Train in Vain?

Once a beacon of progress, the Rail Runner now faces an uncertain future

It's 6 pm in the middle of the week, and two-thirds of the seats on a southbound New Mexico Rail Runner Express train are full. Most of the passengers are coming home from a long day of work in Santa Fe. They live near or in Albuquerque, which offers a cheaper cost of living and "more things to do," as one passenger puts it.

On board, many of them shoot the breeze during the hour-long commute. A few chuckles and a feeling of camaraderie pervade the atmosphere. At the Santa Fe County/NM 599 stop, a group of passengers greet Vincent Olguin, a business operations specialist at the New Mexico Department of Game and Fish.
"I meet all kinds of people here," Olguin tells SFR. "We trade stories. It's part of the experience."

Olguin starts every morning with a bus ride down Central Avenue in Albuquerque to the city's downtown station, where he transfers to the Rail Runner and rides to work in Santa Fe. Each morning, he sees the same group of people seated around him eating coffee cake and downing large amounts of caffeine.
"They start talking louder and louder," Olguin says. "I don't mind it. They're just having a good old time preparing for their workday."

While Olguin appreciates familiar moments like these, the Rail Runner also serves a practical purpose. He estimates the train saves him $400 a month in gas and loads of wear and tear that a daily drive through high altitude would put on his car.

It also contributes to his family time. Olguin speaks of moments when the train has allowed him to catch his daughter's Little League baseball game, which is enough to prove the train is "providing a service for its people," he says.

In its five-year history, the Rail Runner's ridership has grown to 4,500 passengers per day. Last month, the train celebrated its 5 millionth passenger.

Its financials, however, are far less rosy.

This year, the Rail Runner lost $1.2 million in federal funding. By next year, the train, which costs roughly $24 million a year to run, could lose as much as $5 million. On top of that, a new study by the New Mexico Department of Finance and Administration estimates that, in order to service debt the train has incurred, the state will be on the hook for a whopping $784 million by 2027. So far, the only solutions that have emerged are piecemeal—such as an impending fare increase, which will cover a meager 2.5 percent of the train's total operating budget. The combination of mushrooming costs and a lack of big-picture solutions has led some detractors to push for shutting the Rail Runner down entirely.

This year, the Rail Runner lost $1.2 million in federal funding. By next year, the train, which costs roughly $24 million a year to run, could lose as much as $5 million.

The train's critics include Santa Fe City Councilor Matt Ortiz, who says New Mexico doesn't have the "clustered urban communities" needed to make the Rail Runner successful. The best solution, he maintains, is to "cut your losses and shut it down."
"It was one of three big-ticket items [former Gov. Bill] Richardson used to try to become president," Ortiz tells SFR. "What we're left with is his legacy."

Olguin concedes the Rail Runner is a financial loser. But to him, that's not the point.

"There isn't a public transportation system to date that is making money," he says. "But the return we get for this train is on par with any public transit system in the United States."

The Rail Runner's blueprints extend back to the mid-1980s, when then-Gov. Toney Anaya floated the idea of building a commuter train in New Mexico. Over the next several years, the state commissioned several studies to look into potential routes, types of trains and the economic feasibilities of such a venture.

Some ideas were grander than others. A few included connecting El Paso with the whole Interstate 25 corridor and extending the track as far north as Cheyenne, Wyo.

But the project didn't truly move forward until August 2003, when Richardson committed $2 million to start developing operations for a line between Santa Fe and Albuquerque. At the time, federal money had unexpectedly become available through a tax-cut bill.
"It is time to move from the drawing board to tracks, trains and tickets," Richardson said in a press conference at the time. "No more studies. It's time to start building this rail service and getting these projects done."

The Rail Runner was sold as an opportunity to make New Mexico competitive with other states, former Mid-Region Council of Governments Executive Director Lawrence Rael says. At the same time, Richardson had made the rail a campaign promise.

"He wanted to be bold, unique and different," Rael tells SFR.

