Category: Florida

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Florida Intercity Rail Miami Urbanism

How broadly applicable is the All Aboard Florida development strategy?

» Coupling real estate investment with the construction of new transit lines is the future, but the conditions need to be right.

Public development and ownership of the transportation system in the United States provided some broad, important social benefits that would not have been possible had our governments left it in the hands of the private sector. The downfall of the public transit and rail industries between the 1930s and 1970s throughout the country (itself partly a consequence of government investment in roads) was due to the fact that those services were no longer profitable. Government intervention through takeover of bankrupt lines kept those services operating and ensured the continuing existence of what is truly an essential public service in our major metropolitan areas.

Yet with the governments takeover of transit services, our regions lost a powerful skill that private transportation providers a century ago used well: Connecting new development with transit investments. The history of New York City’s Grand Central Terminal is often told, but it bears repeating. The New York Central Railroad, which built the terminal, decided to submerge the tracks under Park Avenue north of the terminal in order to create a massive new business district surrounding the station. That neighborhood remains the nation’s most important commercial center.

The railroad understood that the land it used to build its line was valuable, and that allowing new investments in the area near its station would produce a virtuous cycle that built ridership, which, in turn, increased the value of the surrounding land. It’s an understanding we must absorb if we are to ensure that our transit investments are most effective.

After decades of simply ignoring the land use-related effects of transit investments, over the past two decades local governments have made halting efforts to take advantage of this fact, encouraging transit-oriented development by private investors in areas near new stations through the sale or lease of land or the altering of land use regulations to better accommodate denser growth. The most dramatic version of this is the Hudson Yards program on Manhattan’s West Side, where millions of square feet of new office and residential buildings are under construction or planned. Parts of this land was sold to a private bidder by the Metropolitan Transportation Authority (MTA), which will run a new subway station on the 7 Line, and parts were rezoned to allow big buildings by the city.

Altogether, this represents an intentional effort by New York City to repeat the lessons of Grand Central Terminal by merging transportation investment with a real estate program. But, unlike previous private sector development programs, the MTA and city have not been directly involved in the surrounding projects themselves, relying instead on third-party developers to make the choices and, eventually, reap the rewards.

All Aboard Florida’s $1.5 billion investment in new intercity rail services between Miami and Orlando suggests that the private sector is, in part, picking up the slack by taking advantage of the same forces that the private sector used to build its rail lines a century ago. The rail line will run 235 miles from downtown Miami to Orlando airport in around three hours (compared to five hours on Amtrak today). All Aboard Florida is investing in massive new station complexes in Miami, Fort Lauderdale, and West Palm Beach. The Miami terminal, which will be located on company-owned land downtown, will include two million square feet of office or commercial space, and one million square feet of residential space, as shown below. The project is coming along more slowly than initially planned, but company officials insist they will not need government aid other than a large, low-interest loan from the federal government which it expects to pay back from ticket revenues.

Why has it taken so many decades for the private sector to get back into the development game? The growing demand by individuals to live in urban centers is attracting interest in monetizing the benefits of transit-oriented development, and that’s particularly true for large urban markets like Miami. All Aboard Florida will not need its real estate investments to subsidize its rail operations, which it expects to be operationally profitable, but those developments will certainly help justify the investment in the rail service. They’ll also build the rail line’s ridership, as they’ll create major destinations right at the stations.

Government transit agencies focus on the provision of good transit service, and if you ask management at most agencies, they’ll let you know that they need to focus on “what they’re good at,” i.e., running buses and trains. Yet that approach has repeatedly produced projects with mediocre ridership and little nearby development. Transit agencies are reliant on surrounding land uses to support their operations and whether or not they want to, they must make real estate development something they’re “good at.” It is in the public interest to make our transit system not only well-used, but also the foundation for a sound urban development strategy.

