Is All Aboard Florida A Match For Jacksonville?

[simms3]

I'm sure there are some that will say since AAF did the study, it is wrong, or biased.  I'm sure they would not do this if not profitable.  It's like they are opening a kiosk at the mall.  This is major.

I generally trust the private sector guys to get something right more than I trust the public sector to do so.  That's not to say they can't be completely off, but I guarantee you there is a team of highly proficient private equity guys (i.e. FIG working together with FECI's best and brightest) working in conjunction with the highly proficient consulting guys (from one of the big firms from one of their top offices in one of the big cities, perhaps Miami) and some top real estate team from CBRE's Miami office or something like that (working with Flagler's top guys).

They have it put together, and no offense to the public sector guys, I would think the team they have is going to be smarter and more creative on average than if this were all done under the public umbrella.

Sounds like a very fun, very large and comprehensive private development to work on!

[fieldafm]

They ended up purchasing additional property around the South Florida station sites for TOD. I suspect that the Prime would be attractive given the centralized location and blocks of available dirt surrounding it.

Would be nice to get Bucky Clarkson out of the TOD business

[finehoe]

They have it put together, and no offense to the public sector guys, I would think the team they have is going to be smarter and more creative on average than if this were all done under the public umbrella.

Perhaps, but hey have different priorities.  The private sector is just interested in making as much as they can as soon as they can, and then, if necessary, bailing.  The public sector has many more competing interests to consider.

[Tacachale]

No matter what their motives are, this clearly isn't a "make stacks and bail" situation. Getting into real estate development is playing the long game.

[finehoe]

No matter what their motives are, this clearly isn't a "make stacks and bail" situation. Getting into real estate development is playing the long game.

That's the point.  It doesn't have to be any longer than long enough to find the next sucker investor to sell it to.

[cline]

They have it put together, and no offense to the public sector guys, I would think the team they have is going to be smarter and more creative on average than if this were all done under the public umbrella.

The public sector uses the same consultants as AAF is using.  Not a lot of public agencies do environmental impact statements (for example) in house.

[thelakelander]

Most of the land surrounding the Prime Osborn is owned by JTA.  From what I understand, AAF reps have been talking with JTA staff about some of the land and potential opportunities in the past year or two.

Keep in mind, they already have major land holdings around FEC lines in Flagler, St Johns, Volusia, etc Counties

Also, quite a while ago, Daytona leaders were informed by Congressman Mica's office that it would be prudent of them to start lobbying for a station of their own.

[thelakelander]

They ended up purchasing additional property around the South Florida station sites for TOD. I suspect that the Prime would be attractive given the centralized location and blocks of available dirt surrounding it.

Would be nice to get Bucky Clarkson out of the TOD business

Yes, indeed.

[simms3]

^^^Yes, but I've personally witnessed the public sector get into the business of real estate development and seen them fail miserably (likewise, a private company not in the real estate business trying to enter it can run into similar blips).

My point was that aside from using a few lawyers and agencies to draft EIRs, many city run projects are handled by people with on average (imho) inferior capabilities as their private sector counterparts.  Of course interests are different with a public project, and there are unique aspects that typically the private sector doesn't have to deal with, but overall private investment (as opposed to public interest) often spurs greater results and requires a deeper skill set (lack of government bureaucracy and ultimate flexibility/motivation for creativity and sheer smarts ensures this).

All the more reason for [most if not all] infrastructure projects to be handled by government (I guess these guys have found a way to make privatizing it work).

No matter what their motives are, this clearly isn't a "make stacks and bail" situation. Getting into real estate development is playing the long game.

That's the point.  It doesn't have to be any longer than long enough to find the next sucker investor to sell it to.

The thing about private investment in anything is that there are different types of investors looking for different types of returns.  What you describe is a clouded, narrow-minded vision for private investment (AND, it's not like the public sector in FL is being proactive about rail or real estate!).  There are plenty of investment platforms out there with managers who have fiduciary duties to uphold those investments to the best of their ability for long durations, promising varying types of returns along the way.

As others have noted, with a project of this scope, there are perhaps several different pockets of money available, perhaps several investing platforms/structures, perhaps several types of investors, and the strategy for an individual condo tower to be developed in Miami will be different overall than the strategy for any other building, rail investment, or other investment within the grander scheme of the project.  You're right, though, they may want to throw up a few Architectonica shits in Miami and sell to all-cash Latin buyers as quickly as possible with minimal thought (cookie cutter high rise), to generate funds to build out the rail.  I don't know which comes first, but I would assume most of the sub-investments (sub-funds perhaps?) are not necessarily crossed so they can have the flexibility they need.

[spuwho]

Hey Lake,

Thanks for the AAF summary. Well worded and the civic challenge is right on.

[Redbaron616]

If you think everyone is suddenly going to abandon driving their vehicles from city to city to jump on a train, I have some swamp land to sell you. Why is Amtrak always unprofitable if rail is such a thing of the future? I will use my car every time because I have something to get around the city where I am traveling to. If I go to Miami, I will drive rather than take the train and then rent a car. That's not efficient.

That's $2.5B with a B. Here's betting no one is putting their money on how many promises will not be fulfilled. 3M cars off the road? Ha Ha! Dream on!

[AaroniusLives]

If you think everyone is suddenly going to abandon driving their vehicles from city to city to jump on a train, I have some swamp land to sell you. Why is Amtrak always unprofitable if rail is such a thing of the future?

