On Tuesday, Amtrak announced (PDF) the selection of a multi-disciplinary consultant team that will develop a business and financial plan for its proposed "next generation" high-speed rail system along the Northeast Corridor. This plan will identify a comprehensive finance and implementation strategy to realize 220 mph rail service between Boston and Washington, DC building upon the groundwork laid by Amtrak's Vision for High-Speed Rail in the Northeast Corridor (PDF), released in 2010.
This consultant team, which will be led by the financial advisory firm KPMG, will also include several partners with extensive transportation, real estate, and finance expertise, including Steer Davies Gleave, TranSystems (member of the Business Alliance), DWH Strategic Advisors, and Sharon Green & Associates. Working together with Amtrak, this team will identify potential sources of public and private investment as well as potential revenue streams, demand projections, risks, phasing plans, and institutional constraints. The plan is will serve as a roadmap to inform Amtrak's 2013 federal budget request and will inform future efforts to approach private investors and capital markets.
While Representative John Mica (R-FL), Chairman of the House Transportation and Infrastructure Committee has proposed that the Northeast Corridor could be "privatized" to facilitate high-speed rail development, this new business and financial plan has the potential to produce a detailed analysis on the costs, benefits, and feasibility of pursuing different funding sources and institutional models. Financing a high-speed rail project is a complex endeavor that will likely require active roles from both the public and private sectors. The public sector's role can range from direct grants and equity contributions to low-interest loans, loan guarantees, tax credits, and tax preferential incentives. The private sector can contribute both debt and equity at many stages of the process, such as at the project outset through the sale and leaseback of train equipment, during construction and operations through availability payments, and through concession agreements once operations are stabilized. In addition, the Northeast Corridor faces an $8 billion backlog of deferred maintenance as well as a complicated operating environment, which present additional challenges and add to the project's risk.
Any combination of funding options will present different advantages and drawbacks that will affect the total cost, design, and benefits of the final high-speed rail system. Policy-makers and stakeholders will be well served by a document that clearly lays out these scenarios. Furthermore, this report will be a constructive means to inform public debate and advance the effort to bring world-class high-speed rail to the Northeast.
For additional reading, see the recent report by USPIRG on high-speed rail public-private partnerships, as well as the recent University of Pennsylvania study, High Speed Rail in the Northeast Megaregion: From Vision to Reality.
Image: The Infrastructurist
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