A public-private partnership may be Ohio’s best hope for passenger rail

Brightline trains began operating in South Florida on Jan. 12, 2018 -- the USA's first new privately-initiated passenger rail project and service in more than five decades. The project involves substantial real estate development around stations as well significant public-sector assistance too. But the project was not government-led, unlike passenger rail projects in the USA since the 1960s. (Modern Cities photo)

Brightline trains began operating in South Florida on Jan. 12, 2018 — the USA’s first new privately-initiated passenger rail project and service in more than five decades. The project involves substantial real estate development around stations as well significant public-sector assistance too. But the project was not government-led, unlike passenger rail projects in the USA since the 1960s. (Modern Cities photo)

All Aboard Ohio’s most recent hard-copy newsletter’s content was as much of a mixed bag of good and bad news as one could possibly imagine.

The lead story about the Federal Railroad Administration’s (FRA) Midwest Regional Rail System (MWRRS) study showed that Ohio is a strong market for passenger rail. The second front-page story showed that Ohio’s leaders are still unwilling to invest in anything other than more roads. Their neglect of public transportation to better link people with jobs is what I’d expect from Banana Republics or the USA’s Deep South where poverty is rampant.

And then there’s was the newsletter’s centerspread. It listed urban, regional and intercity passenger rail projects in Ohio that are or were in the planning pipeline. All they need is lots of money – a wee technicality! The reason why All Aboard Ohio did this centerspread is because there is private investor interest in Ohio rail projects. And that’s a good thing considering the near-total lack of public-sector interest in passenger rail, especially at the state level.

For the first time in nearly 50 years, the private sector is investing in passenger rail. You’ve probably read about Japanese leadership of the Dallas-Houston high-speed rail project. Well someone had to finally step up and do the obvious – link the nation’s seventh- and ninth-largest consolidated metro areas, separated by only 240 miles, with high-speed rail. The Japanese, who saw such large cities so close together, came to the natural conclusion.

Thankfully, Americans were able to see the light in Florida – eventually. After Gov. Rick Scott gave back $2.4 billion in federal funds to build Tampa-Orlando high-speed rail, a private-sector effort got rolling. This effort, led by All Aboard Florida (later called Brightline) on behalf of Florida East Coast Industries (FECI), had an advantage – it owned most of the route necessary to link Miami-West Palm Beach (the nation’s 10th-largest consolidated metro area) with Orlando (the nation’s 17th largest).

But there’s some significant public-sector contributions to this project. All Aboard Florida received a tax-exempt $1.75 billion Private Activity Bond (PAB) allocation from the U.S. Department of Transportation. It has permission to build tracks on a narrow strip of state-owned land along 35 miles of Florida Route 528 from Cocoa to Orlando International Airport. The state is spending $215 million to build a railroad station at the Orlando airport to also serve Brightline, Sun Rail commuter trains and a maglev.

Funding also includes $130 million for the 3-million-square-foot MiamiCentral Station from EB-5 immigrant investor visas purchased by wealthy Chinese. Lastly, local governments are providing $70 million for track construction so Tri-Rail commuter trains can also serve MiamiCentral.

While Ohio isn’t growing like Texas and Florida, it’s a populous state surrounded by populous cities. And, as we all know, Ohio is horribly under-served by passenger rail.

In the 1980s, All Aboard Ohio founder David Marshall doubted the state government would ever take the lead in sponsoring a passenger rail project. He said governmental initiative ran counter to Republicans’ policies and Democrats were only willing to be polite toward passenger rail, limiting the state’s leadership to endless studies.

However, the late Mr. Marshall did say Ohio might support a project led by others, be it Amtrak or a private initiative. Unfortunately, Amtrak doesn’t usually take the initiative in passenger rail development and instead reacts to state efforts to purchase new rail services.

So what about a private-sector initiative? What’s interesting is that there are private investors nosing around Ohio. One is Brightline which said it wants to do another rail project, possibly outside of Florida, after it gets its trains into Orlando. Another is a Kentucky investor who rightfully sees the Chicago-Indianapolis-Cincinnati/Louisville travel market as ripe for passenger rail. And the Chinese have been looking in Ohio and elsewhere for projects that combine rail/real estate development, be they urban, regional or intercity passenger rail.

Some believe that private sector leadership of a passenger rail project is the only way Ohio will get trains. To them, the FRA’s updated MWRRS plan may be good news. While trains services below 90 mph aren’t likely to garner much private interest, the MWRRS report will show that all proposed Ohio routes operating at 90-125 mph or faster, as part of a connected Midwest network, will generate enough operating revenues to at least cover the operating costs.

According to the FRA’s preliminary data, the Midwest’s most promising market is the Chicago-Detroit-Toledo-Cleveland-Pittsburgh corridor network. At 90-125 mph or faster, its frequent trains are projected to attract 7.2 million riders per year and achieve a revenue-to-cost ratio of 157 percent. The reason? There’s 10 million people in the consolidated metro area of Chicago (3rd largest), 5.3 million in Detroit (12th), 3.5 million in Cleveland (15th), 2.6 million in Pittsburgh (20th), 650,000 in Youngstown (74th) and in Toledo (75th).

That should draw private-sector interest. So might federal PAB or a low-interest federal loan from the Railroad Rehabilitation & Improvement Financing (RRIF) program. Both can be used to fund rail infrastructure, trains, stations and, just as important, real estate development around stations to enhance ridership and revenues.

Let’s see how the private and public sectors react to the FRA’s MWRRS report when it is released in December. All Aboard Ohio is already doing its part to make sure they’re aware that Ohio’s looks pretty good in it.

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