Welcome to The Business Case for

Passenger Rail Symposium

Pat & Kris Larkin

Proprietors

The Lark Inn

Chris Larson

President & CEO

Larson Binkley

The Business Case for Passenger RailChris Larson, President

Larson Binkley, Inc.

The Northern Flyer Alliance, Inc.

What is it?

Kansas City-Fort WorthIntercity Passenger Rail Initiative

What is it?

Amtrak National Network Over 500 Stops – 46 States – 22,000 Miles

Service Gap

Pop. Kansas City 2 Million

Pop. DFW 6.3 Million

8

1. N

ewto

n –F

ort W

orth

Late Evening -

Early Morning

through the Gap

SW Chief ConnectionsNewton

3:01 AM 3:25 AM

Texas Eagle Connections

2:40 PM 2:20 PM

2

. K

ansa

s C

ity –

For

t W

orth

Afternoon through the Gap

Afternoon through the Gap

3.

Kan

sas

City

– F

ort

Wor

th

Afternoon through the Gap

Afternoon through the Gap

Kansas City-Fort WorthIntercity Passenger Rail Initiative

What can a passenger train do for this region?

My Business Travel Story

Three day trip Expenses To (hrs)

From (hrs) Arrival

Work time (hrs)

Billable hours ($200 per

hour) Net Billable

Billable hours ($125 per

hour) Net Billable

Car $550.00 10.0 10.0 4:00 PM 8 $1,600.00 $1,050.00 $1,000.00 $450.00

Airline $715.00 4.6 4.6 Noon 11 $2,200.00 $1,485.00 $1,375.00 $660.00

Train $397.50 12.0 12.0 7:00 PM 18 $3,600.00 $3,202.50 $2,250.00 $1,852.50

Rating 0-10 with 10

being best SafetyWeather Impact Comfort

Travel Value

Average

Car 5 3 5 4

Airline 7 3 3 4

Train 8 9 7 8

Clearly the advantage goes to rail travel

Why Have Rail for Business?

17

Economic – Energy – Environmental

• 3.2:1 - 4.5:1 Economic Benefit

• Productive, Safe, Easy, Weather Resistant Travel

• New opportunities for construction along rail corridor

• More Interstate commerce

• Overall transportation fuel consumption reduction keeping fuel prices lower, resulting in more disposable

income….

Need Passenger Rail be profitable?

Myth: Amtrak is unique in operating in the red, at taxpayer’s expense.

Fact: All transportation is subsidized by American taxpayers.

What about Highways and Airports?

Myth: Highways and Airports pay for themselves through user fees.

Fact: Generally, highways cover only 51% of total associated costs through user fees.

Fact: The past 5 years have seen an alarming increase in general fund support of FAA

NEXT Steps

Contact your state and federal Representative Tell them they need to support trains!

Joe Szabo

Administrator

Federal Railroad Administration

Derrick James

Director, Government Affairs – Central

Amtrak

An Overview of Amtrak

Derrick James

Director, Government Affairs - Central

24

Amtrak 101 – basic company and system statistics

• We operate a 21,200 mile system– More than 300 daily trains– More than 500 stations– More than half our daily trains reach 100mph– 70% of our train-miles are run on track owned by other railroads

(mostly large freight railroads)

• We carried 30.2 million riders in FY 2011 – a record, the 8th in 9 years

• Amtrak generated total of $2.5 billion in revenues in FY 10 (incl. ancillary business)

– Covered 85% of operating cost (heavy rail passenger carriers in the U.S. typically fall into the 40-60% range)

– Our FY 11 farebox recovery was 79% - one of the highest in North America

• Federal funding for Amtrak will total slightly more than $1.418 billion in FY 2012

– Decrease over FY2011 of about $60 million– $466 million for operating expenses– $952 million for capital investment and debt service

25

Major investments over the last three years

• ARRA-funded infrastructure improvements

– Amtrak ($1.3 billion)- Equipment- Infrastructure

– State-supported service (HSIPR grant program)

• Fleet replacement

– Long Distance Single Level (LDSL) cars

– Electric locomotives

– Acela coaches

25

26

Setting the stage for the future

• New services in 2012

– 110mph service in Michigan, west of Kalamazoo

– Downeaster extension from Portland to Brunswick

– Northeast Regional service from Richmond to Norfolk

• Major line acquisitions

– Poughkeepsie to Albany (94 miles)

– Kalamazoo to Dearborn (135 miles)

• Strategic plan and organizational realignment

• Stair steps to high speed rail

This has been a foundational period- and the investments we’re making willlay the groundwork for the next generation of passenger rail service

