Is All Aboard Florida A Match For Jacksonville?

[simms3]

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.

There are definitely synergies.  No major investor of a publicly traded company such as FECI would allow for such a bold move if there weren't upside across multiple areas of the business.  It could be a way of doubling down to increase risk somewhere, and thus return.

[atlgamike]

I don't think any of the South Florida cities are paying indirectly to have a stop on the line.  Keep in mind that FEC has owned huge parcels of land in downtown Miami since the days of Flagler.  Time will tell if AAF is a success, but clearly FECI believes it will be.  As for the question of whether people will give up driving between Miami and Orlando, I'd bet yes on that one. A three hour train ride will be faster than flying when you factor in all of the waiting time at the airport.  There's no question tourists will make up much of the potential customer base...and the transit necessary to get people from the downtown station to Miami Beach on one end, or Disney and other tourists sites on the other end is or will be in place. For non-tourists, the train alternative makes plenty of sense too...and you can always pick up a rental car when you arrive, just as flyers do.

[Tacachale]

Conceivably, the money from the real estate ventures associated with the project, in addition to improved infrastructure for freight trains, is worth the price of admission for FEC.

[thelakelander]

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?

I wouldn't loop Orlando's plans for Sunrail, Fort Lauderdale's plans for the Wave Streetcar, and Miami's Metrorail and Metromover as "connection fees" for AAF.  These are all transit projects those cities already have or were proposing anyway.  In Orlando, FEC stepping in pretty much fills the void created by the death of the old Florida High Speed Rail project.  Instead of the first phase going to Tampa, it will be going to Miami. Nevertheless, because they do complement each other, these public investments bolster AAF's potential, while AAF feeds riders into them as well.

[simms3]

^^^Right, but I wasn't even referring to other transit modes (because it's FL, none even came to mind), however, now that you bring that up, why wouldn't AAF charge Sunrail some sort of fee?  Who complements who, more?  A big railway like AAF is going to have many more riders than those who ride Sunrail daily - I would bet Sunrail benefits more from connecting to AAF than AAF benefits from connecting to Sunrail.

And Sunrail being a public agency tasked with providing public (for a ticket price) access to transportation to the area's destinations, it would seem logical that in a way an airline pays gate fees it would pay AAF for a direct connection, or at least cover 100% of the cost to connect the two as seamlessly as possible.

In Jacksonville's case, why would Flagler pick up downtown land to develop?  It's far too risky and probably isn't accretive to the overall AAF scheme.  So all FECI has in Jacksonville's case is a connection to a smaller metro with less flow to the other two (not like an Orlando-Miami connection).  Why would FECI cover all the costs to provide that service?  It's not a public agency.  I would assume it benefits Jacksonville more than Jacksonville benefits it, so why wouldn't they demand something from Jacksonville to bring AAF up?

I guess that's what I meant by "connection fee".

It's really no different than heavy rail out to suburban counties (or similarly, a highway).  The added infrastructure benefits the county more than the county benefits the overall system (it really taxes the system), so the county should pay for the connection.

It's also no different than real estate development.  In DT Jax, the City needs to provide a ton of incentives to make something pencil because whatever gets built at this point is going to benefit the city moreso than the benefit received on the developer's part for building something downtown.  The reverse is true in a boomtown, such as Boston or SF right now.  If a developer wants to build something, he must pay the city a boatload to play.

I'm sure FECI sees a roadmap to operational profitability when looking at the rail by itself, however, I would think that its profitability comes from sheer scope and expansion, which in my mind would include these sort of connection/pay to play fees.

[thelakelander]

In Jacksonville's case, why would Flagler pick up downtown land to develop?  It's far too risky and probably isn't accretive to the overall AAF scheme.  So all FECI has in Jacksonville's case is a connection to a smaller metro with less flow to the other two (not like an Orlando-Miami connection).  Why would FECI cover all the costs to provide that service?  It's not a public agency.  I would assume it benefits Jacksonville more than Jacksonville benefits it, so why wouldn't they demand something from Jacksonville to bring AAF up?

I guess that's what I meant by "connection fee".

