Vermont has backed out of the deal to use Colorado Railcar (CRC) DMUs after Amtrak and CRC failed to provide financial guarantees sought by the state. Here’s the story from the Rutland Herald:
http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20071208/NEWS04/712080352/1004/NEWS03
The best CRC could provide was a verbal guarantee that they would repurchase the cars at 90% of sale price after three years is Vermont no longer wanted them.
Gee, guarantees of cost savings and buyback after 3 years at 90 percent of purchase price – can I get that kind of deal on the purchase of an automobile? Seems like an exercise in wishful thinking.
Also, on what kind of cost-basis are those operating cost savings based?
My understanding of the typical kind of state-subsidized Amtrak service is that Amtrak maintains a stable of locomotives, cars, and hires crews, they have their RPS accounting formulas that fully allocates and proportions costs for the pooled Amtrak network to your particular train, formulas showing that enormous quantities of Federal subsidy are going into operating that train of which your poor state subsidy contribution is covering a small portion, and they essentially tell you how much state money your have to come up with to continue operation of the train.
Now California in a big way with their California Cars and F59PHI locomotives, Washington with some Oregon contribution in a lessor way when they were running Talgos, and perhaps North Carolina with whatever they are doing, purchased and have Amtrak operate non-Amtrak standard equipment. California had quite a big purchase to their own specification. Does Caltrans maintain the California equipment or does Amtrak? Is the California operation off the Amtrak budget and on the Caltrans budget like a commuter train? If so, what does California get charged for Amtrak’s end of it.
What I am getting at is that if Vermont believes they are overcharged by Amtrak to run whatever kind of train Amtrak supplies, Vermont can do the same kind of thing California did and buy and operate their own equipment, only that is probably much harder on the scale Vermont wants. Then, if you go out and buy (and I assume maintain your own equipment – you become a kind of commuter operation in that sense), then you assume the financial risk associated with buying, maintaining, and operating equipment, that it doesn’t prove to be high maintenance a
I’m not sure Vermont was justified in this requirement. Having some kind of a floor if there is a problem with the service strikes me as prudent, having the floor this high might be pushing it. How do others feel?
Up there, they throw nickels around like they were manhole covers.
Just for a little perspective, Vermont’s state budget runs over three billion a year and out of that a transportation budget of about $230 million. I’d assume they would float a bond for the equipment, spreading the acquisition cost out over a few years, but like most states, they are strapped for tax revenues. With a high level of per capita state and local taxes, it is political difficult to get more revenue.
Too bad, it would have been a good test of the effectiveness of the the equipment.
The life of most railcars is in exces of 30 years, so if the car were not to perform as advertized the 10% drop is not totaly unreasonable.
After all CRC is advertizing this car as better than RDC and better than anything ever built.
Yet when they are challanged they fold.
Depreciation can be calculated on a straight-line basis but it is rarely done, anybody who has taken an introductory accounting course knows that there are three methods of calculating depreciation and the other two methods put most of the depreciation up front.
This is also not a situation of the car not performing as advertised but the risk of the demand for the service being less than anticipated. The State of Vermont doesn’t want to be stuck with having to sell railcars in a thin market if the service doesn’t pan out and is apparently expecting the manufacturer to absorb this risk.