When the first Brightline trains leave the station this summer, expect more commuters than vacationers to fill the seats.
All Aboard Florida’s Brightline is on the verge of launching its passenger train service between West Palm Beach and Miami on Henry Flagler’s historic railroad corridor, but officials say it could be three years before the company starts shuttling passengers north to Orlando.
All Aboard, which originally billed the Brightline project as a faster and safer way for millions of tourists and business workers to travel between South and Central Florida, has yet to begin construction on its West Palm Beach-to-Orlando leg.
The connection is a key part of Brightline’s business model — representing just under half of its riders and roughly 78 percent of its fare revenue, according to a 2015 ridership and revenue study of the project.
So, can the company succeed on South Florida commuting without the intrastate tourism capability?
Brightline says studies have shown strong demand for express train service connecting South Florida’s three main business districts — West Palm Beach, Fort Lauderdale and Miami. The service will appeal to a broad base of customers including commuters, business travelers and residents traveling for leisure, the company said.
The company points to Inrix’s Global Traffic ScoreCard, which ranks South Florida highways among the most congested in the state.
Although Brightline’s original vision called for the West Palm Beach-to-Orlando route to open months — not years — after the phase between Miami and West Palm Beach launched, Robert Poole, the South Florida-based transportation director for the Reason Foundation, said the delay doesn’t undercut the viability of the project.
“This probably will increase the length of time they need to break even or be in the black, but I don’t think it is going to be a devastating setback,” Poole said Friday.
With weeks to go until its late summer launch, Brightline has turned its attention to the other critical part of its business — South Florida commuters.
Brightline’s parent company, Florida East Coast Industries, this month began touting its residential towers rising next to the rail venture’s train stations in West Palm Beach and Miami, saying the 1,100 rental units offer a unique housing option for commuters looking to avoid interstate traffic.
Brightline is pushing the same message on its social media channels in an effort to convince those living between West Palm Beach and Miami that its trains provide a stress-free alternative to traveling by car. “So long, I95 traffic,” one of the company’s Facebook posts said above a photo of bumper-to-bumper cars. “With # goBrightline , commuting back and forth from Miami will be a breeze.”
Brightline’s timeline released as part of the 2015 ridership and revenue study called for trains to first start carrying passengers between Miami and West Palm Beach in mid-2017, with service between West Palm and Orlando a few months later. But track work between West Palm Beach and Central Florida has been delayed by a myriad of legal challenges, permitting issues and financing setbacks.
More recently, Brightline officials have repeatedly said it will be at least two years from the time the company starts construction on the West Palm Beach-to-Orlando leg to the start of its service on that corridor.
“Brightline continues progress on its Phase 2 extension to Orlando,” the company said in a statement released last month. “We look forward to continuing to work with the communities in the Treasure Coast, especially on partnerships with quiet zones, similar to our efforts in South Florida. These are important steps forward as we build a transportation system for Florida’s future.”
Phillip Brown, executive director of the Orlando International Airport, which houses Brightline’s northernmost station, said airport officials have been told the company’s trains won’t start carrying passengers to Orlando until “late summer or fall” of 2020.
Construction on the airport’s $221 million transportation hub, which includes Brightline’s station, is nearing completion. The building is slated to open for ground transportation this fall, at which point Brightline will be required to start paying rent, Brown said. Brightline has pledged $10 million for the facility.
Meanwhile, All Aboard, which has pushed to sell tax-exempt private activity bonds to help pay for the construction of Brightline’s second phase, now appears to be reconsidering whether to pursue a federal loan instead.
The company initially sought a $1.6 billion Federal Railroad Administration loan, but abruptly changed course in 2014, announcing that it planned to sell $1.75 billion in tax-exempt private activity bonds. But the tight municipal bond market forced the company to shelve the sale.
In an April 11 letter to the U.S. Department of Transportation, Brightline CEO Dave Howard said the company intended to “submit promptly” an application for a Railroad Rehabilitation and Improvement Financing loan, adding that it planned to use the proceeds to complete its service between Miami and Orlando.
No formal application has been received, a spokesperson from the Department of Transportation said Thursday.
Brightline officials said they continue to weigh all financing options.
“The company has invested $1.3 billion to date in the system,” it said in a statement Thursday.
Steve Ryan, a Washington, D.C.-based attorney representing Citizens Against Rail Expansion, also known as CARE-FL, called the loan a “huge concern” for U.S. taxpayers, saying it could leave the government on the hook if Brightline can’t pay its bills.
“This railroad will not be built without government subsidies,” Ryan said Friday. “The subsidies they are seeking don’t make sense for the taxpayers.”
In addition to the financing, Brightline is also working to secure permits for its northern stretch — a requirement that could open up the company to more legal challenges from opponents on the Treasure Coast who have argued frequent trains traveling up to 110 mph will be a safety hazard.
Before its trains can head north, Brightline must update the existing tracks that run between West Palm Beach and Cocoa in Brevard County. A new 40-mile-long section of track linking Cocoa and Orlando must also be built.
Adding to potential challenges, if it wants to pursue the loan from the Federal Railroad Administration, Brightline would be required to revisit a 2 1/2-year-old environmental review of the project.
In 2015, the agency concluded Brightline would have no adverse effects on communities from Miami to Orlando if increased safety efforts and noise reduction plans are completed. But it never cemented its findings because All Aboard stopped pursuing a loan with the agency, according to the agency’s website.
Michael Reininger, executive director at Florida East Coast Industries, expressed frustration with the regulatory process during his testimony before a federal subcommittee on transportation last month. Reininger, who appeared before the group to discuss the challenges and opportunities facing intercity passenger rail, said the company is still trying to secure permits to start the work two years after federal officials released their findings.
Brightline’s 2015 ridership and revenue study, which was based on both legs of service starting in 2017, called for a three-year “ramp-up” period before ridership stabilized in 2020.
The report projected that by 2020, 2.8 million people would be riding the service between Brightline’s three South Florida stations in Miami, Fort Lauderdale and West Palm Beach, generating $64 million in fare revenue. Roughly 2.5 million passengers were expected to take the trains between South Florida and Orlando, generating $229.4 million.
Tourists, business travelers and Florida residents make more than 110 million trips a year between the three South Florida cities and Orlando, according to the report. The study found Brightline’s trains would capture about 10 percent of those trips , and 1.2 percent of trips between the three South Florida cities with Brightline stations.
Rental apartments and office and retail space connected to Brightline’s stations will provide additional revenue for the company, Reininger said.
Brightline’s MiamiCentral station includes 300,000-square-feet of office space, 180,000-square-feet of retail and dining space.
In West Palm Beach, 290 rental units are under construction next to Brightline’s station. The 24-story residential tower is expected to open next year.
“Our business thesis is quite simple,” Reinginer said at last month’s hearing. “We believe that markets comprised of city pairs that are 250 to 350 miles apart present opportunities for trains to provide a more efficient, comfortable and reliable alternative to cars and planes. The addition of integrated real estate development aligns two economic engines that directly support one another and creates a unified business platform that has more than one way to pay the bills.”