The idea of melding new transportation infrastructure with real estate investments does not have to be a strategy reserved to the private sector. For decades, Hong Kong has used its metro system (76% owned publicly) to invest in surrounding developments, which include properties as diverse as towers and shopping malls (this is known as the “rail plus property” model). Similarly, the Grand Paris Express program I profiled earlier this week will integrate its stations into large new developments directly planned by the government implementing agency (“Completed by private developers, the connected project takes into account the technical and functional prescriptions defined by” the agency, with a program “defined by municipal land use plans“). A special tax on property near stations on the line will help pay for the construction of the metro project.

Of course, the All Aboard Florida, Hong Kong metro, and Grand Paris Express projects are exceptional programs that cannot be repeated in most regions. All rely on strong local real estate markets where there is significant demand for major new development. All Aboard Florida takes advantage of that company’s prior ownership of the tracks used for the trains and of the land where its stations and surrounding real estate will be completed. Meanwhile, the transit investment programs in Hong Kong and Paris have been supported by major infusions of government grants that are not available in most American cities and by considerable political will to invest in the creation of denser, more transit-oriented regions.

Most U.S. regions are too sprawling, too auto-dominated, or too poor to expect this kind of transit-oriented development to occur simultaneously with new rail or bus links, particularly if that means that the transit agency has to take on some risk that a project will fail financially.

Nonetheless, major U.S. cities with significant demand for dense living and working environments like Boston, Chicago, Los Angeles, New York, Seattle, and Washington should evaluate their transit investment programs to ensure that they’re taking the greatest advantage of surrounding land to develop large real estate projects. These developments will not only increase system ridership but also bring decades of future revenue from office, residential, and retail rent, all of which can be used to improve transit system finances. Recent system expansions in Los Angeles, Seattle, and Washington — none of which have included major development projects on land owned by the transit agencies — suggest that there is significant work left to be done.

Images above: Proposed Miami station, from All Aboard Florida.

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China Commuter Rail Elections Florida High-Speed Rail Orlando

In China’s High-Speed Successes, a Glimpse of American Difficulties

» With political figures failing to account for the long-term interests of their constituents, the U.S. continues down its confused path.

The opening of the new $32.5 billion Beijing-Shanghai high-speed rail link this week marked a significant milestone in the world effort to improve intercity rail systems. Though the development of fast train networks in China has not been without its failings, the connection of the nation’s two largest metropolitan regions — the tenth and nineteenth-largest in the world — is a human achievement of almost unparalleled proportions, especially since it was completed a year earlier than originally planned and just three years after construction began. It comes as the Chinese government celebrates its 90th anniversary.

With ninety daily trains traveling the 819-mile link at average speeds of up to 165 mph, the corridor will likely soon become the most-used high-speed intercity rail connection in the world. Because of safety concerns, the quickest journey between travel endpoints will take 4h48, more than the four hours originally proposed. But that will still be more than twice as fast as the existing trip by train and about as quick as the air trip when including check-in times and the journey to and from the airport. So from the perspective of intercity mobility, the rail link will be a huge improvement. The fact that trains stop in the major cities of Tianjin, Jinan, Xuzhou, Bengu, and Nanjing (among many others) — and that they free up capacity on the older line for freight use — only improves matters.

China is in a stage of its economic progress that makes great works such as this high-speed system more feasible than similar works in more developed countries like the United States. While the comparison between the Beijing-Shanghai link and the New York-Chicago connection is hard not to make — each would serve resident populations of about sixty million along corridors of roughly 1,000 miles — their respective political contexts differentiate them to such a degree that makes them almost impossible to compare.

Some Americans may dismiss the Chinese achievement, suggesting that the system’s construction by a single-party government with authoritarian tendencies makes it in itself suspect. One of the great things about the American political system is that it attempts to respond to the demands of the citizenry. The defeat of several Democratic governors in last fall’s elections reflected on some degree of disenchantment with the Democratic Party in general, but in three cases — Florida, Ohio, and Wisconsin — the GOP’s open opposition to intercity rail projects there clearly played a role in convincing voters, who evidently agreed with the anti-rail sentiment, to throw out Democrats. In some ways, it is a reflection on a successful democracy that the rail projects in those places were cancelled, whatever their technical merit.