Existing railroad lay between the two cities and belonged to Burlington Northern Santa Fe Railway Co., which used the tracks for freight trains. In 2005, the state agreed to purchase 300 miles of BNSF Railway track stretching from Belen through Trinidad, Colo., for $76 million. The track beyond Santa Fe was meant to prepare for a potential route to Denver.

When voters in four counties agreed to raise taxes for the Rail Runner, it signaled the public’s support of the project, former MRCOG Executive Director Lawrence Rael argues.

That same year, MRCOG entered its contract with Missouri-based Herzog Transit Services. Today, Herzog runs all of the Rail Runner's operations and maintenance. Rail Runner conductors and engineers are Herzog employees operating under a contract with MRCOG. Herzog declined to speak with SFR, referring all questions to MRCOG.

Although several New Mexico businesses bid on the initial contract, Rael says, none met the requirements at the time.

"We had a coalition of New Mexico businesses in the [request for proposal] that had zero experiences in running a commuter rail," Rael says. "These operators had only run freight trains. Remember, we're talking about transferring people, not freight."

Rael, who retired from MRCOG in 2009 and campaigned for lieutenant governor in 2010, says he hopes the next contractor will be local. But for the near future, it appears Herzog will continue operating the Rail Runner.

While MRCOG's contract with Herzog expires after this year, the company is offering a $1 million reduction in management fees and track maintenance for a one-year extension, Terry Doyle, MRCOG's transportation director, says. Doyle says the discount would amount to a 6 or 7 percent cut in the yearly price of the current contract, bringing the total contract to about $18 million.

The discount might also be enough to prevent the board from putting out another request for proposal at the end of the year, Doyle says.

"This board really needs to consider the known versus the unknown," Doyle, referring to MRCOG's Rio Metro Regional Transit District Board, tells SFR. "[Herzog] wants to be here and show this community they're a player."

Still, Doyle says finding ways to further reduce costs is imperative. Like many large-scale public transit projects, the Rail Runner's anticipated costs far exceed initial estimates. In 2003, NMDOT estimated the cost to get the train up and running at $200 million. In reality, the price tag was $400 million. Other costs have spiraled out of control, too—a fact some critics say stems from shortcuts taken amid Richardson's rush to establish the train.

Dan Stone, a retiree, lives near the railroad in Santa Fe. He says he's sick of the sound and vibration created by passing trains.

"You can physically feel the noise on your body," Stone says.

Stone laments design shortcuts, including a section of elevated track that amplifies the noise.

Another problem, Stone says, is the daily movement of "dead heads," or empty trains.

"From day one, they started running dead heads from the downtown depot all the way out to I-25 to park. Then they'd come back, six to eight hours later," Stone says.

The Rail Runner can only park a limited number of trains in the downtown station because Santa Fe Southern Railway, which runs a tourist train to Lamy once a week, also parks its trains in the Railyard.

"It's basically a scheduling conflict between the Rail Runner and Santa Fe Southern," Santa Fe Mayor David Coss tells SFR.

Dan Stone says he and his neighbors have given up trying to start a dialogue with NMDOT about limiting noise and parked trains.

Earlier this year, the City Council voted to end Santa Fe Southern's lease with the city-owned Santa Fe Depot, raising tensions in an already heated relationship between the city and Santa Fe Southern [, April 12: "Railyard Resolution: No Lease for Santa Fe Southern"].

But Rail Runner trains still move around the city and park in neighborhoods or near I-25 during the day.

Stone says it's a waste of fuel and taxpayer dollars that ultimately go to Herzog.

The state has contracted with Herzog for Rail Runner construction and operations for the past seven years. In fiscal year 2010, MRCOG, the regional agency that oversees the Rail Runner, paid Herzog $20.6 million, a number fairly consistent with other years in the contract's history.

To Stone, this out-of-state contract explains why the operators of the Rail Runner don't seem concerned about city residents who live near the tracks.

"They don't live here in Santa Fe," he says. "They don't care."

