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Next Generation Corridor Equipment Pool Committee

Next Generation Corridor Equipment Pool Committee. - Preliminary Considerations -. Steve Patterson and George Howell October 20, 2010. Overview. Overview and Goals for the Call Background Legislative Intent Objectives of Committee Members Options Available

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Next Generation Corridor Equipment Pool Committee

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  1. Next Generation Corridor Equipment Pool Committee - Preliminary Considerations - Steve Patterson and George Howell October 20, 2010

  2. Overview • Overview and Goals for the Call • Background • Legislative Intent • Objectives of Committee Members • Options Available • Considerations in Entity Selection • Q&A 2

  3. Goals for Today’s Call • Provide preliminary information on issues relating to whether the Committee should incorporate • Begin understanding objectives of Committee members and receive feedback More detailed presentation will be provided to Committee members at February 2011 Executive Board meeting. 3

  4. Background • PRIIA Section 305(c): Amtrak and States participating in the Committee may enter into agreements for the funding, procurement, remanufacture, ownership, and management of corridor equipment, including equipment currently owned or leased by Amtrak and next-generation corridor equipment acquired as a result of the Committee’s actions, and may establish a corporation, which may be owned or jointly-owned by Amtrak, participating States, or other entities, to perform these functions. 4

  5. Background Statute allows for, but does not require, establishment of a corporation If the Committee members determine that a business entity other than a corporation should be established, technical amendment to the statute would be required If the Committee members determine that either a for-profit or nonprofit corporation should be established, no technical amendment would be required 5

  6. Legislative Intent Section 305 was based on TTX railcar equipment pool model used by freight railroads TTX characteristics: separate, for-profit corporation with its own management members include freight railroads corporation provides railcars and related freight car management services to freight rail industry 6

  7. Objectives of Committee Members To determine the best options for the Committee to consider, an understanding of the Committee members’ objectives is needed: Increased availability of railcars on shared basis? Economies of scale through group purchasing? Access to alternative funding/financing? Others? 7

  8. Options Available Corporation For-profit Nonprofit Cooperative Limited liability company Other entities (e.g., partnership, business trust) Remain unincorporated 8

  9. Considerations in Entity Selection State law State law prohibitions on certain types of ownership Authority to participate as owner in business entity Access to funding/financing Public or private Separate ownership of assets would facilitate collateralization Separate branding of corridor equipment business 9

  10. Considerations in Entity Selection Taxes In a for-profit corporation, profits would be taxable to the corporation In an LLC, profits would flow through to the owners In a separate business entity, evaluation of availability of state level exemptions is needed Governance Board representation Management Other Considerations 10

  11. Q&A Questions following this call should be directed to: Steve Hewitt shewitt109@aol.com (845) 616-3076 Nancy Greene nancy.greene@amtrak.com (215) 349-1055 11

  12. Presenters Steve Patterson Washington Office spatterson@hunton.com (202) 419-2101 George Howell Richmond Office ghowell@hunton.com (804) 788-8793 12

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