I believe the big bucks Fortress is betting on isn't coming from passenger rail.  I think AAF is simply a means to enhance revenue opportunities for all of their various real estate and logistics businesses.  That ROW and surrounding property can be utilized in a lot of revenue generating ways. So I don't see how charging a connection fee would would come into play or be viable.  I doubt any of Florida's cash strapped cities would pay big bucks to play. Especially Jacksonville. We can't even keep our libraries open decent hours, so no why we're ponying up cash for a privately own and operated passenger train.  In the event some are willing to pay, it's not known if areas willing to pay would be areas worth being served for the type of system being built. With that said, I don't know what FEC's true vision is. Ock seems to think what really makes sense from a passenger rail standpoint is an eventual Miami to Atlanta route via a partnership with NS. If that's the case, Jax becomes a place that benefits from being in the right place and the right time.

[simms3]

^^^Miami would be the big real estate play (obviously), and the vast bulk of that is condos, which I would think don't necessarily need AAF (foreign buyers come to Miami with or without rail and they don't live there year round, or often at all).  I agree cash strapped cities won't pay anything, was just something I was positing.

I would bet that AAF essentially replaces Tri-Rail in South FL.  DT Palm Beach to DT Miami, a far better route than Tri-Rail.  I think FIG is looking at at least a decade's time with its general rail investment in FL.  There's no way running an Amtrak like service, albeit improved, is profitable on its own.  But technologies are improving at a rapid rate (to lower cost and really speed things up) and you have infrastructure that serves to benefit your other investments in the state, and with time you can exit by selling the dream (perhaps sell FECI altogether rather than Flagler, AAF, FEC, etc separately).  I think they really need CA HSR to get going though.  There needs to be momentum at some point, not pipe dreams.

Also keep in mind that because FIG is a very traditional and quite large PE firm that has many many focuses, FECI could be owned by more than one fund with similar, but perhaps slightly different strategies.  I was just looking into their business.  I think, from what I've read, that FECI is wholly owned by FIG through one fund or another (rather than a JV between funds run by two or more separate firms).  They also own Intrawest, which is the 2nd largest investor in a company that counts my firm as the majority investor, an asset that I work on.  Flagler was valued separately from FECI, which indicates to me that for all intents and purposes, FIG treats them as two separate entities (one with RE backing and another with other assets backing it, e.g. infrastructure and a business).  Intrawest and Flagler are two of FIG's largest investments.

With that said, I'm really impressed with the comprehensiveness of this.  Through Flagler, FIG owns a ton of industrial land, and it owns directly and indirectly several logistics companies (or solutions companies).

To all those who think FIG is trying to rape and pillage the state for profits, and trying to build it all and get out quick, it really won't work that way.  All of this only works, over time, as a series of complimentary businesses under the control of one sort of control tower.

My own firm controls the largest mortgage REIT in the country, and through that REIT owns LNR, which itself controls a large stake of Auction.com.  In similar fashion, one of our funds owns a ton of land around the country.  We develop lots and then sell to homebuilders.  The same fund happens to be the largest shareholder of one of the top 10 largest homebuilders in the country (a conglomerate of about 6-7 homebuilders under one overall umbrella...one ticker).

So just examples of investment vehicles with many complimentary investments under the control of one firm.

I think the analogy to Nashville's new convention center is real, too.  That's a solid foundation to stand on, speaking for other investments in the area.  I doubt real estate developers (locals/partnerships, hotel groups, etc) would have considered SoBro for a very long time without the CC.  Whether or not the CC actually benefits a condo tower or a new hotel that's more dependent on greater Nashville market conditions than CC business is beside the point.  It's a story and a foundation for someone to make a bet.  There's no bet to be made without some sort of foundation.

Developing a condo tower on its own in DT Miami doesn't need AAF.  However, as sort of a portfolio premium of sorts, perhaps you get condo pricing pop if you have a master-developed "center" around "Miami's 'Grand Central' of Florida", inclusive of retail, restaurants, office, and entertainment.  All of that comes with a great story, great backing, and it's all about selling the dream, a dream which is marketed around this rail concept.

I don't know how Jax can't figure out how to gin up a tool like that with a solid public works, such as a convention center.  Show me a single new convention center that hasn't led to some sort of revitalization of an area and significant economic development!  I don't give a shit if bookings are dropping - it's still a tool that should be used.

