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Fast Rail Blocked by Public Sector, Boosted by Private

September 27, 2012 By Conrad deFiebre, Transportation Fellow

In Florida, where the conservative governor famously scuttled a government-subsidized high-speed passenger rail line, a private railroad company is pushing ahead with plans to zip travelers from Orlando to Miami on its tracks at a profit.

In the Upper Midwest, where the conservative Wisconsin governor derailed a key link for fast passenger trains from the Twin Cities to Chicago, a foreign business consortium has seriously studied bullet service in the same well-traveled corridor.

So, while conservative public officials condemn improved passenger rail as a money pit, entrepreneurs—likely just as conservative—view it as a gold-plated business opportunity. Private passenger rail initiatives are brewing as well in California and Texas, according to the libertarian Reason Foundation's transportation analyst, Bob Poole.

What's going on here? Maybe the righties in office are correct that government can neither plan nor manage new rail passenger technology cost effectively—even though that's the way our highway, waterway and air travel systems were built. Maybe they don't want the public sector to horn in on the profits to be made from rail passengers.

(For evidence of that suggestion, look no further than the conservative U.S. House transportation chairman's crusade to privatize Amtrak's money-making intercity and commuter rail operations in the Northeast. That would leave the national passenger rail system with only unprofitable long-distance routes sucking up more of the federal subsidies the same chairman denounces. BTW, all those Amtrak subsidies over 41 years come up billions short of the nonuser funds poured into the Highway Trust Fund in just the past four years.)

Or maybe conservatives are just showing their ideological blinders. "The problem with Obama's high-speed rail is that it's an obsolete technology that doesn't make sense today," Randal O'Toole of the libertarian Cato Institute told the Christian Science Monitor last month.

In the same week, however, Wendell Cox, another Reason Foundation scholar, commenting on the $10 billion private Dallas-to-Houston passenger rail plan, wrote that "high-speed rail could be on the right track in the United States for the first time." (Never mind that U.S. passenger trains routinely exceeded 100 miles per hour before World War II.)

The Texas plan is backed by the Central Japan Railway, operator of a bullet train system that Cox and O'Toole maintain has bankrupted Japanese taxpayers. The Florida East Coast Railway's parent company is developing All Aboard Florida, a 230-mile route mostly on its own freight tracks with projected speeds up to 110 m.p.h. That's not really high-speed, but it would beat car travel between the Sunshine State's two biggest metros and might compete with the airlines, as well. (Amtrak's Acela trains already draw more passengers than the airlines in the Boston-Washington corridor.)

FEC's passenger rail business model relies on intermediate stops in only West Palm Beach and Fort Lauderdale to keep the trip to just over three hours, and its plan to build a passenger terminal and large mixed-use development on 9 acres it owns in downtown Miami. This strategy mirrors that of long-ago streetcar magnates in the Twin Cities and elsewhere, who laid tracks as enticements to their greenfield housing developments.

But when the private-sector trolleys went bust in the face of government-subsidized streets for private cars, the same government had to step in with public transit for those left with no mobility. Washington similarly relieved the railroads of their passenger business in 1971.

Conservative commentators have voiced fear that something similar could happen with the new private passenger rail proposals. "While both projects [in Florida and Texas] seem to me to be gambles, as long as they are risking only investors' fund, not those of the taxpayers, I will cheer them on and look forward to being one of their passengers," Poole wrote.

Here in Flyover Land, Siemens of Germany and SNCF of France sank more than $1 million into a feasibility study of bullet trains on the "high potential" Twin Cities-Chicago corridor, said Dave Christianson, Minnesota Department of Transportation state rail plan project manager. "They thought it could make money, but there was hesitation to put the dollars forward until there was more political support," he said.

Nor will the freight railroads that link Chicago and Minnesota follow the FEC's example, Christianson said. "BNSF and the Union Pacific are receptive to hosting government-sponsored passenger trains," he said. "But they don't see going it alone as a good return on their investment vs. hauling coal, frac sand, ag products and containers at low speed."

So we are left with once-a-day Empire Builder service to Chicago and the Pacific Northwest on trains that are consistently 80 to 90 percent full and second only in farebox recovery on the Amtrak long-haul system to the high-speed Acela, Christianson said. That's even though the trip to Chicago on ancient tracks takes 8 hours, slower than driving.

Minnesota is upgrading tracks for faster trains; Wisconsin won't under its current leadership. But there's one tiny hint of progress: Minnesota and Wisconsin have made equal investments in a $50,000 feasibility study of adding a second daily Amtrak train creeping to the Windy City.

Results are due in the spring. It's not much, but it's all we've got.

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