D.C. Court Hears Amtrak’s Eminent Domain Case Over Union Station

The case pits Amtrak against Rexmark, which owns USI and thus oversees the retail portion of the iconic station, with Cushman & Wakefield handling things for the company on the office side.. Rexmark took over the leasing rights in 2022 via foreclosure and has been working to transform the station since. 

Federal code states that Amtrak is allowed to acquire via eminent domain property that is “necessary for intercity rail passenger transportation.” The railroad asserts it needs the entire station to repair and reinforce a train tunnel that runs through it. 

The rail company has also released plans to expand passenger waiting areas and provide more effective day-to-day management of the station — both of which can’t be done without having full control.

Amtrak previously told the court that discussions with Rexmark reached an impasse after 10 meetings failed to yield a purchase price that satisfied both sides, according to the Washington Post. 

During the court proceedings Monday, presided over by Judge Amit P. Mehta, Amtrak chief executive Stephen Gardner testified that things needed to be done quickly. “Every day we wait, we are postponing the opportunity to improve the facility,” he said. “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.”

However, attorneys for the other side argue that Amtrak’s authority to use eminent domain is not valid here, claiming the railroad carrier has yet to meet requirements under U.S. law to take over the entire railway station.

Union Station opened in 1907 in the heart of the nation’s capital. The station is owned by the federal government but leased to and operated by other entities. 

Amtrak owns the station’s platforms and railroad tracks. The U.S. government authorized the nonprofit Union Station Redevelopment Corporation (USRC) to oversee the property in 1985. 

Later, Union Station Investco, then owned by Ashkenazy Acquisitions, bought the long-term sublease rights for the commercial space through USRC.

In April of 2022, Amtrak filed the eminent domain claim to take control of the station from Ashkenazy, which was facing financial trouble. Several months later, real estate investment manager Rexmark foreclosed on the leasehold interest after Ashkenazy defaulted on its loan. At the time, Amtrak offered $250 million in exchange for Ashkenazy’s leasehold interest 

Michael Rebibo, founder and managing principal of Rexmark, noted in the case that if Amtrak is granted authority to take over Union Station, it would terminate all existing leases and undo the advancements in the past year to attract retail and food businesses to the station, which Rexmark has been negotiating since it took over Union Station Invesco.

Earlier this year, Matt Barry, the new general manager of Union Station, on behalf of Rexmark, spoke to Commercial Observer about the leasing plans, noting there was a 10-year plan in place.

“Growth is what we’re always looking for,” Barry told CO at the time. “Clearly, our current strategy is to lease up and provide a fantastic customer experience. We have some major overhauls and some improvements planned. It’s been a great place in the past and has been here a long time, and will continue to be an iconic asset.”

But if Amtrak gets its way, the company will have control of all leasing rights and will be able to negotiate with tenants without going through current ownership. 

There is no set time frame for a decision, though it would appear it will happen before the end of the month.

Keith Loria can be reached at Kloria@commercialobserver.com.