Bruce Murphy
Murphy’s Law

The Twisted Tale of Talgo

Settlement forces state to pay more for trains it didn’t get, leaving it with slower Amtrak trains.

By - Aug 25th, 2015 01:12 pm
Sign-up for the Urban Milwaukee daily email
Talgo Trainsets. Photo by Garrick Jannene.

Talgo Trainsets. Photo by Garrick Jannene.

The story of Talgo, the Spanish manufacturer of trains, and its dispute with Republican leaders, just keeps getting worse for taxpayers.

Last week we learned that state officials have agreed to pay $9.7 million more to the Talgo company to settle a suit by the company over two state-of-the- art train sets that state officials agreed to buy before later canceling the deal. This settlement of a nearly three-year-old lawsuit would bring the total costs to the state for the rejected trains to about $50 million, reporter Jason Stein wrote in a story for the Milwaukee Journal Sentinel, and “reflects the depth of the political disagreement” between Democratic Gov. Jim Doyle and his successor, Republican Gov. Scott Walker.

In reality, the cost to taxpayers is considerably higher, and the suit was caused not by a disagreement between Walker and Doyle, but between Walker and Republican legislative leaders. Yes, Walker famously rejected the high speed, Milwaukee-to-Madison-to-Twin Cities rail project that would have used Talgo trains. But Walker made it clear as soon as he was elected that he supported the use of the newer Talgo trains for the Milwaukee-to-Chicago Hiawatha line, which still used the old-fashioned Amtrak trains.

As Walker noted in a Milwaukee Journal Sentinel story in March 2011, he had always supported improvements to improve and speed up the Hiawatha line, even as he opposed the high speed rail line through Madison. “This is not inconsistent with the position I took in the past,” he said.

As Nora Friend, Talgo’s vice-president for public affairs, told me in May 2012, the company was disappointed with the cancellation of the Madison project, but still intended to retain its Milwaukee manufacturing base, because Walker had made it clear he would honor the state contract for the Hiawatha line from Chicago to Milwaukee. “Gov Walker called us,” Friend recalls. “He said I am a supporter of the Hiawatha Project. I have no issue with it.”

But Republican legislators, over the objections of the Walker administration, decided to reject the Talgo trains. As the suit by Talgo noted, the Walker administration and GOP lawmakers waited more than a year to go back on the state’s order with Talgo for the Milwaukee-Chicago train sets, as the company continued to spend money for the contracted work.

GOP legislators claimed the decision would save money for the state and cited a Legislative Fiscal Bureau study. But the report was based on assumptions GOP lawmakers asked the bureau to use and did not take account of savings on fuel for the lighter Talgo cars, which the company says would save some $300,000 a year. Nor did it take account of potential revenue increases from switching to the state-of-the-art Talgo cars, which attracted a 40 percent increase in ridership in Washington State in the first year there. Nor did it factor in the $11 million spent on the project by Milwaukee, nor the possibility that Illinois might chip in some subsidy for the Talgo trains (that state now pays 25 percent of the cost of the Hiawatha line).

Not to mention that that Wisconsin and Illinois will some day have to pay to replace the Amtrak rail cars, all of which are more than 20 to 30 years old, and that the city has lost a train manufacturing base that Talgo had located in Milwaukee’s 30th Street corridor, along with the jobs it would have generated. Finally, the report couldn’t have accounted for the costs of the resulting suit by Talgo.

Republican Assembly Speaker Robin Vos told Stein that at the time the legislature killed the deal for Talgo’s Milwaukee-to-Chicago train cars, he believed the state had protections against legal action by the company. But no such legal opinion was cited at the time, and as Stein reports, then-state Rep. Jon Richards (D-Milwaukee), an attorney and budget committee member, had warned that the Joint Finance action was inviting a lawsuit for breach of contract and was “completely foolhardy and irresponsible.”

Vos told Stein the legal settlement with Talgo is “is just another reminder of the dark days of Jim Doyle.”

