Editorial: MDOT bungles rail car lease
State transportation department is spending $3,000 a day to lease cars it won't be able to use for years
The Michigan Department of Transportation is in a financial bind thanks to the 23 rails cars it is leasing from the Great Lakes Central Railroad. And the department can't even use these rail cars for at least four more years. That's a huge waste of money.
The cars are meant for two commuter projects in Southeast Michigan — a line from Howell to Ann Arbor and another from Ann Arbor to Detroit. They are to be put into service after tracks along the two lines are upgraded.
However, the projects have been delayed. The new target date is 2019 but there is no guarantee the lines will even be ready by then.
Meanwhile, the cars are sitting idle at a rail yard in Owosso and are costing taxpayers about $3,000 a day. To date, the department has spent about $11.4 million to lease and refurbish the cars.
On paper, the lease option appeared sound. Tim Fischer, a spokesman for MDOT, says rebuilding and leasing a rail car costs about $1 million compared to buying a new one for $3 million.
State officials were trying to be proactive, but they are dealing with two very unpredictable factors: the federal government and local communities.
Part of the blame for the delays has been placed on the oversight from the Federal Highway Administration to the Federal Transit Administration, which brought different considerations and requirements for the projects.
Another problem has been obtaining approval from the communities involved.
There have been delays in lining up financing the work as well.
Fischer says MDOT has a few options to minimize the financial drain.
One is to sublease some or all of the cars until the rail projects are ready for their services.
A second possibility is returning the cars. Or, MDOT may sublease some of the cars and use a few for special events, such as picking up passengers between Ann Arbor and Detroit for the Independence Day fireworks display on the Detroit River.
With the 23 leased cars in hand, it's now a matter of damage control and MDOT needs to do everything it can to recoup its investment, or at least lessen the blow.
The department is reportedly working to negotiate a lower lease rate with Great Lakes Central Railroad. That's a start.
But if MDOT officials can't work out lower rates or sublease the rail cars soon, the department needs to look at canceling the lease.
In the future, MDOT should ensure projects like this are more established with dependable timelines before going full steam ahead with such major investments.