European Group Gears Up Florida High-Speed Rail
Around the State
A consortium of European companies is vying to finance and operate Florida's high-speed rail line between Tampa and Orlando.
The group, which includes train maker Alstom SA of France, will undoubtedly face spirited competition in its bid for the multibillion-dollar project. But the seven-company multinational consortium says no one can rival its combined experience and financial wherewithal.
"The group’s proposal to design, build, finance, operate and maintain the system will include a private financing dimension that offers the best solution for Florida once the specific bidding rules are established," says consortium spokesman Tim Brown.
Envisioning a "public-private partnership that brings private funding to table," Brown said the team's blend of global and Florida experience will "create jobs, enhance mobility and help ensure that tax dollars are invested wisely."
He said no public financing, such as taxpayer-backed bonds, would be requested by the consortium.
VINCI Concessions, one of the team's equity partners, has a worldwide track record with concession-style financing models in which private companies, in return for bringing their own financing, are granted permission to operate rail systems over periods of 30 years or more.
“When the public and private sectors work together, we always achieve a better outcome,” said Fadi Selwan, business development director at VINCI, also based in France.
TEA PARTY CRITICS AREN'T ON BOARD
The Florida Department of Transportation, which has received a down payment of $800 million from Washington to launch the high-speed rail project, will select companies to build, operate and maintain the system.
The eventual price tag is conservatively estimated at $2.7 billion, and tea party groups, anticipating massive cost overruns, are pressuring incoming Gov. Rick Scott to derail the project.
Noting that Florida voters rescinded their approval of a high-speed rail project in 2004, 29 state tea party leaders wrote to Scott, saying, "private solutions to transportation between Tampa and Orlando already exist." (See full text of letter here.)
Scott has said that even if Washington comes through with its promised $2 billion for the rail venture, the state shouldn't be on the hook for any additional expenses.
"Every project we do, we have to get return for taxpayers," Scott said during an election-eve debate in Tampa. "So the way I look at it, if the federal government is going to fund all of it, and there's no -- there's nothing (that's) going to cost the state any money, let's look at it."
Nazih Haddad, chief operating officer of Florida Rail Enterprise, agrees.
"We're looking at a concession period of 30 years. (Companies) will be on the hook for that time," said Haddad, whose office is a division of FDOT.
Last week, a two-day FDOT seminar on the high-speed venture attracted 1,500 people, representing hundreds of prospective bidders. An initial phase of corridor-clearing work will be quickly followed by the vetting and selection of "design-build" contractors for the rail system itself.
Requests for qualifications will be set in December and a short list of bidders -- perhaps up to four -- will be drawn by mid-March, with final selection by the end of 2011, Haddad told Sunshine State News.
"If all the stars align, the rail line will be up and running by the end of 2015," he said.
GLOBAL COMPETITION, FLORIDA EXPERIENCE
Florida could benefit from rising global competition among high-speed rail vendors. In addition to Alstom, Kawasaki Heavy Industries Ltd., Siemens AG and Bombardier Inc. build systems around the world. China recently entered the fray with several companies of its own, and the Obama administration has invited all comers to bid on U.S. projects.
Alstom appears to be the thoroughbred of the field, providing more than 70 percent of very high speed trains across the globe. Its V150 test train set a world record of 357 mph in 2007. Its AGV model is capable of traveling at commercial speeds in excess of 225 mph.
Lower speeds are envisioned on the Tampa-Orlando run, with FDOT targeting a high end of 168 mph, though Haddad says the state wants trains to be able to hit 200 mph in anticipation of a future, yet-to-be-funded leg to Miami.
Initial schedule projections put the Tampa-Orlando trip time at about 55 minutes, including station stops at Lakeland, Disney and International Drive.
The Alstom-led consortium believes it is best equipped to provide a "turn-key" operation. Along with VINCI's financial arm and Alstom's train-building and maintenance unit, Alstom, VINCI, OHL and Archer Western would lead engineering, design, supply (per Buy America standards) and construction.
Using Alstom's rolling stock, Virgin Trains, with VINCI and OHL, would operate the "state of the art" system, officials say.
“High-speed rail has proven to be a great driver of economic development, urban mobility, and a cleaner environment around the world. Virgin and our partners realize the importance of combining strong private expertise and finance with government investment to maximise the economic development benefits and ensure every dollar is wisely invested, said Richard Branson, founder of London-based Virgin.
Virgin's train division is Britain's fastest-growing rail company, serving London, Manchester, Liverpool, Birmingham and Glasgow with 73 lines.
Alstom's trains currently operate in France, Spain, the United Kingdom, Korea, Belgium, Switzerland, Germany and the Netherlands. The company's facility in Hornell, N.Y., is the largest passenger rail manufacturing facility in the United States.
Bolstering the consortium's Florida presence, equity partner OHL is one of FDOT's biggest contractors. The Spanish construction giant has reached financial close on three projects with the state involving private financing. The firm has been active in the high-speed rail sector since Spain's first HSR project opened in 1992.
OHL is currently building the Metrorail extension that connects the Miami Airport to downtown and recently broke ground to renovate or replace each of the service plazas on Florida's Turnpike between Miami and Orlando.
VINCI's affiliated Hubbard Group also has extensive experience in Florida. Hubbard has regional offices in Miami, West Palm Beach, Tampa and Jacksonville, and its corporate office is in Orlando. The Southeast Construction Journal ranked Hubbard second among the top transportation contractors in the Southeast.
Globally, VINCI was recently awarded the concession to build and operate the Sud Europe Atlantique high-speed railway line in France, the largest European transport infrastructure concession project to date with 302 kilometers of new high-speed lines.
Engineering companies AECOM and PBS&J -- which both have a longstanding presence in Florida -- would serve in support roles as nonequity partners.
OK, BUT WILL IT WORK HERE?
Florida's high-speed line is forecast to carry approximately 2.4 million riders in the first year, based on one-way ticket prices of $15-$30. Revenues are estimated at roughly $49 million in the inaugural year.
Rail enthusiasts approvingly note that Amtrak's high-speed Acela line through the Northeast corridor is the only route that turns a profit for the passenger railroad. Acela can charge higher ticket prices for the convenience of time-conscious commuters.
Nevertheless, skeptics continue to question both the financial viability and the logistics of high-speed rail in Central Florida.
Analyses suggest that poor ground transportation at either end of the line would add significantly to the total transport time, making high-speed rail no faster than travel by car.
As for the money trail, "It is certain that there will be government subsidies to cover operating losses," predicts Orlando tea party activist Tom Tillison.
Brown maintains that a concession deal with the Euro team would inoculate Florida against a financial hemorrhage.
"We take the risk and have an opportunity to make a profit," he says.
Contact Kenric Ward at email@example.com or at (772) 801-5341.