All Aboard Florida - not a "Done Deal" nor a a "Good Deal" for Taxpayers. FLORIDA PASSENGER RAIL SERVICE SUMMARY Amtrak operations between MIA-OIA reported loss for 2013 $87.7 million Tri-Rail’s operation between MIA-PBI reported loss for 2013 $58 million Amtrak’s Auto Train reported a loss for 2013 $48 million _______________ Amtrak long distance routes for 2013 per route $600 million Amtrak’s projected losses for the next 5 years $2 billion US passenger rail service profits $0
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WHY IT ISN’T A “DONE DEAL” FINANCIALS FOR ALL ABOARD FLORIDA____________ Start-up costs for All Aboard Florida amount to $1.5 billion, with projected costs now at $2.5 billion, according to AAF President Michael Reininger, in the form of a RRIF loan (Railroad Rehabilitation Improvement Finance). How long would it take to pay back this loan should AAF default? Since AAF itself has no assets---no railroad cars, no tracks, no rolling stock and no business plan, we at Florida Not All Aboard feel that the RRIF loan should be denied. Putting up other FEC assets leaves the taxpayers with a bankrupt railroad. Taxpayers lose, as we did with Solyndra and Digital Domain, once again. Not one passenger rail service in North America operates at a profit. Based upon these historic losses, and with two passenger rail services in Florida already hemorrhaging money, AAF is a guaranteed loss on investment plan. If AAF is fiscally viable, why doesn’t its parent company Fortress, a $60 billion NYC hedge fund asset management firm pay for the start-up costs? AAF offers no cost/benefit analysis and no rider ship survey. Their only business plan is the claim that because 50 million cars per day are driven between Miami and Orlando every year, they will remove 3 million cars from the roads, and their trains will be full of passengers. Let’s do the math. Each automobile carries an average of 2.6 passengers. In the unlikely event that people would abandon their cars and take the train en masse, which is not happening as evidenced by Amtrak’s empty trains, AAF would have to carry 12,800 passengers per day to be profitable. That is not going to happen. Bottom line: This would give us fewer transportation choices, not more. AAF has not provided ticket pricing. Amtrak’s one-way ticket price from Miami to Orlando is $31 ($26.50 for seniors). Taxpayers subsidize 88% of that amount. Surely AAF will have to offer even lower prices to compete with Amtrak as a loser. Such pricing would make AAF the third such service to operate at a loss, proving once again that passenger rail service in Florida is not sustainable. 2
Amtrak travels between Miami and Orlando within 3-1/2 hours. AAF states that it will travel from Miami to Orlando in 3 hours. An automobile can travel the same distance in 3 hours so AAF offers no advantage in time, and certainly not in profit.
Statistics show that public transportation is 5 – 9 times more expensive per passenger mile than private automobiles according to the US Department of Transportation’s National Transit Database and the US Department of Energy’s Data Book and analysis from the Energy Information Administration. Surveys consistently prove that only 1% - 2% of the population is motivated to choose mass transit as opposed to the use of privately-driven automobiles. How can AAF justify spending 5 – 9 times more for transportation? Why should the public invest in such a train wreck of mal-investment? Is the cost-benefit worth the risks? According to Governor Scott in 2011, the answer was “No”. The $3 billion risk to taxpayers far outweighed the benefits of the proposed Orlando-Tampa high speed rail project. Capital over runs, lack of rider ship and the likelihood of default proved that the HSR project was not the answer to Florida’s economic recovery. The same is true for All Aboard Florida. The $1.5 billion RRIF loan is the largest in US history and does not require collateral to obtain the loan. With projected costs of $2.5 billion, this cost would fall on the shoulders of taxpayers when AAF defaults. The end result will be a loser passenger service, probably Amtrak, that will continue to be subsidized by the taxpayer.
