MBTA Commuter Rail (Operations, Keolis, & Short Term)

[Stlin]

Interesting. I’ve never been to a business meeting in Europe and had a US flag present.

Was a state party present? A governmental body, or unit thereof, is different in protocol terms than two private companies. Massachusetts literally has an Office of International Trade and Investment, and I'd be shocked if the Korean Consulate in Boston wasn't involved in some way with that visit.

 

[JeffDowntown]

Was a state party present? A governmental body, or unit thereof, is different in protocol terms than two private companies. Massachusetts literally has an Office of International Trade and Investment, and I'd be shocked if the Korean Consulate in Boston wasn't involved in some way with that visit.

Exactly, I have been to multi-party meetings in France where the trade representatives of several countries were present (as well as private businesses). All the national flags were displayed.

 

[HenryAlan]

Exactly, I have been to multi-party meetings in France where the trade representatives of several countries were present (as well as private businesses). All the national flags were displayed.

This has been my experience in China, Japan, Czech Republic, and Russia. I'm sure it's fairly typical.

 

[TallIsGood]

Was a state party present? A governmental body, or unit thereof, is different in protocol terms than two private companies. Massachusetts literally has an Office of International Trade and Investment, and I'd be shocked if the Korean Consulate in Boston wasn't involved in some way with that visit.

No state party. The statement was “business meetings”

 

[Koopzilla24]

View attachment IMG_6029.jpeg
This is the most full I've ever seen the Readville lot on a normal weekday (3:45pm Tuesday). More frequent Fairmount + Franklin w/ Foxboro running ~30min peak + now the Providence stops select trains here = a lot more service for residents of Dedham and Hyde Park. The lot on the other side by track 5 was almost completely full and the Track 4 upper lot was at ~40%. There are now 10 trains from Readville to South Station departing between 7-9am on weekdays. Interested to see the blue book data on this month when it is available.

 

[Stlin]

In listening to Eng in his latest GBH appearance, he's talked about the choice of BEMUs on Fairmount. To paraphrase, "BEMUs allow us to take limited dollars and we can deliver this now. And it doesn't mean that in the future when dollars are available we don't come back and run full corridor catenary." That's a refreshingly... Reasonable take on that.

 

[TheRatmeister]

In listening to Eng in his latest GBH appearance, he's talked about the choice of BEMUs on Fairmount. To paraphrase, "BEMUs allow us to take limited dollars and we can deliver this now. And it doesn't mean that in the future when dollars are available we don't come back and run full corridor catenary." That's a refreshingly... Reasonable take on that.

Except that logic doesn't really hold up at all. The cost for a single BEMU set based on the Caltrain contract is $80 million, whereas based on inflation adjusted NEC electrification costs, the cost to electrify the entire line would be around $70 million.

 

[Stlin]

Except that logic doesn't really hold up at all. The cost for a single BEMU set based on the Caltrain contract is $80 million, whereas based on inflation adjusted NEC electrification costs, the cost to electrify the entire line would be around $70 million.

The difference is in their plan to lease the sets, and the difference in how that's accounted for. Setting aside the question of "where will they find something to lease" It's ultimately a time value problem - even if it costs more in the long run. Financially, leasing means they limit upfront expenditures and only need to commit 5m dollars in each of the next 10 fiscal years, for example. (Not including whatever work they'll need to do regardless to be able to use BEMUs).

Building out the system and buying traditional EMUs means they have to find the room to program ~100m into the CIP as a lump sum. In FY25, the CIP only had ~850m in funds available for programming, most of which went to Draw 1.

Also, as basically a long term rental, it can represent de-risking - if BEMUs fail to work out, or the technology improves, the T can return them to the lessor at the end of the term, presuming of course that replacements are in place. (That is the pitfall that Amtrak is falling into with the lessor owned Acela Is).

 

[TheRatmeister]

Setting aside the question of "where will they find something to lease"

But you can't just set that part aside. The fact that finding something to lease in the first place will be such a challenge means that the leasing costs are going to be quite high, as you say around 5m per year. So in one single 5 year CIP worth of leasing, we'd already be almost halfway towards having the line electrified.

And where they'll actually get the trains is still an extremely open question. There are exactly 0 BEMUs available in the US right now, and none set to be manufactured that would be able to serve the line's high platforms.

