Efficient, affordable, apolitical: Florida's HSR has everything CA's lacks (and, you know, it's actually completed)

Image by Wikimedia Commons

Manhattan Institute's Tim Rosenberger, Jr. (also Opp Now contributor) and Emily Murphy break down why they believe Florida's private-sector “Brightline” has been so successful: it doesn't need to manage CA's cap-and-trade costs, buy American-made materials as the Golden State requires, or bow to political interests to get funding. Their excellent compare-and-contrast follows, from City Journal.

Public infrastructure projects are often slow and costly. The private sector, by contrast, tends to complete things on time, on budget, and at a level of quality that Americans expect and deserve. Comparing a recently unveiled train line in Florida with California’s attempts to build a high-speed rail system demonstrates the superiority of privately managed projects.

Brightline, a high-speed rail line built and operated by Florida East Coast Industries (FECI), took its inaugural run last September. Its trains, which hit 125 miles per hour, travel between Orlando and Miami, and cross between the two cities quicker than a car or Amtrak ride. Taking the privately run rail is relatively affordable; tickets are competitively priced with both Amtrak and the airlines. Unlike many state-directed projects, FECI finished its high-speed line without unduly burdening public coffers. FECI gathered private capital and tax-free debt (or “private activity bonds”) before construction and also received millions in federal funding for construction, safety measures, and more.

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By contrast, California’s yet-unfinished high-speed rail line has been largely taxpayer-funded. The long-running boondoggle dates back to 2008, when the state voted to approve $9.95 billion for the train project. Planners, hoping to appease local constituencies, crafted a labyrinthine route that ensured the line would move through as many counties as possible. Inefficient design, combined with officials’ underestimating the difficulty of clearing California’s terrain, have delayed construction. Costs for completing the 15-year-old project now run an estimated $128 billion, some of which has come from out-of-state taxpayers.

California’s ineptitude highlights three key distinctions between Brightline and the Golden State project. First, since Brightline is privately owned, it is less reliant on government subsidies and thus more insulated from politics. This structure allowed FECI to plan a maximally efficient line, rather than, as California did, one that touched as many counties as possible.

Additionally, California’s cap-and-trade system to limit greenhouse gas emissions is an added cost in the western state that Florida’s FECI did not have to handle. In order to balance market efficiency and pollution management, the Golden State allots firms a “cap” amount of permissible emissions, which they can trade based on companies’ relative efficiency. Even given the program’s market-based design, it still presents an extra cost for California companies that FECI had not faced. The current cap-and-trade initiative lasts until 2030, when prices may change depending on how stringent new regulations are. In the probable case that prices of the caps will rise, it is in the rail projects’ best interests to finish construction before then, which is looking less and less likely for the public line.

Finally, unlike California and its state-directed build, FECI is not subject to longstanding “Buy America” policies. Those regulations require publicly funded transportation projects to use domestically produced materials, which are often costlier than imports. Whereas California has to purchase often-expensive, American-made inputs, FECI imports materials from Siemens, a German company. Private developers’ ability to use the most cost-effective inputs—and to avoid expensive compliance mandates—makes their construction work cheaper.

Read the whole thing here.

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Related:

• Should Fed grants cover economically/logistically doomed projects like High-Speed Rail?

• “Ready, fire, aim”: CA’n HSR full steam ahead despite financial unviability

• Libertarian president hopefuls on CA HSR: “Cut and run” the only option left

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