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CORPORATE STRUCTURE & the FORTRESS FLIP________ The answer is that All Aboard Florida is ALL About Freight, not about passenger service. AAF is a bit player in an international conglomerate ie. Fortress Investment Group that must have modern rail tracks by 2015 through its subsidiary Florida East Coast Railways, to accommodate the doubling and tripling of freight coming from the Panama Canal through Florida. To understand this, we must understand the corporate structure of All Aboard Florida’s parent company. Fortress, a NYC hedge fund conglomerate is parent to Florida East Coast Railways which owns the tracks, Florida East Coast Industries which owns the land and AAF. This includes Seacastle Ships Holdings, Inc. All of these key players have a special niche to fill and a particular interest in the $1.5 billion loan. Due to the $5.2 billion expansionism of the Panama Canal, Florida East Coast Railways will need more rail space. Why? To import the projected 30% increase in cargo as stated by FEC’s President and CEO James Hertwig in the Press Journal, who said that by 2016, FECR wants to triple the amount of cargo it handles in Florida. This would obviate the need for as many as 24 or more freight trains per day. It follows that this will require more tracks. At a cost of $2 - $10 million per track mile, a donor for this cost must be found. Fortress’ subsidiary Seacastle owns the new mega-containerships, the containers, the docks, and the inter-modal shipping equipment that will, in the words of Hertwig, “…service 70% of the population overnight.” Port Everglades has increased its capacity to handle 943,000 shipping containers per year. Containers from just one new mega-ship placed end-to-end stretches 75 miles long. FECR has already ordered 24 new locomotives. All Aboard Florida as the donor company that applies for the RRIF loan, providing the money needed for FEC’s new tracks, which will leave Fortress
with an improved asset of over $1.5 billion, and in a position to perform its famous Fortress “flip� of FEC, as it has previously done with Rail America in 2012. Fortress purchased Rail America and FEC in 2007. In 2012, Fortress sold Rail America for over double its initial investment. With FEC still losing money , Fortress started up the All Aboard Florida passenger rail scheme and applied for the RRIF loan in 2012. AAF is bit player to be forever subsidized by the taxpayer adding a third passenger rail service loser in Florida.
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THE HUMAN COSTS OF ALL ABOARD FLORIDA_____ SAFETY The human costs are much of much greater consequence because All Aboard Florida places profits above lives. During the past 5 years, FEC safety records show that 21 in deaths due to railway accidents have occurred in Florida. With an increase in train frequency of 366%, and increases in speeds to 110 & 125 m.p.h. traveling over 300+ crossings, the rise in deaths rates will increase commensurately. Kim Delaney, rail specialist with the Treasure Coast Regional Planning Council stated that pedestrian foot traffic across the tracks is quote, “epidemic.” In the past five years FEC has had 84 trespassing fatalities. 79% of these occurred in Florida. Since 2010, Tri-Rail which travels at only 40 m.p.h. has caused 10 deaths and 9 injuries. The USDOT Federal Railway Administration On-Site Engineering Field Report, Part 1, page 2, paragraph 2 cites All Aboard Florida as saying it is not obligated to incorporate “Sealed Corridor” safety upgrades recommended by the FRA, quoting that the costs incurred would be $47 million for the southern portion. The northern portion would more than double that price and that they are not obligated to cover these costs under current recommendations, which are not regulations.
Rusty Roberts, VP for FECI Corporate Development has since stated that safety upgrade costs would be “covered.” AAF owns no assets, only the ROW to operate over FECR’s tracks. Nothing has been submitted in writing committing any funds for safety upgrades, nor are they required to do so under Federal regulations. AAF has no liability to the public. They own only the Right Of Way to operate over FECR’s tracks. Any funding for safety upgrades would come from the taxpayers.
Towns are being held hostage for their safety. For St. Lucie Village for example, the cost of safety upgrades will exceed the town’s annual budget. Additionally, there will be the cost of ongoing maintenance. In Brevard County, commissioners are concerned that these costs will be nearly one million annually. For municipalities that cannot afford to pay the ongoing maintenance costs, “crossings will be earmarked for closings,” said Paul Calvaresi, transportation Planner with Broward MPO organization. There are 68 crossings in Brevard. These closings will significantly impact the re-routing of road traffic. In effect they will “re-engineer” how residents travel within their cities, to the convenience of All Aboard Florida, not to the taxpayers who are trying to get to work or operate a business. Former Chairman and CEO of Illinois Central Railroad states that All Aboard Florida/FECI is proposing a retrofit that is not the product of sound engineering.
