Judge Amit P. Mehta on Monday was hearing arguments from both sides, noting growing tension in recent months between Amtrak and Union Station Investco LLC (USI) amid efforts to reach a settlement. Amtrak told the court in March that the discussions had reached an impasse after 10 meetings failed to yield a purchase price that satisfied both sides.
“Every day we wait, we are postponing the opportunity to improve the facility,” Amtrak chief executive Stephen Gardner testified Monday. “We are increasing project costs … and we are delaying the services and improvements necessary to give our customers the experience that they expect from us.”
Taking over the station in the coming months, Gardner said, would allow Amtrak to advance “a whole series of projects” that are critical to railroad operations in the Northeast Corridor. Amtrak is ready, he said, to make immediate changes at the station, such as adding seating and signage in the historic main hall, creating a dedicated area for law enforcement, increasing security surveillance and expanding customer service in an area Amtrak already leases.
The station, which opened in 1907 in the heart of the nation’s capital, is owned by the federal government but is leased to and operated by other entities. In its complaint filed in April 2022, Amtrak sought control of the property interest owned by USI, a subsidiary of New York-based Ashkenazy Acquisition Corp., which in 2007 obtained subleasing rights through 2084.
The Amtrak complaint also names as a defendant Kookmin Bank Co., a South Korean investment trust and lender in the property. Kookmin Bank represents managing company Rexmark, which owns USI after a foreclosure case last year.
The defense questioned Amtrak’s strategy of seeking to acquire the lease, saying the railroad filed the eminent domain case within days of offering USI $250 million to acquire leasing rights. Defense attorney Paul Kiernan said the railroad “squeezed this process,” questioning whether Amtrak negotiated in good faith.
Dennis Newman, Amtrak’s executive vice president for strategy, planning and accessibility, countered that the railroad was “very concerned” about the status of Union Station and USI’s financial troubles, which eventually led to its foreclosure. He said Amtrak never received a counter-offer and multiple communications went unanswered, which the railroad took as a sign that USI was not interested in negotiating.
Defense attorneys also argued that Amtrak would need congressional support or action by the U.S. transportation secretary to break the original lease agreement between USRC and USI’s predecessor.
The judge questioned why that argument was not made in the months preceding the hearing.
Attorneys for the companies have challenged Amtrak’s authority to use eminent domain, saying the carrier hasn’t met requirements under U.S. law to take over Union Station, including proving the entire property is needed for its transportation operations. Under federal code, Amtrak has authority to use eminent domain to acquire interests in property necessary for the use of intercity passenger rail operations.
Amtrak’s proposals include a long-planned concourse expansion and repairs to a tunnel the railroad said is “in serious need of repair or replacement.”
Amtrak argued Monday that negotiating for more space and permits to advance projects at the station has been challenging over the years and slowed progress on important work for railroad operations. By taking control of the station’s leasing rights, Amtrak said it would remove a governance layer — the private company — at the station and Amtrak could directly negotiate with USRC about changes at Union Station.
Gardner introduced plans at the hearing for an overhaul of the station’s spaces, including the addition of a children’s area in the main hall similar to playgrounds found at some U.S. airports. In addition, he said, Amtrak would expand its lounge area for first-class passengers, expand and modernize baggage facilities, create a crew base and return its headquarters offices to the building. Amtrak’s administrative offices moved out of Union Station five year ago after lease negotiations fell through.
Amtrak said it would deploy customer service stations while adding restrooms and new passenger seating areas, including in the main hall. It also plans to repurpose space in the lower level that formerly was occupied by a movie theater.
Amtrak 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 bought sublease rights through USRC.
Amtrak’s legal moves come amid a push from the railroad and USRC for a multibillion-dollar expansion and overhaul of Union Station that would add concourses, tracks, retail options, a new train hall and modern parking and bus facilities. The proposed expansion, at least a $9 billion private and public investment, calls for a transformation of the hub by 2040.
Since last year’s filing, a new management team at USRC has spearheaded efforts to improve the station’s public areas and draw more support for the redevelopment. Short-term changes have centered around improving cleanliness, lighting and security. Restoration work for the historic main hall is being planned as part of about $20 million in projects over the next few years.
Amtrak recently completed upgrades to its premium lounge and restrooms near the boarding gates. It also plans to add an art display later this year as part of beautification efforts.
In the longer term, Amtrak has planned for years to remake the concourse to double capacity, improve accessibility and alleviate crowding, but that project — which was to begin in 2019 — has been on hold.
Amtrak subleases a small portion of the station — about 13.4 percent — for railroad operations, which includes the concourse area where passengers enter before going to the platform. Officials say they want to create a more modern space for the 100,000 intercity, commuter and local travelers who pass through Union Station daily.
In filings last year, Kookmin and USI rebutted 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 an assessment by USI and the Federal Railroad Administration. Rexmark’s legal team has argued there is no basis for Amtrak to gain control.
The New York real estate firm took over the station’s commercial side late last year and named Matt Barry, who led Tysons Corner Center for four years, as general manager to oversee the revitalization efforts. The company has been negotiating leases to fill empty storefronts. It has also noted recent improvements in cleanliness and amenities.
The companies also say Amtrak’s plan for expansion and upgrades will take place in areas that the railroad already subleases.
