All Aboard Florida to lose millions annually, economist says
Posted on February 18, 2015
By Anjali Fluker
A group fighting the $2.5 billion All Aboard Florida intercity passenger rail said a new economic analysis of the project shows it could lose more than $110 million a year.
Citizens Against Rail Expansion in Florida (CARE FL), which has been against the project for the last several months, on Feb. 18 announced it commissioned former White House economist John Friedman to conduct an analysis of the planned 235-mile project.
The train is set to connect downtown Miami to Orlando International Airport with stops in Fort Lauderdale and West Palm Beach.
Friedman, associate professor of economics, international affairs and public policy at Brown University, in the report concluded:
- All Aboard Florida will charge an average ticket price of $34 one way and attract between 1.5 million-2 million riders.
- The train system will generate annual losses of $110.7 million and will be unable to service the company’s large debt burden. Projected annual revenue is $95.8 million with operating costs of $81.5 million and debt-service costs of $125 million.
- Tickets would have to be priced at $273 one way, “even under unrealistically optimistic assumptions,” to service All Aboard’s debt. The only other option for additional revenue would be from All Aboard’s related real estate.
- All Aboard is expected to get $50 million-$73 million in taxpayer subsidies per year, since it plans to issue $1.75 billion worth of private activity bonds — tax-exempt bonds similar to municipal bonds.
- The company will benefit from $13 million subsidies per year from the state of Florida as well as local governments in the form of a state-funded station in Orlando and safety upgrades and maintenance along the rail line.
See the full Friedman report here.
“For months now, homeowners and residents in the communities CARE FL represents have repeatedly expressed their concerns about the proposed rail project and the adverse impact it will have on the communities along the way,” said Bill Ward, CARE FL chairman, in a prepared statement. “We cannot have 32 trains rumbling through our communities on a daily basis, causing gridlock on our roadways and waterways as well as creating barriers for first responders. The project not only impacts the character of our downtowns, but it will also erode the quality of life that we all enjoy.”
Representatives from All Aboard were not immediately available for comment. However, the company in the past has said the private activity bonds will not require taxpayer dollars.