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Too Costly


As part of the CSX purchase, Florida taxpayers will build CSX a facility bigger than the rail yard pictured here. Citizens will pay for an intermodal center where cargo is transferred between rail and trucks, putting as many as 1,500 trucks on area roads per day.
“I-4 is described as congested and getting worse, but the “case” for the project provides no justification that it will effectively serve I-4 travel markets.” – Federal Transit Administration evaluation of Central Florida Commuter Rail Project, November 2007.


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.

At a time when lawmakers are cutting programs for children, seniors and the disabled, should Florida grow government by buying and running a railroad? And should it help a private railroad construct a freight super-railway through the heart of charming communities in inland Florida?




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:
For station construction: $148,300,000
Other, including double-tracking: $451,400,000
Sub-Total: $605,000,000
Capital costs are expected to be divided this way:
Orange, Osceola, Seminole and Volusia would pay 25 percent, or $151,250,000.
The state would pay 25 percent, or $151,250,000.
The federal government is being asked to pay 50 percent, or $302,500,000.
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:

Purchase 61 miles of track: $150,000,000
Move Taft Yard to Winter Haven*: $ 23,000,000
Upgrade S-line to freight super-railway: $198,000,000
Other freight-track improvements statewide: $52,000,000
Construct 5 rail overpasses: $214,000,000
Build new road to new CSX hub: $9,000,000
Sub-Total: $641,000,000
Running Total: $1,250,000,000
* 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.

Why should taxpayers believe Central Florida Commuter Rail will be different from Tri-rail, which similarly has no dedicated funding source and so seeks annual subsidies from Tallahassee?
*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.



Why should Florida take such a financial risk right now, given the passage of Amendment 1, the decline in gas tax revenue, the state deficit, the recession and the collapse of the credit markets?
Who is looking out for citizens from a conservative, pragmatic point of view?
Who has confidence this project will solve Central Florida’s congestion problems and not simply grow government spending?
The Deal Too Costly Too Risky Too Badly Drawn Public Opinion The Right Track

Comments

#1 Error in price of land above

Submitted by visitor on Mon, 02/02/2009 - 06:50.
"Even when the deal was struck in 2005, with land values at their highest, proponents optimistically priced the land at $89 million." This is incorrect, as your linked document states the $89 million is for the track assets only (rail, ties, ballast, etc.), not the land.
  • reply

#2 Doesn't CSX still intend to

Submitted by visitor on Sat, 02/07/2009 - 15:36.
Doesn't CSX still intend to use the tracks after they "sell" them to the state? And aren't the taxpayers picking up the tab to double track and repair the tracks that they will get to use? Just what is CSX giving up? $89 million is STILL too much.
  • reply

#3 The real error

Submitted by visitor on Sat, 02/07/2009 - 15:43.
The real error is what DOT agreed to pay for $89 million worth of track.
  • reply

#4 Costs to Local Governments

Submitted by visitor on Sat, 02/07/2009 - 14:34.
I live in Polk County where our County and Local Officials keep saying they have to cut services due to revenue shortfalls. How will those other Counties and Cities pay their local share? Is there a funding document out there? Will they raise taxes? Will they cut services?
  • reply

#5 Costs to Local Governments

Submitted by visitor on Sat, 02/07/2009 - 14:43.
Another thing....what is the cost to each of the counties and cities? It seems they are picking up at least $154 million in capital costs up front. It also seems that after 7 years, they are picking up 23 years of bond debt. How much is that? My rough attempt at math assuming 5% interest rate shows the locals will pick up $255 million over 23 years. Could that be right????? Where will these funds come from? Does anyone have answers?
  • reply

#6 Good Question

Submitted by visitor on Sat, 02/07/2009 - 16:04.
I live in Volusia County and it looks like we need to come up with $140 million to be a "partner". This means floating a thirty year bond. I figured we could get it done for 3%, but that was only a guess. At that rate our debt service would be about twenty thousand a day or about 7 million a year. If this thing carries 3600 people a day (and I think that is greatly exagerated) at $2.50 a ride it will produce around $9,000 a day in fares. That leaves us $11,000 short every day just in debt service, not to mention the operating costs of this boondoggle. It's just plain unimagineable that our Council wants to be involved in this thing. Property taxes will be the only way to pay for it. We already have an extra half cent sales tax to pay for new schools and an extra nickel a gallon tax on gas to pay for new roads. Our County Council is getting nervous about our bus service and worrying about keeping the doors open at the libraries. Why they want to be in the rail road business is anybody's guess. I think this whole deal is full of corruption. Looks like our only hope is the idiots in Tallahassee passing on the deal, but I'm sure their palms were the first to get greased.
  • reply

#7 Rail Sales

Submitted by visitor on Sat, 02/07/2009 - 14:54.
Who is MBTA and why are they buying track for $1.5 million a mile from CSX while the ace negotiators for the Florida Department of Transportation have Florida taxpayers paying $10.5 million a mile also from CSX? THAT'S SEVEN TIMES AS MUCH!!! What the hell is that all about? Would they pay that much if it was their personal money and not ours? Do they know we have a budget shortfall?
  • reply

#8 Rail Sales

Submitted by visitor on Sat, 02/07/2009 - 15:32.
Do they care?
  • reply

#9 No, all they care about is

Submitted by visitor on Mon, 02/09/2009 - 08:04.
No, all they care about is getting "atta boys" from the good old boy power structure in Orlando. The developers and business interests are the shadow government that controls our elected officials.
  • reply

#10 Wrong track

Submitted by visitor on Tue, 04/14/2009 - 09:04.
You guys must know the correct facts before posting them on your site. Please do not use this site to determine your vote for sunrail. Use a neutral site and then your vote is in your hands.....Think first guys....Florida need commuter rails.....we need this....
  • reply

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