All Aboard Florida Going Federal?

[Ocklawaha]

Might be time to come up with a realistic plan for a renewed JACKSONVILLE TERMINAL!

By Dan Tracy, Orlando Sentinel
6:44 p.m. EDT, March 18, 2013

The builders of a privately financed train linking South Florida with Orlando International Airport have applied for a federal loan to help pay for the $1.5 billion project.

Karen Hedlund, deputy administrator of the Federal Railroad Administration, on Monday confirmed the application but would not go into detail, saying she couldn't because the document contains proprietary information.

Calls to the train company, All Aboard Florida based in Coral Gables, were not returned. The paperwork was filed Friday, Hedlund said.

The railroad administration website indicates the loan repayment can stretch as long as 35 years at low interest rates. Among other uses, loans can be granted to acquire new facilities or improve existing ones.

The largest loan approved by the government in recent years was nearly $563 million to Amtrak in 2011. The smallest was more than $56,000 to C&J Railroad in the Mississippi Delta.

The railroad agency is committed to having trains provide an alternative to airports and more road construction, Hedlund said. Trains are especially adept at moving people on trips that last three hours or less and cover no more than 500 miles, she said.

"We see rail as the transportation mode of the future," said Hedlund, who was in Orlando to address a meeting of transportation executives and government officials.

All Aboard Florida, owned by Florida East Coast Industries, anticipates competing with airlines flying between Orlando and South Florida. By train, the trip would take about three hours, with top speeds of 125 mph.

No privately run train offering passenger service has operated successfully since the automobile became the main choice of travelers. Government typically helps pay for mass-transit systems because they are so expensive to build and operate.SOURCE: http://articles.orlandosentinel.com/2013-03-18/news/os-train-loan-feds-20130318_1_federal-loan-largest-loan-loan-repayment

You might recall some of my speculation in an article last April: http://www.metrojacksonville.com/article/2012-apr-stunning-things-are-happening-as-florida-goes-rail/page/
Some of our readers came away from that article's discussion looking as confused as a three eyed dog in a fire hydrant factory. Hopefully the clouds are starting to part....

What I suspect the Project is, and what it is not.

“It is incorrect to refer to All Aboard Florida as a high-speed rail project.”


“All Aboard Florida will be a privately owned, operated and maintained passenger rail system. The existing Right of Way and track infrastructure All Aboard Florida will be operating on is privately owned. It is not owned by the State.”

Don't get caught up in the tricky wording in the mainstream media, what FECI is saying is they will manage the project at no risk to the taxpayers. They never said they would own the right-of-way between Cocoa and Orlando, just “the existing right-of-way.” FECI is not going out on a limb in a venture this risky unless there are some solid guarantees and in following my hunches, I have found the collective dividends will be huge. Rapidly growing real estate markets near the tracks is a strong incentive for a company like Flagler Development.

Nowhere in the press release do I actually read the words; FECI will own the right-of-way, tracks, or even the trains, (again except for the historic Miami-Cocoa portion which is owned by sister company FEC RY). All of the indicators point to heavy state involvement in zero risk infrastructure improvements. All Aboard Florida, could easily own the operating rights, maintenance contracts, staffing, and through the complex family tree, 200 miles of the Florida East Coast Railway itself, without really owning the balance of the 40 extra miles of new right-of-way between Orlando-Cocoa, or the tracks, or even the trains.

Call me crazy, but this thing is going to morph, Amtrak could get involved, and Florida HSR in some form might rise "Phoenix  Like" from the ashes. Don't underestimate the power of the government to completely screw this up or turn it into another political circus, FECI might be crazy, but they're crazy like a fox.

[spuwho]

Well Lake,

Maybe those naysayers have some foundation now?

They aren't risking their own bucks in the RR, create a legal entity (AAF) and let the government shoulder the risk.

While Flagler deals with its best hand, the real estate.

Wow. If this sorts out, its a huge perspective change in the public eye.

[thelakelander]

Nothing new here from my end.  I thought they mentioned the possibility of applying for federal loans months ago?  I'm actually fine with them applying for a loan, moreso than a grant.  As Ock said in his quote months ago, no where did they ever say that would ROW, tracks, etc. outside of the line they already own.

[Ocklawaha]

I believe this is also behind the sudden disappearance of the 'Amtrak on the FEC' talk. Amtrak could easily get deeply involved in this basically merging the ideas.

[tufsu1]

Nothing new here from my end.  I thought they mentioned the possibility of applying for federal loans months ago?

they did

[spuwho]

Nothing new here from my end.  I thought they mentioned the possibility of applying for federal loans months ago?  I'm actually fine with them applying for a loan, moreso than a grant.  As Ock said in his quote months ago, no where did they ever say that would ROW, tracks, etc. outside of the line they already own.

It's not the loan, I knew that they had that option, its the concept Ock threw out about creating an entity that carries no business risk to the parent, but provides all of the benefits. Hence all of the cynicism from abroad.

The FRA loan will be cheaper than what the capital markets will provide because we (taxpayer) are carrying the risk of the venture.

If AAF doesn't succeed in its current form, the FRA will have this nice little loan and many will surmise that they will either foreclose or turn it over to the state or Amtrak. Flagler Development will still have their real estate regardless.

Everyone keeps talking about the deep pockets of the FECI parent, I would say it doesn't mean a lot if the FRA loan makes it all work.

[Brian_Tampa]

Let's see... AAF makes an application for a RRIF loan. No one knows for what amount.  Under the FRA guidelines in order to obtain a loan, an environmental assessment must be completed first. You guys do understand that late last year AAF undertook such an assessment for only the portion between Miami and WPB? Also, in order to even apply for a RRIF loan they had to get a decision from the STB for an either an exemption or approval. Under the rules, the loan can only be used for that portion that has passed the environmental review.  The loan thus cannot be for the whole 1.5 billion.  It will be for the infrastructure improvement costs for the Miami to WPB section only. And it takes an average of 19 months to get approved. AAF will have begun construction long before September 2014 when the loan might be approved.  AAF will go ahead regardless of the outcome of this RRIF application.  That tells me that FECI does have deep pockets to finance this project no matter what. I know it's easy to question and proclaim why this project will not be built, but honestly it is too early in the process to conclude anything. if anything, FECI is looking out for their shareholders by taking advantage of any and all available sources of credit at the best rates.  Anything else would be irresponsible.  If a low interest loan is available, go for it.  Many other railroads including KCS, Iowa Interstate, and Amtrak have received RRIF loans in the past. I really don't understand why this RRIF loan application makes AAF less worthy of a project now.

[cline]

Just saw this today.

http://www.orlandosentinel.com/news/local/breakingnews/os-state-train-expressway-20130626,0,5236088.story

[spuwho]

Yes, its true, the Sentinel, the OBJ, the Sun-Sentinel and others are all reporting that FDOT has approved the ROW for AAF between Cocoa and OIA.

Now the only thing left is the FAA/OIA issue.

AAF was holding off until they got the final yes from FDOT/Beachline Board, so they can negotiate a route unto the OIA property.

Last I heard, the petition in the Federal Administrative court was on hold until AAF/OIA and the FAA could come together and see what they could work out.

FAA wants AAF to lower the ROW 6 feet as it comes into the OIA property, either that or have OIA move a runway over several yards. They don't want AAF coming into the property at ground level because it puts them too close to a runway at line of sight. I didn't hear if this is a safety issue relative to the flightline, or if this is an anti-terrorist move to get some separation for AAF.

Either way, now that 2 hurdles have been cleared, there is one more to go.

AAF will be paying the Beachline $275,000 annually to lease the ROW if you haven't perused the stories.