Saturday, January 8, 2011

63 Million Tourists Missing from Reason Foundation's High Speed Rail Report

UPDATES-Feb. 16-22--Governor Scott told the U.S. Department of Transportation that he was rejecting Federal funding for the Orlando to Tampa high speed rail line. The Governor's press release making this announcement relies on contentions in the Reason Foundation's report, discussed below.  This includes a view that metro Orlando's 2 million and Tampa's 2.7 million populations are too small to sustain high speed rail, while disregarding their 63 million tourists (equivalent to one-fifth of the U.S. population, or in other words, more than twice the population of New York City, Los Angeles, Chicago, Philadelphia, and Boston combined). The Governor also said he was protecting Florida taxpayers from up to "$3 billion" in cost overruns.  That figure, from the Reason report, is based on California construction cost estimates, inflated by the extra expense of engineering and constructing a high speed rail line in a major earthquake zone and over miles of viaduct.  (See the video in the blog post below).

Click HERE to read the reaction of House Transportation Committee Chair Rep. John Mica (R-FL) and HERE for U.S. Transportation Secretary Ray LaHood's. (LaHood is also a Republican).  Florida Senate budget chairman, J.D. Alexander (R-Lake Wales), and State Sen. David Simmons (R-Orlando) expressed the view that Governor Scott exceeded his authority. Former Republican Congressman Lou Frey stated on WFLA-AM that the Governor was marginalizing the legislature.  State Sen. Jack Latvala (R-Tampa), chairman of the Senate Transportation Committee, and Sen. Paula Dockery (R-Lakeland) voiced their disagreement with the Governor making this decision before allowing the private sector to submit bids.  Congressman Dan Webster (R-FL) told WDBO that, while he agrees the Federal Government spends too much, the Governor's decision will not reduce the Federal deficit

Sen. Mike Fasano (R-New Port Richey) noted how Florida loses 10 cents of every tax dollar sent to Washington.  "So the money that was sent to us for high-speed rail, those are our dollars, and now we're not going to accept our own money," he said. "We're going to give it away to others states and we're going to have to pay for those dollars that we'll never use." 

More than two dozen members of the Republican-led Florida Senate signed a letter to Governor Scott in opposition to his decision.  Click HERE for a link to the letter.  I have rarely seen this much public criticism of a sitting Republican Governor by Republicans. 
The Orlando Sentinel reported that Governor Scott relied on a telephone briefing without having reviewed an updated FDOT ridership study, still incomplete.  The Governor also gave no indication of reviewing an analysis from the U.S. Conference of Mayors showing a return on investment of $2.9 billion in the Orlando area alone

U.S. Sen. Bill Nelson (D-FL) is proposing the Cities of Tampa, Lakeland, and Orlando form a new entity that could receive the $2.4 billion in Federal funding, with private bidders to assume the remaining $280 million capital shortfall, maintenance, and operations.  The Spanish rail company, Talgo, stated publicly it was confident it could absorb the State's $280 million capital share.  Another prospective bidder, Alston SA, publicly stated Florida taxpayers would incur no bond liability.  Public contracts require performance surety bonds to protect the government from any default. 

Late last Friday, Congressman Mica renewed his call for a 21 mile airport to Disney World initial line, which he said, could have some of the best ridership numbers in the world.  This shortened route would involve an entity created by Orange County, Osceola County, and the City of Orlando.  However, on Saturday, Senator Nelson said Federal officials had reacted negatively to the shortened route concept despite the potential for future expansion.    Ironically, the Reason Foundation proposed this shortened route as an alternative to lessen cost overrun and sustainability concerns. 

Here is my original blog post:

Concept drawing for Disney World High Speed Rail Station
 The Reason Foundation released a "Taxpayer Assessment" report to convince Governor Rick Scott to either abandon High Speed Rail in Florida or insist upon strict terms "to limit the obligation of Florida taxpayers to the [existing] $280 million commitment...."  Despite the report's flaws, reflecting the organization's longstanding anti-transit bias, the latter suggestions are mostly constructive.  The report warrants both study and scrutiny.

A Fiscally Conservative Approach to Florida High Speed Rail

Florida's proposed High Speed Rail system is unlike typical government-run transit in that private industry would build, operate, and maintain it.  This scenario is similar to airport infrastructure--typically paid for and built by government with private airlines operating the flights.

I agree with the Reason Foundation that private industry should bear the risk of cost overruns.  The City of Orlando relinquished authority to the Orlando Magic to build the Amway Center.  The Magic bore the risk of cost overruns, which gave the team an incentive to keep construction within budget.    