26

27

The ridership picture

Amtrak Ridership, 2000-2011

20,000,000

22,000,000

24,000,000

26,000,000

28,000,000

30,000,000

32,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Fiscal Year

To

tal R

ide

rs Ridership today is

44% higher than in 2000

• Growth is across the board – not just one segment of our business:– Best year for Northeast Regionals, second-best year for Acela

– 20 of 27 state-supported routes set ridership records

– 4 of 15 long distance routes set ridership records- Capitol Limited- Southwest Chief- Texas Eagle- Auto Train

28

Federal support helped us invest in our system

• American Recovery and Reinvestment Act (ARRA) provided $1.3B for Amtrak

– $850M for Amtrak system

– $450M for safety and security improvements

– Created equivalent of 1,184 jobs at Amtrak

• Provided for a range of needs:– Returned stored and wreck-damaged

equipment to service

– Station accessibility

– Safety and security

– PTC installation

– System capital needs- Maintenance facilities- Stations- Other rail infrastructure

29

Investing in our system

• Capital investment– New and refurbished stations– Replaced one drawbridge at Niantic, CT and numerous

fixed bridges in the Northeast– Major improvements to enhance all-weather service in

Chicago– Major maintenance facility improvements in Chicago,

Seattle, Los Angeles, Hialeah, Washington, New York, and Boston

• Equipment returned to service:– 15 P-40 locomotives– 21 long distance cars – 60 Amfleet cars

• Accessibility improvements– Raised percentage of stations with barrier-free access from

74% to 90%– New wheelchair lifts installed at 176 stations

After

Before

After

Before

Without ARRA, it would have taken years – if not decades – tofinish these projects

30

Fleet replacement strategy

• First tranche of procurements will address most pressing needs/opportunities:

– Replace 60 year old Heritage cars

– Replace 30 year old electric locomotives

– Purchase additional cars for Acela (projected financial impact ~$100M)- Proposals received in February, evaluation ongoing

- Expect to issue Notice to Proceed in July

• Fleet plan provides for future procurements

– Third annual update just completed

– Envision bi-level fleet replacement in the 2018-2022 timeframe

31

New technologies

• Wi-fi

– 2010: Acela Express and Cascades

– 2011: Eastern and Western corridor services

– Planned 2012: Piedmont, Chicago-St. Louis, others as funding available

• eTicketing

– Downeaster and Auto-Train pilots complete

– Last round of pilots have begun- Conductor training underway- City of New Orleans starts March 15- Capitol Corridor and San Joaquin start April 15

– Nationwide deployment starts late summer

Anticipated annual ticket revenue impact should exceed $20M for wi-fi and another $20M for eTicketing

32

The Midwest Regional Rail Initiative

• Link Midwestern states to promote growth

• Use existing rail rights-of-way

• A “hub-and-spoke” system

• Introduction of state-of-the-art train equipment operating at speeds up to 110 mph

– WiFi access– Food service– Power outlets at each seat– Roll-on bikes

• In addition to current routes, provide rail service to Midwest areas not presently served by passenger rail

• Modernized stations and facilities7 of 8 MWRRI States are included in the National HSR Corridor System

33

Chicago-St. Louis corridor

• HSIPR program provides $1.142 billion to upgrade line for 110mph service:

– Improve tracks, signals, road crossings

– Install Positive Train Control

– Plan studies for additional service enhancements

• Work ongoing between St. Louis and Dwight

• First test trains planned for late 2012

• Eventual increase to eight round trip frequencies per day on Chicago-St. Louis corridor

34

• Amtrak currently owns Porter-Kalamazoo segment

• State negotiating to buy NS-owned line

• Planned Federal investment in this route (including Chicago-Porter, Indiana and Englewood Flyover) in the vicinity of $600 million

• We have a strong partner in the state of Michigan

– Since 1990, state has invested about $65M in equipment and infrastructure

– This is the opportunity of a lifetime

Amtrak Lines in Michigan and adjacent states

Wolverine serviceOther Amtrak services

Amtrak’s Michigan Line

Amtrak-ownedAmtrak-owned

NS-ownedNS-owned

35

Improving the Michigan Line

• Speeds on Amtrak-owned segment just advanced to 110 mph

• State negotiating to acquire 135 mile Kalamazoo-Dearborn segment

• Incremental upgrades will eventually raise 77% of route to 110mph, cutting trip times by thirty minutes

