Tony Coscia knows just how important a healthy Amtrak system is to New Jersey's economy — and so does just about everyone else who's paying attention these days.
Paying for investments in the system is another matter altogether.
"It would be great if everyone agreed that we should put substantial levels of capital into building the infrastructure," said Coscia, the New Brunswick attorney who chairs Amtrak's board of directors. "But we realize we're going to have to prove a lot to people."
So it's more important than ever that the federally subsidized railroad is run like a successful business, he said, one that controls its expenses and builds revenue over time. It's also critical for it to make strategic investments that help advance "the real business at Amtrak" — connecting cities via rail — in hopes of becoming a self-sustaining entity and gaining support for high-profile, long-term projects such as the Gateway tunnels.
Amtrak is starting to do just that.
Last month, Amtrak unveiled the first of 70 new locomotives for its Northeast Regional Service, replacing equipment that has been pulling its coaches for three decades. Coscia expects the new engines to improve service and reliability while yielding savings though fuel and energy costs, he said.
How Amtrak funds the $466 million project is perhaps another case study.
The railroad has borrowed the money through a federal loan program, which it expects to repay through profits from Northeast Corridor service.
"In a way, it's a bit of an opening act to what we think is a continuing process," said Coscia, a partner with Windels, Marx, Lane & Mittendorf.
Its next move is to replace 26 high-speed Acela Express train sets on the Northeast Corridor, aiming to add capacity and modernize the high-speed service between Boston and Washington, D.C. The agency last month issued a request for proposals for the project.
Each piece of new equipment will help build revenue and support for a business that is becoming more important than ever, Coscia said — especially as companies and younger employees drift toward rail-connected cities such as Newark. The operator broke a ridership record in fiscal year 2013, carrying 31.6 million passengers.
It's also a business that matters greatly to New Jersey, which sits in the middle of the Northeast Corridor. The accessibility is critical to companies such as McCarter & English, the regional law firm based in Newark, which serves clients in eight offices stretching from Boston to Washington.
"There's no substitution for face-to-face contact, and we want to have face-to-face audiences with our clients as much as we can," said Michael Kelly, the firm's chairman, who rides Amtrak almost every day. The same goes for interacting with partners.
He added that "if I can get to Boston in three hours instead of five, it's a big difference," especially in a profession where time is money.
Coscia also pointed to the impact on real estate values that can come from upgrades to the rail system, especially with so many major companies, universities and population centers in the Garden State.
But funding big-ticket transportation projects, however critical they may be, remains one of the biggest quandaries facing state and federal governments. New Jersey is living proof: It is home to one of the lowest, most static gas taxes in the nation — stifling one of the main sources for infrastructure funding — plus the trans-Hudson ARC tunnel project that was killed by Gov. Chris Christie in 2010.
So the question looms even larger when it comes to Amtrak's $15 billion Gateway tunnel project, which would relieve congested rail tunnels under the Hudson and upgrade the surrounding infrastructure. Martin Robins, a longtime transportation expert at Rutgers University, said stakeholders should line up behind Amtrak's plan, but the political climate in Washington raises doubts about whether it can assemble the financial support.
"I don't blame Amtrak — this is a congressional problem," said Robins, the director emeritus of the Alan M. Voorhees Transportation Center at Rutgers. "There is so much resistance to expenditures on public works, particularly (those) that benefit the Northeast economy, that you just have to be constantly vigilant and worried about whether or not they're going to be able to succeed in getting that money."
He also cited the uncertainty about New Jersey's role in funding Gateway. Up until now, he said, the Christie administration has been unclear about its support.
With that in mind, Robins said he'll be looking for some indication in Christie's upcoming budget for fiscal 2015.
For Coscia and Amtrak, clearing those hurdles can be helped by an improved balance sheet and reliable service, especially as demand grows. Its operating subsidy from the federal government was the lowest it's ever been in fiscal 2013, and in fiscal 2012, it had its smallest operating loss in 38 years.
Even with the uncertainty over funding, Amtrak is pushing ahead with Gateway however it can. It took a key step last summer when it started work on a "tunnel box" on Manhattan's west side, an 800-foot-long concrete casing under the Hudson Yards development site that preserved its right of way for the 15-year project.
And Coscia said the railroad is continuing to spend money on planning work for Gateway, touching on critical areas such as alignment, costs, timelines and site acquisitions.
"Certainly a lesson that was learned from the ARC experience is that we are going to do as much homework as possible up front to be able to create a level of business certainty … that people can rely on," Coscia said. That will mean that, for investors, "wherever they're coming from … there will be a level of reliability that is exceedingly high."
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