 

[HenryAlan]

In listening to Eng in his latest GBH appearance, he's talked about the choice of BEMUs on Fairmount. To paraphrase, "BEMUs allow us to take limited dollars and we can deliver this now. And it doesn't mean that in the future when dollars are available we don't come back and run full corridor catenary." That's a refreshingly... Reasonable take on that.

I've assumed all along that this was the rationale, but it's definitely good to get the confirmation.

And where they'll actually get the trains is still an extremely open question. There are exactly 0 BEMUs available in the US right now, and none set to be manufactured that would be able to serve the line's high platforms.

It will probably be a lease from the manufacturer or perhaps some middleman, but the actual equipment will be new, like a traditional procurement. The question isn't about used or idle BEMUs, but about any off the shelf models that might become available soon.

 

[ritchiew]

But you can't just set that part aside. The fact that finding something to lease in the first place will be such a challenge means that the leasing costs are going to be quite high, as you say around 5m per year. So in one single 5 year CIP worth of leasing, we'd already be almost halfway towards having the line electrified.

And where they'll actually get the trains is still an extremely open question. There are exactly 0 BEMUs available in the US right now, and none set to be manufactured that would be able to serve the line's high platforms.

I'm also confused where Keolis will get the trains from. However, Keolis is saying they can do it. Keolis came up with this plan, bid on it, set dates and prices, and signed a contract saying they'll get BEMUs by 2028. It really sounds like they have a plan. I'm willing to hear people's theories why Keolis would do all this if they didn't think it was possible. But I don't see a good reason Keolis would take on a fairly high-profile, doomed project. Especially when this overlaps with them rebidding to remain the Commuter Rail operator.

BTW, has anyone seen the contract or a breakdown of costs? I'd love to see how much of the money goes to things that will be probably later reused for regular EMUs.

 

[F-Line to Dudley]

But you can't just set that part aside. The fact that finding something to lease in the first place will be such a challenge means that the leasing costs are going to be quite high, as you say around 5m per year. So in one single 5 year CIP worth of leasing, we'd already be almost halfway towards having the line electrified.

And where they'll actually get the trains is still an extremely open question. There are exactly 0 BEMUs available in the US right now, and none set to be manufactured that would be able to serve the line's high platforms.

The Stadler KISS BEMU that Caltrain is ordering for its un-electrified Gilroy tail comes within 2 inches (50 vs. 48 inches) of fitting our full-high platforms, within the tolerance of a shop adjustment. Stadler bid the Caltrain version in both the T's straight-EMU and BEMU RFP's, so it does conform natively to all agency specifications in spite of that 2-inch adjustment. But that's literally the only make on the planet that it could be. Nothing else in-use or on-order fits our platform heights, or comes within feet close to it. And it's costing Caltrain $80M for just 1 pilot trainset, with no commitments to ordering more. So it's completely unexplained how an $80M trainset is going to fit into a $60M pot of program money for the lease of considerably more than one trainset, and completely unexplained where the extra physical built cars would ever come from since the Caltrain contract options for more BEMU's have not been exercised and will not be exercised for up to a few years.

It's nice that Eng feels like this is such a great deal if they can pull it off, but the circumstances of the extremely limited-to-nonexistent lease market for BEMU's kind of compel him to explain exactly how it is they're going to pull it off. Specifics, makes, contract partners, squaring the discrepancy between current vehicle prices and available funding...toothy questions like that. Because right now it sure looks for all intensive purposes like total make-believe.

 

[Koopzilla24]

From what I understand about modern railcar manufacturing they are built to be able to adapt the same car for a wide variety of different European platform heights because they only need to change the shells' layout while maintaining almost entirely the same mechanical and electrical configuration (mostly the location of electrical boxes and panels shifting slightly). Changing the shell design to fit our loading gauge and platform height shouldn't be the most time consuming thing. Considering this, there's an interesting potential candidate Keolis could be eyeing in Europe for a deal:
Keolis was set to begin operation of battery electric FLIRTs in Eastern Nertherlands in 2027 for a partially electrified network. That deal fell through in 2022 resulting in the cancellation of the project but they ran tests with new highly customizable Stadler WINKs that can be ordered in whatever length, height, propulsion, etc. Considering lead times Stadler was likely underway with design and build of the battery trains for that project. The Netherlands has a high platform height for Europe at 33" and the loading gage of the trains that were going to be used fits well-within ours (126" width, 13'6" height). Changing the boarding height and power delivery on likely mostly un-built trainsets wouldn't be the biggest operation. Keolis and Stadler could have discussed if and how quick they'd be able to shift that contract to our needs. The low cost of the deal could come from there being existing assets from that project, Stadler's desire to do something with them, and the fact that Caltrain and Metra's orders have the experience and parts necessary for that. The lease model also plays into this because Stadler could simply deploy them to a different North American operator such as if Mertra wanted additional trainsets later on.