Yet the completion of China’s longest high-speed line should raise questions in the minds of Americans about whether our particular political and economic system is most fit to compete in a rapidly changing global economy.

The United States, celebrating its own 235th anniversary, has in many ways yet to escape the doldrums of the recession. But unlike China, whose government moved forward quickly to invest in its economy in response to investor insecurity, the U.S. has been characterized by a pile-up of political figures grounding their schizophrenic decision-making in paranoia over the role of government and a general distaste for definitive action on anything.

This week’s endorsement of the Central Florida SunRail commuter train project by Governor Rick Scott (R) was a reflection of American democracy at its worse. Having complained of budget deficits and scorned off federal intercity rail funds for a fast train to link Tampa and Orlando that would have likely cost the state no money, Mr. Scott has given his go-ahead to a project whose primary beneficiary will be CSX, the freight rail operator, and whose costs to the state will run up the tab into the hundreds of millions of dollars — with few public benefits. The SunRail service will operate every 30 minutes at peak hours and every two hours during the middle of the day, at least at the beginning of operations. Future operations improvements lack funding.

The commuter line’s first phase was approved by the Federal Transit Administration in 2009 for New Starts funding because of years of influential lobbying by similarly debt-obsessed Congressman John Mica (R) despite considerable objections from the U.S. government over its cost effectiveness; it was arguably the most expensive per rider of any project approved that year. The project will serve an estimated 4,300 riders a day at a final cost of $1.2 billion, $432 million of which will be handed directly over to CSX for the purchase of its line.* This amounts to a state subsidy for a private corporation, in direct contrast to the high-speed rail line, which was attracting offers of hundreds of millions of dollars from private groups that saw operating profits on the horizon.

This in a country where even the head of the supposedly progressive party claims, just like the Republican opposition, that the best way to soothe the country’s economic woes is to reduce government spending. And meanwhile, expensive projects with only a minor impact on mobility or accessibility somehow make their way forward. Ideological consistency appears not to be an American strongpoint.

Americans cannot raise their hands in dispair, brushing off the successes of Chinese dictatorship as simply the consequence of a lack of democracy. The U.S. political system’s failures to adapt to contemporary needs are no fault of democratic practice.

Indeed, China was not alone in moving forward with fast train systems last week. The French railroads authority approved the first phase of the Sud Europe Atlantique high-speed line, which will run 190 miles from Tours to Bordeaux and decrease travel times from Paris to Bordeaux from three hours to 2h05 in 2017. The program is the largest public-private partnership ever signed in Europe and will cost a total of $11.3 billion, half of which will be covered by a group of private firms expected to pay off their initial capital expenses with fifty years of operating profits. In case the point was not clear, France is a perfectly democratic place; the project underwent ten years of studies before being approved for funding, including a significant round of public forums on the scheme. The program was approved by a succession of political leaders who were elected to their posts.

Thus it is not democracy in itself that makes it difficult to envision projects similar to the Beijing-Shanghai line being completed in the U.S., but rather our particular brand of democracy. Its short political term lengths, reliance on two center to center-right political parties, overwhelming involvement of lobbying groups in the legislative process, strong state governance, and weak local and state revenue production capabilities too often result in indecision, half-hearted solutions, and reckless governing logic that focuses on short-term wins more than long-term considerations. In many ways, it’s the opposite of the Chinese governance system, where most decisions are factored into a multi-decade conception for the country’s future by state master planners who seem to know what they’re doing. Do we?

What is the appropriate response to this problem? We can speculate away, but what is obvious is that American political support for specific investments in projects such as commuter trains or high-speed rail lines is haphazard at best and dangerously wasteful at worst. This is no way to run a country.

* The funds will allow SunRail to use the corridor during the day, but CSX will still be able to run freight trains on the corridor at night, potentially making maintenance of the line more difficult. This includes a completely out of proportion $200 million insurance policy that the state is paying to CSX to use the tracks. In addition, the funds provide tens millions of dollars to CSX to upgrade an adjacent line.

