Sunday, August 1, 2010

Overstating SunRail's Cost to Orange County

Mayoral candidate Matthew Falconer sent a mailer accusing his opponents of voting "to spend $1.5 billion on a rail system we the people rejected by our vote."  (An earlier mailer claimed $1.6 billion.)  His opponents did, in fact, support SunRail, but they did not vote for anything close to a $1.5 billion Orange County budget obligation.  The SunRail Interlocal Agreement, excerpted below, shows Orange County's actual share of SunRail expenditures will amount to just over $40 million over seven years.

SunRail Interlocal Agreement, p. 14.

$40 million is a lot of money--and Orange County needs to monitor to make sure it's spent wisely--but the cost is in line with expenditures for typical road widening projects.  For example, the Planning and Zoning Board voted two months ago on a $75 million road widening project for Southeast Orange County--covering only four miles.  (SunRail will ultimately span 61 miles).  The Orlando Sentinel reported on August 5 that 3 miles of road widening in East Orange County is costing $27.8 million).  For another comparison, the Wekiva Parkway to I-4 interchange will cost about $450 million (slated to come from our tolls unless Congressman John Mica secures federal funds).  No politician is making any of these  expenditures a central campaign platform.   

I'm not certain how Matthew is calculating $1.5 billion for the SunRail system.  Here's my understanding of the numbers: capital construction, right-of-way, trains, and soft costs are expected to amount to just under $600 million, according to a 2009 economic impact report:

Aecom Economic Impact Final Report, p. 4.
SunRail is budgeting $615 million for these capital costs.  In addition to that figure, the Florida Department of Transportation is paying CSX Transportation, Inc. $432  million for the 61 miles of track, right-of-way, and facilities upgrades, (with a leaseback from CSX to operate freight trains at night).  This figure includes $150 million, which CSX committed to spending for upgrading track and facilities elsewhere in Florida to which CSX will divert freight trains. 

Second Amendment to the Contract for Sale and Purchase, March 29, 2010

In addition, FDOT is building five bridges to separate the CSX line from grade level in Alachua, Sumter, and Marion Counties for $214 million--work scheduled independent of SunRail.  I total all that ($615 million plus $432 million plus $214 million) to reach $1.25 billion.  (Matthew's book on p. 169 also computes $1.25 billion). The United States Department of Transportation is covering half with funds they'd otherwise send to other states.  I can assume only that Matthew's $1.5 billion SunRail figure includes years of maintenance and operating expenses (a figure rarely, if ever included when we discuss the cost of roads and highways) and potential cost overruns (although construction costs to local governments have declined with the recession). 

[UPDATE 9 10 10: Matthew informs me the $1.5 billion figure is the total cost to all local governments over twenty years according to the FDOT.  I'll post his entire email below.]

Congressman Mica, Senator Dan Webster (before he left office), and every conservative member of the Greater Orlando legislative delegation presumably compared the cost of the SunRail to the cost of right-of-way acquisition and construction of 61 comparable miles of I-4 lane capacity--SunRail cites $2.3 billion for 30 miles of I-4--and concluded SunRail's $1.2 billion shared price tag was worthy. There's a lot of collective wisdom in that group.

The Voters' Will

Matthew claims the voters rejected SunRail. They didn't. Seven years ago when Mobility 20/20 appeared on the ballot, voters rejected a different system, on a different route (not on the CSX line), intermixed with I-4 toll lanes (derided as "Lexus lanes"), and an acceleration of the State and County's voluminous roadbuilding schedule. Taking Matthew's rationale to its logical conclusion, to uphold the voters' intent, one would also need to oppose all the taxpayer subsidized roadbuilding, too, rejected by the voters. (Not a position I would take).

Property Taxes Not Slated for SunRail

Matthew filed a lawsuit calling SunRail "unconstitutional" on the grounds that operations and maintenance after seven years would require expenditures of property taxes without a popular vote.  Matthew faces an uphill legal battle.  He will need to demonstrate that the Interlocal Agreement removes local government funding flexibility.  The Interlocal Agreement does no such thing and, further, each local government's share of debt service must come from "non-ad volorem sources," that is, not from property taxes. 

Interlocal Agreement, pp. 21-22. 

I could not find anything in the agreement that would obligate local governments to fund operations and maintenance from property tax revenues.  In contrast, shifting more financial burden to road construction and maintenance, the only option Matthew would leave us, would increase long-term pressure to raise property tax millage rates.  Orange County's 4,500 miles of roads (which could stretch to Los Angeles) and State roads don't pay for themselves.  Their ongoing maintenance, resurfacing, and ultimate rebuilding costs reach truly staggering proportions.

"...shifting more financial burden to road construction and maintenance, the only option Matthew would leave us, would increase long-term pressure to raise property tax millage rates.  Orange County's 4,500 miles of roads...don't pay for themselves"

In any event, a proposed $2.00 daily rental car surcharge--less than the cost of a "butterbeer" at Universal's Wizarding World--would provide a plausible source of funding for Orange County's share of SunRail operations and maintenance beginning in the year 2020. 

