Most expensive rail deal in U.S. history

To create commuter rail in Central Florida, Gov. Charlie Crist would have taxpayers spend $641 million to buy 61.5 miles of track from CSX Railroad around Orlando, build a freight super-railway through the state’s interior and upgrade private CSX tracks throughout the state.

At $10.5 million per mile of track, this purchase represents the most anyone has ever paid for rail.

When the deal was struck, former-Gov. Jeb Bush agreed to pay $150 million for the tracks, but then threw in a bunch of extras.

But the state values the land at only $22 million for tax purposes.

Even when the deal was struck in 2005, with land values at their highest, proponents optimistically priced the land at $89 million. But the state Department of Transportation shows little inclination to look at this deal with conservative lenses.

Some think this deal will cost the state only $641 million, but that money simply compensates CSX for the tracks. The other side of the ledger includes capital costs to build the system, and operating costs – perhaps $80 million a year – for which there is no funding source.

This deal costs a minimum of $1.2 billion, just from what is known. But there are many unknowns, including what it will cost for taxpayers to assume liability for a private railroad’s wrongdoing.

1. Capital Costs: $609,700,000

The capital costs are barely mentioned in the Florida Department of Transportation’s deal with CSX.

Preliminary Capital Costs: Capital costs are expected to be divided this way: If the federal money fails to come through, the four counties would have to make up half the loss.

2. Compensation for CSX: $641,000,000

Besides purchasing the track around Orlando, the Florida Department of Transportation agreed to improve the railroad’s S-line through communities such as Wildwood, Dade City, Plant City and Lakeland. This line will essentially become a freight super-railway that divides communities much like the interstate highway divided communities in the 1950s.

Here’s how the dollars add up:

* CSX has no plans to close Orlando’s Taft Yard, but wants a second bigger yard in Winter Haven.

3. Annual Operating Costs, No Way To Pay

The Florida Department of Transportation says it will pay Operating and Maintenance Costs (O&M) for seven years, but it doesn’t say what those costs will be or where the money will come from.

In the eighth year, Orange, Osceola, Seminole and Volusia counties – plus Maitland and Winter Park* – must pick up operating costs for 99 years, but no one knows where the money will come from.

Central Florida has no dedicated revenue source for commuter rail. Short of cash this year, the region’s Lynx bus system is cutting routes and services for veterans and the disabled. Five years ago, local taxpayers rejected a half-cent tax for transportation.

In South Florida, Tri-Rail, a commuter rail system that is 22 years old, still has no dedicated funding source. That means Palm Beach, Broward and Miami-Dade counties must still ask the state for an annual subsidy.

*As municipalities, Maitland and Winter Park are not considered Central Florida Funding Partners and so have no voice on expenses. However, their citizens must pay the same percentage as the four county partners. Given that these citizens also pay county taxes, this means they will be double-billed.

4. Liability costs, unlimited

Florida taxpayers will pay the premium for liability insurance that covers Central Florida commuter rail and the freight railroad. Premiums start at $2.5 million a year.

Plus, taxpayers will be on the hook to compensate people who are injured or whose property is damaged by the freight railroad, even if CSX, no stranger to safety violations, is found to be wantonly reckless. The Florida Senate refused to swallow this provision last year.

Sub-total: $2.5 million, annually

Plus assumption of unknown liabilities. See Too Risky.

5. No Federal Money

Despite claims to the contrary, the Federal Transit Authority has not approved a Federal Funding Grant Agreement for this project. Check here for the press release of funded transit projects. You'll see that Central Florida is not on the list.

The state wants to apply for a grant this year, but FTA says it must first clear up a bunch of problems. Even then, a maximum of $178 million would be available for the 31 miles in Phase I.

Curiously, Congressman John Mica, R-Orlando, the deal’s biggest supporter, has managed to allocate $22.5 million for Central Florida commuter rail. Though the CSX deal isn’t done, the congressman pushed the purchase of five rail cars from Colorado Rail Car, which just went out of business. The cars are currently on loan for use by Tri-rail.

6. Road Projects Delayed To Fund CSX Deal

To get the money for Central Florida Commuter Rail, in 2005 the Department of Transportation delayed highway projects in every district of Florida but one – Orlando’s. Click here to see the projects deferred in your area.

Much of the money appears to have come from the 2005 Growth Management Law, which appropriated new money for roads, schools and water projects across the state. But under former Gov. Jeb Bush’s leadership, state transportation leaders diverted much of the money to Central Florida Commuter Rail.

If this project fails to get legislative approval, the money would return to those districts.