John D. Boyd | Jun 29, 2011 4:58PM EDT
The Amtrak passenger system is borrowing $562.9 million in the largest-ever credit issued by a federal rail loan program to buy 70 locomotives for two high-density traffic corridors in the Northeast.
The Department of Transportation said the loan will also “create hundreds of manufacturing jobs across several states,” as locomotive builder Siemens Industry USA will utilize contributions from factories in Georgia, Ohio and California.
Those units will be put to work on Amtrak’s prime Northeast Corridor running between Boston and Washington, D.C., and the Keystone corridor that connects Philadelphia to Pittsburgh.
Transportation Secretary Ray LaHood said besides the deal fitting into the president’s plan of improving the intercity passenger rail system, the loan is part of a job-creating strategy. It also comes as economists have worried about the pace of factory orders for durable goods.
“The Obama administration is committed to making strategic, long-term investments that create jobs and boost the economy now,” LaHood said. “This financing plan is already putting Americans back to work at assembly plants and supply companies in Ohio, Pennsylvania, California and Georgia.”
The DOT said this includes PHW of East Pittsburgh which has already contracted to make safety-related parts.
The 70 new power units will begin operating in the Amtrak system in 2013. They are in the final design phase, and will replace locomotives in service for 20 to 30 years with an average of 3.5 million miles traveled.
The money comes out of the Federal Railroad Administration’s Railroad Rehabilitation and Improvement Financing program, which issues low-interest, long-term loans at the government’s own borrowing cost while the borrower pays a risk premium to the federal treasury.
It is more than double the size of a loan of $234 million to Dakota, Minnesota and Eastern Railroad in 2004, which up until now was the largest RRIF credit. The program, which is authorized to lend up to $35 billion but has less than $1 billion outstanding, is often criticized in Congress and the rail industry for a time-consuming application process that has discouraged some potential borrowers and led others to trim their requests.
This is just the second RRIF loan the DOT has approved to date in 2010. Earlier this month the FRA OK’d the first RRIF loan of the year and it was the smallest since the program began issuing credits in 2002. The agency lent $56,204 to C&J Railroad so its Mississippi Delta rail subsidiary could buy high-capacity grain loading equipment.
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