To be fair, Amtrak IS profitable in the Northeast Corridor, although, to your point, there's a mass transit component in place in the cities up there that make it workable. I'm uncertain if this will work in Florida without investment in transit connections at each stop. But it might make a good tourist train and that might keep THEM off the roads...but, if that's the case, then it's less about regional transit and more about connecting tourist destinations.

While the TOD is certainly a part of the money making scheme, I do think they're looking at a long term reality here, which is to say that Miami-Dade, Broward and Palm Beach...unless they depopulate...really have no choice but to densify even more and to incorporate mass transit. Tampa and Orlando MSAs, while nowhere near as populated nor as dense, are really...at the very least...building both dense cores and "fake downtowns," so while it may not make sense today...it might tomorrow.

Or global warming will drown the state and everyone will live densely anyway, because we have no choice.

[thelakelander]

If you think everyone is suddenly going to abandon driving their vehicles from city to city to jump on a train, I have some swamp land to sell you. Why is Amtrak always unprofitable if rail is such a thing of the future? I will use my car every time because I have something to get around the city where I am traveling to. If I go to Miami, I will drive rather than take the train and then rent a car. That's not efficient.

That's $2.5B with a B. Here's betting no one is putting their money on how many promises will not be fulfilled. 3M cars off the road? Ha Ha! Dream on!

Good for you. Something tells me that the group and investors behind AAF probably aren't counting on Redbaron616 to make their endeavor a success either. They didn't make their billions by being idiots when it comes to thinking out their investment strategies. At the end of the day, regardless of whether they can pry your knuckles off your steering wheel or not, they believe they can provide a 100% privately funded mobility option on their own dime and make cash off of it. More power to them.

[thelakelander]

If you think everyone is suddenly going to abandon driving their vehicles from city to city to jump on a train, I have some swamp land to sell you. Why is Amtrak always unprofitable if rail is such a thing of the future?

To be fair, Amtrak IS profitable in the Northeast Corridor, although, to your point, there's a mass transit component in place in the cities up there that make it workable.

To be fair, Amtrak isn't profitable in the Northeast Corridor if you include cost to maintain the tracks their trains operate on.  I believe their "profitability" is based on funds needed to operate and other entities are responsible for everything thing else.

I'm uncertain if this will work in Florida without investment in transit connections at each stop. But it might make a good tourist train and that might keep THEM off the roads...but, if that's the case, then it's less about regional transit and more about connecting tourist destinations.

This probably doesn't work if we're thinking of AAF's financing model being the same as a typical public transit system.  However, it's not. AAF is a subsidiary of FECI with is owned by Fentress. Another Fentress company, FEC already owns and makes a profit off the infrastructure. So it's not like a new passenger rail system starting from scratch.  Flagler Development, another subsidiary, is involved in real estate development and already owns thousands of acres along FEC's corridor.  Rail enhancements made to provide AAF access to Orlando also open the door for FEC to provide freight service to one of the largest and most rapidly growing metropolitan areas in the state.

Infrastructure upgrades on FEC's tracks in South Florida also improve their ability to move freight from those ports and opens the door for commuter rail on FEC's tracks, which makes the numbers for their TOD look even better.  When you own everything indirectly related, you can probably break even or make a profit on the passenger rail operations itself (assuming there's a market, which there appears to be).

My guess is passenger rail is being implemented in a innovate means that leads to all of their other subsidiaries also making more profit in their areas of focus.  A brilliant plan that more should follow, if you ask me. The funny part is, this isn't some new sort of strategy.  It's how modern Florida and most of America were built.

[simms3]

I wonder how much of it is connection fees.  For instance, MCO.  They aren't getting a stop for free.  Will Disney/LBV be connected?  While not "publicly funded", I wonder if the Cities of Miami, Fort Lauderdale, and Palm Beach are paying indirectly to have a stop on the line?

Finally, they are touting Miami to Orlando in 3 hours.  That's pretty darn good.  And considering the intracity traffic between the two, it could be quite a hit.

And $2.5Bn for this much rail is nothing.  What IS something is the amount of eggs in just one basket (basically one PE group and its subsidiaries essentially making a bet on the quite risky and ever volatile in every which way State of Florida).  FECI could be by far the largest investment in one of FIG's funds (and subsequently this could jeopardize their investment in FECI, or it could be a boon).

To put things in perspective, here in CA, more specifically the Bay Area, just to electrify our existing commuter rail line is projected to cost over $2Bn (that is right now all trains are pulled by DMUs, but they need to electrify the system to expand capacity and allow for CA HSR).  Just to build a transit center in DT SF to accomodate an electrified Caltrain underground and potentially CA HSR, and buses, with a park on top, is costing $4.5 Bn.  A 1.7 mile underground extension of Muni Metro here in SF is costing $1.6Bn (that is one billion dollars per mile).  CA HSR is projected to cost $65+ Bn.  The Eastern span of the Bay Bridge was replaced for $6.4 Bn.  A new BRT line down Van Ness (just 2-3 miles worth) will cost $125M.

So all in all, that is $14.7 Bn for a BRT route, 1.7 miles of LRT subway, electrification of an existing commuter rail line, a central transit center that only includes 2 modes, and half of a bridge.

So rail around the entire state of FL for a few billy is pretty pretty good!