MDOT Close to an Agreement on Commuter Rail Cars

The Michigan Department of Transportation (MDOT) and the Great Lakes Central Railroad (GLC) are negotiating contract terms and conditions for 23 rehabilitated commuter rail cars that are currently being stored in Owosso. GLC, which owns the cars, has offered to eliminate MDOT lease payments and assure the availability of the cars for up to five years for future commuter rail services in southeast Michigan. In return, GLC would have the option to engage in other interim opportunities to generate revenue from the cars, such as subleasing them to other commuter rail agencies across the U.S. and Canada. Once commuter rail service begins in southeast Michigan, which is expected in 2019, the rail cars can return and MDOT would resume lease payments. MDOT expects to terminate lease payments to GLC after Sept. 30.

"This agreement remove's MDOT's lease expense and protects the state's investment in the commuter rail cars." State Transportation Director Kirk Steudle said. "It's a win for MDOT, GLC, the Southeast Michigan Council of Governments (SEMCOG), the Ann Arbor Area Transportation Authority (AAATA), and future commuter rail service in Michigan."

Steudle had set June 1, as a target date to have a sublease substantially complete in order to eliminate MDOT's ongoing lease payments. If an agreement is failed to be reached, then MDOT has the option to terminate the lease 30 days after issuing a letter to GLC.

Initially, the cars were rehabilitated for two separate commuter rail demonstration projects from Dearborn to Detroit (West - East Line) and Howell to Ann Arbor (North - South Line), also known as the Wally. Changes in lead federal agencies, technical requirements, and the state acquisition of the Kalamazoo-Dearborn-Detroit corridor caused delays in the projects.