– Currently 5:30 from Chicago to Detroit

– 3:00 Chicago-Battle Creek

36

A strategy for high speed rail

Acela Capacity Increases 40%

Acela II Fleet Doubles Capacity

NEC 160 mph MAS: NYC to WAS

NEC Gateway: Newark to NYC

NextGen HSR: NYC to WAS

NextGen HSR: NYC to BOS

NEC-UP(Upgrade Program)

160 MPH MAS

NextGen HSR

220 MPH MAS

37

Modernizing our company and our processes

• Modernizing our processes and our relationships

• Partnering with labor

• Implementing modern business processes

– High-Performance Organization

– Lean Six Sigma

• Aligning the business

– Reorganizing along business lines

– Flattening our structure

38

Some of our very best years lie ahead

• These are foundational years – and we’re setting the stage for the next level of development

– Infrastructure improvements

– Fleet replacement

– Facilities upgrades

– Service improvements and extensions

– Organizational modernization

• When we’re done with this current round of investments, we’ll be positioned for

– Nationwide corridor development

– Major capital investments

– Higher speeds in the Northeast and Midwest

Through the end of this decade, we will be delivering big projectson an annual basis

Dennis Slimmer

Bureau Chief of Transportation Planning

Kansas Department of Transportation

Expanded Passenger Rail

Service in Kansas,

Oklahoma, and Texas

April 6, 2012

Recent History of Passenger Rail Initiative

• Amtrak Feasibility Study completed in March 2010

• Service Development Plan (SDP) completed in November 2011

• SDP Posted on KDOT’s passenger rail web page– http://www.ksdot.org/PDF_Files/PDF-Passeng

er-Rail-SDP.pdf

Work on the SDP

• Report prepared jointly for KDOT and OKDOT

• Finances

• $250k federal HSIPR grant

• KDOT and OKDOT each matched $125k

• Parsons Brinckerhoff was consultant

• Cooperation and assistance from• Texas DOT• Missouri DOT• BNSF Railway Company• Amtrak• Federal Railroad Administration

SDP Contents• Contents of SDP

– Discusses purpose and need for the service

– Describes operation of the service

– Identifies required infrastructure improvements

– Estimated costs

– Estimated ridership and revenues

– Benefit-Cost Analysis using FRA criteria

Options Studied

• Two options

– Heartland Flyer Extension (nighttime service connecting with the

Southwest Chief at Newton, KS)

– KC-OKC-FW Daytime service (daytime standalone service between Kansas

City and Fort Worth via Wichita and Oklahoma City)

• 79 mph top speed

Service Options

Findings• Estimated ridership

– HFE: 200,500 (including riders on existing HF service)

– KC-OKC-FW: 270,500

• Capital Investment required

– HFE: $136.5 million

– KC-OKC-FW: $436.2 million

Findings (cont.)• Annual operating subsidy required (operating cost minus

revenue)

– HFE: $4.4 million (incremental over existing HF subsidy)

– KC-OKC-FW: $10 million

• Benefit/Cost ratio

– HFE: 0.88/0.93 (assuming 30% contingency/15% contingency)

– KC-OKC-FW: 0.61/0.64

Legislative Testimony

• Presented findings to Kansas Legislature– House and Senate Transportation

Committees– Kansas Rail Caucus

• Legislative funding commitment is needed

Follow-up Questions and Concerns

• Funding sources and timing• Additional benefits from Economic Development and Jobs• What are Kansas’ likely costs?

Follow-up Activity

• TIGER grant application– Pre application for crossing improvements and signals from Newton to

Oklahoma state line– KDOT was advised the work would provide no benefits and result in

additional costs– Final application was not submitted

• Economic impact calculations– Kansas station stop cities contacted– Existing Heartland Flyer station stop cities contacted

Going Forward

Contact Information

Thank You!

Dennis SlimmerChief of Transportation Planning(785) 296-3865dennis@ksdot.org

Ross Capon

President & CE

National Association of Railroad Passenger

Northern Flyer Alliance2012 Business Case for Passenger Rail Symposium

April 6, 2012Ross Capon, President & CEO

National Association of Railroad Passengers

Developing Intercity Rail: Benefits & Case Studies

NARP’s Vision

40 Year map-grid and gateway plan World-class passenger train network Provide more jobs for Americans Offer a choice of travel for the traveler Consistent source of funding for trains Safe, clean, affordable, on time, etc.

To turn this…

…into this!

Impact of the Heartland Flyer

Heartland Flyer’s impacts

Texas Transportation Institute undertook a study of the 206-mile Amtrak service linking Oklahoma City and Fort Worth.

