State Politics

Foreign firms lining up to build U.S. rail

TALLAHASSEE -- As Florida puts the brakes on its high speed rail plan, corporations from around the world are eagerly pressing for bragging rights as builders of the first such line in the United States.

The Florida Rail Enterprise has delayed advertisement of a $70 million “early works’’ contract to prepare the Interstate 4 median for the line connecting Tampa to Orlando, which would have created about 2,000 jobs starting in March.

The advertising date was postponed from Nov. 15 to early next year, as Gov.-elect Rick Scott frets about unforeseen costs to Florida taxpayers.

Meanwhile, seven teams from around the world have lined up to bid on construction of the $2.6 billion line between Orlando and Tampa, which will be paid for largely with federal money. In addition to building the connection, the contract would require the

teams to do everything from supplying train cars to financing, operating and maintaining the line for up to 30 years.

Some of the big names on those teams include Cintra, Amtrak, Hyundai, Samsung, Mitsubishi, Siemens and Richard Branson’s Virgin Rail Group.

“There’s a lot of interest, especially from the car-building side, which is what we are, because everybody wants to be the first ones to get their high speed trains in America,” said Al Mincarelli, director of marketing and government affairs for Hyundai-Rotem, a member of one of the bid teams. “Every major train car builder is on that list.”

Meetings between Florida transportation officials and bid teams last month revealed that many of the groups are willing to cover any construction cost overruns and assume some ridership risk in exchange for the opportunity to build the first high speed rail line in the United States.

The contract also could give them first dibs on a leg connecting Orlando to Miami.

Michael Turner, program manager for Skanska, which is on a team with Siemens and several other groups, said it’s common for the private side of a public/private partnership to take on any construction cost overruns.

“I can’t see the model being any different. So if it costs me more money to build the bridges or whatever the case may be, I eat that,” he said.

The ridership question, he pointed out, is new. Florida transportation officials have a high speed rail ridership study from 2002, but the private teams have indicated they plan to do their own studies.

“Let’s be honest. There’s never been a high speed rail in the United States. So we really don’t know how that’s going to be perceived,” Turner said.

But his team, he said, is willing to consider taking it on.

One possibility, he said, would be sharing the risk with the state during the early years of operation while interest in riding the train, theoretically, builds.

“It could be the first three years we share the risk and the next 27 it would be all me,” Turner said.

On the flip side, if ridership exceeds expectations in the first few years, the state would share in the excess revenue, he said.

Hyundai’s Mincarelli was equally emphatic about covering all the construction costs. But he was more circumspect about absorbing losses due to low ridership.

“If there’s nobody riding the train, then there will be discussions,” he said.

Tim Brown, a spokesman for a seven-company team that includes Virgin, said it’s customary for the private sector to assume ridership risk in high speed rail projects.

“The most important thing at this stage is for the state to launch the proposal process,” Brown said. “By releasing the procurement, the state will enable the private sector to provide innovative ideas to make this project a success.”

State Sen. Paula Dockery, R-Lakeland, a high speed rail advocate, is a member of Scott’s transition team.

She expressed frustration Tuesday that the Department of Transportation hadn’t yet advertised the early works contract, which paves the way for the larger contract.

“One of the reasons we received so much federal funding is because we’re shovel ready,” she said. “To delay it now is sending the wrong message.”

She said she has discussed with Scott the private sector’s interest in investing in the project, and criticized state transportation officials for not giving him all the available information.

“It’s about job security. They don’t want to do anything to make the incoming governor angry. But they’re not listening to what he’s saying,” she said. “I don’t think Rick Scott is opposed to high speed rail. He’s opposed to entering a bad deal that doesn’t have

a good return on investment.”

Dockery said the private companies are talking about putting $300 million to $400 million on the table, which would cover the $200 million for construction not covered by the federal government.

She’s particularly intrigued, she said, by the possibility of a train car manufacturing plant opening in Florida that could supply high speed rail projects throughout the country.

“So for no investment,” she said. “We get an incredible return.”