Amtrak Asks to Use Penn Station for Loan

Amtrak is facing the most serious cash crunch in its 30-year history and has asked White House permission to use a large part of Pennsylvania Station in New York as collateral for a $300-million loan to keep operating, according to officials of the Transportation Department and Amtrak.

Amtrak now is more than $3 billion in debt, but this is the first time it has sought a loan to cover operating expenses. Previous loans mostly raised cash to fund capital projects, such as buying locomotives and building new facilities.

Amtrak received $521 million from Congress for both operations and capital expenses in this fiscal year, but it now needs the additional $300 million to carry it to Oct. 1, when the next fiscal year begins. It is unclear when Amtrak would run out of money without the loan or some other emergency action.

“There’s no question Amtrak is facing very, very serious financial problems,” said Transportation Secretary Norman Y. Mineta.

Mineta casually mentioned the Penn Station mortgage Tuesday during a regular session with reporters. Until then it had been a closely guarded secret. Federal sources said that a “facilitator”--a bank or group of banks--is now arranging a consortium of lenders to provide the loan. After that, the White House and the Transportation Department would have to make a final decision on whether to release a federal lien on the property to enable Amtrak to secure the loan.

For most of its 30 years, Amtrak has led a hand-to-mouth existence, with Congress squeezing its budget to the minimum necessary to keep a “national” passenger rail system operating through as many states and congressional districts as possible.

Federal sources said this crisis is different, and the government must decide soon what to do about the corporation. Amtrak is now mortgaged to the hilt and has cut back so much on maintenance and needed capital projects that service and reliability are beginning to deteriorate, especially on the New York-Washington Northeast Corridor.

Mineta, who will soon become the federal government’s member on the Amtrak board, contradicted Amtrak officials who have consistently assured Congress that the passenger train corporation will meet the congressional goal of “operational self-sufficiency” by fiscal 2003.

“It’s obvious that by 2003 they are not going to be self-sufficient,” Mineta said.

Technically, Amtrak would have to be liquidated if it fails to meet the requirement, although there is doubt Congress would allow passenger service to die.