Search Results for: all aboard florida

Is All Aboard Florida a Scam?

By | | Transportation
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All Aboard Florida is a plan by the Florida East Coast Railway (FEC) to run moderate-speed passenger trains from Miami to Orlando. Where a highway trip over the route takes about four hours, FEC promises train times of just three hours. While an airline trip is just an hour, when an hour is added for going through airport security, FEC thinks their route will be competitive.

The railway’s ridership study estimates the operation will attract 4 million riders per year by 2019 and that the fares these riders will pay will be enough to operate the line as well as cover the capital cost of building 40 miles of new rail between the FEC’s current tracks in Cocoa and Orlando Airport. However, a counter-study by Brown University economist John Friedman and funded by Citizens Against Rail Expansion, which opposes the train, disagrees.

Friedman estimates the line will only attract 1.5 to 2.0 million passengers a year and the fares they will be willing to pay will come nowhere near covering the railroad’s costs. As a result, it will have losses of more than $100 million per year and will soon default on the debt it plans to incur to build the new line.

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All Aboard Florida Goes Private

By | | Transportation
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After going to the effort of writing an environmental impact statement in order to be eligible for a federal Railroad Rehabilitation and Improvement Financing loan, All Aboard Florida has suddenly switched tracks and says it wants a private activity bond instead. Private activity bonds are issued by cities or states, but the funds are given to private entities that are responsible for repaying them–for this reason, they are sometimes called conduit bonds.

Since they are issued by a government entity, they are tax exempt. Yet the private companies that get the funds range from American Airlines, which built new terminals at JFK and other airports, to Transurban, which built HOT lanes on Virginia’s I-495. The tax exemption allows bond issuers to pay lower interest rates, giving companies that receive such bonds an advantage over their competitors. The tax exemption is also controversial, as it effectively costs the federal government money.

All Aboard Florida, which is part of the Florida East Coast Railway, promises to build a moderately high-speed (110-125 mph) rail project without any subsidies. Yet it also wants government loans of one sort or another to do it. It has already issued $405 million in bonds paying a whopping 12 percent interest–which one critic notes puts them in junk bond territory–with the up-front expectation that the bonds will be repaid out of a much lower interest $1.6-billion loan that the company expects to get from the federal and/or state governments.

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Another possibility is that the Federal Railroad Administration let the Florida company know that full funding of the proposed RRIF loan was unlikely. This would have been the largest RRIF loan in history and one of the few dedicated to passenger rail.

The Antiplanner remains suspicious that running sixteen trains a day in each direction between Miami and Orlando is not really a viable project. If it truly were viable, would Florida East Coast really need to get tax-subsidized loans to make it work? Why doesn’t it save itself the trouble and red tape that comes with federal or state support and simply go to the truly private bond market? I suspect the answer is that not enough private investors would have faith in the company’s ridership and fare projections to fully fund the project.

Notes from All Over

By | | Transportation
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Tomorrow the Antiplanner will review more 2017 census data, but today I’ll briefly comment on a few events that took place while I was reviewing census data last week. First, the New York Metropolitan Transportation Authority is blaming subway delays on the passengers, claiming that late-arriving riders sticking their feet in the doors as they are closing are responsible for slow trains. Because no one ever did that before this year!

Speaking of the MTA, a member of MTA’s board is suing Mayor de Blasio and New York policy commissioner James O’Neill for their failure to release data on subway fare evaders. Because it is easier to blame financial problems on someone else than it is to actually do your job of overseeing the agency’s finances.

Speaking of fare evaders, San Francisco’s Muni is upset to discover that one out of four transit riders on the city’s famous cable cars aren’t asked if they have paid their fares. Since most riders pay before they board, this doesn’t mean that one in four haven’t paid, only that they haven’t had their tickets checked by the conductor. Continue reading →

Brightline’s Folly to Vegas

By | | Transportation
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Brightline says it has raised enough money to start construction on a 200-mph rail line from Victorville, California to Las Vegas. The company projects the line will cost $10 billion, or about $45 million a mile for the 218-mile route.

Brightline in Florida. Illustration by All Aboard Florida (Brightline’s original name).

Brightline has $1 billion in private activity bonds to start construction. But I would be surprised if Brightline has managed to find private investors foolish enough to give the company the other $9 billion needed for this line. The company says that it expects to attract 12 million people a year heading to Las Vegas or Los Angeles out of their cars and buses, or almost 30 percent of the 42 million traveling by highway today, but that seems highly unlikely. Continue reading →

The Future of Brightline

By | | News commentary, Transportation
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Mexican conglomerate Grupo Mexico is acquiring Florida East Coast Railway for $2.1 billion. This raises questions about the future of Brightline, FEC’s planned moderate-speed rail line that was previously called All Aboard Florida. Brightline is scheduled to begin operating between West Palm Beach and Ft. Lauderdale in July, and extending to Miami in August.