Those “dark days” secured $810 million in federal funding that would not only have paid for construction of the high-speed rail line from Milwaukee to Madison, but would have paid for the maintenance base to keep up the Talgo trains for both the Hiawatha line to Chicago and the extension through Madison. All told the federal grant would have paid for $99 million in costs to upgrade the current Hiawatha line.

To help attract Talgo’s plant to Milwaukee, the city spent nearly $11 million and state invested another $3.5 million to upgrade an 82-acre site, paying for new tracks and pavement and retrofitting and making additions to the old AO Smith warehouse Talgo used before abandoning it. The state also issued bonds for the rail improvements which have presumably been cancelled, but I’ve yet to see any cost figure for this.

Meanwhile, the state has paid about $40 million for the Talgo trains it will never get to use and has now agreed to pay the company an additional $9.7 million in damages. The state could be reimbursed the $9.7 million, if Talgo is able to sell the train cars for at least $29.1 million.

Walker said he rejected the high speed rail project because he objected to the estimated $30 million in operating costs the state would face for the train’s first 20 years. In fact, as experts noted at the time, the majority of those costs were likely to get picked up the federal government, given past practices. But even if the total cost was $30 million for Wisconsin, the total costs to taxpayers for the Talgo debacle are now up to at least $65 million, with nothing to show for it and more costs to come when the Amtrak trains need replacement. Those dark days of Doyle’s transit policies are looking pretty sunny right now.

Talgo Trainsets Leaving Town in 2014

More about the History of Talgo in Milwaukee

36 thoughts on “Murphy’s Law: The Twisted Tale of Talgo”

  1. Rich says:

    “… secured $810 million in federal funding that would not only have paid for construction of the high-speed rail line from Milwaukee to Madison to Twin Cities, …”

    Really? I don’t think the $810m covered to the Twin Cities. Options for that route are still being debated today. Maybe it allocated some funds towards research or early design, but certainly not construction. Unless you mean the early (and stupid) version of the the route in Madison that turned away from downtown and went northwest to the airport with dreams of reaching TC…

    The state could be reimbursed the $9.7 million, if Talgo is able to sell the train cars for at least $29.1 million.

    That’s some sly negotiating on the part of the state. Separately, another source said the sale price has to be $32.5 million (http://www.scrippsmedia.com/nbc26/news/State-settles-unused-trains-lawsuit-for-nearly-10-million-322427131.html)

    …All told the federal grant would have paid for $99 million in costs to upgrade the Hiawatha line.

    Lots of numbers flying around…Worth calling out the Milwaukee Intermodal Station upgrades that the State is paying for right now. Cited JS source pegged that at $20.4 million in 2011.

  2. Beer Baron says:

    Anyone ever ask if it’s because of this that Walker sided with the new arena and coined the slogan “cheaper to keep them?” Cause it sounds like there was a lesson learned in all of this.

  3. Dave Reid says:

    @Rich I’ve corrected the story. The $810 was to only to get to Madison. Though it was always as part of a larger plan to get to the Twin Cities.

  4. wisconsin Conservative Digest says:

    Halfast trains are disaster round world, look at Ca. We saved at least a billion dollars that would have gotten us a halfast train with service only to Madison> Buses go faster and can go right to Capitol. Another reason why Milwaukee is such a mess cause they buy trolleys, arenas instead of cops and reading for kids plus better roads. Half are in really bad shape. Dopey Left idea, no wonder they are out of power..

  5. Dave K says:

    Jill Bader, Scott Walker’s Spokesperson, tweeted a (dog whistle) racist comment in the form of a YouTube video, which had apparently been making rounds in the conservative blogosphere and comments. The bottom line is that Walker spent our tax dollars to keep African Americans from access to jobs in the predominantly white suburb of Waukesha. Waukesha has been paying him back ever since. https://www.youtube.com/watch?feature=player_embedded&v=A_Zi-YSW3aQ

  6. A busdriver says:

    How can a thinking person even entertain voting for Walker. He is too stupid to be believed. I can’t imagine why Wisconsinites voted this STUPID snake into office. His not fit to walk my dogs.