[thelakelander]

^^^Miami would be the big real estate play (obviously), and the vast bulk of that is condos, which I would think don't necessarily need AAF (foreign buyers come to Miami with or without rail and they don't live there year round, or often at all).  I agree cash strapped cities won't pay anything, was just something I was positing.

I would bet that AAF essentially replaces Tri-Rail in South FL.  DT Palm Beach to DT Miami, a far better route than Tri-Rail.  I think FIG is looking at at least a decade's time with its general rail investment in FL.  There's no way running an Amtrak like service, albeit improved, is profitable on its own.  But technologies are improving at a rapid rate (to lower cost and really speed things up) and you have infrastructure that serves to benefit your other investments in the state, and with time you can exit by selling the dream (perhaps sell FECI altogether rather than Flagler, AAF, FEC, etc separately).  I think they really need CA HSR to get going though.  There needs to be momentum at some point, not pipe dreams.

Also keep in mind that because FIG is a very traditional and quite large PE firm that has many many focuses, FECI could be owned by more than one fund with similar, but perhaps slightly different strategies.  I was just looking into their business.  I think, from what I've read, that FECI is wholly owned by FIG through one fund or another (rather than a JV between funds run by two or more separate firms).  They also own Intrawest, which is the 2nd largest investor in a company that counts my firm as the majority investor, an asset that I work on.  Flagler was valued separately from FECI, which indicates to me that for all intents and purposes, FIG treats them as two separate entities (one with RE backing and another with other assets backing it, e.g. infrastructure and a business).  Intrawest and Flagler are two of FIG's largest investments.

From what I understand, Tri-Rail will expand with a second line down FEC's tracks.

Tri-Rail moving ahead with coastal railroad expansion

A plan to expand Tri-Rail service would deliver commuters smack in the center of downtowns from West Palm Beach to Miami.

A proposed Tri-Rail service, called the "Coastal Link," would use the train tracks running through coastal downtown communities such as West Palm Beach, Boca Raton and Fort Lauderdale. The trains would be added to the Florida East Coast Railway tracks that run along Dixie Highway, but would not replace Tri-Rail service on the tracks along Interstate 95.

Earlier this year, Tri-Rail and All Aboard Florida reached an agreement on how the two services would operate. Basically, they agreed not to compete with each other, leaving Tri-Rail as the local commuter service and All Aboard Florida as a limited-stop service.

Two construction projects critical to Tri-Rail's coastal service are in the works. Work on two additional connections that link the coastal railroad to the tracks near I-95 should begin within a year. Those connections would allow Tri-Rail trains to travel between the two railways.

http://articles.sun-sentinel.com/2014-08-23/news/fl-tri-rail-coastal-link-20140816_1_tri-rail-service-coastal-tracks-second-track

[tufsu1]

I would bet that AAF essentially replaces Tri-Rail in South FL.  DT Palm Beach to DT Miami, a far better route than Tri-Rail. 

umm, no.  TriRail charges about $6 for that trip and AAF will charge about $35.

As Lake noted, TriRail is looking to run a second line on the AAF tracks.  They will come into AAF's Miami Central Station and TriRail will pay AAF about $50 million for the extra track, platform, and station needs.

[acme54321]

How much will Tri Rail pay FEC to use their tracks and infrastructure?  Curious as to how that works because I'm sure FEC will be making money on it.

Are the additional Tri Rail trains included in the AAF traffic and bridge studies?  If not they better hope no one realizes it.

[simms3]

I would bet that AAF essentially replaces Tri-Rail in South FL.  DT Palm Beach to DT Miami, a far better route than Tri-Rail. 

umm, no.  TriRail charges about $6 for that trip and AAF will charge about $35.

As Lake noted, TriRail is looking to run a second line on the AAF tracks.  They will come into AAF's Miami Central Station and TriRail will pay AAF about $50 million for the extra track, platform, and station needs.

Well there we go...Tri Rail will presumably pay AAF to operate on its tracks and will shuffle over.  There's still no reason that "AAF won't replace Tri Rail" effectively, as Tri Rail's older tracks would become largely obsolete, and they are shuffling over in recognition that it's a superior route (and as it stands now, there isn't much ridership on Tri Rail's current tracks).