Phase two of Brightline is to be an extension to Orlando, which would require construction of about 40 miles of new rail line that would be used almost exclusively for passengers. FEC estimates this will cost more than $1.0 billion.

Brightline claims its trains will operate at 80 to 125 miles per hour. But it is promising to deliver people the 65 rail miles from Miami to West Palm Beach in 60 minutes. That’s an average speed of–let me see–65 miles in 60 minutes (counts on fingers) works out to just 65 miles per hour. That’s certainly faster than existing commuter trains, which require about 100 minutes for the same trip (making many more intermediate stops). But it’s not significantly faster than driving, which Google says takes about 70 minutes.

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Is MagLev a Game Changer?

By | | News commentary, Transportation
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Much like the proposed Florida passenger trains that can be run without government subsidies (but can we have some anyway?), train supporters are gushing over Japan’s tentative decision to build a magnetically levitated (maglev) line from Tokyo to Osaka. Japan apparently sees this as a way to revitalize its economy, especially if it can sell the trains to the United States and other countries.


Maglev train being tested in Japan. Wikimedia commons photo by Yosemite.

The Antiplanner has maintained that transportation improvements are economic game changers only if they make travel faster, cheaper, and/or more convenient. Maglev meets only one of those criteria: at projected speeds of a little more than 300 mph, maglev would be at least 50 percent faster than existing high-speed trains and possibly even faster than flying over short distances. Flights from Tokyo to Osaka, the route of the proposed maglev, take about 80 minutes, and the maglev promises to reduce times to little more than an hour.

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Premature Celebration

By | | Transportation
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The Atlantic may be a bit premature in heralding “the triumphant return” of private passenger trains. This claim is based on the Florida East Coast (FEC) Railway’s All Aboard Florida plan to build and operate for-profit passenger trains from Miami to Orlando.

The success of this supposedly unsubsidized train depends on, among other things, the willingness of the federal government to loan the company $1.6 billion to start the service. The plan is to improve 195 miles of existing track and build 40 miles of new track, plus passenger stations, all of which is expected to cost around $2.5 billion.

To partly fund the project, FEC recently stunned the bond market by selling $405 million worth of bonds promising to pay an incredible 12 percent return. Of course, at rates like that the bonds sold quickly, but at a time when comparable bonds are offering to pay just 6 percent, this raises questions about why the railway is offering to pay twice as much.

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Brightline Resumes, Wants More Money

By | | Transportation
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After a 20-month shutdown due to the pandemic, Brightline, which wants to run moderate-speed passenger trains from Miami to Orlando, resumed service between Miami and West Palm Beach on Monday — and hit a car on its very first day. The company is building a line to Orlando, and is asking the state-owned Florida Development Finance Corporation for the right to sell tax-exempt private activity bonds to help pay for it.

I would be thrilled to see privately funded passenger trains. But Brightline’s presentation to the Florida Development company’s board of directors contains a lot of distortions of the truth that reduce my enthusiasm for this project. Continue reading →

Housing Affordability from 1950 through 2019

By | | Housing, Policy brief
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An article in Human Progress—a project of the Cato Institute—finds that, when interest rates are taken into account, housing is actually more affordable today than it was 40 years ago. A standard measure of housing affordability divides median home prices by median family incomes. At any given point in time, areas with lower price-to-income ratios are more affordable.

Click image to download a four-page PDF of this policy brief.

When comparing different time periods, however, mortgage interest rates must be considered. Those rates have varied in the last 40 years from under 3 percent to more than 18 percent. For a 30-year loan, the monthly payment at 18 percent is 3.5 times greater than at 3 percent. If housing really is more affordable today than it used to be, then the frequent claims that we are in a housing crisis may be as exaggerated as the claims of an infrastructure crisis. Continue reading →

SunFail: Orlando’s Commuter-Rail Disaster

By | | Policy brief
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Central Florida politicians face difficult choices about the future of SunRail, a commuter-rail line out of Orlando. One question is whether to finish the originally conceived project by improving 12 miles of tracks and building a new station for a cost of about $100 million, which is expected to add 200 riders per day. A second question is whether to build a new extension to the Orlando Airport, which is expected to cost about $200 million.

Click image to download a four-page PDF of this policy brief.

Beyond new construction, a major problem is how to get anyone to ride the trains, as ridership is well below expectations and 2018 fare revenues only covered 5 percent of operating costs. A final question is how to pay to continue operating the trains, which lost more than $40 per passenger in 2018. The state has been subsidizing operations but wants four county governments to take over. Continue reading →