Early Observations on the E. I. S. By Tom Monahan September 26, 2014
Here in South Florida, we have to wonder if government officials hundreds of miles away in Washington realize how much we look to them to protect us from abuses. By living with the rumble of freight cars, waiting at crossings and bridges, and witnessing the situations where too many freight cars can ruin a beautiful downtown, we are constantly weighing the impact of All Aboard Florida.
Since May, when the Environmental Impact Study of the Federal Railroad Administration was first expected, we have been in a state of limbo. According to Reuters, All Aboard President Michael Reininger assured us that the E. I. S. would “alleviate most concerns.” I don’t think so. We have been hoping that the delay of the F. R. A.’s Environmental Impact Study (EIS) would result in more meaningful depth and integrity. However, the disappointment was profound. Rather than accuracy, we got more propaganda. Rather than consideration of the issues, we got the brush off. That could be because the railroad ignores reports and such that explore negative issues that don’t support it vision and are therfore sloughed over by contractors it commissions for support. The Palm Beach Post quoted the Federal Railroad Administration as saying the EIS was the result of a federal study conducted by the F. R. A. since last year.
Our idea of a study was a thorough gathering of the facts, a professional analysis of those facts by experts, with the result that we would get objective conclusions. We expected the F. R. A. to use the E. I. S. to bring some objectivity, even sanity, to the table.
Most of the year we have faced the public relations onslaught of the railroadiers, laced with misleading statements, protection of secrets, strawmen as spokesmen, and phantom organizations. Only concerned individuals and some dedicated local officials have defended us with the truth, but the depth and complexity of the problem is daunting. Therefore, we were expecting the F. R. A., as a represntative of the people and with access to the resources of our government, to support our need for objectivity.
We soon found out that the statements attributed to the F. R. A. about the study were not quite accurate. The E. I. S. is not really a study conducted by the F. R. A., and neither can it be called independent. Furthermore, it is too flawed to be considered objective, or fair and balanced. An explanation comes to us from the analysis of Paul Druce, a railroading expert, who explained it was prepared by Louis Berger Group (LBG) for the Project.
According to Wikipedia, Louis Berger Group, of Morristown, NJ, is one of the largest engineering companies in the U. S. It does come with some baggage, however. According to Wikipedia:
In November 2010, Louis Berger Group agreed to pay a record $69.3 million to settle charges of fraud that the company by the government brought under the False Claims Act. The case, filed by a whistle blower, alleged that the company billed the government for internal costs unrelated to the rebuilding contracts in Afghanistan. This is the largest fraud settlement paid by a war- zone contractor to the U. S. government.
In connection with the false claims settlement, the Louis Berger Group entered into a Deferred Prosecution Agreement with the U. S. Attorney’s Office in New Jersey, and agreed to retain an outside monitor to supervise its compliance with promises for remediation and reform. I assume we at least got a report by proxy that was subject to monitoring.
Wait! There is more on the internet, with critiques of LBG’s projects, including it design of the failed AEP/FE (American Electric Power and First Energy) project involving the proposed electric transmission line in West Virginia. The project lives on in the PATH Abandonment Case (See Federal Energy Regulatory Commission No. ER-2708). Louis Berger Group is widely involved in a complex world.
That is why the E. I. S. appears to echo the public relations campaign of last Spring. That is when the All Aboard Florida came forward with a “Report” to support its project. In an editorial, the Palm Beach Post said the projections were shown to a Wall Street analyst, and he saw favorable results based on ‘back of the napkin” projections. The Post also quoted one economist as saying, “Essentially, these are just pie in the sky estimates.” The last thing the Florida public needs is for the E. I. S. to consist of a study commissioned by Florida East Coast Industries.
Of course, the E. I. S. does contain some worthwhile facts that help us understand the project, for example, at pp 3-45, you can find:
The rolling stock for the Project would consist of ten train sets. Eight train sets would be required to be in concurrent operation along the AAF route to deliver regularly scheduled, hourly-service frequency. Each train set would be comprised of two locomotives, and seven coach-type passeger cars (two Business Cars, a Cafe/Economy Car, four Economy Coach Cars). In addition, AAF would procure one spare locomotive and one spare cafe car. The two-locomotive arrangement provides redundant push/pull operation and would assure smooth operation up to the maximum speed of 125 mph even with an expansion of the train set to nine cars, if needed. The fleet and all facilities (stations and maintenance) are designed to accommodate expansion to nine-car trains.
According to Druce’s analysis, the prediction of an initial ridership of 3.5 million passengers per year comes to an average of 300 passengers per train. He says, “with one coach as first class seating, their seven-car sets will only have 446 seats, 396 if one coach is a dedicated cafe car. If AAF has full capacity in 32 trains, its daily limit would be (32 X 396 =12,678). Don’t forget, that’s from early morning to late at night, just like in the war.
