|Amtrak has asked for White House permission to use a large part of Pennsylvania Station in New York as collateral for a $300 million loan, according to a story today in the Washington Post online edition (WP). The proceeds will be used to keep the company operating through October 1st, when the next fiscal year begins.
According to WP, Amtrak is facing the most serious cash crunch in its 30-year history -- during which it has led a hand-to-mouth existence -- and now is more than $3 billion in debt.
The story quoted Transportation Secretary Norman Y. Mineta as saying, "There's no question Amtrak is facing very, very serious financial problems." The Penn Station mortgage has apparently been a closely guarded secret until yesterday, when the Secretary casually mentioned it during a regular session with reporters.
WP cited Federal sources who said that a "facilitator" -- a bank or group of banks -- is arranging a consortium of lenders to provide the loan. After that, the White House and the Transportation Department would have to make a final decision on whether to release a federal lien on the property to enable Amtrak to secure the loan.
Echoing an issue facing the Government Sponsored Housing Enterprises, Fannie Mae and Freddie Mac, WP said that there is doubt Congress would allow passenger service to die. The implied government backing benefits both Amtrak and the GSE's in the financial markets. Technically, Amtrak would have to be liquidated if it fails to meet the congressional goal of "operational self-sufficiency" by fiscal 2003. Amtrak has received about $23 billion in federal capital and operating funds since it was formed on May 1, 1971. The Transportation Inspector General, Kenneth M. Mead, was quoted as saying, "Without a significant long-term source of capital funding, failure will be a certainty".
Amtrak's chief financial officer was reported to attribute the cash crunch to the late delivery of new Acela Express high-speed trains for the Washington-Boston run from a consortium led by Bombardier of Montreal and Alstom of Paris.
The mortgage would be limited to concourses A and B, according to the story.