Mobile mayor says Alabama, port authority willing to invest one-third into Amtrak subsidy

The City of Mobile could share in the payment of a $3.048 million operations subsidy for Amtrak’s Gulf Coast service with the State of Alabama and the Alabama State Port Authority, according to Mayor Sandy Stimpson.

The mayor, in comments to the City Council during a pre-conference meeting Tuesday, said that Gov. Kay Ivey’s office and the Port Authority gave verbal approval toward helping the city offset the costs for operating a twice-daily Amtrak service from Mobile to New Orleans.

The agreement comes amid support for the service by a variety of entities, including the Port Authority, who once objected to it. But $228 million in capital improvements loom over the rail line stretching from New Orleans into Alabama, much of it coming from $174.4 million Consolidated Rail Infrastructure and Safety Improvements (CRISI) program grant the Federal Railroad administration awarded Amtrak last fall.

In Alabama alone, estimates are around $72 million in capital improvements provided by the federal government as long as the Amtrak service is operating. If the service doesn’t operate, then the capital improvement grants will likely not be distributed.

“We applaud Mayor Stimpson’s work that has produced the good news from Gov. Ivey and an expansion of our partnership with the State Port Authority,” said Amtrak spokesman Marc Magliari. “Amtrak and the Southern Rail Commission look forward to the City Council’s upcoming actions on funding and real estate agreements in order to set the stage for track and platform construction to enable twice-daily Amtrak service between Mobile and New Orleans.”

Reactions

Stimpson described the reception he got from Alabama Gov. Kay Ivey’s office as “warm and supportive” toward helping offset the operations costs over a three-year period. The Alabama State Port Authority, he said, was also receptive toward assisting as long as during the next three years, Amtrak doesn’t push to have the Gulf Coast service expanded north of downtown Mobile and through the rail operations of the State Docks.

Stimpson’s comments got some immediate support from council members like Gina Gregory, who said it was a “much better deal” for the city to have other entities – particularly, the state – sign on to support the Amtrak service. The states of Louisiana and Mississippi are paying for their $3.048 million subsidy for the train’s operations over a three-year time span.

Councilman Cory Penn praised Stimpson’s announcement, calling the interest from the port and Ivey’s office as “a bonus.”

“It’s an opportunity to bring quality-of-life to Mobile and fix issues with the railroad track and infrastructure,” Penn said. “I’m ready to see it and let’s move forward with it.”

At least council member is unmoved from his opposition. Councilman Ben Reynolds said he remains concerned about the city paying into an operations agreement for a service that will exist for three years, but which could require the city to support in future years.

“I don’t think the city ought to be signing any contract,” Reynolds said. “The last we need to do is sign up the citizens to a long-term obligation, beyond the three years.”

He added, “The reality is once they build the infrastructure down there, they then have the leverage and ability to pit us against certain people in the city who want it or don’t want it. It’s harder to get rid of them once they are here. And if you don’t pay the subsidy (beyond the initial three years) then what?”

Caveats

Stimpson said the agreements with the state and the port authority has some caveats. For one, the State of Alabama does not have a mechanism to provide funding for the service right now. The state’s fiscal year budget was adopted last month, and the legislature is likely not returning for another session until next spring.

Ivey’s spokeswoman Gina Maiola, in a statement said the state “just concluded the appropriations process” for fiscal year 2025, confirmed that “funds are not immediately available.” But she said the governor’s office is “exploring options to potentially provide support” toward the operations.

“They’ve agreed in a good faith effort between now and the next session, to go to various departments to come up with one-third of the costs and funding the $3 million for Amtrak,” Stimpson said. “They could not put a finger on the bucket of money now to say we could do this because they don’t have that authorization.”

Amtrak’s requests the operations agreement be paid out in three increments: $500,000 in the first year, $1 million in the second, and $1.5 million in the third.

Stimpson said if the state cannot come up with funding before the end of 2024, the city and port could split the first year’s costs -- $250,000 each – before the state comes in and assists in future payments.

Maggie Oliver, spokeswoman with the Alabama State Port Authority, said that port officials remain supportive of implementing the infrastructure outlined in the CRISI grant, which “protects our freight operations south of the (Arthur R. Outlaw Mobile) Convention Center and, once Amtrak and the city come to an agreement on a lease, will help us accommodate passenger rail to the Downtown Mobile station.”

The council still has to approve a lease agreement for the site of the Amtrak train stop at the foot of Government and Water streets across from the Exploreum.

“If approved by our board of directors, the Port will contribute $1 million over three years to the operating subsidy as part of our good faith effort to see the CRISI grant through to fruition,” Oliver said.

She said that along with CRISI grant match for rail improvements at Virginia Street, the port will be contribution a total of $1.75 million. The port authority’s board will vote on the matter next week.

Stimpson said the port authority wants assurances that Amtrak will not operate its trains beyond the train stop at Government and Water.

“As part of our lease agreement, Amtrak could not go north and east with their services during this three-year period,” Stimpson said. “If they decide to do that in future, there has to be a study to show it does not adversely affect the docks.”

City support

There is no timetable for when the council might vote on the reduced operations subsidy, or the lease agreement.

City Attorney Ricardo Woods said it could be another 60 days before the council votes on either matter.

Stimpson’s efforts to seek additional funding to support the operations of the Amtrak service come after council members, during a May 28 meeting, expressed frustrations with the city being asked to foot the entire bill.

Council members noted that cities in Mississippi and Louisiana were not required to subsidize the service, noting that payments were being handled by both state’s governments. The service will include four stops in Mississippi -- Pascagoula, Biloxi, Gulfport and Bay St. Louis -- before arriving into Union Station in downtown New Orleans.

Stimpson said the approximately $1 million obligation from the city would represent a benefit from the tourism lift that passenger rail could bring to the city. 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.

“In two to three years, we’ll know if this thing is working or not,” Stimpson said, adding that he doesn’t see the city as being obligated to pay for the service’s operations beyond the third year.

Amtrak officials have noted it’s a rarity for a city to have to pay into the operations of a state-supported train service, or routes that are 750 miles or less that operated outside the system’s popular Northeast Corridor.

The last one to do so was the Hoosier State in Indiana, which folded about five years ago due to a lack of financial contributions.

Mobile’s decision looms large on the overall fate of the project. A state-supported Gulf Coast route has been the subject of more than a decade of planning and boosterism by rail advocates and from Mississippi and Louisiana state and federal officials.

The project is also an Amtrak priority, as it looks to expand shorter, state-supported services around the country.

This story was updated at 2:49 p.m. on June 11, 2024, to include a comment from Ivey spokeswoman Gina Maiola.