Infrastructure Past, Present, and Future Casebook/Brightline Rail System

Infrastructure Past, Present, and Future Casebook/Brightline Rail System

Brightline Rail System

This casebook is a case study on the Brightline Rail System by Adam Alamin, Zachary Robinson, Fahad Saad, Rodrigo Salas, and Mireen Yabut as part of the Infrastructure Past, Present and Future: GOVT 490-004 (Synthesis Seminar for Policy & Government) / CEIE 499-001 (Special Topics in Civil Engineering) Fall 2022 course at George Mason University's Schar School of Policy and Government and the Volgenau School of Engineering Sid and Reva Dewberry Department of Civil, Environmental, and Infrastructure Engineering. Modeled after the Transportation Systems Casebook. Under the instruction of Prof. Jonathan Gifford.

Summary

Brightline Rail is a high-speed train that operated under “All Aboard Florida” in its early development stages. In March 2012, Florida East Coastal Industries officially announced the project launch, which would connect Miami to Orlando. After multiple agreements, foreign investments, and funding efforts, Brightline officially began service in 2018. In 2019, the second phase of construction started in order to connect West Palm Beach to Orlando. Phase 3 is the final planned phase, and it is set to link Tampa to Orlando International Airport.  

Three main challenges during the first two construction phases were faced by the companies involved: the struggle to find funding, easement acquisition resistance, and accidents. When the project was first launched, it was the only entirely privately funded railway system in the nation, but government subsidies were later provided. Brightline is currently estimated to cost $6 billion, as opposed to the original estimate of $3 billion. Current funding is centered around tax-exempt private activity bonds and, while Brightline still receives private funding, the Florida state government and the federal government are heavily involved.  

Annotated List of Actors

• High-Speed Rail Alliance (HSRA)

Ownership and Operation:

• Florida East Coast Industries LLC
• Fortress Investment Group
• AAF Holdings LLC
• AAF Operations Holdings LLC
• AAF Operations LLC

Financing:

• Florida Development Finance Corporation[1]
• United States Department of Transportation – for funding approval[1]

Timeline of Events

Origins:

• May 9th, 2007: Florida East Coastal Industries Is purchased by Fortress Investment Group.
• March 22nd, 2012: FECI announces the launch of the project "All Aboard Florida" (later Brightline), a private rail system linking Miami to Orlando.
• October 3rd, 2013: The project is approved for the rights to a plot of land along SR 528.
• August 2014: Siemens USA announces it will build Locomotives and Passenger Cars for the project.

Initial Construction Period:

• October 29th, 2014: Project All Aboard Florida begins construction in Fort Lauderdale.
• November 10th, 2015: Florida announces a new name for the High-Speed Rail: Brightline.
• December 14th, 2016: Brightline’s first trainset (BrightBlue) consisting of four passenger cars and two locomotives, arrives in West Palm Beach.

Further Development and Events:

• February 14th, 2017: Japanese company SoftBank Group purchases Fortress Investment Group for $3.3 Billion.
• March 13th, 2017: The Railway’s second trainset (BrightPink) is brought to Florida.
• May 11th, 2017: Two more trainsets, BrightGreen and BrightOrange, are brought to West Palm Beach.
• October 5th, 2017: The final Trainset (BrightRed) is delivered to Florida.
• January 13th, 2018: The project’s first ride, from West Palm Beach to Fort Lauderdale, officially marks the start of the service.
• June 2019: The second phase of construction, linking West Palm Beach to Orlando, begins.
• March 25th, 2020: Brightline suspends all project services due to the dangers of the COVID-19 Pandemic.
• November 8th, 2021: Service begins again.

Maps

Phase 1: Miami - West Palm Beach

• Operation of Phase 1 began in 2018.
• Shared use line of 65 miles with freight
• Runs at a speed of approximately 79 mph.
• Estimates of ridership in 2019 were approximately 885,000 people.

Phase 2: West Palm Beach - Orlando International Airport

• Still under construction, and plans to be operational sometime in 2022.
• Spans from West Palm Beach to Cocoa up to Orlando International Airport.

• 120-mile upgraded shared-use line.30
• Will run at speeds between 110-125 mph.
• 35-mile new dedicated high-speed line.
• The Expected annual ridership is around 3+ million.

Phase 3: Orlando International Airport - Tampa

• 85-mile proposed dedicated line in the medians of I-4 and SR 417.
• Planned to run at 125 mph.
• Currently still in the planning phase.

This grant, an extension of the U.S. Department of Transportation's Rebuilding American Infrastructure with Sustainability and Equity (RAISE) program39, is planned to include 33 miles of fencing at hotspot trespassing locations along with other extensive improvements at all 333 crossings along the corridor, which will span from Miami to Orlando.