  7. tim haering says:

    As often as the Hiawatha stops and slows for local speed restrictions, having faster trains wouldn’t matter. Pedal trains could cover the distance as quickly. High-speed rail will never be high speed in WI because the locals won’t allow it. When Tommy “Amtrak” Thompson tried to get HSR moving, community after community nimbied high speeds. Gentleman Jim’s luck of the Irish couldn’t turn the tide. HSR is wishful thinking in W, no matter who pays for the line.. Surely, Shirley, you knew that when you came here. Your croupier’s shift ended, leaving no one to stop the little ball on 00 Green for you.

  8. Tom D says:

    WCD, California’s HSR is nothing like Wisconsin’s and therefore it doesn’t predict what would have happened in Wisconsin.

    California’s HSR:
    • 220 mph
    • Electric trains (new electrical infrastructure)
    • 2-4 track (minimum) lines
    • All new route (lots of land acquisition and eminent domain)
    • Lots of tunneling (more added monthly to satisfy NIMBYs)
    • Railroad car designs never before used in US
    • Mostly local capital funding

    Wisconsin’s HSR to Madison:
    • 110 mph
    • Diesel trains
    • single-track west of Watertown, 2-track elsewhere
    • No new routes
    • No tunneling
    • Railroad car designs used in Oregon/Washington for years
    • 100% federal capital funding (including overruns up to $130 million)

  9. Jimtherepublican says:

    Let’s get a few things straight. First off, the initial run from Downtown Milwaukee to Dane County Airport while projected at $1 billion, was already moving closer to $1.5 billion with the Feds only kicking in $800,000,000,,, only…. Moving the proposed route to downtown Madison, requiring a rather vast section of private property increased the costs by an additional $1 billion. So we are, in infrastructure alone at $2.5 billion while the feds only kicked in $800 million. Then you take into account the Talgo scams done by Doyle and supported by Barrett. GE, one of Wisconsin’s larger builders has a rail division based in the USA. The passenger cars could have been built here in Wisconsin by Super Steel. But Diamond Jim decided to give a no bid contract to an unknown foreign rail builder with a questionable safety history. Then when people asked why we bought trains he claimed they were for a Federal program, Amtrak. By the way, at the time, Amtrak didn’t want them either because the high speed trains were not designed for running on freight tracks. That’s another misnomer, these would never be the high speed trains like the left always talks about in Europe. Our rail beds are rated for 65 mph. Legally, they can’t or shouldn’t go faster. When it comes to the run to Minneapolis, the left always talks about this but never shares the real costs or plans publicly because it’s never going to happen. If someone’s going to take a car speed train, why not just drive in the first place. That way you don’t have to rent a car when you get there. You just drive there…

  10. Greg C. says:

    @WCD.

    Yes, put all your eggs in one basket. Spend all our transportation money on roads. And by the way, stop the clock permanently. We don’t want that damn future, because it scares us. Will conservatives ever embrace progress, or is this nation destined to sink in the mire of complacency. You are the 21st century version of Ludites.

  11. Paul says:

    Greg, it seems all the progress in transportation the left is pushing comes from the 1800s. Doyle knew that Walker was going to stop this waste of money, but he pushed it through thinking once started it couldn’t be stopped, same thing Barrett is doing in Milwaukee with his asinine Trolley.

  12. Dave says:

    That’s a whole lot of assertions, Jim, with zero citations. I would expect no less from a Republican, though. By the way, you might want to look up Super Steel’s track record on building passenger rolling stock. Hint: not good. At all.

  13. Tim says:

    If the teaching is so great & pays so well, why do we have trouble finding teachers that can take impoverished, aimless, and/or violent children & get them to value getting themselves educated/trained for their future?

    Hmmm… maybe we should just settle for warehousing them until they either get themselves locked up or find one of the many opportunities available to uneducated youth here… like the exciting world of part-time cellular sales.

    I wonder which option Wisconsin is choosing?