The Reason report cites the negligently designed Boston Big Dig, which had about $10.6 billion in cost overruns, as an example of what could go wrong with Florida's High Speed Rail.  The comparison has little merit since the Florida high speed rail system does not include costly underground tunneling.  (Nor could it, given Florida's high water table).  

The Reason report suggests that Florida should anticipate construction costs commensurate with California High Speed Rail's cost per mile estimate.  However, engineering a High Speed Rail line in a major earthquake zone invariably results in higher construction costs.  California's Central Valley line would include miles of viaduct construction.  The video below may give you an idea why California's construction will exceed the cost of Florida's mostly at-grade construction:

The Reason report raises an idea floated originally by Rep. John Mica (R-FL), the House Transportation Committee's new chairman, to phase-in the project, beginning with a line between Orlando International Airport and Disney World.  Governor Scott should, at a minimum, allow this segment to proceed.  The Transport Politic, in a thoughtful post, "A Fiscally Conservative Approach is the Right One for Florida High-Speed Rail," opines that phasing is unnecessary if the State of Florida follows most of the Reason Foundation's other cost-containment recommendations. 

Criticism of Ridership Projections Omits 63 Million Tourists

The Reason report attacks Orlando-Tampa ridership projections as follows:
3. Comparison to Amtrak Acela Express Ridership: The Tampa to Orlando line ridership projections appear very high in relation to Amtrak's high-speed Acela Express service that runs between Boston and Washington, DC. The Florida project is predicted to carry 2.4 million riders annually, which is two-thirds the ridership on the Amtrak Acela Express service (3.2 million in 2010).  This could be difficult, in view of the much smaller size of the Tampa to Orlando market compared to the Boston, Philadelphia, New York, Baltimore, Washington, DC market. The Acela market has approximately eight times the population of the Tampa-Orlando market. The metropolitan areas in both markets have substantial tourist volumes.
The report does not quantify the "substantial tourist volumes" -- a glaring omission, given that the Orlando leg runs through the tourist corridor.  The number of tourists in both cities amounts to over 63 million people--far more significant than the Orlando metro area's 2 million or the Tampa area's 2.7 million populations. 

City                       Number of Visitors      

Orlando                48.7 million
Tampa                  15 million
TOTAL                63.7 Million

Disney World, the nation's most visited tourist destination, would have a station on the High Speed Rail route.  The Orange County Convention Center, also with a station, is the nation's second largest convention facility.  A rail-to-rail connection with SunRail could generate non-tourist usage.

The 2.4 million annual ridership estimate averages 6,575 riders each day.  Despite old passenger cars (one person told me his car was leaking in the rain), inconvenient schedules, and slow travel, Amtrak had about a quarter million passengers board or get off non-high speed trains in Orlando, Lakeland, and Tampa in 2009.  Some portion of existing rail riders would use high speed rail when traveling between these cities.  Press reports state the Florida Department of Transportation is preparing new ridership estimates for Governor Scott's review. 

Over the Christmas holiday, on C.R. 535 outside of Disney World, traffic stood in gridlock for much of the day.  While spending an aggravating half-hour getting through one intersection to cross C.R. 535, we checked GoogleMaps Traffic.  It depicted I-4 as one long red line, meaning traffic was at a standstill.  The tourist district needs options other than automobiles to address transportation (and consequent economic) dysfunction.     

State Senator Paula Dockery, a fiscal conservative and early supporter of Governor Scott, knows well how to scrutinize rail projects (as SunRail supporters can attest).  Yet she is on record supporting the High Speed Rail system.  She said that "private companies are talking about putting $300 million to $400 million on the table, which would cover the $200 million for construction not covered by the federal government."  John Mica, another fiscally conservative Republican, has likewise stated that the project is viable with private industry covering the 10% capital shortfall.  As part of his vetting, I hope Governor Scott is reaching out for their important perspectives.

General Electric, Siemens, Bombardier, and other corporations, appear interested in building and operating these systems.  They would not demonstrate this interest if they did not expect to turn a profit.  High speed rail systems internationally--including in Japan, Spain, France, Great Britain, and Taiwan--return profits, though that does not occur in every instance or in every year. 

Nothwithstanding the Reason report, now that the Federal Department of Transportation is redirecting to Florida $342 million in funding from Ohio and Wisconsin, the case for rejecting a Florida system has weakened.  Any decision to abandon this project will not shrink the Federal deficit, but will instead direct $2.4 billion intended for Florida to California and elsewhere.  Governor Scott is too smart to make that his legacy, given the option of making private industry shoulder the risks of proceeding.