Researchers used on-board survey to identify the economic impact of the rail service, measured through total spending on certain items (including associated sales tax revenues).

Economic benefits of passenger activity Cost the state around $3.9 million/year Heartland Flyer passengers spent approximately

$18 million on lodging, meals, shopping, and entertainment on their trips. $1.4 million contributed to local sales tax revenues

25% of passengers surveyed were traveling on this train for primarily business purposes.

30% wouldn’t have traveled at all if the Heartland Flyer didn’t exist

Benefits through modal-shift

TTI’s mobility analysis found that more than 39,000 annual vehicle-trips diverted onto the rail service from the I-35 highway corridor, eliminating approximately 7.9 million VMT (vehicle miles traveled) from the corridor’s roadways.

Montana & the Empire Builder

Montana’s study of Empire Builder

Empire Builder links Chicago with Seattle/Portland via Milwaukee, Twin Cities, northern North Dakota and Montana. US DOT 1979 findings: 40% of the passengers during FY1978 (80,000 people)

would have had no other reasonable public transportation if the train had not operated

The train had dependable all-weather capability in Montana's severe winter weather.

The parallel highway was a difficult two-lane road.

Montana’s DOT 2003 study: Analysis of the Economic Benefits of the Amtrak Empire Builder to Montana (linked from www.narprail.org reports by others)

Total on + off at the 12 Montana stations was 109,550 in fiscal 2003 and 156,723 in fiscal 2010 – an increase of 43%

Montana’s study of the Empire Builder

Montana’s study of the Empire Builder

Annual expenditures within Montana from the direct spending of non-resident Amtrak travelers was found to be $7.641 million annually (2003 dollars).

Direct annual spending by Amtrak in Montana—employment, materials, and services—was between $3.7 and $4.1 million annually.

This nonresident spending generated: $2.45 million personal income for Montana residents 142 Montana jobs, and $642,000 in state and local tax revenue.

North Carolina Station Improvements

North Carolina Station Improvement NC spent about $140 million on station

revitalization projects in the early 2000s. Stations have backup generators to address

power outages Commissioned AECOM to do a seven station

study, looking at a $63 million subset (Burlington, Hamlet, Greensboro, Salisbury, High Point, Selma, Kannapolis)Share of subset construction cost:

65.8% federal; 18.8% state; 15.4% local

AECOM scope of study Construction Impacts: one-time impact. Activities Accommodated at Stations: recurring

impacts such as any additional hiring required to operate and maintain expanded station activities.

Land Use Impacts: development impacts stemming from station revitalization that occur around the station area.

Tourism Impacts: Experiencing the station may rarely be the train passengers’ reason for traveling; however, the surrounding area may develop such that it becomes the destination.

Fiscal Impacts: The estimated fiscal impacts are derived from the tax revenue generated

Source: AECOM

Summary of NC wage benefits over 20 years

Construction: $43 million Surrounding Area Development: $44.6 ml Leasing: $2.9 million Tourism $3.5 million Total add’tl wages accrued: $94 million In wages alone, there was a payback ratio of

1.47 across these seven stations over the forecast horizon

Summary of fiscal impacts over 20 years

Income Taxes: $5.9 million Sales Tax (local): $1.2 million Sales Tax (state): $815 thousand Corporate Taxes: $595 thousand Employment Security Taxes: $586 thousand Property Tax: $16.5 million Occupancy Tax: $55 thousand Taxes Total All Types: $25.7 million

National Association of Railroad Passengers

505 Capitol Court NE, Suite 300

Washington, DC 20002-7706

www.narprail.org

rcapon@narprail.org

Pete Meitzner

City Council Member

City of Wichita

Homer Nicholson

Mayor

Ponca City, Oklahoma

Rick Harnish

Executive Director

Midwest High Speed Rail Association

Stu Nicholson

Media Relations & Public Involvement

Engage Public Affairs

Ohio: Lessons Learned

What’s Running In Ohio?

Lesson #1

Frame the issue before the critics

(or the media) frame it for you.

Lesson #2

Define your terms.

Lesson #3

Don't be afraid of the critics.

Lesson #4

Do your homework on the

opposition.

Lesson #5

Speak with one voice.

Lesson #6

Be clear about the benefits.

Lesson #7

Don’t over-promise and build

expectations.

Professor Wally Meyer

University of Kansas School of Business

NORTHERN FLYER ALLIANCEECONOMIC BENEFIT STUDY

December 17, 2009

Objective

Perform an analysis to ascertain the economic justification for renewing passenger rail between KC

and OKC.

