AAF Ridership Study is Out All Aboard Florida (AAF) produced their ridership and fare projection report and Nicole Rodriquez of our own TCPalm did a fine job of reporting on it. Here is a link to her article. (Rodriquez just happens to be one of the few bright spots at TCPalm, IMHO) The report was done by the Louis Berger Group, (LBG) a multinational corporation of engineers and bean counters that issue reports on infrastructure projects around the world. The report was paid for by Florida East Coast Industries (FECI), parent of AAF. I have no doubt that the cost of the 150 page report was quite high, and when you pay a lot for something you have a pretty good idea of what you’re going to get in return. The report has a lot of information. LBG will tell the reader the numbers produced are assumptions. These assumptions amazingly fall in line with what AAF has projected all along. The report does not delve into the cost side of the equation. Just best case scenario ridership and what a ticket will cost. These numbers equate to best case scenario revenue. LBG has a long history of producing reports for governmental infrastructure projects worldwide, where cost benefit and profitability are rarely if ever taken into consideration. Yet their website does list financial feasibility as an area of expertise. This report lists itself as an “investment grade” report; LBG is the company you call in to do these reports on huge undertakings. Why not allow them to look at both sides of the ledger. Both revenue and cost, and do a real economic feasibility report. I’m sure the investors, taxpayers and legislators would have liked to see that all in one place. I wonder why FECI didn’t pay for that as well. Maybe FECI thought that it was better to show everyone how much they could take in without concern for the cost of operations and the cost of servicing $1.75 Billion in debt.
The report does mention Tri-Rail although it doesn’t mention that Tri-Rail has never been profitable. It doesn’t mention that Tri-Rail costs Florida taxpayers upwards of $85 million dollars per year. Nor does it say that AAF will pull riders from Tri-Rail exacerbating losses. AAF says that they are not competing for the same riders but we know that isn’t true. An AAF representative even went as far as telling a local group that AAF signed a non-compete agreement with Tri-Rail. Not only will AAF sell tickets for travel between Miami, Ft. Lauderdale and West Palm, the area covered by Tri-Rail, the study done by LBG included surveys of Tri-Rail riders. After all who better to ask if they would ride a train than people already riding a train? There has been a lot of comparison between AAF and Amtrak’s Acela. Acela serves the northeast corridor which covers the cities of Boston, New York, Philadelphia and Washington, DC. Boston, NY and Philly have a combined population of 8.4 million compared to Miami, Ft Lauderdale, and WPB which combine for less than a million, 5.7 million if you count the entire population of their counties. While Orlando is synonymous with Disney and tourists with deep pockets, Washington is the biggest Mickey Mouse operation of them all with lobbyists and significantly deeper pockets. AAF representatives have bristled at the fact that the public has not rolled out the red carpet for trains hurtling through their communities 32 times a day. One of the main concerns is what will the taxpayers be on the hook for. Here on the Treasure Coast, with no stops, we’ll be absorbing the costs of maintaining the rail crossings and quiet zones with receiving zero benefit from the train. I don’t know of anyone who will travel 1 hour south to WPB to take a train to Orlando which is two hours north only then to be left without a car. AAF touts that this will all be done with private money or PABs, Private Activity Bonds. If AAF fails then it is the investors that lose not the public. Except that AAF has applied for RRIF loans (Railroad Rehabilitation & Improvement Financing), which are issued by the Dept. of Transportation. If AAF used a RIFF loan to pay off the PABs to lower their cost of borrowing, then the taxpayers would be on the hook if AAF failed. $1.75Billion is equal to 33 RIFF loans issued through 2012. By comparison the government (through various depts.) only lent Solyndra $536 Million, Fisker $193million, and A123 $249million. Three massive failures of note (there were others) and what should be a lesson in what happens when the government blindly lends money to speculative private enterprises. Locally we have Digital Domain, VGTI and Torrey Pines if we need a refresher course. What say you?