Under federal code, Amtrak has authority to use eminent domain to acquire interests in property that’s necessary for the use of intercity passenger rail operations. In a complaint filed last month in District Court for the District of Columbia, Amtrak said it hopes to take over operations and management of the train hall to pursue multibillion-dollar investments, including a long-planned concourse expansion and repairs to a tunnel under the station that Amtrak said is “in serious need of repair or replacement.”
USI’s filing counters that the bulk of those two projects “will take place in areas already subleased by Amtrak” and adds that the railroad can seek additional space if needed. Amtrak subleases a small portion of the station — about 13.4 percent of it — from USI for railroad operations, which includes the concourse area before passengers go to the platform.
“Neither of these projects necessitate taking the entirety of Union Station, which is approximately 420,797 square feet. Nor could Amtrak expand its operations into many parts of the Station because they are protected as historic sites,” USI argued in the latest filing.
The station, which opened in 1907 in the heart of the nation’s capital, is owned by the United States but is leased to and operated by other entities. Amtrak already owns the station’s platforms and railroad tracks. The U.S. government in 1985 authorized the nonprofit Union Station Redevelopment Corp. (USRC) to oversee the property. Union Station Investco has sublease rights through USRC until 2084.
Officials at Kasowitz Benson Torres LLP, the law firm representing USI, didn’t respond to requests for comment Wednesday.
Amtrak said in a statement Wednesday that its “focus remains on protecting the safety and security of the traveling public, and to improve passenger amenities and experience at the station.”
The Amtrak complaint also names as a defendant Kookmin Bank Co., a South Korean investment trust and lender in the property. Kookmin Bank in a separate filing last week called for dismissal of the case, questioning Amtrak’s motive for taking over the property.
“Amtrak wants to seize control of a valuable asset or at least leverage its position in order to extract economic concessions to which it is not entitled,” the Kookmin filing said.
The Kookmin and USI filings decry Amtrak’s allegation that the station is plagued by poor maintenance and a lack of capital investment. According to the Amtrak filing, about $75 million in deferred maintenance is needed at Union Station, citing a building assessment by USI and the Federal Railroad Administration.
A transportation hub with retail and food establishments, Union Station also serves many commuters using Metro, as well as Maryland and Virginia commuter trains and local and intercity buses. The station’s outdated facilities and poor lighting are a source of traveler complaints, coming as local officials have pushed for investments to modernize the busy transit hub.
“The potential that this site holds is enormous,” Mayor Muriel E. Bowser (D) said during a news conference at the station in March. “Union Station is the first place that many people experience Washington, D.C., and we want that to be an exceptional experience. … We also know that the redevelopment of Union Station is critical to our transportation growth, and not just our growth, but the entire region and indeed the entire East Coast.”
Amtrak’s action comes amid a push from the railroad and USRC for a multibillion-dollar expansion and overhaul of Union Station that would add concourses and tracks, more retail options, a new train hall, and modern parking and bus facilities. The proposed expansion, at least a $10 billion private and public investment, calls for a transformation of the nation’s second-busiest rail hub by 2040.
USI’s filing says it has made “substantial and significant improvements to the Station” and turned it into “a premier dining and retail location” during its 15 years of managing the property. Among the investments cited is an $18 million project to restore the ceiling in the main hall after a 2011 earthquake.
The Investco filing also alleges that Amtrak is “thoroughly incapable of running Union Station’s non-rail operations.”
Amtrak made an offer to USI to buy its leasing rights for $250 million on April 6, but said the company did not respond to the offer by an April 13 deadline. A day later, the railroad filed the lawsuit and made the $250 million payment to the court, “the amount of which it estimates to be just compensation,” according to the court filing, which says the amount was determined through an independent real estate appraisal.
The Investco filing calls the $250 million “a lowball, bad faith offer” and said the seven-day deadline Amtrak imposed was not “remotely sufficient time to consider and negotiate the sale of any significant commercial property, let alone one that is as large and complex as Union Station.”
Investco said Amtrak’s appraisal was faulty and made without sufficient analysis of the station’s revenue and financial standing, and that a recent investor valued Union Station at more than $700 million. The court would determine the appropriate price if Amtrak were to take over.