Additionally, the analysis will determine the economic impact that the proposed passenger rail service would have on the states, counties, and municipalities along

the route.

Parameters Use reliable data from trusted sources

Kansas Department of Transportation data US Census data Previous study data

Avoid making assumptions without justification

Limited to economic impact

Provide an unbiased analysis

Simple Return on Investment

Focus on KC-OKC route with Heartland Flyer in mind

Participating Team

Alexander King, Senior Freight Planner/ Analyst Joseph Gurskis Wilbur Smith Associates

Pat Oslund KU Institute for Policy & Social Research

Robert Honea and Ariel Heckler KU Transportation Research Institute

Art Hall Director of Center for Applied Economics

Alexander Metcalf Transportation & Economics Management Systems, Inc.

Ron Kauffman and John Maddox Kansas Department of Transportation

Jeremy Hill Wichita State University

Project Approach: 4 Component Strategy

KDOT Feasibility Study as Baseline for Ridership and Costs

Execute IMPLAN Model

Creative Marketing Programs to Build Ridership

Enhancement of Value/ Cost Avoidance

ECONOMIC BENEFIT

Project Approach Summary Step

Component

Research Rationale Analysis

1 Determine Ridership and Costs

KDOT Rail Feasibility

Study, 2000

Latest hard #s on ridership and

costs (capex and operational)

Update revenues, costs to 2010 dollars using US Labor Dept Inflation CalculatorRevenues: $10M-Costs: $22M=($12M loss)

2 Build Ridership

Segmentation Analysis of key rider

groups

Original study devoid of marketing efforts to increase ridership

Key segments identified/programs developed for Big 12 students, VIP travelers, senior travelers (+15% ridership) Incremental revenues: $14M

3 Identify economic benefits

IMPLAN Economic

Model

Widely accepted economic

modeling tool; very

comprehensive

Input of KDOT study costs and ridership; increased ridership due to marketing campaigns. Economic value added from:Infrastructure: $36M; Station/Ops: $28M

4 Enhance value/cost avoidance

KDOT, USDOT, NHSA

reports

Increased rail usage declines

property, fatality auto

costs

Savings from lessened loss of life: $6M

Return on InvestmentBase Ridership + Marketing Strategies + Cost

Avoidance

1-Year 5-Year 10-Year

Economic Benefit

$72,660,000 $217,700,000 $399,000,000

Investment $66,500,000 $86,500,000 $111,500,000

Return on Investment

1.09 2.52 3.58

Base Ridership and Costs

Creative Marketing

IMPLANEnhanceme

nt/ Cost Avoidance

Economic Benefit ROI

Return on Investment(after taxes)

Net out of pocket investment: $1.00

Value produced from investment: $3.58

Incremental economic benefit: $3.22*

Tax considered ROI: 3.2:1

For each $1.00 of net investment, NFA project produces $3.22 in economic

benefits after tax consideration, a 3.2 to 1 ratioBase

Ridership and Costs

Creative Marketing

IMPLANEnhanceme

nt/ Cost Avoidance

Economic Benefit ROI

*net of average 10% all taxes impact on value produced

Other Studies Verify KU ROI Results

Two studies have verified the economic benefits of passenger rail service in the TX/OK/KS corridor:

Texas Transportation Institute (TAMU, 4/10) Findings:

Heartland Flyer passengers enrich OK and TX by $18M annually (spending on lodging, meals and entertainment during the trip)

Investment subsidy estimated at $4M Return on Investment: $4.5:$1 ($3.6:$1 net of subsidy)

OK DOT Economic Benefit Report (Carter Burgess, 4/05) Findings:

$11.5M direct spending on Heartland Flyer yielded $23.1M in economic activity for the state of Oklahoma ($2.0:$1 ROI)

“The Heartland Flyer delivers important economic benefits of the communities it serves”

NORTHERN FLYER ALLIANCE

ECONOMIC BENEFIT STUDY

Senator Daryl Beall

Iowa State Legislature

Senator Dick Kelsey

Kansas State Legislature

Michele Teel

Missouri Department of Transportation

Andrew McHenry

Emporia RAIL

Deborah Fischer Stout

Northern Flyer Alliance, Inc.

Next Steps

Request Interim Study Committee

Recommended Outcomes:

• Evaluate moving forward with NEPA and PE studies

• Be prepared to submit projects for Federal Funding

• Create a Tri-State Rail effort

Contact your state and federal legislators

Symposium Participants continue dialogue