  14. Ryan says:

    While it was awful that these trains and this plan was destroyed for now it at least looks like the anti-streetcar groups second petition is imploding. They were frothing at the mouth and confident when it started but haven’t posted to their Facebook page since 7/29 and the people are panicking. No mention of signatures, no blustering, less than two weeks until we can stick a fork in them on Labor Day. They can’t stop the momentum and the expansions WILL happen. Milwaukee WILL reinvent itself.

  15. Bill Sell says:

    Interesting to see history re-invented; I lived through this one, too.

    The 65 mph railbeds would have been upgraded in the future as money becomes available. The Feds require overpasses or tunnels when a train’s speed is to exceed, I believe, 110 mph. If one wishes to criticize the “high cost” of implementing rail it might be a bad idea to undercut your own argument by complaining that the first step is “too small.”

    So, yes, it would have profited Wisconsin to keep the trains, run them, use the already negotiated federal money for the Intermodal station gates make-over. And then wait for the (Walker-promised) spurt in our economy to consider the next upgrade. That’s how planning in a budget is done.

    Streetcar, case in point, the critics would avoid looking at the larger plan which will cost hundreds of millions down the line, but they will complain that the design is a “downtown trolley.”

    Tim, about your exaggerations about the speed of the Hiawatha. Comparing it to a pedal tavern!! (very funny) Perhaps you hope no one in your reading audience has ever used Amtrak to Chicago? (very obvious) Or are you sharing most riders’ wish Amtrak could have its own right of way? I do agree. (very emphatically) But really, Tim, on behalf of actual Amtrak users, may I explain to you that the Chicago run compares to and often exceeds auto travel time. It costs less than gasoline and downtown Chicago parking. (miser here) And it’s well subscribed; so get on board and help us add another run to Chicago.

  16. Paul says:

    Bill Sell
    One of the main reasons we are against the trolley is because of the hundreds of millions of dollars more it will cost
    The only reason the Milwaukee to Chicago trip is cost effective to the riders is because of the government subsidies
    Planning a budget is done by not wasting money on bad ideas

  17. Ryan says:

    @Paul

    It’s a good thing then that you can’t stop the streetcar. The second petition even acknowledges that by not even trying to stop it (because legally direct legislation (ie petition) can’t stop already passed legislation). From what I hear the second petition is failing miserably too with no posts of support or anything out of the Facebook page since 7/29. Ding dong the second petition effort is dead!

    And the angry challengers to Witkowski and Murphy will likely fail too along with Bathroom Bob Donovan’s mayoral campaign so it’s destined to be expanded.

    This is all coming from a conservative who isn’t blinded by hatred to the city like many of the people who live in the suburbs like me. Milwaukee is re-inventing itself. Arena and entertainment district, The Couture, NM’s building along with their mixed use building, JCI tower and many other developments.

  18. stacy says:

    Such clarity is a public service.

  19. Observor says:

    Paul, I’m curious. Are you a City of Milwaukee resident?

  20. Paul says:

    Observor, I’m curious why don’t you use your real name?

  21. Paul says:

    Ryan, I’m for a strong and vibrant Milwaukee, that’s the reason I don’t want them to go bankrupt spending hundreds of millions on a trolley that will be nothing but a money pit

  22. Ryan says:

    @Paul

    You calling it a trolley when it’s not shows that you don’t know what you’re talking about. “Trolley” is a slur against the streetcar used by people who don’t really know the facts of the situation. Plus, transportation is always subsidized and will NEVER pay for itself. Roads are the most heavily subsidized and so are the buses and so will the streetcar. Money isn’t the only benefit to a strong public transit system.

    Again, you have to spend money to make money and see the benefits.

  23. Will says:

    @Paul
    1.) you can criticize Observer for not using his real name as soon as you include your last name.
    2.) The streetcar is a trolley the same way a ham sandwich is a piece of pizza.
    3.) what about the development that will occur adjacent to or nearby the streetcar that otherwise wouldnt have occurred. The ripple effect from these developments?

  24. Paul says:

    Will (no last name ), I just was pointing out that a person that wants to know details about me won’t even post using his or her name. Kind of ironic isn’t it.

