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Analysis and Modeling 43 Centralized Traffic Control (CTC) and replace manual siding switches with powered switches controlled from the central office, but the project is not sufficiently beneficial or urgent for the railroad to implement on its own. A contribution from the passenger rail agency will reduce the total cost to the railroad, enabling the project to go ahead under a cost-sharing agreement. Where the proposed passenger corridor is not an investment priority for the freight railroad, but the freight railroad will receive identifiable benefits from passenger-related investments. Stakeholders in passenger rail agencies often express the view that the freight railroad should share in the cost of these improvements, because it will receive benefits in the form of higher speeds, fewer delays, quicker trip times, etc. The benefits can be estimated using the results from capacity modeling. However, it can be difficult to reach an agreement on whether these benefits have any value to the freight railroad and, if so, how to determine the value. The difficulty derives from how a freight railroad, or indeed any private business, approaches capital planning. At the beginning of its fiscal year, a railroad will estimate the capital expendi- ture it can afford in the year based on estimated earnings, borrowing costs, and related factors. Some investments will be to support long-term strategies established by the railroads' top man- agement; some will support previous commitments, such as a contract to purchase a number of new locomotives that year; and others will be selected from among candidate projects submit- ted by the railroad's operating, engineering, and mechanical departments. In the latter case, proj- ects will be ranked by return on investment (ROI), and the railroad will fund those with the highest ROI, up to the total of available funds. Projects that do not make the ROI cut will not be funded. It is unlikely that a railroad will be willing to contribute to a passenger servicedriven investment if that project would not otherwise qualify for an investment, given the railroad's pri- orities and the current ROI hurdle rate. Alternatively, a freight railroad might be willing to con- tribute, provided the corridor is an important link in its network and the benefits relative to the investment meet the railroad's ROI and other investment criteria. The best approach to reaching agreement on capital cost sharing is to discuss at the beginning of the capacity analysis what the railroads investment service needs on the corridor might be and seek to structure the project to meet both freight and passenger service needs. If the corridor is part of the railroad's core network, then the freight railroad would likely be willing to contribute at a level where the benefits yield an adequate ROI. If the corridor is not a priority for the freight railroad, then the passenger agency will likely have to fully fund the improvement project. Another cost-sharing possibility occurs where a state agency is able to contribute funds from freight rail and grade crossing safety improvement programs. This was the case in Washington State on portions of the Portland, Oregon, to Seattle, Washington, and Sounder commuter ser- vice lines. Even if the state is able to provide funds from a freight rail program, the investment in the corridor must still be of value to the rail freight business and more broadly contribute to state freight transportation and economic development objectives. 3.3.4 Rolling Stock Capital Costs Any new service has to provide for equipment (passenger cars and locomotives) to operate the service. There is no one best or recommended approach--use whatever meets objectives for the specific corridor and service at the time the equipment is needed. A summary of the approaches to providing equipment and the implications for capital costs follows: Amtrak Intercity Service Purchase new equipment. In this case, a competent railroad rolling stock consultant can develop specifications for the trains and develop a cost estimate based on recent prices paid to suppliers of similar equipment.