This is entirely speculation

 

[F-Line to Dudley]

From what I understand about modern railcar manufacturing they are built to be able to adapt the same car for a wide variety of different European platform heights because they only need to change the shells' layout while maintaining almost entirely the same mechanical and electrical configuration (mostly the location of electrical boxes and panels shifting slightly). Changing the shell design to fit our loading gauge and platform height shouldn't be the most time consuming thing. Considering this, there's an interesting potential candidate Keolis could be eyeing in Europe for a deal:
Keolis was set to begin operation of battery electric FLIRTs in Eastern Nertherlands in 2027 for a partially electrified network. That deal fell through in 2022 resulting in the cancellation of the project but they ran tests with new highly customizable Stadler WINKs that can be ordered in whatever length, height, propulsion, etc. Considering lead times Stadler was likely underway with design and build of the battery trains for that project. The Netherlands has a high platform height for Europe at 33" and the loading gage of the trains that were going to be used fits well-within ours (126" width, 13'6" height). Changing the boarding height and power delivery on likely mostly un-built trainsets wouldn't be the biggest operation. Keolis and Stadler could have discussed if and how quick they'd be able to shift that contract to our needs. The low cost of the deal could come from there being existing assets from that project, Stadler's desire to do something with them, and the fact that Caltrain and Metra's orders have the experience and parts necessary for that. The lease model also plays into this because Stadler could simply deploy them to a different North American operator such as if Mertra wanted additional trainsets later on.

This is entirely speculation

A 1'5" difference in floor height is still a very large difference. The biggest deviations from standard that Stadler has done on the modular FLIRT platform involve mixed-low/high floorplans with raised ends. The Mass Architectural Board would throw a fit if we were trying to buy single-levels with stairs in the middle like it was a Type 8 trolley on steroids; it would defeat the purpose of buying single-level at all. So I have a lot of doubt that it's even possible with small within-contract customizations. It would likely have to be an entirely new shell.

The WINKs also haven't qualified for FRA compliance like the FLIRTs and KISSes have. They haven't been bid anywhere outside of the Netherlands yet. Switching the contract doesn't take into account any of the costs of modifying them for FRA compliance. Stadler is a company that'll attempt any customization the customer wants, but they're very risk-averse about taking on those costs internally; they pass the risk onto the customer instead. That's why Caltrain's FrankenKISSes ended up costing so much; their mods were first-time customizations where the customer assumed nearly all the risk. If you've got a make that projects to needing lots of mods to even get a regulatory greenlight here, much less fit our platform heights, it's the T that's got to sop up all those costs. They're not allotting enough of a funding pot for these BEMU leases to be able to absorb much of any customization cost.

 

[Riverside]

In listening to Eng in his latest GBH appearance, he's talked about the choice of BEMUs on Fairmount. To paraphrase, "BEMUs allow us to take limited dollars and we can deliver this now. And it doesn't mean that in the future when dollars are available we don't come back and run full corridor catenary." That's a refreshingly... Reasonable take on that.

Except that logic doesn't really hold up at all. The cost for a single BEMU set based on the Caltrain contract is $80 million, whereas based on inflation adjusted NEC electrification costs, the cost to electrify the entire line would be around $70 million.

The difference is in their plan to lease the sets, and the difference in how that's accounted for. Setting aside the question of "where will they find something to lease" It's ultimately a time value problem - even if it costs more in the long run. Financially, leasing means they limit upfront expenditures and only need to commit 5m dollars in each of the next 10 fiscal years, for example. (Not including whatever work they'll need to do regardless to be able to use BEMUs).

Building out the system and buying traditional EMUs means they have to find the room to program ~100m into the CIP as a lump sum. In FY25, the CIP only had ~850m in funds available for programming, most of which went to Draw 1.

Also, as basically a long term rental, it can represent de-risking - if BEMUs fail to work out, or the technology improves, the T can return them to the lessor at the end of the term, presuming of course that replacements are in place. (That is the pitfall that Amtrak is falling into with the lessor owned Acela Is).

