Amtrak said yesterday that it will move ahead with plans to build a 72-room hotel inside Baltimore's historic Pennsylvania Station at a time when it may be in danger of losing control of its Northeast Corridor real estate.
Whether Amtrak might lose ownership of the local station and others in the corridor came into question yesterday after a federal oversight panel presented a report to Congress that called for sweeping changes in the operations of the nation's passenger railroad.
The panel, called the Amtrak Reform Council, has been advising Amtrak on how it might improve service and wean itself from federal subsidies, which have amounted to billions of dollars since its inception in 1971. The panel reported that Amtrak could not fix itself and others should be given an opportunity.
Several congressional committees have begun pondering the report, which calls for creation of a federal agency to set policy and oversee two government corporations. One corporation would conduct train operations and one would own and maintain the real estate in the Northeast Corridor - including Penn Station. Competition for passenger rail service would eventually be introduced.
Such changes would require legislative approval - and the proposals in the council's report could be altered or rejected.
A spokeswoman says Amtrak would move ahead with its own cost-cutting measures, possibly eliminating long-distance routes outside the Washington-Boston corridor, but that it plans to honor all of its real estate deals in the meantime.
Amtrak signed an agreement with a local developer to build a moderately priced hotel in Penn Station that would open in 2003 in the second-, third- and fourth-floor offices.
"We are proceeding as normal. There is an agreement in play," said Amtrak spokeswoman Cecelia Cummings. "The ARC plan has not been finalized. It's in the hands of Congress."
Cummings acknowledged that the air of uncertainty could lead some of Amtrak's business partners to question their relationships with the railroad. Some may face difficulty obtaining financing for development projects because changes at the railroad could come in the middle of the construction process, she said.
Amtrak had sought a developer for a hotel at Penn Station about two years ago after looking for ways to use its assets to increase revenue. The arrangement with Columbia-based James M. Jost & Co. Inc. would be the first of its kind in the Northeast Corridor, the railroad's busiest with 13 million people riding in the last fiscal year.
Amtrak also plans to build a hotel near its station in Philadelphia.
Jost expects to begin construction inside the station on a moderately priced, $5 million hotel next summer and spend a year converting the offices to guestrooms. The 72 rooms will be accessible from an elevator in the station's lobby.
"We're diligently working with Amtrak to relocate people," said James M. Jost, the company's owner.
About 100 police, customer service and maintenance workers will have to be moved to other Amtrak offices to accommodate the construction.
Jost would own the hotel and lease the space from Amtrak, provided the economy and financing troubles do not crush the project, and a hotel brand is found for the facility.
But Amtrak may not be the landlord once the hotel is built. The oversight panel concluded that the railroad should not own real estate and other assets.
"Amtrak has proven that it cannot focus effectively on its core mission of running trains and running them well," said ARC chairman Gilbert E. Carmichael in the report. "And under current law, there is no one who can hold the railroad accountable. Amtrak has too much to do and does little of it well.
"In addition, the council believes separating the Northeast Corridor infrastructure from Amtrak's trains operating company is a must. Owning the Northeast Corridor is not good for Amtrak's financial statements and the Northeast Corridor is not benefiting by being owned by Amtrak."