[tufsu1]

Are the additional Tri Rail trains included in the AAF traffic and bridge studies?  If not they better hope no one realizes it.

the bridge and traffic concerns are north of Palm Beach County.  TriRail will not run further north than Jupiter.

[tufsu1]

Well there we go...Tri Rail will presumably pay AAF to operate on its tracks and will shuffle over.  There's still no reason that "AAF won't replace Tri Rail" effectively, as Tri Rail's older tracks would become largely obsolete, and they are shuffling over in recognition that it's a superior route (and as it stands now, there isn't much ridership on Tri Rail's current tracks).

what the heck are you talking about?  The current TriRail ridership is pretty decent for a single line system.

http://en.wikipedia.org/wiki/List_of_United_States_commuter_rail_systems_by_ridership

The current tracks are very conveniently located for capturing commuters on the I-95 corridor.  Plus, for long-haul trips (like West Palm to Miami) that line will still be far superior.  The new line will be more like urban commuter rail with stops every 1-2 miles (like BART). 

[Ocklawaha]

So AAF owns the land surrounding the stations in all these cities?  How and when did they obtain it?  And if the answer is yes, that's your answer to them coming to Jacksonville.  If they control the land surrounding a future station, they'll come.  If they don't, why would they.

Julia Tuttle purchased the Egan grant of 640 acres (1-square mile) which included the original Fort Dallas buildings which she rebuilt into her own home. Tuttle had long envisioned a city on Biscayne Bay, and when the Great Freeze of 1895 cut down agriculture as far south as West Palm Beach, Tuttle sent Henry Flagler a box of fresh flowers from her garden. Flagler sent a task force to investigate agreeing to divide her property between them in alternating parcels, as well as supplying a depot, hotel, streets, water, power, school and church... The first train arrived on April 15, 1896, and within a week the city was a massive construction site. THIS is where the railroad got the land which has been divided, sold, built up, torn down, resold, repurchased, rebuilt, etc.

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.

Amtrak is only 'unprofitable' because the entire national system, with the exception of a few short corridors, try to support all of the infrastructure, shared maintenance, some track ownership and maintenance, stations, staff, commissary, supply, locomotive and car maintenance and about 100 other tasks with a single daily train in each direction. A couple of the routes even 'feature' tri-weekly service. This is like the government opening a Target store and only stocking a single shelf, and opening one hour a day. Lose money? You betcha!

In the bigger picture, Amtrak doesn't lose any more money and you didn't spend nearly as much for it in last years tax bill as you (and the rest of us) did for the street in front of your house, or JIA last year. Why would people ride? Its a choice made by the modern business and traveling public anywhere that the discovery of having 10 toes and 10 fingers isn't considered a major life achievement.

As for economics? It currently cost 'as little' as $319 dollars for economy and $517 for business class AIR FARE between Washington DC and New York City. That doesn't include the 'last mile' of your trip, which with air travel is typically more like 20 miles. The trip by car is 226 miles from downtown to downtown, consuming, 3 hours and 44 minutes. This doesn't include tolls (which are hefty) but at least you'd have your truck when you arrived. Oh and did I mention that according to AAA that trip will set you back $178.62 ONE-WAY or $357.24 roundtrip. The alternative of course is to take the train which will set you back $86 for coach, roundtrip or $149 for business class, consuming 2 hours and 45 minutes.

Tell you what, drive that wagon and start counting those toes and we'll wave from the window of the train as we leave you in the dust... 

I would bet that AAF essentially replaces Tri-Rail in South FL.  DT Palm Beach to DT Miami, a far better route than Tri-Rail.  I think FIG is looking at at least a decade's time with its general rail investment in FL.  There's no way running an Amtrak like service, albeit improved, is profitable on its own.

AAF or Amtrak won't replace Tri-Rail on any route, they will compliment each other. There are a ton of ways that railroads operate on each others tracks, shared track, joint track, charged by the wheel, by the car, by the ton or through reciprocal agreements (example - FEC to Atlanta/NS to Miami). There will also be restrictions on tickets, tickets vended on one won't be usable on the other, typically a Amtrak or AAF schedule will read, 'stops to entrain or detain passengers to or from points north of West Palm Beach,' or 'no local fares.'

