Proceed, it will be debt about cheap as it gets.

As of Friday, February 19, US Treasury rates for 20 year notes are 2.17% and 30 year notes 2.61%. Hurry up and get the RRIF loan approved and signed off on while rates are this low.
 
Are any modern distributed traction trains capable of being hacked in that way?
Yes, nearly all of them. It's usually not too hard to convert anything into a hauled coach; just remove all the smart bits. The "dumb" failsafes like handbrakes are usually still present for redundancy of safety equipment. You can usually even haul the whole damn trainset.
 
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Ah, the things one can find by doing a little digging in US government websites. In this case, the US DOT Credit Council (link which leads to the meeting schedule and agenda page). To be specific, the February 19, 2016 Agenda has this under action items:

(b) Application for a $2.45 billion RRIF loan from Amtrak for the financing of 28 new trainsets, trainset spares, facility improvements and ride quality improvements - the Council recommended to the FRA Administrator the approval of Amtraks application
So, the RRIF loan application is for $2.45 billion total and may be officially approved soon, if not already done. The $2.45 billion will also pay for facility improvements (ie the maintenance facilities and storage tracks at WAS, NYP, BOS) and "ride quality improvements". I take this last item to mean that some of the financing will go to undercutting and fixing segments of the track bed between WAS and NYP so the ride on the new trainsets won't be as bumpy. Which means that Amtrak will be using some of the predicted Acela II operating surplus to pay for financing NEC track maintenance and improvements as new debt, for better or worse.
 
Ah, the things one can find by doing a little digging in US government websites. . . .

(b) Application for a $2.45 billion RRIF loan from Amtrak for the financing of 28 new trainsets, trainset spares, facility improvements and ride quality improvements - the Council recommended to the FRA Administrator the approval of Amtraks application
. . . "ride quality improvements". . . . [likely meaning] . . . undercutting and fixing segments of the track bed between WAS and NYP so the ride on the new trainsets won't be as bumpy. Which means that Amtrak will be using some of the predicted Acela II operating surplus to pay for financing NEC track maintenance and improvements as new debt, for better or worse.
One can find this sort of thing, but I can't. :( I count on you to do it. You the best!

I'm glad they've found a way to pay for the much needed undercutting and fixing. That work will benefit the Acelas, Regionals, Keystones, as well as the Palmetto, the Star, the Meteor, the Crescent, the Cardinal, the Carolinian, the Pennsylvanian, the Vermonter, and the Virginia services.

I only wish they could have borrowed more money to do more things. Interest rates will never be cheaper, so borrow and build NOW. Amtrak will benefit from these investments for years to come.
 
If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?
 
If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?I
The resulting improvements -- such as buying another 20 Viewliner II sleepers, investing a Billion or two to bring 110-mph Higher Speed Rail to South of the Lake, a Billion to build a new Potomac Long Bridge, to make D.C.-Richmond-Petersburg into 90-mph service and another Billion to open the shortcut Petersburg-Raleigh -- of course these would decrease losses, likely putting a few LD trains into operating surpluses. So then, the loans could repaid in the usual way. Why would Amtrak need to have any loans forgiven?

As I've been given to understand, it's obvious that several Amtrak investments could "pay for themselves" with better operating results. Amtrak can't take that to a bank, not even the RRIF bank, because Amtrak's ability to repay depends on Congress continuing the yearly federal funding without any reduction. But nobody can guarantee that a future Congress won't cut the yearly funding and ruin Amtrak's ability to repay any and all loans.

Recently Amtrak reorganized to keep Acela/NEC separate from the LD and state-supported divisions. Perhaps one reason was to fence off the Acela/NEC enuff to be able to pledge the Acela surpluses without fear that Congress would pull the plug on funding for LD or other services, wreck Amtrak's budget, and jeopardize loans taken against forecasted Acela surpluses.
 