  25. Paul says:

    Ryan, yes buses and the roads they and everyone else use are subsidized, why spend more money on a system that will cost hundreds of millions to build and lose money every year with no added benefit that cannot be accomplished by expanding the bus system we already have .

  26. Ryan says:

    Paul, no one who is against the streetcar truly supports expanding the bus system. Everyone was saying that when the streetcar vote happened and then when Abele suggested BRT they all came out saying no more finding for buses and how the routes and funding should be cut further.

    It will help transit and be used by a lot of people. Right now it’s iust downtown but it will be expanded for the entire city eventually. Just becaus you won’t get any use out of it doesn’t mean the money shouldn’t be spent. I doubt most people get any benefit out of the roads by your house but you don’t see people trying to eliminate that. I don’t use the buses but I support the funding.

    Either way the point is moot. The base streetcar root can’t be stopped, the petition drive will fail miserably and we have the votes for future expansion that Bathroom Bob Donovan can’t stop so it will happen. If you don’t like it and love in the city you can always move to a suburb and never have to pay for it.

  27. Paul says:

    Ryan, they said the high speed rail couldn’t be stopped either. Moving to a suburb may not be far enough, the mayor will call for expansion into the suburbs, going to the malls Mayfair, Bayshore,Southridge and Brookfield Square and spread the costs. I’m planning on moving at least two counties away.

  28. Ryan says:

    Paul, the mayor can’t make unilateral decisions outside the city. It would require county and other local approval. Once the suburbs see the success they’ll want to tap into it. Like the county already wants to do. A few of the conservatives on the county board have said they don’t want to fund it but they want to run it, meaning they think it will be successful.

    But that’s awesome that you’ve moving away. We need the people who hate the city to be out of the county and really have no say on what goes on. What people need to realize is without the city the suburbs would be nothing but without the suburbs the city would be nothing. It’s moving in the right direction now though.

    And high speed rail will come back eventually, it’ll just cost more then if we had just put it in place. Walker wasn’t even against it fully, he supported it from Milwaukee to Chicago by renovating the Hiawatha line and just stop the extensions to Madison and Minnesota but the out-state hayseed hicks killed it.

  29. Paul says:

    Ryan, I love the city, that’s why I want the best for it.
    The ” out – state hayseed hicks” would have been paying for this boondoggle and the right thing was done to kill it

  30. Tom D says:

    Jim (post 9)

    Let’s look at some of your assertions.

    The total cost of infrastructure (track work, stations, maintenance facility, signals, etc) plus rolling stock(locomotives and coaches) to extend the train from Milwaukee to the Madison airport was something between $600 and $700 million with the feds providing about $800 million (including over $100 million for “contingency” (i.e. cost overruns).

    The added cost for rerouting it from Madison’s airport to downtown was expected to be zero or negative. No real estate would be acquired. The tracks are already there and carrying freight trains.

    The downtown Madison station would have been in the basement of an existing State-owned office building (at 101 E Wilson Street); the tracks run past the rear of that building. The City of Madison pledged to build a new parking garage across the street (at Madison’s expense).

    By moving the station from the airport to downtown, the route became slightly shorter (because, by rail, 101 E Wilson is closer to Milwaukee than is Madison’s airport) so the cost of trackwork to downtown would be lower (or certainly, no higher) than the no-longer-needed trackwork out to the airport.

    The “unknown foreign rail builder with a questionable safety history” has been known to Amtrak since 1994 when Amtrak started running their equipment on its “Cascade” trains (Portland-Seattle).

    Your statement that “Amtrak didn’t want [Talgo equipment] either because the high speed trains were not designed for running on freight tracks” flies in the face of reality. Amtrak has been using them for over 20 years (and recently started using two new Talgo trains built in Milwaukee) and has been safely using them on freight rail lines.

    Your blanket statement “Our rail beds are rated for 65 mph” is absurd. Some tracks are faster (e.g. 79 mph south of Milwaukee on today’s Hiawatha) and some are slower (like the 10 mph tracks that the Madison extension would have upgraded).

    If driving is so great, why do so many Wisconsinites take the “car-speed” Hiawatha to Chicago (average speed 57 mph—slower than the Madison-Chicago train)?