But most shocking exposition in the E. I. S. was the flippant projection of statistics to give the appearance of a viable business plan. They don’t compute, and don’t match our knowledge of reality. Many problems of accuracy show up in the ridership projections purportedly “developed by the F.R.A. in its study.” A good example of the muddled statistics is the statement by Druce, “I am quite confused as to how All Aboard florida can expect to divert 31,000 passengers from AMTRAK and 152,000 from air travel when these totals exceed the current passenger levels.” That may result from the railroadiers wanting the $1.6 billion loan so much. As I remember the old English saying, “If wishes were horses, all the infantry would be cavalry.”
The first conclusion of the study was that AAF would achieve 3.5 million annual ridership by 2019.
That is preposterous. The entire population of the four big southern counties that would be serrved by an AAF passenger service (McDade, Broward, Monroe, and Palm Beach) is 5,625,226. A ridership of 3.5 million is about 70 percent of the entire population. What kind of data could possibly predict that 70 percent of the entire southern population is going to abandon their cars and ride the train up to Orlando — every year.
The second conclusion of the Study was that AAF would achieve 4 million annual ridership by 2030.
That compounds the fallacy by predicting that 70 percent of the entire population would abandon their cars and ride up to Orlando on the train every year for a dozen years. I think it would kind to attribute this to the wishful thinking. As another version of the saying goes, “If wishes were horses, beggars would ride.”
The question is how could an objective government study be so fanciful?
The imaginary projection of ridership here is obviously not called for and cannot be based on actual factual data. There is factual data available that is inconsistent with F.R.A.’s conclusion. The oldest continuously operated passenger rail system in Florida is the Silver Meteor, which, along with its counterpart, the Silver Star, has been operated ever since its innaugural run from the New York World’s Fair in February 1939. Each running once a day, the Silver Star has 1,163 riders per day and the Silver Meteor, has 1,023. Together, that is 798,071 passengers per year, A ticket costs $43 one way. Those are the facts. There is a reason why imaginary statistics are called “pie in the sky. And now we learn he AAF has an agreement with Tri-Rail to keep its fares high. It seems that, not only does AAF want to pose as being privately funded while seeking capitalization from the government, it wants to pose as a free-enterprise paragon while eschewing competition by agreeing to keep ticket prices high.
The effect of the hypothetical figures from the F. R. A. “study” is to project 9,865 riders per day and 309 for each of the 32 trains per day that AAF says it will operate. The big problem with these numbers is that they have no correlation to the actual figures compiled by the Silver Meteor, Silver Star, or other trains of AMTRAK, which, if you will excuse the pun, have an actual track record.
The third conclusion of the Study was that an additional 10 percent of airline traffic would be diverted to AAF.
The airline mileage from Miami to Orlando is 133 miles. According to the study, there are 244 daily and 88,900 annual passengers who travel between Orlando and Miami by airplane. As Druce points out, its hard to rely on the study data of 152,000 passengers when there are only 88,900. What would you say, “Close enough for government work.”
The fourth conclusion of the Study was that 63 percent of car ridership would be diverted to AAF.
The automobile mileage from Miami to Orlando is 632 miles. According to the Florida Department of Highway Safety, the only way they keep such statistics is to rely on electronic traffic monitors at key locations, which can be viewed at www2.dot.state.fl.us/florida traffic on line. As of September 22, 2014, about 47,000 autos passed Okeechobee Boulevard on I-95 that day in two directions. Also about 35,800 cars passed Neptune Road near Orlando on the Florida Turnpike in two directions. I believe in the height of the snowbird season the numbers might be higher. However 47,000 plus 35,800 passengers is 82,800 trips per day. I am certain any competent study by a federal government agency would suitably refine those numbers even though the Florida Department of Transportation does not. But assuming that 82,800 is a close enough, then 63 percent is 52,164 passenger trips per day will be “diverted,” according to the study by the Federal Railroad Administration. That is 19,039,860 diverted auto trips per year. I am only counting one passenger per car. It would take a sophisticated government study to determine how many passengers that would mean per car, and the Florida Department of Transportation does not have that kind of statistics.
Nonetheless, Druce reads the study as saying 335,628 auto vehicle trips would be diverted each year from auto travel. I distrust the accuracy of any bona fide study that can confidently predict that 63 percent (and, not say, 62.5 percent) of auto travelers are going to give up the convenience of their automobile and drive to the nearest AAF station (You will have a choice of going either north or south to three, Miami, Ft. Lauderdale, and West Palm Beach.) in order to ride to Orlando.
The fifth conclusion of the Study was that 10 percent of bus service passengers would be diverted to AAF.
The bus mileage from Miami to Orlando is 236 miles, and costs $56. According to the Druce analysis, there are 1,526,000 annual bus passenger trips and 10 percent would be 152,600 per year.