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Recently Amtrak reorganized to keep Acela/NEC separate from the LD and state-supported divisions. Perhaps one reason was to fence off the Acela/NEC enuff to be able to pledge the Acela surpluses without fear that Congress would pull the plug on funding for LD or other services, wreck Amtrak's budget, and jeopardize loans taken against forecasted Acela surpluses.
No, it doesn't really do that. The Acela surpluses, like everything else, depend on funding of Amtrak's national system overhead (IT, backshops, etc.), about $1 billion a year. The Acela surpluses aren't nearly large enough to cover that overhead on their own. Amtrak needs that overhead funded.

I really think it would make the most sense to present the accounting with a "national passenger train central services" account and make it clear to Congress that they are funding the equivalent of the FAA.
 
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If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?I
The resulting improvements -- such as buying another 20 Viewliner II sleepers, investing a Billion or two to bring 110-mph Higher Speed Rail to South of the Lake, a Billion to build a new Potomac Long Bridge, to make D.C.-Richmond-Petersburg into 90-mph service and another Billion to open the shortcut Petersburg-Raleigh -- of course these would decrease losses, likely putting a few LD trains into operating surpluses. So then, the loans could repaid in the usual way. Why would Amtrak need to have any loans forgiven?
As I've been given to understand, it's obvious that several Amtrak investments could "pay for themselves" with better operating results. Amtrak can't take that to a bank, not even the RRIF bank, because Amtrak's ability to repay depends on Congress continuing the yearly federal funding without any reduction. But nobody can guarantee that a future Congress won't cut the yearly funding and ruin Amtrak's ability to repay any and all loans.
The RRIF loans are funded by US Treasury bills, so "forgiving" the loans would require Congress to come up with the funds to pay off the bills. Well, unless we want to default on US Treasury bills. Which is not a good idea. At all.
As for using RRIF or other federal loans to pay for a bunch of NEC infrastructure projects and rolling stock, it is likely to happen. But loans are debt which has to be paid off over the next 20 to 35 years. Burying the NEC under $500 million or $1 billion a year in debt payments, expecting the NEC revenue and NEC transit agencies to pay off the debt, will inevitably hamper funding of maintenance and additional NEC improvements projects 10 or 20 years from now.

Should figure out what the annual debt service payments for a $2.45 billion RRIF loan would be. There will be fees and credit risk premiums on top of the 20 to 25 year loan, but could estimate what the ballpark minimum annual cost is. Then extrapolate that to an additional, say, $10 billion loan for NEC projects at 3%, 3.5%, 4% interest.
 
Well, the US Treasury can just print money to pay off the T-bills. (Federal Reserve Notes, US Notes, superjumbo platinum coins, whatever.) There would be very little effect, economically speaking. But there's this illusion that the government has to "borrow" money which certain people like to maintain.
 
Well, the US Treasury can just print money to pay off the T-bills. (Federal Reserve Notes, US Notes, superjumbo platinum coins, whatever.) There would be very little effect, economically speaking. But there's this illusion that the government has to "borrow" money which certain people like to maintain.
Specially some who seem to be unable to balance their own personal finances. People don't realize that managing a national account of a country that owns the core currency of international trade is nowhere near like balancing one's checkbook. ;)
 
The US dollar doesn't HAVE to be the core international currency, and there are states that are working to see that it doesn't remain so. If that happens, and it is more likely to happen if we keep selling huge amounts of T bills, then the cost to borrow will go up substantially which will be a huge drag on our economy. If the perception of the strength of the dollar changes, and profligate spending might do that, then we will pay a huge cost down the road. No way to know for sure, of course.

Well, the US Treasury can just print money to pay off the T-bills. (Federal Reserve Notes, US Notes, superjumbo platinum coins, whatever.) There would be very little effect, economically speaking. But there's this illusion that the government has to "borrow" money which certain people like to maintain.
Specially some who seem to be unable to balance their own personal finances. People don't realize that managing a national account of a country that owns the core currency of international trade is nowhere near like balancing one's checkbook. ;)
 
I hope you are right, jis. I don't think our spending is completely out of control, but between the Russians, the Chinese, the Saudis and a few others, there are states that would love to see us take a hit.

