Alabama State Port Authority, once opposed to Amtrak, backs Gulf Coast rail with $1 million subsidy

The Alabama State Port Authority, once strongly opposed to bringing Amtrak service back to the Gulf Coast, is now willing to commit to $1 million over the next three years to support its service.

The authority’s board of directors, without debate Tuesday, voted unanimously to approve a $1 million expenditure to help offset the $3.048 million operations subsidy needed before the train service can begin with twice-daily trips between Mobile and New Orleans.

The vote came after John Driscoll, president & CEO with the Port Authority – the state agency which oversees the handling of the state’s only seaport in Mobile, including its rail operations in and nearby the downtown area -- urged members to support the subsidy based on the fate of a $178 million federal Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant.

Benefits

Of that, $77 million will be applied to improvements to rail infrastructure “critical to the Authority and its operations,” according to the resolution requesting the board’s support for the subsidy.

Mobile Mayor Sandy Stimpson, last month, called the CRISI grant a “game-changer” for the port’s rail operations.

“We think it’s in the Port’s best interest to offer one-third (toward the subsidy) in moving this forward,” Driscoll told the board members during their monthly board meeting. “We think this can help move the ball forward.”

Amtrak officials applauded the board’s vote.

“We appreciate the continued and expanded partnership with the Port and we welcome their involvement,” said Marc Magliari, spokesman with Amtrak.

Driscoll said the biggest benefit for the authority is an approximately $4 million-plus project to rail infrastructure in Mobile. He said the Port Authority is already supporting that project with a $750,000 matching appropriation.

That project, called the “Virginia Street Lead,” comprises of 1,400 feet of new track and 4,100 feet of refurbished track. The track, once completed, will improve access to McDuffie Island Coal Terminal and the Port’s Intermodal Container Transfer Facility, and will reduce potential conflicts with Amtrak operations.

No guarantees

The Port’s approval of the subsidy is no guarantee that the Amtrak project will receive its full operational funding.

The State of Alabama, through Alabama Gov. Kay Ivey’s office, still must make a commitment of $1 million over three years. Ivey’s office has verbally expressed interest in support, but the state’s fiscal year 2025 budget is already approved and the Legislature – which votes on the annual budget – is not in session and likely won’t be until next spring.

The Mobile City Council is also going to be asked to support a $1 million subsidy over the next three years, and some of the council members have said they have concerns about the appropriation and whether the city will be on the hook for its operations after the third year. It takes five of the council’s seven members to approve the subsidy, and at least two council members have expressed deep reservations about backing it.

Driscoll, during the board meeting, acknowledged that there were no guarantees that the project will happen given the situation with the Mobile City Council.

“(The board’s approval) doesn’t mean (a city subsidy) will be agreed by the city and Amtrak in their negotiations,” Driscoll said. “We think it is a pretty powerful gesture on our part and hopefully will bring it over the line.”

Caveat & shift

The agreement does have a caveat: Amtrak cannot move its Gulf Coast route north of downtown Mobile. Amtrak does not have any near-term plans to move the state-supported Gulf Coast route beyond Mobile and toward Atmore and Pensacola.

Driscoll said the only way the Port Authority would support a longer route would be if there was an additional rail traffic study conducted that analyzed the impact of passenger rail to the port’s operations, and looked at additional infrastructure that would be required.

The board’s approval is a significant shift in support for the Amtrak service by an entity that currently is named in a lawsuit against Amtrak before the U.S. Surface Transportation Board. Also involved in the case are the two freight operators along the Gulf Coast route – CSX, which owns the rail line in Alabama and Mississippi, and Norfolk Southern, which owns a part of the line in Louisiana.

That case reached a settlement in November 2022. The confidential agreement was aimed at allowing Amtrak to operate the passenger trains between Mobile and New Orleans for the first time since 2005.

But the process since November 2022, when the agreement was reached, has been slowed while the parties waited on the Federal Railroad Administration to announce the CRISI grant award last fall.

The process has also been slow in Mobile, where negotiations between Amtrak and the city’s administration have been ongoing over a lease to allow for a train depot at the foot of Water and Government streets.

Related: ‘We’re not colonizing Mars’: Why Amtrak service has not started between Mobile and New Orleans

Related: ‘What’s going on?’ Federal board blasts Amtrak, requests progress in Gulf Coast service

The operation subsidy talks have only just surfaced in recent weeks. Council members, during a meeting on May 28, criticized the structure of the $3.048 million subsidy that relied solely on the City of Mobile. Council members noted that in Mississippi and Louisiana, state governments were willing to handle the three-year payout for the train’s operations.

The service will include four stops in Mississippi -- Pascagoula, Biloxi, Gulfport and Bay St. Louis -- before arriving to Union Station in downtown New Orleans.

Mobile Mayor Sandy Stimpson told council members last week that other entities, including the Port Authority, would be asked to split the costs by a third.

The mayor also stressed the economic benefits of the project saying that an approximately $1 million obligation from the city would represent a benefit from tourism. David Clark, president & CEO with Visit Mobile, said the train could attract $10 million in overall tourism impact, as well as $1.7 million in extra lodging tax revenues.

A council vote on the subsidy is not scheduled. Magliari said Amtrak officials “are at the call of the council and the mayor” on when they anticipate a council vote.

This story was updated at 1:54 p.m. on June 18, 2024, to include comments from Amtrak’s Marc Magliari.