A federal judge weighing Amtrak‘s bid to seize the historic Washington Union Station wondered whether those plans are consistent with Congress’s intent under a 1981 law that requires the station to be managed with “maximum reliance” on the private sector, given the railroad service’s desire to have sole domain over the property.
U.S. District Judge Amit Mehta heard arguments on Nov. 28 over the railroad service’s effort to take full control of the property in Washington, D.C., which includes a request to set “just compensation” for the station at $250 million despite the owner’s $730 million appraisal. Mehta last week fired off a series of questions asking Amtrak’s lawyers whether that plan conforms with the Union Station Redevelopment Act of 1981, according to a courtroom transcript obtained by the Washington Examiner.
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The judge cited a section from the law that states its intent is “historic preservation and improved rail use of Union Station with maximum reliance on the private sector and minimum requirement of federal assistance.”
“So if that is what Congress meant to do here, how is what you’re proposing to do consistent with that?” Mehta asked. “Because you are now essentially removing the private sector part of this from the equation, are you not?”
Amtrak’s attorney, Patricia Lambert, pushed back on Mehta’s assertion, contending that Amtrak is a corporation.
“I think that the fact that there is no restriction on Amtrak’s ability to use the station when Congress could have easily put that into the statute … established that this is not beyond the purview of the Union Station Redevelopment Act,” Lambert said.
Amtrak currently leases a small portion of Union Station, roughly 13.4% of it, from Union Station Investco, which is owned by Rexmark.
Federal law gives Amtrak the authority to seize property for intercity rail passenger transportation, and while such applications are typically used for building new tracks, Amtrak CEO Stephen Gardner has said its goal is to “take away that interference and distraction between us and instead have control over the leased area.” The railroad service has also gained a sizable boost from President Joe Biden‘s Bipartisan Infrastructure Law, which offered the company a $66 billion investment.
Rexmark contends that Union Station is worth at least $730 million, leaving Mehta to consider whether the railroad service can seize the station for an amount three times lower than the owner’s appraisal and just a fraction of the sizable investment provided under the infrastructure bill.
Mehta noted that part of Amtrak’s proposal “is to substantially constrain the retail part of Union Station.”
“And, of course, it wouldn’t pay rent to itself,” Mehta said, adding that one could assume “the rents kind of are going to go down a fair amount.”
Noting that historically Amtrak “hasn’t turned a profit” and is not in the business of retail, Mehta asked, “Shouldn’t I be concerned that Amtrak is going to need federal assistance to sustain and maintain the station?”
An attorney for Rexmark told Mehta the proposal would cause “irreparable harm” if Amtrak were “given possession now before the court determined the propriety of the taking.” Rexmark founder Michael Rebibo argued that allowing the takeover would “effectively terminate the [existing] leases” at the station.
“They are not retail, commercial, call it what you want,” defense attorney David Scharff said. “They’re not in the business of doing anything except getting the trains in and out.”
Amtrak’s eminent domain case coincides with a rising number of vacancies inside the station, which is set to go through a $10 billion redevelopment process over the next two decades. Conversely, Rexmark officials believe allowing the takeover would undo efforts in recent years to attract retail and food businesses to the station and have said the company would continue to work with Amtrak to approve its development requests so as not to interfere with its broader plans.
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The proposed expansion and renovation of Union Station, slated for completion by 2040, includes the use of at least $9 billion in private and public investment.
While it is unclear how Mehta will rule and when, he questioned whether there would be any harm in awaiting a file judgment on possession of the station, meaning it remains to be seen whether Amtrak will have to wait additional months before any decision on the taking request.