Actually we are nowhere as profligate as the certain states that are trying to change it. As long as we keep things as they are we should be fine as we watch China and Russia collapse into a heap of mush :)
 
But if you look at their own finances you soon realize that they will be dreaming for a long long time, while struggling to stay afloat themselves. You can run on completely cooked books for only so long, specially in the case of the Chinese.
 
If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?I
The resulting improvements -- such as buying another 20 Viewliner II sleepers, investing a Billion or two to bring 110-mph Higher Speed Rail to South of the Lake, a Billion to build a new Potomac Long Bridge, to make D.C.-Richmond-Petersburg into 90-mph service and another Billion to open the shortcut Petersburg-Raleigh -- of course these would decrease losses, likely putting a few LD trains into operating surpluses. So then, the loans could repaid in the usual way. Why would Amtrak need to have any loans forgiven?
As I've been given to understand, it's obvious that several Amtrak investments could "pay for themselves" with better operating results. Amtrak can't take that to a bank, not even the RRIF bank, because Amtrak's ability to repay depends on Congress continuing the yearly federal funding without any reduction. But nobody can guarantee that a future Congress won't cut the yearly funding and ruin Amtrak's ability to repay any and all loans.
The RRIF loans are funded by US Treasury bills, so "forgiving" the loans would require Congress to come up with the funds to pay off the bills. Well, unless we want to default on US Treasury bills. Which is not a good idea. At all.
As for using RRIF or other federal loans to pay for a bunch of NEC infrastructure projects and rolling stock, it is likely to happen. But loans are debt which has to be paid off over the next 20 to 35 years. Burying the NEC under $500 million or $1 billion a year in debt payments, expecting the NEC revenue and NEC transit agencies to pay off the debt, will inevitably hamper funding of maintenance and additional NEC improvements projects 10 or 20 years from now.

Should figure out what the annual debt service payments for a $2.45 billion RRIF loan would be. There will be fees and credit risk premiums on top of the 20 to 25 year loan, but could estimate what the ballpark minimum annual cost is. Then extrapolate that to an additional, say, $10 billion loan for NEC projects at 3%, 3.5%, 4% interest.
I would guess that the annual debt service payments would be about $130 million per year, $2.45 billion @ 25 years @ 2.38% interest, very reasonable considering today's Acela takes in about twice that in profit, and the Acela II's will at minimum, increase profit by 50%, and likely even more through a combination of increased capacity per set, additional frequencies, and slightly lower operating and (hopefully) lower maintenance costs. They should also be a little faster, doing DC to NY in about 2h21m-2h30m and DC-Boston in about 6h8m, which would attract a few more riders/revenue on top of what I thought above.

To caveat, similar claims were made about the original Acela and we only ended up with some benefits.

Yes, Amtrak is thinking about financing some NEC projects with RRIF. It is a good idea and helps to weed out some of the really expensive projects (ie $1 billion for reduce travel time by 1 minute or 2).

"Amtrak may borrow through RRIF to finance investments within the NEC that demonstrate economic benefit and the ability to repay the loan." p77 https://www.amtrak.com/ccurl/133/704/FY15-Budget-Business-Plan-FY16-Budget-Justification-FY-15-19-Five-Year-Financial-Plan.pdf
 
