Three years ago, Orange County voters rejected a half-cent tax increase for Mobility 20/20, a highly touted plan to raise $2.6 billion to widen I-4 and build a light-rail commuter system from the ground up.

But even as voters were rejecting Mobility 20/20, Florida Department of Transportation officials were talking informally with CSX executives about a different way to create a commuter train system in metro Orlando using existing railroad tracks, says Tawny Olore, an FDOT project manager in Orlando.

In 2004, CSX shared its plan with FDOT, looking for common ground between its own long-term needs and the state's desire to use commuter rail to mitigate gridlock on central Florida's roads. CSX's position was "if the state wanted to act, we could work out an agreement," says CSX spokesman Gary Sease.

What emerged from the discussions are deals that will shape freight and commuter transportation in central Florida for decades.

In part, the deals are economic development subsidies: The state is giving CSX big bucks help to move some freight operations to a state-of-the-art hub that gives CSX additional freight capacity. And in part, the deals are transportation policy -- a shift toward public transportation. Together, they represent a $600- million-plus bet by the state that a commuter rail system in central Florida will reduce gridlock on area roads. But did everybody get a good deal?

Boxcar Profits :
Higher oil prices, efforts to cut auto emissions and heavy traffic on interstates and other roads have been a boon to railroads. CSX's operating revenue for the year ended Dec. 30, 2005, was up 7.2% from 2004. Earnings from continuing operations were up 72.2% for the same period, due in part to what CSX calls a "robust pricing environment."

Pieces of a Transportation Puzzle
The basic components of two "agreements in principle" between CSX and the state, involving some $491 million from the state and $100 million from the railroad company.

› Deal 1
In January, CSX announced it will build an advanced, all-in-one, rail and truck transfer facility known as an Integrated Logistics Center (ILC) adjacent to its current tracks in Winter Haven in the heart of central Florida.

In today's "intermodal'' transportation system, huge containers and entire truck trailers travel on flatbed rail cars from a port to an ILC. There, the containers and trailers can either go into warehouses for temporary storage or be transferred onto trucks that take them to retailers or wholesalers. Most consumer products, from DVD players to athletic shoes, travel this way, says Sease. "It's anything you buy that's produced in Asia."

Only a handful of big U.S. cities, including Fort Worth, Chicago and Dallas, have the advanced hubs. Burlington Northern Santa Fe Railway has one in Texas and another in Illinois. Union Pacific Railroad has three, with a fourth in the works.
Building an ILC in Florida was a key element in the strategic plan CSX shared with the state. "We see Florida as a growing market, particularly on the intermodal side with containerized freight," says Sease. "We wanted to be able to handle that as efficiently as possible."

CSX chose Winter Haven, the midsized city best known as the home of Cypress Gardens, for the site of its ILC, purchasing 1,250 acres adjacent to the railroad's current tracks in the southeast part of the city. CSX will pay the city $21.8 million for the land, about 20% of the $100 million the company will invest to create the ILC.

Development will be in two phases, the first starting in 2007 and the second in 2010. Employment at the ILC, including warehouse facilities, is expected to total 2,000 with an average wage of $43,000. Related employment in Winter Haven outside the ILC is expected to grow by 6,500. "It's a significant economic development project," says Pete Chichetto, strategic initiatives director for Winter Haven.

The hub will accommodate CSX's intermodal operations as well as its shipments of cars. Coal, another major product in CSX's freight operations, will not be handled at the Winter Haven site but will continue to go directly to utility power plants.

› Deal 2
The second announcement by CSX came in August, six months after the first, but the two are inextricably linked.

The bottom line for the state in the second deal is the acquisition -- for $150 million -- of 61.5 miles of CSX tracks on the railroad's "A-line" between DeLand and the Poinciana Industrial Park in southern Osceola County. It will use those tracks to create a commuter rail system serving central Florida.

Building efficiency: Today's intermodal transportation system makes use of efficient Integrated Logistics Centers, where entire truck trailers are transported via rail cars from ports. Only a handful of big cities have the centers. CSX is planning one on 1,250 acres in Winter Haven.

As it acquires that track, the state will help CSX shift traffic from the Aline, which travels from Jacksonville through Sanford, over to its other main freight line, the S-line. That line runs more westerly from Jacksonville down through Ocala and Winter Haven, the site of the ILC.

Making that shift means upgrading the S-line, and the state is paying, using $198 million from a state program set up in 2003 designed to finance high-priority transportation infrastructure, including airports, seaports and rail corridors. The improvements mean adding a kind of double-tracking called long-passing sides to allow trains on the S-line to pass each other. In addition, the state will spend $59 million to build five overpasses in Alachua, Sumter and Marion counties, make $52 million in improvements on other CSX rail lines around the state and allocate $9 million to build access roads to the ILC. The state will turn to the bond market to finance the $150 million for the A-line tracks and the additional $23 million to relocate CSX's rail yard near downtown Orlando to Winter Haven.

The upgraded S-line, likely to be finished by 2009, will then become CSX's primary north-south freight corridor. In addition to creating the possibility for commuter rail, the deal moves freight traffic away from Orlando. And it will also make it more efficient to supply anticipated development in Florida's heartland ["Final Frontier," July, FloridaTrend. com].

CSX is coy on whether it would have invested its own funds in improving its S-line if the state hadn't come up with the money. "Our long-range Florida rail plan recognized the need for additional capacity, and more than one option was available to us to realize that capacity," says Sease. "This particular option -- reflected in the agreement in principle with FDOT -- is driven by what the state of Florida sees as a critical need for commuter rail in central Florida."

Passengers
In other words, the state wanted a commuter line in metro Orlando badly enough to spend $491 million for it.