Setting aside the question of "where will they find something to lease"

But you can't just set that part aside. The fact that finding something to lease in the first place will be such a challenge means that the leasing costs are going to be quite high, as you say around 5m per year. So in one single 5 year CIP worth of leasing, we'd already be almost halfway towards having the line electrified.

And where they'll actually get the trains is still an extremely open question. There are exactly 0 BEMUs available in the US right now, and none set to be manufactured that would be able to serve the line's high platforms.

Perhaps I'm overly cynical about the world, but I see Eng's remarks as a (very reasonable) bit of political strategy here. Think about it -- there are 4 possible scenarios:

1. Eng supports BEMUs while maintaining a long-term preference for catenary; the BEMUs magically appear by 2028, and, woohoo, Fairmount gets higher-freq low-emission trains within 4 years
2. Eng supports BEMUs while maintaining a long-term preference for catenary; the BEMUs unsurprisingly fail to appear, and so the plan falls back to full catenary
3. Eng disparages BEMUs; they somehow magically appear, despite all expectations to the contrary, and, woohoo, Fairmount gets higher-freq low-emission trains within 4 years
4. Eng disparages BEMUs; they don't appear and now the same people Eng needs to get money from for full catenary have egg on their face and will get defensive and maybe even double down

Scenarios 1 and 3 seem unlikely, given what is known publicly about the availability of FRA-compliant BEMUs.

Between the others, Scenario 2 definitely seems preferable to Scenario 4. In Scenario 4, Eng will have burned political capital and not actually gotten any closer to full catenary. At least in Scenario 2, he's been a "team player" who's been "willing to try new solutions."

And besides: Eng probably knows that the BEMUs won't materialize. He doesn't need to say anything to stop them from happening -- they're just gonna not-happen perfectly fine on their own without his help.

Really, all this is right now is Eng saying, "Yeah full catenary is what I want but also I'm literally trying to keep our subway cars from catching fire so this isn't a hill I'm gonna die on this year."

(All of which is to say, if people other than Phil Eng want to step up publicly to push for full catenary, I'm all for it. In the meantime, I'm fine with him keeping his powder dry, living to fight another day, whatever metaphor we want to use.)

 

[Stlin]

The WINKs also haven't qualified for FRA compliance like the FLIRTs and KISSes have. They haven't been bid anywhere outside of the Netherlands yet. Switching the contract doesn't take into account any of the costs of modifying them for FRA compliance. Stadler is a company that'll attempt any customization the customer wants, but they're very risk-averse about taking on those costs internally; they pass the risk onto the customer instead. That's why Caltrain's FrankenKISSes ended up costing so much; their mods were first-time customizations where the customer assumed nearly all the risk. If you've got a make that projects to needing lots of mods to even get a regulatory greenlight here, much less fit our platform heights, it's the T that's got to sop up all those costs. They're not allotting enough of a funding pot for these BEMU leases to be able to absorb much of any customization cost.

Thats the thing though about leasing - they'd be asking an investment bank to soak up that upfront cost. The T wouldn't have to front load that - the premise is that some capital leasing firm will. The T is basically hoping to go "Hi! If you guys, ABC financial, will buy 5 trains from Stadler that meet these specs for $150 million, we'll lease them back from you for $10 million dollars a year for the next 20 years." *Made up numbers

As far as Stadler is concerned, their customer wouldn't actually be the T - it'd be GE Capital, Phillip Morris, or whatever finance firm partner Keolis ropes into this. It's kinda like how a lot of airlines don't own the planes or engines they fly - GE Capital buys them from Boeing, and leases them to a carrier who then paints their logo on the side. It's less efficient over the long run, but it means you don't have to put $150m on your balance sheet - that 10m a year in leasing costs isn't capital, it becomes an operational expense.

Now, whether or not there's a bank or a manufacturer that's willing to take that deal is a different question entirely.

 

[Koopzilla24]

A 1'5" difference in floor height is still a very large difference. The biggest deviations from standard that Stadler has done on the modular FLIRT platform involve mixed-low/high floorplans with raised ends. The Mass Architectural Board would throw a fit if we were trying to buy single-levels with stairs in the middle like it was a Type 8 trolley on steroids; it would defeat the purpose of buying single-level at all. So I have a lot of doubt that it's even possible with small within-contract customizations. It would likely have to be an entirely new shell.