If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?I
The resulting improvements -- such as buying another 20 Viewliner II sleepers, investing a Billion or two to bring 110-mph Higher Speed Rail to South of the Lake, a Billion to build a new Potomac Long Bridge, to make D.C.-Richmond-Petersburg into 90-mph service and another Billion to open the shortcut Petersburg-Raleigh -- of course these would decrease losses, likely putting a few LD trains into operating surpluses. So then, the loans could repaid in the usual way. Why would Amtrak need to have any loans forgiven?
As I've been given to understand, it's obvious that several Amtrak investments could "pay for themselves" with better operating results. Amtrak can't take that to a bank, not even the RRIF bank, because Amtrak's ability to repay depends on Congress continuing the yearly federal funding without any reduction. But nobody can guarantee that a future Congress won't cut the yearly funding and ruin Amtrak's ability to repay any and all loans.
The RRIF loans are funded by US Treasury bills, so "forgiving" the loans would require Congress to come up with the funds to pay off the bills. Well, unless we want to default on US Treasury bills. Which is not a good idea. At all.
As for using RRIF or other federal loans to pay for a bunch of NEC infrastructure projects and rolling stock, it is likely to happen. But loans are debt which has to be paid off over the next 20 to 35 years. Burying the NEC under $500 million or $1 billion a year in debt payments, expecting the NEC revenue and NEC transit agencies to pay off the debt, will inevitably hamper funding of maintenance and additional NEC improvements projects 10 or 20 years from now.

Should figure out what the annual debt service payments for a $2.45 billion RRIF loan would be. There will be fees and credit risk premiums on top of the 20 to 25 year loan, but could estimate what the ballpark minimum annual cost is. Then extrapolate that to an additional, say, $10 billion loan for NEC projects at 3%, 3.5%, 4% interest.
I would guess that the annual debt service payments would be about $130 million per year, $2.45 billion @ 25 years @ 2.38% interest, very reasonable considering today's Acela takes in about twice that in profit, and the Acela II's will at minimum, increase profit by 50%, and likely even more through a combination of increased capacity per set, additional frequencies, and slightly lower operating and (hopefully) lower maintenance costs. They should also be a little faster, doing DC to NY in about 2h21m-2h30m and DC-Boston in about 6h8m, which would attract a few more riders/revenue on top of what I thought above.

To caveat, similar claims were made about the original Acela and we only ended up with some benefits.

Yes, Amtrak is thinking about financing some NEC projects with RRIF. It is a good idea and helps to weed out some of the really expensive projects (ie $1 billion for reduce travel time by 1 minute or 2).

"Amtrak may borrow through RRIF to finance investments within the NEC that demonstrate economic benefit and the ability to repay the loan." p77 https://www.amtrak.com/ccurl/133/704/FY15-Budget-Business-Plan-FY16-Budget-Justification-FY-15-19-Five-Year-Financial-Plan.pdf
And I believe that Amtrak will continue to lobby Congress this year to be allowed to retain the NEC "surplus" revenues for reinvestment back into the NEC. The Fast Act signed by Obama this past December permitted this, but the appropriations bills did not comport with the Fast Act. We'll see what happens during the remaining time for this Congress.
 
In effect what Congress needs to do is appropriate at the level of the authorization. This whole business about reinvesting NEC profits is partly accounting magic that first of all gives the impression of the surplus by carefully hiding away maintenance and shared costs. Carefully accounting for actually operating the NEC, not just a made up above the rails cost using mysterious allocation algorithms to allocate away shared costs elsewhere is need and is very hard to come by. And meanwhile the unsustainable usurious fares charged on the NEC in face of lower energy costs need to be addressed too.

I was talking to a few current and recently retired Amtrak folks, and apparently the finances are really in a bit of shambles due to drops in ridership across the board with no respite in site given the situation with the world oil market and weakness in demand relative to supply.
 
Saudi Arabia runs out of money in roughly late 2018 (maybe earlier) if the price of oil doesn't go up above $50/bbl. So definitely expect the price of oil to go up in 2018.

Fracking for oil is already collapsing due to low prices so the price may actually go up in 2017 or even late 2016.

Oil demand will probably continue to drop, however. Also electric cars are going to be a mass-market item starting late-2017, early-2018, and once you own one, the cost of driving it is roughly equivalent to having $1.50 gasoline.

Amtrak needs to be faster than driving, and can't charge too much more.
 
