Florida High Speed Rail Bidders Frustrated, Perplexed
Friday, February 18, 2011 - 07:26 PM
(Matt Dellinger, Transportation Nation) When Governor Rick Scott (R) announced this week that he planned to return $2.4 billion in federal grant money for a proposed High Speed Rail line that had already been three decades in the making, many were shocked. A bipartisan group of Floridian Congresspeople—including the House Transportation and Infrastructure Committee chair John Mica (R-Fla.)—was almost literally falling over itself with consternation at a press conference yesterday as they announced an emergency effort to keep the funds in Florida.
To one member of the Florida Mobility Partners—one consortium that had expressed interest in building Florida’s high speed rail line—the announcement was downright disturbing. “What does [the Governor] have to lose?” Nora Friend, the Vice President of Public Affairs and Business Development at the Spanish rail company Talgo asked, when I reach her by phone today. “To allow all of these strong companies and
concessionaires to do their own diligence and to come and see if they could make it work? What would the state lose?”
Indeed, Scott’s decision came at a highly disorienting moment for prospective bidders. At least eight teams had assembled and were anxious for the state to issue its formal Request for Qualifications. The RFQ was drafted late last year and, according to Friend, bidders were expecting its formal issue within a month.
The state was clear in its hope that the eventual public-private partnership would be a DBOM&F (Design-Build-Operate-Maintain-and-Finance) arrangement. As such, to be eligible, each consortium bidding would have had to present a financing plan as part of their initial proposal. At a hearing in November, Friend said, her consortium had gone on the record as saying they were confident they would be willing to accept the risk of construction costs, currently estimated at $280 million (or roughly 10 percent of the total cost). This, of course, is the very risk from which the Governor wanted to save Florida taxpayers.
Friend wasn't willing to guarantee anything—the due diligence wasn't done, and bidders don't like to show too many cards—but she felt that with the strength of tourism (Disney) and the chance to extend the line to Miami, the project looked healthy and doable. "We feel that the project warrants the risk, with the expectations for the second segment to Miami," she said. "Unfortunately this is the third time around for Florida. It’s unfortunate for the United States because we are lagging behind so terribly because of politics. All these partisan issues, and in this country they choose, unfortunately, rail as one of those very contentious partisan issues. And we think it’s just terrible. If we don’t assume some risk and launch at least a first initial project that can be successful, the rest is not going to come."
"You can tell I'm frustrated," Friend apologized. And with good reason: Talgo suffered similar disappointment last year when Wisconsin Governor Scott Walker (R) returned Wisconsin's share of HSR stimulus money just months after the company opened a rail car factory in Milwaukee. "It seems like wherever we go, they’re returning all these ARRA (American Recovery and Reinvestment Act) funds," Friend said. "We basically did everything the administration was hoping for—to attract companies and technologies, to transfer this know-how to the United States." The Milwaukee facility is making four trains, two for the Hiawatha line and two for the Cascades line between Seattle and Portland. "We’re going to be forced to shut down the manufacturing part of the facility after we deliver those four trains in early 2012."
Friend believes that it's time for the Florida State Legislature, the DOT, and the people of Florida to speak up in favor of the plan. She's obviously watching closely to see what fruit current negotiations bear. "We are hopeful that Secretary LaHood is not going to rush, like the U.S. DOT did to take away the funds from Wisconsin and Ohio. We hope that they’ll try to figure out how to make it work. We are very—I'm not sure how to say this politely—disheartened may be a good word—about this governor’s decision of returning the funds and not going ahead with the project, without any proof to validate his concerns."
“The truth is that this project would be far too costly to taxpayers and I believe the risk far outweighs the benefits,” the governor said in making the announcement earlier this week. “President Obama’s high-speed rail program is not the answer to Florida’s economic recovery.”
Transportation Nation posted Scott's speech where he laid out his reasons for the decision.
Even if Secretary LaHood, Senator Nelson, and others find a legal, willing place to park $2.4 billion, the path forward relies on Governor Scott's cooperation. But there's only one way to find out who's right and who's wrong about whether the private sector is willing to bear the risk in building high speed rail: let the bid process move forward. And let the consortia place their bids.