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REAL ESTATE DEVALUATION Losses due to the operation of All Aboard Florida include the devaluation of private property on a large scale. Independent studies from Atlanta (1990) cited by Martin County property appraiser Kelly Laurel, and a Boston (1994) study cited by Bill Hall, president of the JTHS Association of Realtors shows that properties located within 400’ to 1,000’ of the railroad tracks will lose between 5% - 20% of their value. In Martin County, the property appraiser’s office shows 1,300 private properties located between 200’ and 1,000’ from the tracks. In St. Lucie County, 1,539 properties are located within 400’ to 1,000’ of the tracks. In SLC alone, this represents over $300 million in real estate, resulting in a loss in value of $77 million that will be dropped from the tax rolls. In Palm Beach County, over 170,690 properties are located within 1,000’ of the tracks. The financial toll for this loss to our economy is mounting. Further studies show that the sell off begins before the first track is laid. Current studies are underway for Palm Beach and Brevard. With AAF’s high speed 110 m.p.h. trains ripping through neighborhoods at Category III hurricane force winds 32 times per day, 3 times per hour, combined with as many as 50 freight trains, the negative effect upon real estate values will be in the multimillions of dollars. These property values will plummet while taxes will increase for all cities and municipalities. As for the “mitigating” effects of “Quiet Zones,” there is nothing quiet about quiet zones when mega-tons of diesel engines and cars roar through neighborhoods. The FRA & DOT have conducted numerous studies on the impact of noise on communities. They conclude that the use of railroad horns in addition to wayside horns would reduce accidents by 69%. As
reported by the study, most residents would stop talking or close their windows. 14% considered moving. 7
http://www.coaltrainfacts.com/doc/The-effect-of-freight-railroad-tracks-andtrain-activity-on-residential-property-values.pdf California hearings and workshops showed that properties were negatively impacted even when the train project had yet to be implemented, by putting the properties in a category of “limbo,� placing doubt on their Fair Market Value. Who wants to buy a house when it might be taken from them due to eminent domain? This negative impact also obviously includes the FMV for homes left with the noise, vibration, pollution and visual impacts. http://news.yahoo.com/california-high-speed-rail-real-estate-limbo173000521.html Train noise will have a detrimental impact on property values of adjacent properties. A federal report discussing the social costs of freight transportation suggested there is a 0.4% decline in property value for each 1 decibel increase in noise resulting from an increased level of freight traffic. If noise levels increase by 25 db., this would suggest a 10% decrease in property values within 500 feet of the rail track. All Aboard Florida’s db level is cited as four times that amount. But even for the homes and businesses that are not located in close proximity to the tracks, they will be affected by the devaluation of properties that are also in part, due to assessed value taken from the counties tax rolls. The real estate loss issue is not about NIMBY (Not in My Back Yard), but by the NOMD (pronounced NOMAD) issue---Not On My Dime. Passenger rail service not only comes with baggage, it comes at a forever price---an endless taxpayer subsidy as proven by every passenger rail service in the US.
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ENVIRONMENT When the Environmental Impact Study is submitted, it will become evident that neither AAF, Fortress nor FECI/FECR will be concerned about the environmental impact along the full length of rail tracks throughout the Treasure and Space Coasts. The EIS document will become an irrelevant document since it is written by consultants paid for by FECI, then edited by the Federal Railway Administration as “draft.” As rail specialist Dr. Kim Delany stated, “It is awkward.” Rusty Roberts, CEO and VP of Corporate Development for FECI predicted, “It will be a less stringent review.” The reality for populations along the entire Southeast coast of Florida will be pollution, vibration and noise from the 24-hour mobile industrial complex consisting of trains gutting our towns 24/7 pervasively around the clock. Trains are required by law to blast their horns 4 times at each crossing. With 114 crossings in Palm Beach for example, that’s 32 trains per day x 4 = 14,972 horn blasts. Even without the horn blasts there is nothing quiet about a “Quiet Zone.” 32 mega-ton train passages moving at hurricane force wind speeds will not go quietly into that good night. Nor will 20+ freight trains at up to 2.5 miles long, propelled by massive diesel engines. Natural habitats including Jonathan Dickinson State Park, the Savannahs and the Sebastian Scrub Jay will be threatened. The Transportation Equity Act (SAFE-TEA-LU) in 2005 reads: “protect and enhance the environment….improve the quality of life.” See USC 135(d). All Aboard
Florida and expanded freight operations will only degrade the environment and quality of life.
ALL ABOARD FLORIDA IS ALL ABOUT LAND_________ Flagler Real Estate Development is a subsidiary of Fortress’ FECI, which includes substantial land holdings along the entire FECR service route. Land tracts from Miami to Jacksonville include over 3,000 acres. In recently published information in the Palm Beach Post, All Aboard Florida’s most recent PR push is to show that All Aboard Florida will bring jobs. These jobs will in fact be temporary labor brought from outside our local areas and will follow the rail construction as it moves north. In Indian River for example, the temporary work would transit the county within 60 days. Current track construction is automated and requires a small amount of manual labor and will produce very few jobs. Whatever false and temporary economy AAF purports to bring, the reality is that the big developers have their sights set on the future acquisition of land along the rail corridor. When private and business properties become blighted and are taken through eminent domain or Right-of-Way law, Fortress’ land developers through FECI and Flagler land holdings will have made land acquisition for their Transit Oriented Development very easy for their taking.
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RESOLUTIONS Given the risks, financial and human costs and the damage that will come to our East Coast communities, the following list of property owners, Fire District and law enforcement entities have signed Resolutions in opposition to All Aboard Florida: The City of Vero Beach The City of Sebastian Indian River County North Beach Civic Organization covering Route 60 to Wabasso The City of Micco including: Barefoot Bay, Indian River Shores MHP, Little Hollywood, Snug Harbor Lakes and Village of Brevard County The City of Ft. Pierce The Village of Tequesta St. Lucie Village Mariner Sands Country Club The Guardians of Martin County Sailfish Point Martin County Sheriff’s Office Martin County Health System, Stuart St. Lucie County Fire District Indian River County Taxpayers Association Signatures on the www.floridanotallaboard.com petition now total over 14,600.