A few times a week, Stone vents his frustration on the corner of St. Francis Drive and Cerrillos Road in view of the Rail Runner's operators. Dressed in a T-shirt portraying a yellow smiley face with a bullet hole in its forehead and wearing a Grateful Dead hat, Stone holds signs with slogans such as "Stop Vibrating Santa Fe Bitch," "Worst Train in the USA" and "State-Sponsored Terrorism" scrawled across them.

Rick Martinez, the vice president of the Santa Fe Neighborhood Network, corroborates some of Stone's complaints, noting a few examples of poor planning that stand out.

For one, Martinez says, Santa Fe has too many stops for a city of its size. Three stops within the city currently operate while another, the Zia Road Station, has been sitting unused for two years. This summer, the Santa Fe City Council tasked city staff with finding a way to use the Zia stop after private developers build a planned "kiss and ride," enabling train passengers to park nearby and transport to the station.

Developers are also proposing a new stop in the city's south side to go along with a potential state government supercomplex. That would bring the total to five stops in Santa Fe, compared with six current stops in the Albuquerque metro area.

"For a population of 80,000 compared to a population of 1 million, does that make sense?" Martinez asks SFR.

He also points to a 2006 decision to build 21 miles of new railroad down the I-25 median to connect to existing tracks in Santa Fe, which came at a price of $140 million. Other potential routes, including one that would have passed through Eldorado, faced too much opposition from residents who didn't want the train running near their homes.

The Rail Runner also didn't solve some of the issues Richardson promised it would, such as reducing congestion on I-25.

"A couple of years after the Rail Runner is built, here they are adding another lane from Bernalillo to Albuquerque," Martinez says.

The state finished the two-year, $43 million lane extension project in August.

Santa Fe also lacks a representative to make decisions about the Rail Runner. In 2009, the North Central Regional Transit District, which governs public transportation in northern New Mexico, passed up a chance to put one of its members on the Rio Metro Board.

"We're being asked to pay for this tax to fund part of its operations, yet we don't have a say on its board?" Ortiz asks. "It's all being run out of Albuquerque. That doesn't make sense."

Jack Valencia, a transit project manager with NCRTD, says his agency didn't want to be held liable for any potential Rail Runner accidents. He also says Santa Fe County doesn't contribute enough in taxes to justify membership on the board.

In 2008, voters in Santa Fe, Bernalillo, Sandoval and Valencia counties approved a one-eighth of one percent gross receipts tax increase to help pay for Rail Runner costs. Santa Fe County contributes roughly $2 million of an approximately $12 million total.

"The board felt we were minor contributors who would have had limited input," Valencia tells SFR. "Could we have analyzed it differently or got different insurance? I'm sure we could have."

Coss says he can't recall NCRTD's decision ever coming to the City Council before it was made.

"Hindsight is 20/20," Coss tells SFR. "I wish they had joined the board."

In July 2006, the Rail Runner ran its first 3,600-horsepower diesel/electric locomotive from Albuquerque to Bernalillo. By December 2008, the Rail Runner had officially extended the line to Santa Fe. In the short time since, the train has encountered seemingly endless financial problems.

When the four-county gross receipts tax increase passed, proponents expected it to bring in $16 million annually. Yet in a down economy, the increase has since yielded $4 million less than expected each year. Other costs covered by Amtrak fees and special revenues weren't enough to prevent a $1.3 million shortfall in 2009, which threatened a shutdown of weekend services.

Richardson responded by pumping in stimulus dollars and other federal grants. To Rio Metro Vice Chairman and Los Ranchos de Albuquerque Mayor Larry Abraham, it was a Band-Aid solution that only "prolonged the inevitable."

This past summer, the Rail Runner experienced a similar dilemma when it faced a $1.2 million shortfall from expiring federal grants. In June, the Rio Metro Board voted to cut weekend services, but then reversed the decision and instead axed two daily routes [, July 15: "Board spares weekend Rail Runner routes"].

