Financing rail gets 2nd look
May 2, 2010
Private companies - mostly dormant for the past half century in U.S. rail investment - have begun to look at how they can profit from and help build Florida's high-speed rail system.
Dozens of manufacturers, vendors and train operators from here and abroad activated campaigns to profit from groundwork the Obama administration laid when it allocated $1.25 billion toward construction of a high-speed rail line between Tampa and Orlando in January.
While lawmakers on Capitol Hill expect federal money will fill Florida's funding gap on the $2.56 billion project, some of the world's largest transportation companies and a handful of investment firms have taken steps that could reinforce the government's high-speed plans.
"Government provided a jump-start but cannot do it alone," said U.S. Rep Kathy Castor, D-Tampa.
Private sector companies are expected to bid to become the concessionaire for Florida's rail project.
The winning company would subcontract with others to design, build, operate and maintain the rail, overhead electric lines and passenger equipment required for the Tampa-Orlando trains that are expected to reach 168 mph.
The interest by the private sector is keen.
In March, 40 companies, investors and rail operators came to an Orlando conference organized by the U.S. High Speed Rail Association, a nonprofit advocacy group. That was on top of the more than 500 people who gathered at a Florida Department of Transportation industry forum in December on Florida's high-speed rail program, even before the state won its federal stimulus money.
"The competition is good news for Florida and the entire national high-speed rail program," said Castor, who attended in March. "Private sector companies with innovative rail technologies are going to create a number of good paying jobs."
Among those in attendance were Siemens AG, HOK architects and the Japan International Transport Institute.
December's gathering, said Kevin Thibault, interim director of Florida Rail Enterprise, "was like the United Nations, every country you can think of."
While part of the allure of U.S. high-speed rail is to use electric-powered technology that would reduce the country's reliance on foreign oil, it's also true that many manufacturers of rail equipment and systems are foreign based.
That's because the United States has invested in little beyond local and commuter rail systems since the decline of passenger railroads in the 1950s, with government-backed Amtrak struggling with minimal capital improvements since it began service in 1971.
That has led to critics challenging who will benefit from federal stimulus money for high-speed rail beyond short-term construction jobs.
The Obama administration has said that more than 30 manufacturers have agreed to expand or create U.S. operations if they get contracts.
"A key thing to point out is that we have manufactured passenger rail equipment in our U.S. facility in Sacramento for more than 25 years," said Becky Sabin, director of communications for the mobility division of Siemens Industry, a U.S. division of the European industrial conglomerate based in Germany.
The company envisions offering a variant of the Velaro high-speed trains it has built for Germany, Spain, China and Russia.
Siemens is not alone in its interest in landing a contract with Florida. Canadian manufacturer Bombardier, the Central Japan Railway, Alstom of France, and Talgo - whose light-weight Spanish-designed trains operate on Amtrak runs between Eugene Ore., and Vancouver, British Columbia - were among participants at the March meetings.
Private investment could help get trains rolling sooner and faster, and fill in gaps in Obama's original network proposal, said Andy Kunz, the high-speed rail association's president and chief executive.
"The government money is really just seed money," said Kunz, whose Washington-based group is among the most aggressive and optimistic of high-speed rail advocates.
Last month, the rail association organized a session in Miami in which vendors, a Japanese bank and an insurance company interested in high-speed rail investments participated. U.S. firms amounted to about 70 percent of the three dozen participants that discussed creating a $100 billion private investment fund, Kunz said.
The American Association of State Highway and Transportation Officials has added high-speed rail to its role of educating the public and decision makers on how transportation affects the economy and quality of life.
It organized a meeting in Chicago in April drew more than 200 domestic and international manufacturers and suppliers of passenger rail equipment. A Chicago-to-St. Louis route is among the corridors that got early Obama administration backing, with a $1.1 billion federal stimulus grant to improve track.
Public investment a catalyst
"I think public investment was the key to getting things started, but over time there will be more and more interest in private investment," said Gene Conti, secretary of transportation for North Carolina and head of the highway association's rail committee.
"I think the real issue is to make a commitment to what is reasonably achievable, deliver what you promise and follow through with service," he said.
That is the Florida strategy, with the Tampa-Orlando route expected to be operational by late 2014 or early 2015, to be followed by an Orlando-Miami segment by 2018 if money can be found. The state is using its money to continue planning on the south Florida phase.
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