Image above: Shanghai Hongqiao station, from Flickr user triplefivechina (cc)

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Florida High-Speed Rail Orlando Tampa

Florida Governor Rick Scott Rejects Funding for Tampa-Orlando Intercity Rail Project

» Despite its capital costs being almost entirely covered by Washington and plenty of evidence that private investors want to move forward, project is off the tracks for now.

Just days after the White House revealed its ambitions for a $53 billion, six-year plan for an American high-speed rail network, the place where it was all supposed to begin now appears to be out of the running. Today, Florida Governor Rick Scott (R) announced that he would refuse $2.4 billion in federal funds to build a rail line between Orlando and Tampa. The project’s construction would have required $280 million in state aid to be completed, but projections had indicated that the line would cover its own operating costs.

The Obama Administration has funded the project more than any other outside of California and hoped that the scheme, which would have opened in 2016 as the first line in a nationwide network, would serve as a model for the rest of the country. Numerous private corporations — including international conglomerates such as Siemens, Alstom, and JR East — have indicated that they would be willing to pick up the state’s tab and cover construction and operations risks, in exchange for the right to operate the trains.

Yet Mr. Scott has moved to squash the project nonetheless, acting before those companies were supposed to respond to the state high speed rail authority’s request for proposals. This is a shortsighted move that will only benefit others: The federal funding will be redistributed to projects in states such as California and Illinois.

Citing concerns that the project’s costs would spin out of control and that taxpayers would be burdened with operating subsidies, Mr. Scott argued that fiscal prudence gave him no choice. The Governor apparently has no trust in the private companies he claims to laud, failing to give them a chance to demonstrate their interest in the project. He apparently has no interest in offering his citizens the opportunity to pioneer a mode of transportation that has been repeatedly scuttled, in Florida and elsewhere, by the distinctively American ability to ignore the potential benefits of intercity rail.

Indeed, while the Governor’s decision may have been framed in a rhetoric of financial austerity, the hastiness of the announcement and its timing just after the unveiling of the President’s high-speed rail proposal indicates that intercity rail, more than ever, has become a tool for partisan disagreement. Republicans all over the country, inspired by the refusal of federal funds for rail systems by Governors in Ohio and Wisconsin, have rallied against almost every such project. The House GOP budget, which would gut the rail program — as well as transit capital projects — is only a continuation of this crusade.

What does this say about the state of American transportation? Is the status quo, in which the vast majority of Americans get around only by car for short to mid-range journeys, ramping up congestion and increasing environmental degradation, acceptable? Do we have any interest in developing a future vision for our cities or our society as a whole?

Image above: Florida High-Speed Rail route alignment, from Florida High-Speed Rail

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Finance Florida High-Speed Rail

A Fiscally Conservative Approach is the Right One for Florida High-Speed Rail

» If the government invests billions in this fast train project, it is not unreasonable to expect the line to cover its operating costs.

The first phase of Florida’s high-speed rail plan is by no means perfect: It is too short to produce major time savings over car trips and it fails to serve a number of downtowns along its route. Nevertheless, its construction is now fully funded and when completed in 2015 as planned it will be America’s first new fast train line. From the perspective of the Obama Administration, the project’s limited scale is a major benefit, as its relatively small budget makes it more realizable in the short term and thus more likely to serve as a model for the development of a nationwide network of similar projects.

Getting the project’s financing and construction done right, then, is of essential concern to anyone interested in establishing a well-functioning intercity rail system in the United States. Making that happen will require a serious effort to keep costs in line. A new report from the Reason Foundation notes some useful ways to do so that are worth consideration.

New Florida Governor Rick Scott, a Republican who was elected in November 2010, has not yet indicated a serious commitment to the 84-mile project that would connect Downtown Tampa with Orlando Airport. Despite the U.S. government’s decision to grant the project almost $2.4 billion of the project’s $2.7 billion budget, some Florida politicians have recently signaled that they would decline the funds if given the chance, just as have the states of Ohio and Wisconsin. The governor has suggested that he will wait until the release of updated cost and ridership reports due in February or March to make a decision; Mr. Scott says he does not want to commit any more of the state’s taxpayer dollars to what he considers a superfluous scheme.