The WINKs also haven't qualified for FRA compliance like the FLIRTs and KISSes have. They haven't been bid anywhere outside of the Netherlands yet. Switching the contract doesn't take into account any of the costs of modifying them for FRA compliance. Stadler is a company that'll attempt any customization the customer wants, but they're very risk-averse about taking on those costs internally; they pass the risk onto the customer instead. That's why Caltrain's FrankenKISSes ended up costing so much; their mods were first-time customizations where the customer assumed nearly all the risk. If you've got a make that projects to needing lots of mods to even get a regulatory greenlight here, much less fit our platform heights, it's the T that's got to sop up all those costs. They're not allotting enough of a funding pot for these BEMU leases to be able to absorb much of any customization cost.

To clarify, I'm not saying to operate the 15" difference on our infra but rather that changing the shell design of yet unbuilt trains to be for 15" higher floors is easier than for 26" higher floors which would be the deviation from the standard FLIRT. The point of mentioning that was a theoretical way that a "designed from scratch" trainset could be completed in the 3 year timeline. The WINKs were also not the candidate for the battery electric trains but rather they outfitted one with a pantograph to test battery service on their partially electrified network. Mentioning their ability to be highly customized was to serve the same purpose of demonstrating Stadler's experience in adaptability to further bolster that rapid production time. The fact that Caltrain has already taken on the costs of that R&D for the North American also helps us getting them at lower costs since the same or generally the same modifications can be applied to different rolling stock in the same family during production. Taking @Stlin 's point about investment into consideration, that $80mil price tag per train minus all the associated R&D could drop the price into a range that an investor or bank could have made a handshake pre-agreement with Keolis to front if the MBTA accepted their proposal.

Again all theoretical of how it could possibly be done

 

[HenryAlan]

Thats the thing though about leasing....

It's less efficient over the long run, but it means you don't have to put $150m on your balance sheet - that 10m a year in leasing costs isn't capital, it becomes an operational expense.

I'm not in the transportation industry, which may operate under different rules. But I work in a finance/accounting adjacent position that deals, among other things, with how we account for major equipment leases. The rules have begun to change, and GAAP is more and more requiring that leases be treated as capital. So when we enter in to a lease for a major asset, it goes on the balance sheet as both an asset (for the physical property we control) and a liability (because a lease is really just a loan). This nets to zero and has no impact on equity, but it nevertheless is on the balance sheet. I'm in healthcare, but I see no reason why FASB wouldn't require a similar treatment for leased trains and planes.

For the MBTA, the value in leasing would be cash flow management, which is important and could very well make this plan more feasible than outright purchase.

 

[ritchiew]

It's nice that Eng feels like this is such a great deal if they can pull it off, but the circumstances of the extremely limited-to-nonexistent lease market for BEMU's kind of compel him to explain exactly how it is they're going to pull it off. Specifics, makes, contract partners, squaring the discrepancy between current vehicle prices and available funding...toothy questions like that. Because right now it sure looks for all intensive purposes like total make-believe.

If this looks like make-believe then, again, what do you think Keolis is doing here? I do actually trust Keolis knows what trains are on the market, or likely available in the next four years. Keolis came to the MBTA with this plan, bid on it, and signed a ~$50M contract to procure BEMUs. If Keolis knew that wasn't possible but maybe they could get some money in the mean time, that's something in the range of criminal fraud, which seems unlikely. They might be trying to string along the MBTA, but that needlessly jeopardizes Keolis's much bigger contract to keep running the commuter rail. Really, if the BEMU plan is make believe, what is Keolis doing here?

Doesn't it make more sense that Keolis, the multi-billion dollar, international transit company, simply knows something we don't? Like, maybe they've made some tentative deal with Stadler already?

 

[TallIsGood]

I'm not in the transportation industry, which may operate under different rules. But I work in a finance/accounting adjacent position that deals, among other things, with how we account for major equipment leases. The rules have begun to change, and GAAP is more and more requiring that leases be treated as capital. So when we enter in to a lease for a major asset, it goes on the balance sheet as both an asset (for the physical property we control) and a liability (because a lease is really just a loan). This nets to zero and has no impact on equity, but it nevertheless is on the balance sheet. I'm in healthcare, but I see no reason why FASB wouldn't require a similar treatment for leased trains and planes.

For the MBTA, the value in leasing would be cash flow management, which is important and could very well make this plan more feasible than outright purchase.

The T would use GAGAP and not GAAP. Government accounting is not the same as commercial accounting. I’m not sure that lease accounting is as important as cash flow to the T on this point.