Part of these funds will also go towards installing an additional 150 warning signs and 170 additional suicide crisis hotline signs to reach out to individuals considering suicide.

Narrative of the Case

Project Description

In 2012, All Aboard Florida, a wholly owned subsidiary of Florida East Coast Industries, announced the plan to operate a passenger rail service between Orlando and Miami (Railway Gazette). This new express service offers an alternative mode of transportation for 50 million passengers, who currently travel by air or road between Orlando and South Florida. Being an infrastructure project of such a large scale, the Brightline Railway system has been in the works for the past decade and will not be fully completed for years to come. Nevertheless, the project was broken down into 3 phases. Phase 1 connects Miami with West Palm Beach through Fort Lauderdale. Phase 2 of the Brightline high-speed rail project extends the railway from West Palm Beach to Orlando. Phase 3 will include a rail line between Orlando International Airport and Tampa.

Project Construction

Due to the magnitude of the project and its various locations, multiple general contractors were hired at different phases for distinct portions of the work involved.

Suffolk Construction was contracted by All Aboard Miami for the pre-construction and as the general contractor for the nine-acre multimodal station built in downtown Miami. Work on the Miami-West Palm Beach section began in mid-2014 with the laying of new tracks and temporary surface lot closures in Government Center, Downtown Miami. Site clearing and demolition began in late 2014.

Moss & Associates, was the general contractor for the West Palm Beach and Fort Lauderdale stations. Work on the Fort Lauderdale station also began in late 2014 with the demolition of existing structures on site.

Construction work on Phase 2, between West Palm Beach and Orlando, was officially underway in June of 2019, following a groundbreaking ceremony at Orlando International Airport. Preliminary work on the corridor began in September of 2019 and began path clearing for construction of the Orlando–Cocoa portion in October of the same year.

The contractors involved in phase 2 are Wharton-Smith, The Middlesex Corporation, Hubbard Construction Company, Granite, and HSR Constructors. These five contractors are responsible for the development of 170 miles of new track into the completed state-of-the-art intermodal facility located in the new South Terminal at Orlando International Airport. Herzog is the managing partner for the HSR Constructors joint venture constructing the express intercity passenger rail system expansion project.

Phase 1 launched on January 8th of 2018, currently running 16 daily round trips. Phase 2, after several launch date setbacks, is scheduled for launch in early 2023. While passenger trains are not yet running, Brightline began to test trains in October of 2022 at 110 mph.

In 2014, All Aboard Florida placed a contract for five train sets with Siemens USA. The first train set was delivered in December 2016, while the last was received in December 2017.

Cummins won the contract to supply the QSK95 engines for the locomotives, while the interiors of the train sets were designed by the Rockwell Group. GE Transportation was contracted to provide a signaling system for the high-speed rail service.

Florida Power & Light Company and Brightline partnered for the supply of clean biodiesel to fuel the trains. Florida Power & Light agreed to supply more than two million gallons of biodiesel-blended fuel per year under the two-year contract.

Future Development

Brightline proposes to construct a high-speed passenger rail system between Tampa and Orlando, Florida; this project is recognized as phase 3 of the Brightline Railway System. Current passenger mobility is primarily provided by highways, particularly Interstate-4 (FDOT).  The Federal Department of Transportation states that projected transportation demand and travel growth, as prompted by social demand and economic development and compared to existing and future roadway capacity, show a serious deficit in available capacity. In addition, increasing population, employment, and tourism rates continue to elevate travel demand.

New stations along Brightline’s original Phase 1 and 2 routes are also programmed for future expansion under Phase 3. While the Aventura station between Miami and Fort Lauderdale is currently under construction, Brightline intends to connect its railway system 3 new stations: Port Miami on the southeastern archipelago of the Florida peninsula, Boca Raton between Fort Lauderdale and West Palm Beach, and the Disney Springs station located on the outskirts of Orlando heading towards Tampa. Phase 3 is programmed to begin construction in 2025 with a completion date slated for July 1st, 2028.

Funding & Financing

Funding Structure

The Brightline rail system is unique because it was initially America’s only railway system that was completely privately funded. While the government does provide substantial funding to the project, the rail system is still the only privately owned and operated railway in the United States. Florida East Coast Industries, which is a fully owned subsidiary of Fortress Investment Group, owns Brightline and is responsible for its operation. The initial cost for constructing Brightline was estimated at $3 billion but current estimates have the project costing $6 billion.

In its initial construction, Brightline received heavy investment from private entities. One of those was Virgin Group which had announced in 2018 that it would become a minority investor in the project. This deal allowed Virgin Group to rename the railway to Virgin Rail but was forced to pull back due to not upholding its financial promises.