In order to receive the federal funds, the state agreed to pay at least $280 million for the construction of the project, which would be covered by the Florida Rail Enterprise, a publicly-funded authority.

The Reason Foundation, a libertarian think-tank, released a report this week by Wendell Cox that argues that the Florida rail project’s cost and ridership estimates are likely to be way off track and that the state’s assumption that the project will be operationally profitable is not necessarily correct. The line is expected to attract 2.4 million riders annually. The Reason Foundation, and Mr. Cox himself, have established themselves as against public transport and intercity rail projects everywhere in the nation.

The report, as Robert Cruickshank chronicles extensively, has its problems. It compares projected ridership on Florida’s line to that on the Acela Express, stating that it is unrealistic for the Sunshine State’s project to attract 2/3rds of the riders of the Northeast’s premier rail line. Of course, the study neglects to mention that other rail services in the Northeast, including Amtrak Regional and many commuter rail lines, attract many times that ridership. It compares Florida’s cost estimates to those California’s high-speed project, arguing that the Tampa-Orlando corridor will cost more than estimated, without noting that Florida’s right-of-way is already entirely reserved, unlike that of the Golden State. It suggests that the project will not be operationally profitable, despite the fact that nearly every high-speed rail project completed anywhere in the world has achieved as much. (In October 2010 YTD, for instance, the Acela Express made a profit of $17.7 million on total revenues of $45.7 million.)

That said, many of the report’s conclusions — that the state either abandon the project or develop a strict and comprehensive system by which to guarantee cost controls — are reasonable and should be implemented if Florida is to move forward.

Fundamentally, Mr. Cox argues that the state should enter into an agreement with a private builder and operator that would ensure that Florida taxpayers are not stuck with construction cost overruns or operations losses. If high-speed rail projects around the world have been operationally profitable, so should the Tampa-Orlando line, and private corporations should be able to accept the risk in buying train cars and beginning services, especially since the project’s construction costs are entirely covered by the federal and state governments.

The rail authority previously announced that it expects to award a build-operate contract to a private consortium later this year. Many foreign and domestic firms have already expressed their interest in the program.

The study notes five conditions: One, the winning private bidder should assume all risks for construction cost overruns; Two, the state should have to provide no operating subsidies; Three, any changes in the project’s design that would increase costs should have to approved directly by the governor; Four, the government should provide no guarantees on debt taken on by the private companies (which should be minimal considering that the government is paying for construction); and Five, the project should be built in stages to guarantee cost controls.

Apart from the fifth condition, which seems largely unnecessary if the other four are implemented, these conclusions amount to reasonable advice to the new governor. If Florida is set on contracting out operations to a private operator (and it has been for a long time), it should take steps to ensure that risks on construction and operations are absorbed by that entity rather than by taxpayers. Similar agreements have become standard abroad.

If Mr. Scott commits to these rules, he should have no fear about devoting (largely federal) government dollars to the project — giving up on the project before at least attempting to construct it under these guidelines would be a mistake. Considering the positive response by companies far and wide to the project thus far, getting a bidder to agree to these conditions should not present much of a difficulty.

Image above: Proposed Orange County Convention Center Station, from Florida High-Speed Rail

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DOT Finance Florida High-Speed Rail Orlando Tampa

With More Federal Funding, Florida in Striking Distance of New High-Speed Line

» In sinking $800 million more into the Tampa-Orlando line, Obama Administration is making clear its interest in making this the nation’s model program for fast trains.

In terms of high-speed rail funding, the thinking of the current Department of Transportation is easy to understand: Of the dozens of projects proposed across the country, only one could offer true high-speed service and open before the end of President Obama’s second term, all within a relatively tight budget. That is Florida’s 84-mile Tampa-Orlando link, expected to be complete by 2015 at a cost of less than $3 billion. It is therefore no surprise that in the latest round of grants for fast train services, the project has been awarded enough money to virtually ensure its construction.

