Weighing the Fate of Amtrak's Hoosier State 

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For the record: INDOT spokesperson Will Wingfield emailed on Sept. 17 to note a clarification about this story's references to federal rail grants:
In addition to the $71.4 Indiana Gateway project, INDOT submitted a $2.8 billion application for rail service from Chicago to Cleveland. The news release is linked here.
INDOT is also providing matching funds for the grant-funded development of a Tier 1 Environmental Impact Statement and Service Development Plan for Chicago to Detroit/Pontiac, which is being led by the Michigan DOT. More information is at greatlakesrail.org.

Indiana stands to lose its Hoosier State Amtrak line from Indianapolis to Chicago if the state fails to identify $3 million in local funding to cover the train's operating costs by a federally imposed Oct. 1 deadline.

The deadline has been on the calendar for five years, since Congress passed the Passenger Rail Investment Improvement Act of 2008, which included a provision that required states with passenger rail service lines of less than 750 miles to take financial responsibility for the routes — or lose them.

As part of the PRIIA's mandate of rail-related funding equity among the states, a multi-state working group partnered with Amtrak to devise a "single, nationwide standardized methodology for establishing and allocating the operating and capital costs among the States and Amtrak."

In Indiana's case, that methodology requires the state to cover 80 percent of the Hoosier State's operating costs for fiscal year 2014, or $3 million by Oct. 1.

As vocal groups of activists, from all points on the political spectrum, are rallying in support of the Hoosier State, others — most notably officials with the Gov. Mike Pence administration — are less than enthusiastic about the train's value.

Speaking to an auditorium packed with people at an Aug. 21 Amtrak Summit in Lafayette, Troy Woodruff, chief of staff at the Indiana Department of Transportation, kept his message simple.

"We've approached this with an open mind," Woodruff said. "When [the PRIIA] came through Congress, we opposed it as an unfunded mandate. That position for us hasn't changed. We don't believe this subsidy should be the responsibility of the taxpayers of Indiana."

Woodruff's rough analysis breaks down as follows: The Hoosier State line's operating and equipment expenses of about $3.87 million for the upcoming year are anticipated to be offset with revenue of about $907,000. With an estimated 37,000 riders paying $23 per ticket, that leaves Indiana subsidizing each passenger by about $80, he said.

click to enlarge COURTESY OF AMTRAK
  • Courtesy of Amtrak

INDOT spent an estimated $2.1 billion in fiscal year 2012.

In anticipation of the pending deadline, the biennial budget passed by 2013 Indiana General Assembly endowed INDOT with the authority to fund the Hoosier State, but legislators did not require state officials to do so. In line with the "open mind" approach, Woodruff said that INDOT commissioned a study to analyze a variety of options, so officials can consider the cost of doing nothing, funding the line at its current service level or expanding the frequency and speed of the line to accommodate two or four trips a day.

Of course, added service and performance means added cost, Woodruff noted, arguing that revenue increases other states have seen as ridership grows in response to service improvements would not be alter his assessment of the bottom line: "There will be subsidization no matter what ... unless we are willing to charge more (for tickets)."

Though the study has yet to be released, Woodruff offered the audience a basic assessment of his agency's thinking thus far.

"We view this as a bad model, not a good investment," he said. "Not that we won't participate ..."

If keeping the Hoosier State is important to local communities and stakeholders, Woodruff added, "We will come to the table; we can work collaboratively with you, we will have a hand in this. We will be a piece of the pie, a sliver of the pie — but not the whole pie."

click to enlarge COURTESY OF INDOT
  • Courtesy of INDOT

click to enlarge COURTESY OF INDOT
  • Courtesy of INDOT

Diverse dividends

Rep. Randy Truitt, R-Lafayette, doesn't look at the funding request as a subsidy.

"The word is investment," he said. "I look at this as a great opportunity to invest in something that may not fit a typical business model of revenue and investment."

Several summit speakers highlighted similar themes, arguing that investing in improved passenger rail service should be considered a critical component of the state's economic development strategy — that the dividends of such an investment would be evident far beyond the train's total ticket revenue.

"I don't personally see this as any different than TIF (tax-increment finance) investments or tax incentives," Lafayette Mayor Tony Roswarski said. "I see this as an investment in economic development — something we need to do."

In a global economy, he said, "competitiveness is paramount."