Rail Successful in Phoenix Despite Sprawling Development Patterns

I agree with Matthew that sprawling development patterns are not conducive to rail transit.  However, a local traffic engineer who returned from sprawling Phoenix a couple weeks ago told me their new light rail system is successful despite surburban development patterns.  The following video confirms ridership exceeding expectations:

Phoenix’s METRO Light Rail Takes Flight from Streetfilms on Vimeo.

Ridership on rail transit systems throughout the nation is reaching near record levels (though down from when gasoline was $4.00 a gallon), as many links in the right-hand column demonstrate.  When I worked in Philadelphia after law school in the early 1990's, friends would drop off their cars in Cherry Hill or other locations in New Jersey and take the train to their jobs in Center City.  SunRail stops furthest from downtown Orlando have considerable parking planned.  It's better to under-promise and over-deliver, but all this does bode well for SunRail's ridership, if SunRail is done right. 

Time Away From Families

For many who spend around 50 hours annually sitting in I-4 traffic, SunRail can provide a congestion-free option.

Questions for Conservatives

For conservatives pondering all this, I'd pose the following questions:

1.  Where are the family values of leaving us with no choice but to spend the equivalent of more than a work week in traffic away from our families? 

2.  Where's the commitment to providing economic opportunities for small businesses?  Opposing rail also means opposing the mixed use, small-business dominated, transit oriented development SunRail would foster.  (Light rail lines in Charlotte, Portland, Seattle, and other cities have generated billions in such development around stations.  Check out pages 198-202 of the report at this link.) 

3.  Where's the commitment to our national security by leaving us overly dependent on Hugo Chavez, the Saudis, and other foreign sources for our transportation energy needs?  Does it serve our interests to send so many billions of our nation's wealth overseas?  Does our susceptibility to oil price shocks--such as those in 1973, 1979, and 2008--advance our economic interests? 

4.  Don't we want America to be #1?   Shouldn't we have a mass transportation system at least as good as the Czech Republic's

5.  Why did Ronald Reagan make no effort to curtail massive federally-funded expansion of the Washington, D.C. Metro system into suburban Virginia and Maryland during his presidency?   

Small businesses dominate Transit Oriented Development in Orange, NJ
Roads Alone Can't Solve Congestion

Before the recession, Orange County was spending roughly $355 million each year on capital roadbuilding projects.  Our Commissioners trimmed that to around $150 million as property tax receipts and impact fee revenues declined.  The reality is that, for nearly two decades, we haven't, and couldn't afford to build our way out of congestion with roads and highways alone:

We haven't come close to keeping pace with our increasing vehicle miles traveled, even while paving over Orange County with extremely wide, high speed roads making us #1 in the nation for pedestrian danger.  Matthew claims that SunRail will take away funding for road safety.  The reality is that we devote much of our road "improvement" funding to creating awful environments like University Boulevard, shown in the photo below, which place pedestrians (you can find at least two in the wrong place) in danger:

University Boulevard, Orange County, Florida

The bottom line is that, while SunRail won't eliminate congestion, I-4 will have more congestion without it.  Matthew is correct that passing trains will delay motorists heading to I-4.  However, SunRail is cutting those delays in half by using double-decker trains

Massive Government Subsidies and Market Intervention

Matthew tells audiences the fact they drove to the event where he is speaking, instead of using mass transit, is a "free market choice."  Cultural conservative William Lind would disagree.  He wrote a thoughtful article published this month on the conservative case for rail transit.  He argues that our rail-free, auto-dependent lifestyles are not a free market choice, but rather reflect massive, decades-long government intervention in the market consisting of road and highway building subsidies.  Until the 1950's, the nation's private rail carriers flourished--and paid taxes.  However, when the Government taxes one economic activity while subsidizing a competing one, the competing one will undoubtedly prevail.  You can find Lind's interesting article at this link

Here is a video in which Mr. Lind makes these arguments:

William Lind: A Conservative Voice For Public Transportation from Streetfilms on Vimeo.

UPDATE 9 10 10: I told Matthew that, in all fairness to him, I would post his Response:

From: Matthew Falconer
To: Richard Geller

Cc: Paula Dockery
Cc: Beth Dillaha

Sent: 9/8/2010 1:59:03 PM

Hi Rick. I was sent your blog on my overstating Sun Rail cost. The $1.5 billion is the cost to LOCAL governments over the first 20 years as provided for in the FDOT analysis. Given Miami's Tri-Rail loses $87 million a year and has 5 times the rider ship I think Sun Rail will repeat that expense.

Your love for new urbanism and mass transit is allowing you to look at facts that support your desired conclusion. I only look at facts. Our nation is $14 trillion in debt. Our state has a $7 billion budget deficit. Twenty five percent of mortgages in Orange County are in default and 75% of small business are losing money. Twenty Five percent of rental car cost is already tax.

Seminole County is seeking a tax increase to pay for mass transit and Orange County will after the elections. This will take $300 million out of our small business economy. I may have lost the election but I was not incorrect about one thing; we are killing the golden goose of small business.

It is hard for insiders, lawyers, engineers and others to understand how bad the economic conditions are. It can and will get worse if we continue to add to the tax burden of consumers and small business.

Matthew Falconer
Falcon Real Estate Solutions