In a July Albuquerque Journal op-ed, Abraham wrote that the board had no real consensus for what changes were needed to cut costs. He went on to highlight that the Rail Runner can only pay for 13.5 percent of its budget and predicted more financial crises would come.

"Putting this in even bleaker perspective over the span of 20 years," Abraham wrote, "the true cost of the Rail Runner is close to $1.3 billion."

Rael, however, says the Rail Runner's costs are a bargain compared to similar transit systems elsewhere. Utah spent roughly $1 billion to develop TRAX, a light rail that currently travels 64 miles. The state is currently considering a 70-mile addition to TRAX that would cost $3 billion.

Similarly, FasTracks, a light-rail diesel line in construction, which will connect 119 miles between Denver and Boulder, Colo., comes with a $6.5 billion price tag.

Rael adds that criticisms of the Rail Runner's deficit miss the point.

"It was never designed to pay for itself," Rael says. "Every single transportation system is subsidized. Roadways don't pay for themselves. That's why you have a federal and state gasoline tax."

Subsidized or not, transit systems across the country commonly find themselves in fiscal holes. In 2010, California's Bay Area Rapid Transit addressed a $25 million deficit by laying off employees.

In most transit systems around the country, fares pay for roughly 30 percent of the budget. Rail Runner fares, however, make up a meager 10 percent of the train's total revenue, partly due to low ridership.

Rael says he anticipates a future without weekend train services.

Art Guzzetti, vice president of policy for the American Public Transportation Association, says the underfunded nature of public transportation explains why stopgap solutions like Richardson's use of stimulus dollars are common. He advocates "strong funding sources" such as sales taxes and property taxes, which he says are reliable.

Dallas and Denver are examples of cities with strong public transportation funding,

Art Guzzetti of APTA says.

"You don't want a model that's sending you back to a crisis year after year," Guzzetti tells SFR.

But the recession and rising fuel costs put even those sources in jeopardy throughout transit systems across the country.

"People aren't buying what they used to buy," Virginia Miller, an APTA spokeswoman, tells SFR. "No one anticipated what was going to happen."

Half of the country's transit systems have cut service or raised rates since 2010, according to a recent APTA report. In October, the Rail Runner followed suit: Nine members of the Rio Metro Board voted to approve new rate hikes, while only three voted against them. John Alsobrook, a Rio Metro Board member who also serves on the Corrales City Council, opposed the hikes because of what he sees as a piecemeal approach to addressing the train's financial problems.

"When we make moves like this, riders always ask me, 'What's coming next?'" Alsobrook tells SFR. "The public is much better off if we wait to get the big picture."

Scott Darnell, a spokesman for Gov. Susana Martinez, says that big picture should include fewer "general fund bailouts"—that the train should have its own sustainable funding sources, rather than relying on the state to fill budget gaps.

Roughly 10 percent of NMDOT’s road and highway funds are used to pay off the Rail Runner’s yearly debt, Martinez spokesman Scott Darnell says.

Darnell says the project was fast-tracked, citing as an example Richardson's decision to forgo a substantial amount of federal funding because of the lengthy assessment requirements that came with it.

"We're trying to take a deliberate approach," Darnell tells SFR.

What exactly that "deliberate approach" entails, however, remains unclear. So far, it has included analyzing the train's costs and ending negotiations to buy additional miles of track.

During Martinez' 2010 gubernatorial campaign, she criticized the Rail Runner in ambiguous ways, saying she never would have supported the train "in its current form" and urging a new analysis of its operations. She also mulled the idea of selling the train to a private operator.

Since taking office, Martinez' actions have been louder than her words. In April, NMDOT dropped out of a contract with BNSF Railway to finish a purchase of 250 miles of track between Lamy and Trinidad, Colo. A letter from NMDOT canceling the purchase blames BNSF's failure to close the transaction.

Darnell says the BNSF contract would have put the state on the hook for more than $9 million in yearly maintenance and upkeep costs. For now, the move nixes any plans to develop a line to Denver.