The DOT’s announcement, expected to be formalized on Thursday, will hand Florida $800 million of the $2.5 billion in total allocations from the Congress’ FY 2010 budget. The Sunshine State now has $2.05 billion in federal funds to complete its $2.7 billion project, including the $1.25 billion it received in January. A further $300 million is expected to follow in 2011 thanks to the $1 billion in additional funds expected to be earmarked for high-speed rail nationwide in the FY 2011 budget. This would be enough to pay for the whole line.

Of the remaining $1.7 billion to be allocated this week, $902 million will go to California, primarily for the construction of a new line in the state’s Central Valley, between Merced and Bakersfield; Iowa and Illinois won $230 million for a link between Chicago and Iowa City; Michigan received $150 million for the Dearborn-Kalamazoo line; and Connecticut landed $121 million for the New Haven-Hartford-Springfield connection. Several other projects, like Virginia’s Washington-Richmond corridor, Oregon’s Eugene-Portland line, and the Atlanta-Charlotte connection, won smaller planning grants. Of these projects, only Florida’s and California’s plans would produce true high-speed rail, operating at maximum speeds above 150 mph.

Unless Republican political foes of high-speed rail shut down these projects after November’s elections (likely in Wisconsin, possible in Ohio and Florida, unlikely in California), these funds are likely to be spent on actual construction, as were the $8 billion in funds distributed earlier this year. Once the DOT makes this week’s allocations official later this week, I will discuss their national implications.

But Florida is the biggest story here: In almost fully funding the state’s first line, the federal government is hoping to produce a model for the rest of the nation to eventually emulate. The Obama Administration, despite inducing a sea change in thinking about the role of intercity rail in American society, also has been rather incrementalist in its thinking. The government has steadily embraced the concept of high-speed rail but the Administration has not been particularly successful in making the issue big enough to ensure a massive Congressional allocation — yet.

Florida, because its project will be the first true high-speed rail line in the U.S. and will be done relatively soon, will be judged on its effectiveness and therefore serve as the standard for future U.S. fast train projects. That means the state has a particular obligation to ensure that the program is implemented with few or no cost overruns and that it is able to attract high ridership once it opens. If it is successful in the eyes of the media and the political class, increasing funding for this transportation mode will be virtually assured. Otherwise, far more ambitious schemes like California’s San Francisco-to-Los Angeles line, will likely remain on the sidelines.

The Florida line will include five stations, in downtown Tampa, Lakeland, the Disney resorts, the Orange County Convention Center (pictured at top), and the Orlando Airport, and is expected to attract 2.4 million riders in its first year. Though trains will accelerate to up to 168 mph, express trains between Tampa and Orlando Airport will make the trip in 50 minutes — roughly 100 mph on average. The majority of the line will be built in the median of Interstate 4 by a public-private partnership responsible for construction, rolling stock, and operations. It is expected to be chosen at the end of next year, after an RFP review beginning in March.

A future extension to Miami would come next; this week the federal government also provided Florida several million dollars to study that project.

As I’ve argued several times before, Florida’s high-speed line is far from perfect. Most problematically, it includes no station in downtown Orlando; its highway alignment also limits associated development possibilities in Lakeland.

Nevertheless, the Obama Administration is right in its focus on this project. Florida’s interest in attracting foreign investors in the line’s construction and operation means that the corridor is likely to be well-run and offer a surprising alternative to the mediocre (and under-funded) Amtrak intercity service too many Americans think is as good as it gets. The fact that this link will be operationally profitable won’t hurt, either. By ensuring that the state gets its corridor up and running as soon as possible, the Obama Administration will be providing a model for the quality and undeniably exciting benefits of true high-speed rail, no matter its limitations in this context.

Image above: Conceptual layout of Orange County Convention Center Station south of Orlando, from Florida High-Speed Rail