Capital Metro to Contract with New Rail Provider for MetroRail

Capital Metro terminated its rail contract with Veolia today, but is expected to award a new contract with another rail provider this afternoon. Here is the text of the news release.

Capital Metro Terminates Rail Contract with Veolia
Board will vote on new passenger and freight rail contracts this afternoon

December 9, 2009

Austin, Texas – Capital Metro terminated its rail operations and maintenance contract with Veolia Transportation today. At this afternoon’s Board of Directors Work Session and Board Meeting, staff will present for approval two new contracts:

1) Herzog Transit Services, Inc. for MetroRail operations and rail maintenance
2) Watco Companies, Inc. for freight rail operations

Herzog Transit Services is prepared to begin work immediately to complete the remaining steps in the MetroRail project. This change will not affect the estimated timeline for beginning passenger service in the first quarter of 2010. Capital Metro made this decision to ensure the timely completion of the MetroRail project and a successful launch of the system, and to meet existing freight obligations.

Herzog currently operates passenger rail systems in Dallas-Fort Worth (Trinity Railway Express), Albuquerque, NM (Rail Runner), Stockton, CA (Altamont Commuter Express), and Oceanside, CA (Coaster), and has been in the railroad industry for 40 years.

Watco has been operating Capital Metro’s freight line since October 2007, and runs a total of 22 short line railroads on more than 3,500 miles of track in the United States.

During recent contract negotiations, Veolia demanded changes to the terms of the existing contract as a condition for completing the remaining work. Capital Metro could not agree to these changes because they would have exposed the Authority and the community to additional costs and risks. Capital Metro immediately took the responsible step of considering other options which included securing agreements with Herzog and Watco.

This action is a responsible business decision in the best interest of not only Capital Metro but the Central Texas community.

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