Speaker after speaker emphasized the importance of how Indiana relates to China and other economic leaders, in terms of attracting investment and recruiting top talent to study, work and raise families here.

"The Chinese operate the largest high-speed rail system in the world; by 2015, they will operate nearly 16,000 miles and achieve their goal of uniting an extremely diverse nation," said Arvid Olson, who helped organize the Amtrak summit and serves on the Greater Lafayette Commerce Quality of Life Council and as director of development at Faith Ministries.

He noted that a train connecting the 1,428 miles between Beijing to Guangzhou takes 7.5 hours — and the seats convert to full-length beds.

Part of Eric Angermeier's role as general manager at Lafayette's Nanshan American Advanced Aluminum plant involves welcoming Chinese companies looking to invest in the U.S. and, more specifically, Indiana. Chinese executives expect rail to be a part of the transportation mix, he said.

"Expanding passenger rail would help attract investment and create jobs," Angermeier said, noting Nanshan considers passenger rail to be a growth industry.

"Selfishly, it is good for our business. We continue to believe passenger rail will continue to expand in the U.S.; it is growing quite rapidly. We hope Indiana can be part of that growth. We need to look for ways to keep it viable and expand."

A February 2013 study of the Midwest high-speed rail supply chain by the Chicago-based Environmental Law and Policy Center found that 99 Indiana business support the rail industry through manufacturing and related services — the second-largest number of rail-tied firms in the Midwest.

For Indianapolis, greater ridership could be a boost for Union Station and Downtown business, noted freelance journalist Bill Malcolm, who attended a rail support-building meeting in Indianapolis on Aug. 19.

"Indianapolis is unique among Midwest cities in having an Amtrak station steps from Downtown hotels," he wrote in an email exchange following the meeting. "Since 60 percent of convention visitors come from Chicago, this needs to be more heavily promoted."

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Millennial milieu

Not only do international executives view passenger rail as part of a modernized transportation mix, international students do as well.

West Lafayette Mayor John Dennis noted that Purdue University supports the second-largest international population of any university in the country.

"Do they come with cars and drivers licenses?" he asked. "No, they come with the expectation of an efficient and reliable transportation system. Passenger rail is not something they are optimistically hoping for, it's something they expect."

This dynamic is evident in Indy as well. IUPUI and Butler reported stats on incoming classes this week.

More international students than ever — 1,837 or 6 percent of the student body — enrolled in IUPUI this fall. India surpassed China as the lead feeder country this year.

And at Butler, the university reports: "The Class of 2017 comes from 32 states and 22 countries. Forty-three percent are from Indiana, and 57 percent are from out of state. This is Butler's highest percentage of out-of-state students in history. Approximately 25 percent of the class comes from nearby Illinois."

More and more domestic students — and young graduates — are looking for rail options as part of the transportation mix as well.

As president of the Purdue University Student Senate, Micah Matlock was the summit's sole panelist under the age of 30.

He confessed that when he first received the invitation to speak, he thought the panel was about expanding rail options and was "surprised" to find out that the topic involved possible cuts to service.

As state officials conduct their cost-benefit analysis to determine whether an investment in Amtrak is warranted, Matlock encouraged them to consider the impact of bringing new students into the state and retaining that talent.

"Without rail, (students) will not be impressed with Indiana or want to stay here, period," he said.

Matlock added that, as far as making a business case for Amtrak, when Indiana succeeds in scoring students from out of country and out of state, "that is money coming from out of Indiana."

Among some other issues he considered to be relevant, Matlock said: "Amtrak is cool, the technology is cool. It's good for the environment ... and reduces wear and tear on highways. Airfare is not affordable and gas prices are rising. Also, tuition is frozen, but still ... one of my friends just paid $450 for one book for one class.

"All of these costs are not very easy on the pocket books of students."

Matlock said he would submit a recommendation on behalf of the Purdue University Student Senate that Amtrak be supported in Indiana.

In analyzing the economic issues as stake when considering the Hoosier State's fate, Lafayette Commerce's Olson split his time between explaining the investments others are making in rail — in other states and around the globe — and in emphasizing that the millennial generation's approach to life is quite different from that of generations before.

"This is the slowest generation to buy a car in 60 years," he said. "In 1982, 80 percent of 18 year olds had a driver's license. In 2012, it was 60 percent.

