Floridian of the Year
Brightline Passenger Train: Floridian of the Year
Meanwhile, urbanization and the return of residential living to downtowns — downtown Miami has 92,000 residents, more than downtown Los Angeles — provided another bonus. The advent of ride-sharing services such as Lyft solved the “last mile” problem of getting passengers to and from train stations.
Still, challenges abounded. Creating Brightline involved the $1.7-billion task of adding a second track to the existing rail line, along with the cost of constructing stations in Miami, Fort Lauderdale and West Palm Beach. The company didn’t meet its original schedule, but the Fort Lauderdale-West Palm Beach segment opened in January, and service to Miami began in May.
“The hardest part is honestly behind us,” says Brightline President Patrick Goddard. “Building on an active freight railroad with 180 crossings between Miami and West Palm Beach — that’s as hard as it’s going to get from a construction project perspective. We’ve been able to accomplish a fairly Herculean feat in terms of delivering what is the first passenger railroad privately built for over 100 years.”
This year, Brightline began the preliminary work to add a second track along the rail line to Cocoa, work that includes upgraded signaling, crossings and bridges. It will lay rail along the Beachline highway from Cocoa to Orlando International Airport, where its station at the new airport transportation hub is finished and ready for tenant improvements. The Cocoa-Orlando leg won’t have any road crossings, which will allow the train to run faster.
“Orlando is the key to their success. So much of it relies on tourism and, of course, Orlando is our tourist capital,” says Palm Beach County Commissioner Steve Abrams, who served on TriRail’s governing board and is knowledgeable about the train industry.
Construction of the northern leg should take 30 months and $2.1 billion, taking the total Miami to Orlando project cost to $4 billion. To fund the northern leg, Brightline is raising more equity. It will also sell another $1.75 billion in bonds to help out and to retire the $600 million in bonds it sold to fund the southern leg. It has begun talking with Treasure Coast communities — some of which have fought unsuccessfully in court and in Congress to keep Brightline from running through their region — about adding stations. It continues talks with Cocoa about a station. Jacksonville? Goddard says the business case hasn’t been made.
Targeting other cities
At the opening of the Miami station, Edens talked about taking Brightline to other cities. In March, Brightline proposed an Orlando-Tampa link. In September, Fortress announced it would buy XpressWest, a private company aiming to link Las Vegas to Southern California by passenger rail along congested I-15. Xpress West already has the approvals to build its route. Brightline will have to finance and construct the line, which will run from 38 acres Brightline owns near the Vegas strip to Victorville, about an hour and a half from downtown Los Angeles. Goddard said the ultimate aim is to extend the nation’s second private intercity rail from Victorville down into the Los Angeles basin.
Houston-Dallas is another pairing that intrigues Edens and Goddard. Texas Central, a private company, is far along in the regulatory process to build true highspeed rail between the two cities, which are 239 miles apart. But Brightline says its model can be done for a fraction of Texas Central’s planned $15 billion to $18 billion and can be built years faster than Texas Central’s high-speed dream. Brightline and Texas Central say they haven’t talked.
On the whiteboard in Goddard’s office is a list of other possible pairings. Edens says the “phone has rung off the hook” from cities around the nation anxious to get rail service. Goddard says announcements of expansions could come within six to 12 months. Earlier this year, a prominent Charlotte, N.C., business leader, in a major address to a business group there, extolled Brightline as the model for a 244-mile link between Charlotte and Atlanta.
Robert Poole, a Reason Foundation transportation expert based in Broward County, has said, “It looks to me that Brightline has identified a sweet spot where passenger rail can be competitive with driving and flying. Whether the demand will be high enough to cover debt service and a return on equity remains to be seen, but this is a model well worth continued attention.”
Indeed, Brightline’s finances are a hot topic, especially among Treasure Coast opponents of Brightline. Objecting to the prospect of fast trains crossing through their cities 32 times a day without stopping, a segment of the population and political leaders have suggested Fortress’ real motive isn’t making money on passenger rail. They see real estate plays, a way to fund the upgrading of the freight line, or a setup to get bailed out by the state. They’ve highlighted a small number of vehicle wrecks and deaths caused by people who put themselves on the tracks in the train’s path. And they funded a 2015 analysis by Brown University economics professor John Friedman that said Brightline wouldn’t be able to cover its debt payments.
Edens says Brightline not only will make its debt payments, but also “will be highly profitable. What we’ve seen thus far is incredibly encouraging.” Brightline’s market studies say it can make money if it captures just 0.74% of trips in the market. Through the six months ended June 30 — the Miami link was open only for the final two months — Brightline carried 180,870 passengers and lost $56.5 million on $1.9 million in revenue. Second-quarter ridership was up 42% over first quarter, while revenue doubled. Trains would have to run nearly full on every run to make forecasts.
In rating the $600 million in bonds Brightline sold to pay for the Southeast Florida leg as non-investment grade, Fitch Ratings noted that Brightline is an untested concept in an auto-dominant market but also said that it needs to capture only a modest market share to succeed and also will be supported by revenue from parking, food and beverage sales. Of late, the bonds, which are tax-free to investors, have traded at a premium. Edens says he thinks the debt markets will be receptive to Brightline and one day so too will the equity markets — hinting at least some type of stock sale.
Goddard says Brightline is on pace for its first-year ridership to exceed Acela’s first-year number. He notes that Euro- Star lost nearly $1 billion its first year. He says it will take three to four years for Brightline to ramp up. Projections are to top 1 million riders next year, climbing to 3 million a few years after opening to Orlando.