On top of that, a September report by DFA estimates that the state will rack up $784 million in total debt from high-interest state transportation bonds between now and 2027. Excluding hefty balloon payments in 2025 and 2026, that still amounts to roughly $28 million in debt service annually—more than it costs to operate the Rail Runner.

"The costs are more than New Mexicans ever thought," Darnell says, adding that these new cost projections could lead to renegotiations between the state and the Rio Metro Board.

Future federal funding for the train is in question as well. The Rail Runner's federal funding—which comes in the form of US Department of Transportation grants known as Congestion Mitigation Air Quality, or CMAQ, grants—will expire next year and put the train $5 million in the hole.

Rael says NMDOT is slacking in finding ways to fill that gap, and emphasizes that the train was a statewide project passed by the Legislature and governor.

"The state has a responsibility in meeting the local governments halfway," Rael says. "It would be a shame if we didn't find a way to continue to operate."

For now, the state may have found another Band-Aid solution. Jude McCartin, a spokeswoman for US Sen. Jeff Bingaman, D-NM, says New Mexico can technically still seek CMAQ funding for the train's first phase—the section extending from Albuquerque to Bernalillo.

"If that's the case, we would definitely reapply for whatever we'd be eligible for," Augusta Meyers, a spokeswoman for MRCOG, tells SFR.

But Darnell says throwing more money at the Rail Runner won't solve bigger problems down the line. A "critical assessment" of tax dollars and a frequent dialogue between the state and the Rio Metro Board are good starting points to solving the problem, he says.

The new rate increases are only expected to raise $600,000, falling far short of a projected $5 million in potential losses next year. Tony Sylvester, a special projects manager with MRCOG, says other options, such as cutting more services and adding advertisements, are under consideration.

Olguin, for his part, worries that Martinez will try to shut down the train. He says Republicans are on a mission to chip away at Richardson's accomplishments.

"They have to portray it as a failure and a waste of money," he says.

On a northbound train during a weekday evening, Sally Moore and Rachel Saiz are discussing health care reform on their ride home from work. Saiz, who rides every day from the Kewa station to her job in Albuquerque, can point to many of her friendships that originated on the Rail Runner. Every few months, she gets together with eight of them to celebrate birthdays and other events.

"We call each other 'train buddies,'" Saiz tells SFR. "We watch out for each other."

Moore, who works at Central New Mexico Community College in Albuquerque, rides the train daily from her home in Bernalillo. When the issue of the Rail Runner's woeful budget arises, Moore says the overall analysis of transportation costs is shortsighted.

"We don't have a holistic approach," Moore tells SFR. "If you were to really compare the true cost of driving, you'd have to take into account the maintenance of roads and environmental costs as well."

Saiz veers the conversation back to a familiar refrain: the Rail Runner's poor planning.

"If you have a federal grant that's going to expire, you don't wait until it expires to figure out what to do financially," she says.

She pauses for a moment before offering a final thought. "Mass public transit is a new concept in New Mexico."  SFR

Rate Increases

The Rio Metro Board passed the Rail Runner's first-ever rate increases Oct. 21. New rates will go into effect this month or next.

Day passes, which currently run $9 for all zones, will soon rise by $1 or $2 for most people. Monthly passes will jump anywhere from $4-$11, while yearly passes will increase by $35-$110.

Tony Sylvester, a special projects planner with the Mid-Region Council of Governments, spent part of the fall holding public forums on the rate increases, which received broad support from Rail Runner riders in online surveys.

The rates were approved after NMDOT commissioned the University of New Mexico's Bureau of Business and Economic Research to study how fare increases affected ridership in 10 transit systems in other parts of the country. The study showed most transit systems didn't see great change in ridership after imposing small rate hikes.

Sylvester admits that most of the transit systems studied—many of which are in highly populated urban areas—greatly differ from the Rail Runner.

"It's really hard to compare these systems across the board," he tells SFR.

Rail Runner Ridership

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