Amtrak could be marginally profitable, but the best opportunities for the long haul is to privatize it M/L in the AAF model through federal and state tax incentives. Indiana is about to launch a frequent 'Hoosier' service from Indianapolis to Chicago, with Louisville and Cincinnati on the 'expansion map,' through private operators.

I think they really need CA HSR to get going though.  There needs to be momentum at some point, not pipe dreams.

On this front watch Texas, where the Japanese National Railroads are investing in a Houston-Dallas project that appears to have legs.

Also keep in mind that because FIG is a very traditional and quite large PE firm that has many many focuses, FECI could be owned by more than one fund with similar, but perhaps slightly different strategies.  I was just looking into their business.  I think, from what I've read, that FECI is wholly owned by FIG...
...With that said, I'm really impressed with the comprehensiveness of this.  Through Flagler, FIG owns a ton of industrial land, and it owns directly and indirectly several logistics companies (or solutions companies). ...To all those who think FIG is trying to rape and pillage the state for profits, and trying to build it all and get out quick, it really won't work that way.  All of this only works, over time, as a series of complimentary businesses under the control of one sort of control tower.

Because railroads are extremely cash intensive most of those involved tend to be very conservative and traditional business models.

The biggest part of this as far as major cash flow is concerned is freight and the improvements that have been, and/or are are being made to the railroad. JAXPORT is at Port Canaveral, JAXPORT handles all Disney cargoes, FEC is positioned in Atlanta, Port of Miami is positioned for one additional 18,000 TEU container ship from the Orient per company, per year. HUGE. There is no way to escape the impact on Jacksonville (in spite of itself) as no rail car can enter or exit the peninsular of Florida without passing through our railroad yards. Jacksonville has a complete monopoly on Florida rail freight, a point not lost on FEC, CSX or NS.

... if you have a master-developed "center" around "Miami's 'Grand Central' of Florida", inclusive of retail, restaurants, office, and entertainment.  All of that comes with a great story, great backing, and it's all about selling the dream, a dream which is marketed around this rail concept.

I don't know how Jax can't figure out how to gin up a tool like that with a solid public works, such as a convention center.  Show me a single new convention center that hasn't led to some sort of revitalization of an area and significant economic development!  I don't give a shit if bookings are dropping - it's still a tool that should be used.

However one see's Jacksonville you cannot escape the fact that there are 1.4 million of us calling this home. There is still a lot of 'Old Florida' money floating around, international shipping and industrials, etc... There is simply no reason why Flagler/AAF/FIG/FECI couldn't pull off a smaller version of Grand Central at the traditional old railroad depot. The JTA revamp, BRT, Skyway expansion, are just a small part of what's going on behind the curtains. I promise!

I've got 10 on both my hands and feet! God, my sarcasm knows no bounds!

[simms3]

Well there we go...Tri Rail will presumably pay AAF to operate on its tracks and will shuffle over.  There's still no reason that "AAF won't replace Tri Rail" effectively, as Tri Rail's older tracks would become largely obsolete, and they are shuffling over in recognition that it's a superior route (and as it stands now, there isn't much ridership on Tri Rail's current tracks).

what the heck are you talking about?  The current TriRail ridership is pretty decent for a single line system.

http://en.wikipedia.org/wiki/List_of_United_States_commuter_rail_systems_by_ridership

The current tracks are very conveniently located for capturing commuters on the I-95 corridor.  Plus, for long-haul trips (like West Palm to Miami) that line will still be far superior.  The new line will be more like urban commuter rail with stops every 1-2 miles (like BART). 

Hmm, I don't think it's very good ridership, but what do I know.  Caltrain is a very similar single line system with over 4x the ridership.

57,500 vs 14,600 using essentially an equivalent system (single line DMU with no major DT stops) and through equivalent density down a highway corridor

Also, stops every 1-2 miles?  That's 14-28 stops between Miami/Fort Lauderdale, and dozens more to West Palm (doesn't sound like commuter rail, and if they are using DMUs, that pretty much sucks as acceleration and deceleration, loading and offloading are inefficiently slow).  They'll have to implement express trains if they want the network to be effective.  Are there enough tracks for express trains?  I'm assuming so if they're going to operate intracity rail on the same tracks.

Anyway, POINT STILL STANDS.  Tri Rail is using AAF tracks to allow for commuting.  That's no different than what I originally said, except by way of technicality.