The Brightline rail system still receives private funding, however, both the federal and Florida governments have begun to invest heavily in the project. Florida officials announced in June 2022 that Brightline rail will be receiving a grant award of up to $15,875,000 in federal funding from the U.S. DOT’s Consolidated Rail Infrastructure and Safety Improvements (CRISI) Grant Program. The grant’s primary purpose is to fund preliminary engineering activities and environmental approvals.

Financing Structure

Brightline’s financial structure revolves around the selling of tax-exempt private activity bonds (PABs). These bonds are issued by Florida Development Finance Group and are valued at $2.15 billion. These bonds are primarily used to help open new routes such as its Miami-Orlando train line, and expand the service to Tampa. Due to the pandemic, ridership and revenue numbers were below projections. It had a ridership of 180,000 and a revenue of just $6 million and had to suspend the service until November 2021. In 2022, ridership has increased by 22% and revenue has increased by 66%.

Budget Allocation

In 2017, Fortress Investment Group applied for $600 million in tax-exempt bonds to construct Phase 1 of the Brightline rail. In 2019, with Phase 1 being complete, $1.75 billion tax-exempt bonds were issued to build Phase 2 and Fortress Investment Group injected $150 million equity into the project. In 2020, $950 million in tax-exempt bonds was issued to aid in the construction of Phase 2 which was 35% complete. Finally, in 2021, the project received $400 million in taxable debt to build Phase 2 which was 65% complete.

In short, Phase 1 cost $1.2 billion, and Phase 2 cost 2.1 billion. Other expenses include capacity expansion and inline station at $400 million, land and contributed assets at $800 million, pre-funded interest and debt service reserve at $800 million, and development, ramp-up, and financing costs at $700 million for a total project cost of $6 billion.

Challenges

The three main challenges that arose during both the first and second phases of construction were the battle for funding, easement acquisition resistance, and the number of accidents that occurred upon Phase 1’s completion. Easement acquisition resistance is especially apparent in the second phase as the line must now construct a completely new alignment.  

For example, when acquiring funds for the second phase of construction, All Aboard Florida originally applied for $1.75 billion in tax-exempt bonds by the USDOT but after a lawsuit by Martin County, All Aboard Florida was forced to withdraw. They then lowered their application amount to $600 million. This was preceded by a similar lawsuit from Indian River County.

Unlike Phase 1, where the alignment was based on existing and repurposed freight rail lines, Phase 2 requires a lot of acquisition of new easements through existing counties. As with the example of the lawsuits with Martin County and Indian River County, resistance arises when a noisy interruption to private property is constructed in built in people's backyards.  

There is also the glaring issue of the high rate of accidents linked to the line since its short operation time. Dubbed the “deadliest train in the nation” or “death train” the first phase is linked to more than 60 dead and hundreds of injuries. The theory is that this is a high-speed rail line going through relatively slow-moving residential areas.

Key Takeaways/Lessons Learned

Complexity of Planning

Both hard and soft planning for Brightline has proven to be difficult processes. For example, many aspects of planning this project were based on projections that ended up either over-estimating or under-estimating costs such as those pertaining to construction and contracting. This leads to the need to re-organize the funding structure. While originally fully privately funded, Brightline eventually began receiving heavy investment from the federal government and the Florida state government.

While map layouts of Brightline’s railways offer many incentives such as creating a high-speed train with minimum stops with easy accessibility to tourists and travelers, the train also cuts through downtown areas and coastal cities of Florida. Despite these promising plans, it is evident that Brightline has failed to account for the safety aspect such as the number of reckless drivers and individuals such as homeless people seeking shelter near the train tracks.  

With the ongoing construction of Phase 2 and Phase 3, these safety issues must be addressed and kept in mind to prevent more deaths and life-threatening incidents from happening.  

Economic Impacts

Brightline has been a huge economic investment for both private entities and the government who have poured billions into the project. The good news is that Brightline has aided the economy significantly. So far, Brightline has added $3.5 billion to Florida's GDP. The rail line is also responsible for $2.4 billion in labor income and $653 million in federal, state, and local tax revenue. More than 10,000 jobs are created per year through rail-line construction and more than 2,000 jobs are created post-rail-line construction.

Discussion Questions

1) Considering the three phases of Brightline’s railway construction and how only one of them is complete, is this a project worth investing $6 billion in?

2) Dubbed the “deadliest train in the nation” the first phase of the Brightline railway is linked to 60 deaths and hundreds of injuries. What are some plausible solutions to the high rate of accidents linked to the Brightline railway?

3) Considering the current track that the Brightline railway is on, what do you think the future of high-speed rail in Florida will be like? Is there a chance that it will be successful in easing the flow of traffic?