"Their dreams do not require 2.3 kids, a house in the suburbs and a fleet of cars. According to study after study ... they have a new way of doing community."

Coming of age today means owning a smart phone, not a car, Olson said.

"Why don't they want to drive?" he asked, holding a smart phone is front of his face. "They can't do this while they're driving.

"We need to preserve and enhance passive transportation."

Olson pointed to the competition Indiana faces in neighboring states. Normal, Ill., is about the same distance to Chicago as is Lafayette and, he said, that town has 10 passenger trains into the city, carrying 300,000 passengers a year.

"They are starting to build high-rise apartments near the station because young people can live in an affordable, safe community and be in downtown Chicago in 1 hour and 45 minutes," Olson said. "That is faster and cheaper than commuting everyday from Schaumburg or Elgin by car."

If the Hoosier State could generate the same amount of ridership, ticket sales, at their current $23 price point, would generate $6.9 million in revenue — more than two times next year's projected annual operating costs.

Hoosier State supporters also point to the environmental and safety benefits of rail.

A letter the Hoosier Environmental Council is circulating in support of the Hoosier State notes: "Cars and light trucks use over one and a half times more energy per passenger mile than Amtrak trains. Improved rail travel means less dependence on oil, and lower motor vehicle emissions as travelers choose rail over auto travel."The communities that rely on the Hoosier State are also the communities that clean up the accidents along I-65.

Indiana's highway deaths dropped 23 percent from 1994 to 2011, according to the National Highway Traffic Safety Administration's Fatality Analysis Reporting System. Still, in 2011, 750 people died in Indiana auto accidents — 85 of those deaths occurred in Marion County.

In 2012, 12 people died on I-65 in Indiana counties between Indy and Chicago.

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Meet the Hoosier State

The Hoosier State leaves from Downtown's Union Station four days a week:Sunday,Tuesday,Wednesday and Friday.

The trip takes five hours, leaving at 6 a.m.Eastern Standard Time and arriving in Chicago at 10:05 a.m.Central Standard Time. Return trips leave Chicago's Union Station at 5:45 p.m. CST, arriving in Indy at 11:50 p.m. EST. The route includes stops in the Indiana Towns from Dyer at the Northernmost, south through Rensselaer, Lafayette and Crawfordsville.

The Hoosier State's ridership hit almost 37,000 last year — an increase of 77 percent from 2002. During the first half of fiscal year 2013, ridership increased by 5.8 percent and revenue rose by 15.1 percent, making July 2013 the best revenue and ridership month in the line's history, according to Ray Lang, Amtrak's chief of state relations.

When considering the potential to build ridership, increase revenue and improve performance, Lang noted that 42 percent of Indiana's population lives within 25 miles of an Amtrak station. In addition, the line serves eight of Indiana's college campuses.

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The Hoosier State also hauls equipment in need of repair to Amtrak's maintenance facility in Beech Grove, a giant installation where an estimated 550 Hoosiers work on trains from all across the nation. The Beech Grove shop is the only Amtrak facility in the U.S. where services such as diesel engine repair and dining car overhauls are performed.

"It's an important piece of the Amtrak network — we couldn't survive without the Beech Grove facility," Lang said. "It's the only place we can maintain bi-level super equipment; that equipment will not fit under the wires on the East Coast."

click to enlarge The Amtrak maintenance facility in Beech Grove is the only shop to specialize in several functions for the company — diesel engine repair, for example. - COURTESY OF AMTRAK
  • The Amtrak maintenance facility in Beech Grove is the only shop to specialize in several functions for the company — diesel engine repair, for example.
  • Courtesy of Amtrak

Beech Grove

As Amtrak's principal heavy maintenance facility, the Beech Grove shop — which covers 300 acres and houses 1 million acres of under-roof shop space. The company estimates annual wages paid at $49 million. In addition, Amtrak estimated its annual 2012 Indiana-based procurement expenses at $21.5 million.

"In short, folks, Central Indiana cannot afford to lose this vital asset," Beech Grove Mayor Dennis Buckley said.

With regards to Woodruff's contention that the $3 million expense of the line cannot be justified, Buckley said, "I respectfully disagree — and I'll give you 61 million reasons why I disagree: That's what Amtrak contributes to local economy."