If Amtrak could borrow more and the resulting improvements decrease losses would it be prudent to borrow more ? Then would congress critters forgive some of the loans ?I
The resulting improvements -- such as buying another 20 Viewliner II sleepers, investing a Billion or two to bring 110-mph Higher Speed Rail to South of the Lake, a Billion to build a new Potomac Long Bridge, to make D.C.-Richmond-Petersburg into 90-mph service and another Billion to open the shortcut Petersburg-Raleigh -- of course these would decrease losses, likely putting a few LD trains into operating surpluses. So then, the loans could repaid in the usual way. Why would Amtrak need to have any loans forgiven?
As I've been given to understand, it's obvious that several Amtrak investments could "pay for themselves" with better operating results. Amtrak can't take that to a bank, not even the RRIF bank, because Amtrak's ability to repay depends on Congress continuing the yearly federal funding without any reduction. But nobody can guarantee that a future Congress won't cut the yearly funding and ruin Amtrak's ability to repay any and all loans.
The RRIF loans are funded by US Treasury bills, so "forgiving" the loans would require Congress to come up with the funds to pay off the bills. Well, unless we want to default on US Treasury bills. Which is not a good idea. At all.
As for using RRIF or other federal loans to pay for a bunch of NEC infrastructure projects and rolling stock, it is likely to happen. But loans are debt which has to be paid off over the next 20 to 35 years. Burying the NEC under $500 million or $1 billion a year in debt payments, expecting the NEC revenue and NEC transit agencies to pay off the debt, will inevitably hamper funding of maintenance and additional NEC improvements projects 10 or 20 years from now.

Should figure out what the annual debt service payments for a $2.45 billion RRIF loan would be. There will be fees and credit risk premiums on top of the 20 to 25 year loan, but could estimate what the ballpark minimum annual cost is. Then extrapolate that to an additional, say, $10 billion loan for NEC projects at 3%, 3.5%, 4% interest.
Any update on the financing and Notice to Proceed? The RFP was issued back on July 1st, 2014.
 
If you read the FY2016 budget and business plan the calendar for the project is quite compact. Once the notice to proceed the vendor must provide a operational prototype by 36 months, first operational train set by 48 months, final delivery 60 months. ) not sure if it will be operational ? ) That would be a delivery better than one every two weeks./ Even ACS-64s did not meet that metric.

The only problem will be certain spoil sports taking Amtrak to court changeling the award.
 
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If you read the FY2016 budget and business plan the calendar for the project is quite compact. Once the notice to proceed the vendor must provide a operational prototype by 36 months, first operational train set by 48 months, final delivery 60 months. ) not sure if it will be operational ? ) That would be a delivery better than one every two weeks./ Even ACS-64s did not meet that metric.

The only problem will be certain spoil sports taking Amtrak to court changeling the award.
Let's be honest.. The way that the Sprinters have performed so far.. Siemens will be awarded the deal.. Alstom will complain and sue.. But who does it come down to.. Fat Mouthed Charlie....
 
If you read the FY2016 budget and business plan the calendar for the project is quite compact. Once the notice to proceed the vendor must provide a operational prototype by 36 months, first operational train set by 48 months, final delivery 60 months. ) not sure if it will be operational ? ) That would be a delivery better than one every two weeks./ Even ACS-64s did not meet that metric.

The only problem will be certain spoil sports taking Amtrak to court changeling the award.
The production schedule won't have to be quite that compact on the latter end. Amtrak got the waiver from the FRA for the first two trainsets to be built outside the US, so those 2 trainsets can be delivered in the 36 month period for testing. Those 2 trainsets may be called "prototypes", but they will be used in revenue service. To go into operational service at 48 months, that implies a minimum number of trainsets delivered and approved for revenue service by then, whatever that number is. Since the US plant will build 26 out of the 28 trainsets, the delivery schedule could be something like from 42 to 60 months or over a 18 month period. That is roughly a trainset a little under every 3 weeks.

An aggressive schedule? yes. Do I think whoever the vendor is will meet it? Probably not, given the established recent (and not so recent) history of US based manufacturing plants not meeting the original agreed delivery schedule for passenger trains, be it intercity, commuter, subway, or light rail equipment.
 
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