Audit: MDOT spent $9.5M to refurbish idle rail cars

Chad Livengood
Detroit News Lansing Bureau

Lansing — The Michigan Department of Transportation is coming under fire from state lawmakers and auditors for spending millions of dollars on commuter train cars before passenger service can be viable in southeast Michigan.

A state audit released Friday criticized MDOT for refurbishing and leasing passenger train cars for commuter rail service before making upgrades to the tracks and building new stations for two planned Metro Detroit routes.

MDOT’s Office of Rail spent $9.5 million on train cars sitting idle at a rail yard in Owosso that the agency “neither owns nor expects to use until at least 2017” because upgrades in tracks between Howell and Ann Arbor as well as Detroit to Ann Arbor remain years away, according to the Auditor General’s report.

The commuter train projects, which have the backing of the Southeast Michigan Council of Governments, have run into hurdles over federal oversight and unsettled questions about who will pay for their operation.

“They’re — no pun intended — putting the rail car before the horse,” said Rep. Jeff Farrington, R-Utica. “Those are not the kind of decisions you make when it’s your own money.”

But backers of the long-sought commuter train line defended MDOT Friday, saying the refurbished 1950s-era train cars are necessary to build public support for constructing a mass transportation system in Metro Detroit that helps alleviate freeway congestion.

“I don’t view it as cart before the horse,” said Carmine Palomba, deputy executive director of SEMCOG. “I view it as doing the best you can with limited resources to move a project (forward) that meets a lot of the state’s objectives and a lot of local objectives.”

In April 2010, MDOT signed a contract with the Great Lakes Central Railroad to refurbish 16 used coach train cars and seven cab cars at a cost of $2.7 million in lease payments and $7.9 million for the upgrades, according to the audit. The state’s mass transportation fund paid for $8 million, while federal funds covered the remaining sum.

A company affiliated with Great Lakes Central Railroad bought the 23 MDOT cars — and 26 other train cars — for $5.63 million in 2010 from a mass transit district affiliated with Chicago’s suburban Metra commuter train system, said Michael Gillis, a spokesman for Metra.

The auditor general’s report said MDOT is on the hook for another $6.5 million in lease payments and adding bathrooms to 14 of the coach cars before commuter train service is expected to begin.

“As a result, the Office of Rail did not effectively and efficiently oversee the lease and refurbishment of cab and coach cars designed for two commuter rail projects,” state auditors wrote in a stinging report about the rail office’s operations.

Farrington, who says MDOT should have waited to lease or buy the train cars, and other lawmakers criticized the agency’s decisions during a House committee hearing earlier this week.

The train car leases were part of $346.5 million in federal grants the state has been awarded since 2009 to create a higher-speed rail system using southern Michigan’s existing freight and Amtrak passenger tracks.

MDOT officials blame a change in federal oversight of the train track improvements as the reason the agency upgraded the commuter trains before they began modifying tracks for 60 miles per hour commuter trains and building new stations along the two proposed routes.

“MDOT believes it made every reasonable effort to coordinate the various phases of the project to help ensure the initiation of commuter service between Detroit and Ann Arbor in 2015,” the agency said in a written response attached to the audit.

The Howell-to-Ann Arbor project, however, remains years away from becoming a reality. A 12- to 18-month feasibility study began last month on the project, and there is not complete buy-in from communities along the route to fund commuter train operations, said Michael Benham, a strategic planner at the Ann Arbor Area Transportation Authority.

“We’ve been talking about this service since 2006, and people are wondering, why haven’t we started this service yet?” Benham said Friday. “The simple answer is there’s not a full agreement among the communities whether the service is needed and whether it can be funded.”

To promote commuter rail service, MDOT has tried to put the idled train cars to use. Last summer, people attending Howell’s annual Melon Festival got to take a ride on the train cars. During the recent holiday season, the Steam Railroading Institute in Owosso used its Pere Marquette locomotive to pull the cars along its North Pole Express route to the Christmas-themed village of Ashley in Gratiot County.

SEMCOG’s Palomba is pushing for MDOT to put the train cars to use for other special events, such as picking up passengers between Ann Arbor and Detroit for the Tigers’ Opening Day at Comerica Park in April or the Independence Day fireworks on the Detroit River.

“The trains have given us an ability to show people exactly what it is that they’d be getting for their money,” Benham said. “Without those cars, it’s a PowerPoint presentation up on a screen, and it’s kind of abstract.”

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