I divided this story into 2 sections: The Quick Read which hits the high points followed by The Full Story for those of you who want to read more. Exclusive: All Aboard Florida document reveals financial, ridership information By Arnie Rosenberg and Matt Dixon TCPalm Originally published 04:19 p.m., June 20, 2014 Updated 07:25 p.m., June 20, 2014 THE QUICK READ: ALL ABOARD FLORIDA PROJECTIONS: Passengers: 2.7 million by 2019 Farebox revenue: $71 million by 2019 Ticket prices (Miami-West Palm Beach): $23.77 in 2016; $25.23 by 2019 Real estate development near stations: 3.5 million square feet Real estate income: More than $80 million (before taxes and interest) WHAT YOU SHOULD KNOW: • The Treasure Coast has been the hotbed of opposition to All Aboard Florida. Although the project was first announced by Florida East Coast Industries in March 2012, the groundswell didn’t begin until early this year. • Local cities and counties began questioning their costs to upgrade and maintain grade crossings for high-speed passenger trains. They also raised concerns about the 32 additional trains per day creating delays for first emergency personnel. • Unique to Martin County has been the protests by recreational boaters and the maritime industry. Their concern is the single-track bridge over the St. Lucie River in Stuart, where, they claim, closings can block river traffic for at least 20 minutes per train. • The private All Aboard Florida document, obtained by the Scripps/Tampa Tribune Capitol Bureau, cites 15 “key factors” that could affect the timing, cost or the railroad’s ability to complete its $2.25 billion project. Among them: “Potential opposition from governmental and nongovernmental organizations, environmental groups, public-interest or citizen groups, local or other groups, such as opposition rallies that have occurred in certain counties in Florida ...” • Even after the federal Environmental Impact Statement is issued, and All Aboard Florida responds to any issues cited in the report, construction through the Treasure Coast would not begin right away. All Aboard Florida still would need to borrow more money. • Construction from West Palm Beach to Orlando would begin in late 2014 or early 2015 and take about two years, making the entire system operational in 2016. • An unanticipated increase in freight traffic — operated by its sister company, Florida East Coast Railway — would be a “risk factor” to All Aboard Florida, according to the document. It could affect the railroad’s ability to grow, its reliability and its on-time performance. THE FULL STORY: All Aboard Florida will make much of its money from real estate development, not just selling tickets on its trains, according to a private document obtained by the Scripps/Tampa Tribune Capital Bureau. The 349-page document, developed to help raise $390 million for the first phase of the project, details ridership projections and financial estimates. It is information All Aboard Florida has kept secret — despite government officials and private citizens calling for its release — and details All Aboard Florida has gone to court to protect. The document also reveals All Aboard Florida plans to seek a $44 million state grant to connect its service with Tri-Rail in Miami. All Aboard Florida officials declined to comment on the preliminary bond-offering document. Controversy around plans for the 235-mile, high-speed passenger train, linking Miami and Orlando, has grown since the beginning of this year. The document’s section on “risk factors” mentions opposition rallies “in certain counties in Florida” without mentioning the Treasure Coast, where opposition has been widespread. All Aboard Florida would be built and operated with private funds, although it is seeking a $1.5 billion federal loan for upgrade of its infrastructure. Real estate would be a major profit driver, according to the document, and transit-oriented real estate development is considered part of the overall project. Potential profitability has been among the many questions raised by opponents, particularly along the Treasure Coast. How could the railroad attract enough riders to make money, they’ve asked. The document helps answer that question. While no passenger railroad in the world is profitable without a government subsidy, All Aboard Florida’s real estate development — some of which already has been unveiled — would contribute to its bottom line, generating $30 million in net operating income in its early phase and more than $80 million when it’s built out and leased, according to the document. The railroad already owns 21 acres in Miami, Fort Lauderdale and West Palm Beach and is trying to buy another 7 acres in Miami and Fort Lauderdale, according to the document. Ultimately, All Aboard Florida plans to develop about 3.5 million square feet of retail, office, commercial and residential space at or near its three new stations. Last month it unveiled plans for its Miami station, which includes three towers, 15-28 stories each, and an 80-story skyscraper. Along with the real estate revenue, All Aboard Florida anticipates a quick rise in revenue tied to ridership and merchandise sales. In 2016, the first year of operation, it estimates $9 million from those sources. That jumps to more than $92 million in 2019, the first year the entire route is operational. It’s reduced to roughly $61 million after items such as taxes, interest and asset depreciations, according to the estimates. By 2019, the railroad anticipates 1.9 million to 2.6 million riders, based on three different scenarios used in its Ridership and Revenue Study, prepared in 2013 by international engineering firm the Louis Berger Group. The average coach ticket price for the first leg of the journey from Miami to West Palm Beach is expected to start at $23.77 in 2016 — when that phase of the project opens — and increase to $25.23 by 2019. Over the same period, business-class ticket prices would to increase from $28.22 to $29.95. All Aboard Florida opponents also have been vocal in their accusations that improvements to the rail corridor were intended only to serve the railroad’s sister company, freight line Florida East Coast Railway, which would share the upgraded tracks. All Aboard Florida officials have consistently declined any comment about freight, deferring because freight is handled by an altogether separate company, but the bond document pulls back the curtain on their expectation: Freight traffic along the corridor will grow. And more-than-expected growth could be a problem, according to the document. “If FECR’s freight operations grow faster than we have anticipated, our ability to grow our service could be impacted and our level of on-time performance and the reliability of our passenger service could be affected as a result of our shared use of the corridor,” the document stated. All Aboard Florida will have no cash flow or revenue until the project gets off the ground in 2016, which the company acknowledges is a risk. “If the railway is not completed or operational on schedule ... we may be unable to make payments of principle, premium, if any, and interest on the notes,” the bond proposal reads. That caution was in the “forward look statement” section of the private bond offering document and is intended to give a clear picture to investors, so it often includes a range of potential risks. The entire All Aboard Florida project is expected to cost $2.25 billion. A $1.5 billion federal loan, that remains pending at the Federal Railroad Administration, is included in that total, railroad officials have said. Construction on the Miami-to-West Palm Beach section, including the three stations, should begin as soon as the financing is secured and construction contracts are signed, according to the document. That work would take about two years. Similarly, work from West Palm Beach to Orlando International Airport would take about two years. It would begin after additional financing and governmental approvals — including addressing any issues cited in an upcoming Environmental Impact Statement — are finalized
Posted on: Sun, 22 Jun 2014 01:46:08 +0000
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