  31. Paul says:

    Tom D, zero to negative cost to reroute from Dane County Airport to downtown Madison, that’s the funniest thing I’ve heard all day

  32. Bill Sell says:

    I stand by what I wrote. I learned about the streetcar, by reading the information, by asking questions, by attending meetings, and (long ago) by actually using street cars and rapid (rail) transit. These are people moving tools that are efficient, cost effective and they do reduce the load on highways which happen to be more expensive per mile per person use than rail of any kind. Now, if you don’t want to read, to learn, to listen to experts, to take information from the evidence provided by cities that built streetcars over the past several decades, I cannot help you or force you. But I have a life and I don’t spend time with people who choose to be lame, ignorant, or blind.

  33. Tom D says:

    Paul (post 31):

    When the Madison train station moved from the airport to downtown, only two costs changed:
    • the track (and related items like signals)
    • the station building itself

    The track cost decreases because moving the station reduces the track needed by about 1.5 miles: while about 1.5 miles was added to the route at the downtown end, about 3 miles of track was dropped at the airport. (Both distances are measured from the existing rail junction just east of First and Main Streets in Madison, where the two routes diverge.)

    Now let’s look at the two station buildings. The airport station would be built at the edge of the airport property. It would require new construction and probably new underground utility lines. It might also require land acquisition if there isn’t enough suitable land next to the tracks.

    By contrast, the downtown station would be in the basement of a state office building (101 E Wilson St) which sits right next to the tracks. The building already exists and has a full complement of utility lines. Parking spaces would be provided in a new garage across the street, courtesy of the City of Madison.

    In summary, there were two new costs incurred by moving the station from the airport to downtown:
    • About 1.5 miles of additonal, existing track to be upgraded
    • Renovations to the existing building at 101 E. Wilson Street;

    There would be two costs that would be avoided by moving the station:
    • About 3 miles of existing track that would no longer need upgrading
    • A station building that wouldn’t be built

    If the Wilson Street renovation could be held to the savings from not building the airport station plus the savings from upgrading 1.5 fewer track miles, the cost would indeed be zero.

  34. The train that mattered was the KRM, not this one, which was about connecting Chicago to Minneapolis through Rochester. Who the fuck needed a train from Milwaukee to Madison? Nobody, of course, but this was never about us — we were just a sidestop in the larger plan. The KRM, on the other hand, WAS about us, and that was killed by Vos and the Racine folks who refuse to get involved with anything that involves tax dollars. We’re stuck in a situation where Racine County has blocked the public great of connecting Chicago to Milwaukee by commuter rail, and Wisconsin has allowed this, despite the METRA and federal funding that has always been available. It’s obscenity politics and it’s a shame we haven’t figured out how to get around it all, though not particularly surprising given the characters involved. Train talk makes me wish Tommy Thompson was still running things.

  35. Ryan says:

    Per a JS article: http://www.jsonline.com/news/regional-news-briefs-b99562410z1-323040121.html

    The Anti-streetcar petition is officially dead. Thank God it’s finally over.

  36. Rich says:

    #34: John-david Morgan says: August 27, 2015 at 1:48 am: The train that mattered was the KRM, not this one, which was about connecting Chicago to Minneapolis through Rochester.

    KRM was not CHI to MSP, but rather, CHI to MKE commuter rail a la CHI Metra, which seems to get corrected in the remainder of that posting.

    Who the fuck needed a train from Milwaukee to Madison? Nobody, of course, but this was never about us

    Commentary like that makes you no better than Vos, who killed everything. Why is it only about the train that’s by you? I live in MKE and supported both as transportation options. Consider just momentarily that momentum from either one of those projects being successful would’ve contributed to the other (KRM was first, so the other order is speculation)

    Train talk makes me wish Tommy Thompson was still running things.

    Oh, you mean “Turncoat Tommy”, who supported rail before he discovered that more people would pay him to run for office if he said he didn’t?

Leave a Reply

Your email address will not be published. Required fields are marked *