The Hoosier State allows Amtrak to haul equipment on a passenger line, which gives it priority over freight trains. In fact, Lang said, the Hoosier State line grew out of Amtrak's need to haul equipment to the Beech Grove facility without delay. Without passengers, the shop trains did not have priority over freight trains, sometimes delaying transport by more than 24 hours.

Regardless of the Hoosier State's fate, Amtrak's Cardinal Line would continue to run between Indy and Chicago on Mondays, Thursdays and Saturdays as a part of long-distance route between Chicago and New York. But it would not offer the "shop train" flexibility that the Hoosier State enables.

Moving forward, this dynamic raises the question of whether the Beech Grove facility could remain a vital maintenance hub for the company should Indiana forgo support of the Hoosier State line. On the flipside, with Amtrak expanding services and adding new amenities to its cars, summit speakers also said they can see the possibility of expansion at the Beech Grove shop.

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Other states

Fifteen states provided Amtrak with $191 million in operating support for 21 different routes during fiscal year 2011, the company said.

Several states are pursuing aggressive upgrades with more frequent and faster service. In cases where Wi-Fi service is added, ridership jumps can be seen the next day, Lang said, noting that efforts to enable people to be more productive as they travel are meeting with "great success."

He highlighted the train-to-air market share rates between several cities where upgrades have been implemented. For the route between New York and Washington D.C., Amtrak controlled 77 percent as of the first quarter in fiscal year 2012. Its Acela Express makes the 226-mile trip in just under three hours. On the 187-mile Seattle-Portland route, rail controls 69 percent of the market and for the 86-mile trip between Chicago and Milwaukee, 89 percent of travelers chose rail over air.

"What that proves is with fast, frequent service, you can be a relevant transportation provider," Lang said.

Arvid Olson sees Indiana's lack of rail investment in comparison to surrounding states as an even greater challenge than the immediate issue of whether state officials will save the Hoosier State.

Between 2000 and 2009, of the $1.9 billion Midwestern states spent on rail investment, Indiana spent $150,000 — or about $15,000 a year. And rather than facilitate higher line speeds, Olson said, the state granted CSX's request to reduce top speed on the line between Lafayette and Dyer from 79 to 60 miles per hour.

Indiana's lack of enthusiasm for rail investments left the state sidelined in a recent round of federal grant distribution. Between 2009 and 2012, the federal government sent Midwestern states $2.6 billion to support rail improvements.

Indiana received about 3 percent of that money.

"Only one grant was submitted by Indiana," Olson said. "It was the Indiana Gateway grant to provide better access in Northwest Indiana for the three passenger trains operated by the state of Michigan on their increasingly busy trips to and from Chicago."

As one of two Indiana appointees to the 11-state Midwest Interstate Passenger Rail Commission, Rep. Truitt said he was disheartened to find that local rail service could not deliver him in a timely manner to the committee's meeting in Kalamazoo, Mich.

"Here I am, a commissioner from Indiana, and I couldn't take the train," Truitt said.

He was, however, able to take a high-speed line from Chicago across northern Indiana to Kalamazoo that hit a top speed of 110 on its 2 hour-and-16 minute journey. That experience marked the highpoint of his journey. The meeting itself just served to highlight how far Indiana lagged in terms of rail assets.

"All the states were bragging about their rail involvement and I didn't have much to say," Truitt said.

What's Next

With the deadline for cutting service just over three weeks away, Amtrak said four states at risk of losing routes have signed boiler-plate contracts to maintain existing service.

INDOT officials have yet to determine a course of action as they await the results of the feasibility study, which they anticipate having by mid-September. No public meetings are planned to review the findings, though INDOT plans to publish the study to the department's website site upon its release.

State Sen. Brandt Hershman, R-Buck Creek, encouraged the audience at the Amtrak summit to approach rail advocacy in pragmatic terms. He asked people to think about and communicate what would inspire them to use rail service more often — or at all.

"The challenge," he said, "is to not pound the lectern and say, 'We want rail service!' But to go to lectern and say, 'We want rail service and here is how we can make it work.'"

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About The Author

Rebecca Townsend

Rebecca Townsend

Rebecca Townsend served as NUVO news editor from May 2011 to August 2014. During a 20-plus year career, her bylines have appeared in publications ranging from Indiana AgriNews to the Wall Street Journal. Her undergraduate degree is in sociology and anthropology from Earlham College, and her master's is in journalism... more

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