The sixth conclusion of the Study was that 2 percent of ridership on AMTRAK would be diverted to AAF.
To start with AMTRAK’s service between Miami and Orlando and on to New York is undoubtedly the most reliable data base available to any agency studying passenger train service in Florida. It has been in continuous operation since 1939. It was taken over by AMTRAK in 1971. According to Wikipedia, the daily ridership on the Silver Meteor is 1,023 and the daily ridership on the Silver Star is 1,1167 or 2,190 per day. Two percent daily diversion to All Aboard Florida is only 44 passengers per day.
RECAP OF THE RIDERSHIP FIGURES
So what was concluded by the F. R. A. in its independent and impartial study on behalf of the United States Government as provided by Louis Barger Group?
Gain in General Ridership Per Year 3,500,000 3,500,000
Gain in Diverted Auto Riders Per Year 19,039,860 335,628
Gain in Diverted Air Riders Per Year. 88,900 88,900
Gain in Diverted Bus Riders Per Year 152,600 152,600
Gain in Diverted AMTRAK riders Per year 17,740 17,740
(Note I’m not savvy enough to comprehend Druce’s diversion of auto riders numbers. If 335,625 is 63 percent of the total, or 532,700, I don’t have any idea where it came from, but hee’s an expert.)
You divide that figure by 365 to get the projection of passengers per day of 11,080. You divided that number by 32, which is the number of trains scheduled per day, and you get 346 per train. That is less than AMTRAK, which has been running for 75 years. Why do we need it except to help FECR haul freight.
More significantly, Druce says the AAF train, in seven car sets will only have 446 seats, and 396 if one coach is a cafe car. Also, according to Druce, All aboard Florida has a contract with Tri-Rail restricting competition by limiting the number of AAF stations and pledging high fares.
Another issue unrelated to the contents of the EIS is the absence of any reference to AAF’s pledge to put up adequate collateral for the $1.6 billion loan. AAF President Michael Reininger said in the Reuters interview in June that “the loan will be fully collateralized by the company’s land, stations and track improvements.” This is confusing as usual. Reininger usually insists the companies are all separate in management and ownership. The corporate structure was obviously set up to isolate each corporation from the liablities of the others. It is believed that the F. R. A. will not require this data to be disclosed.
All we know is what we read in the papers, and that is that some of these corporations are holding companies and designed to have no assets; some have been unprofitable for years, including FECR, which holds title to right of way, the tracks, and improvements. and has debts of $640 million. There is a reason companies are labled “junk bond” companies. AAF and its affiliates insist they are “private companies,” even though they are trying mightily to get taxpayer capitalization and financial support. As a consequence, they claim that the key aspects of their business plan are proprietary secrets. On the other hand, in the context of the largest federal railroad loan in history, the taxpayers have a right to be convinced of the true substance of the collateral.
Obviously, the 24 state-of-the art locomotives that FECR ordered from General Electric were expensive and had to be ordered on credit. The locomotives have to be encumbered so that there is only so much equity left to pledge elsewhere. The same goes for their 500, 53-foot freight containers recently ordered to handle the expected growth in freight hauling. AAF has announced that it has ordered its eight passenger train sets from Seimens, which has a long-standing relationship with Disney. You might need a CPA to help you figure out where there is any solid collateral left for the loan. Suppose there is a bankruptcy later and a court seals the record from public review. One of my great fears is that our federal government will shield AAF from the scrutiny the public deserves, and, in the end AAF just might pull this off, and we’ll never know how they did it.
On the Internet, under AAF financials-articles, it says “Along with its shiny new trains and the second track, it plans to build along most of its Miami-to- Cocoa corridor and would put up as collateral its right to run passenger service on the Florida East Coast Railway right of way.” The question is how much will be left if these assets are previously encumbered? The Scripps/Tampa Tribune Capitol Bureau obtained a copy of the agreement of easement between AAF and FECR which provides, in pertinent part, that AAF owns:
. . . the permanent, perpetual and exclusive rights, privileges and easement over and across all of the real property within FECR’s main line right of way located in Florida for passenger rail purposes.
This has been justifiably criticized as somewhat etherial since there has not been a passenger service here in over 40 years and it has a history of failure. Other Fortress Group affiliates have substantial real estate assets, but they are protected by corporate firewalls — that is what they are designed for. Another document obtained by Scripps/ Tampa Capitol Bureau helps to explain. “Real estate would be a major profit driver, according to the document, and and transit -oriented real estate development is considered part of the project.” That is probably where the F. R. A. could obtain substantial collateral, if it would make the effort. We may have to amend our watchword — “It’s All About Freight! and Real Estate’’
Tom Monahan Observations On All Aboard Florida EIS Draft - A MUST READ
Early Observations on the E. I. S. By Tom Monahan September 26, 2014