And the expenses won't stop with the outlay for track and upgrades. The estimated startup costs for the first two phases of the commuter rail are $474 million, with the federal government paying half, 25% from state government and 25% from the four counties. Preliminary estimates show the local financial breakdown of $11.7 million for Volusia County, $39 million for Seminole, $44.3 million for Orange and $22.3 million for Osceola.

Overall, the commuter line's startup cost is about $7.8 million per mile. By comparison, state reconstruction costs for 22 miles of I-4, including adding two express lanes in each direction and interchange improvements is expected to cost $2.3 billion, or about $104 million per mile.

Commuter rail has been discussed in central Florida for more than a decade, driven in large part by U.S. Rep. John Mica, a Republican who represents parts of Orange, Putnam, Seminole and Volusia counties.
The initial phase of the Central Florida Commuter Rail will run 31 miles, linking 10 stations from DeBary in Volusia County to the Orlando Amtrak station. Olore says the plan was developed by FDOT in conjunction with its local funding partners, including the counties and jurisdictions that have stations.

One community, however, says it was never approached about having a station -- which it couldn't afford in any event -- and is unhappy with the plan. Edgewood, a middle-class community of about 2,000 south of Orlando, passed a resolution opposing commuter rail, saying it will make traffic problems worse on the Orange Avenue corridor because of continuous east-west traffic flow interruption. "You're literally going to triple the number of trains," says Gary Heath, president of Edgewood's city council. "It is going to cut our city in half."

FDOT says that service on the line could begin as early as 2009, just as a major reconstruction project on I-4 begins. Commuter rail cars would have exclusive use of the tracks for morning and evening rush hours, a total of 12 hours a day. From midnight to 5 a.m., freight trains will have exclusive use of the tracks. Passengers and freight would share the corridor during non-rush hour daytime hours. Once at their rail station, passengers would use the Lynx bus service and its Lymmo downtown circulator and Volusia County's public transit, VoTran, to get to their final destinations.

Phase two of the commuter line would extend service from Orlando through Kissimmee to Poinciana Industrial Park. Later plans show an extension of the northern part of the line to DeLand's Amtrak station. "We expect the ridership to be approximately 9,000 to 11,000 passengers per day," says Olore, adding that during peak hours the rail line would move as many passengers as one lane of I-4. But most startup rail systems only serve about 3,500 to 4,000 passengers each workday, according to Central Florida Commuter Rail's website.

Unlike the ill-fated Mobility 20/20 project, the local money will come out of general revenue, says Orange County Commissioner Bill Segal, so there will be no need for a referendum. In Orange County, funding will come from Orlando and perhaps other municipalities as well as the county. Heath, the Edgewood council president, is skeptical that central Florida commuters will be happy with the scheme. "I think most people aren't paying attention to what's about to happen," he says. "The trains have been turned down by the voters in the past. This is just another way to get it."

For the counties, there are several financial sweeteners for the project: The state will pick up the operations and maintenance costs not covered by passenger fares and a federal subsidy for the commuter rail for the first seven years, for example. Also, CSX will pay a yet-tobe- determined per-car charge for freight that runs at night on the A-line track to be purchased by the state. The CSX per-car charge along with fares paid by passengers will reduce the ongoing operations and maintenance costs for the counties when they begin paying those costs after the first seven years of operation.

Still, those ongoing costs could be steep. A July 2005 report projects operating and maintenance costs for the system to be about $6.2 million in 2009 but rising to almost $27 million in 2015. Typically, passenger fares cover about 20% to 30% of a commuter rail's operating costs with a federal subsidy paying 30% to 45%. The balance will be paid by local governments.

The CSX initiative isn't a done deal yet. The first phase of the Winter Haven land purchase is not expected to close until 2007. As of early November, the CSX/ FDOT deal was still just an agreement in principle. If completed, it's clear that CSX will benefit from the deal, but what about central Florida commuters and taxpayers? "It looks good on paper," says Edgewood's Heath. "But it isn't going to remove that many drivers from I-4."

Sharing the Rails:
Fourteen years ago, the Virginia Railway Express in the suburbs of Washington, D.C., began using CSX tracks for part of its system. Today, more than 25 cities, including Charlotte, Denver, Minneapolis and Austin, are planning or discussing commuter rail systems, many using existing rail tracks, according the American Public Transportation Association.

All aboard: A new deal between the state and CSX may extend south Florida's Tri-Rail system to Homestead.

Next Stop, South Florida...
Commuter rail in south Florida, from Palm Beach County to Miami International Airport, has been a reality for 17 years. In 1988, the Florida Department of Transportation purchased 67 miles of CSX rail tracks from West Palm Beach to Miami, with CSX retaining freight rights. When Tri-Rail started service in 1989, it was the first new commuter line in more than two decades.

Tri-Rail later expanded to 81 miles, and now a new deal between FDOT and CSX may extend the service on CSX's tracks from Miami International to Homestead. "I don't know if they envision a lease or an outright sale," says Gary Sease, spokesman for CSX.

The agreement, if finalized, would also give FDOT and the South Florida Regional Transportation Authority more control over dispatch and maintenance operations for the tracks.

...with Tampa Bay on Hold
"It's hard to say if there is available capacity for commuter rail in Tampa," says CSX's Sease. CSX's freight operations in the Tampa Bay area revolve around the phosphate industry in what's known as Bone Valley. But Sease says that people interested in commuter rail in the Tampa Bay area have taken notice of the central Florida commuter rail deal. "We have a major, major transaction ongoing. We simply cannot accept any further discussions right now. That's what we've told the folks in Tampa Bay," says Sease.