Monday, May 10, 2010

EACC passenger rail conference brings praise, outlines strategies

At the heart of Wednesday's European-American Chamber of Commerce (EACC) 2010 Urban and Regional Public Transportation Conference was strong praise for President Barack Obama's national vision and Ohio Governor Ted Strickland's statewide vision for high-speed passenger rail.

American and European business, government, and policy experts convened at the Westin Hotel for a day-long discussion of economic development, technology, and financing, with a heavy focus on Ohio's 3C Corridor passenger rail project.

That project would connect the cities of Cincinnati, Dayton, Columbus, and Cleveland via 256 miles of existing rail lines.

A $564 million "Quick Start" service, with trains traveling at conventional speeds of 79 miles per hour or less, could be up and running by 2012. A study by Amtrak estimates that 478,000 passengers would use the service annually.

The service is part of larger Ohio Hub plan, a statewide network of rail lines that will connect into the proposed Midwest High Speed Rail network and the dedicated Empire and Keystone rail corridors, opening up rail travel to such markets as New York City, Philadelphia, Chicago, Minneapolis and Toronto.

"One of the most interesting things is that nobody in our circles thought Ohio was ready," said Rick Harnish, executive director of the Midwest High Speed Rail Association. "To have the governor be so aggressive at getting that money, you should be behind it."

Filling the 'donut hole'

In January, Ohio received $400 million in American Recovery and Reinvestment Act funding for 3C. The Ohio Rail Development Coalition (ORDC), an arm of the Ohio Department of Transportation (ODOT), will administer the funds.

Part of the challenge in applying those funds is in making sure that 3C doesn't negatively impact the movement of freight along Ohio's rails, said ORDC Executive Director Matt Dietrich.

"We need this to be a win, win, win for everyone," he said.

Cincinnati Union Terminal, the top local choice for a Cincinnati station, is clogged with two intermodal and two freight yards. The addition of a fourth main line through the Mill Creek valley, currently under study by the Port of Greater Cincinnati Development Authority and ODOT, would be necessary to alleviate that congestion.

Because of that, a temporary station has been proposed for Bond Hill. In this case, "temporary" could mean 20 years.

But, although imperfect, Dietrich said that "Quick Start" is important to fill the "donut hole" that Ohio represents in the passenger rail network.

Now the challenge is to grow the service and capture value, he said.

"Ohio has lost half of its railroad infrastructure since World War II," Dietrich said. "It's going to take a while to get that back."

"Let's think big," Harnish said. "Let's think bold. Turn that $8 billion [in ARRA-funded transit projects] into $20, $30, $40, $50 billion – so we can start catching up with the rest of the world."

Josh Coran, director of operations at Talgo, Inc. agreed. Spanish-owned and based in Seattle, Wash., Talgo operates the Amtrak Cascades line between Vancouver, B.C. and Eugene, Ore.

"We need to do it quickly," Coran said. "The stars are aligned. But stars don't stay aligned. We see the political arguments against us. We need to strike while the iron's hot."

Working together

"If you look at our nation, the whole pathway to our history was built by transportation," said Jolene Molitoris, director of ODOT. "Whether it's canals, or railroads, or two men from Dayton who believed we could fly."

In 2008, ODOT convened the Ohio 21st Century Transportation Priorites Task Force, a 55-member group charged with studying the ways in which all modes of transportation could work together to promote safety, economic development, and sustainable growth.

What emerged from the process, Molitoris said, were seven words that have become ODOT's mantra: "Moving Ohio into a prosperous new world".

Behind this mantra is the concept of "One ODOT" – all divisions of the department working together toward a common transportation goal.

"What kind of economic driver are we going to create?" Molitoris said. "And what more exciting task for us to have than to work together as one team to make this happen."

This concept of an integrated network can be seen in large parts of Europe, China, and Japan, where expansive high-speed rail systems tie into local conventional-speed networks, streetcar systems, and bus lines.

Hervé Le Caignec, senior vice president of international business development with transportation and logistics firm SNCF, said that the success of high-speed rail in France has been due to its fully-integrated system, which includes 1,200 miles of high-speed rail and 4,400 miles of track running conventional-speed trains.

But success also comes in the way the system's operated, and should include partnerships inside and outside of the country.

"When developing a passenger rail system, you have to think of all of the links you have to draw people into your system," Le Caignec said.

It also has to be thought of as part of an overall strategy, he said.

"Don't view your project as standalone infrastructure," Le Caignec said. "You have to think of all of the agreements you can have with other industries to increase revenue."

Al Engel, vice president of high speed rail with AECOM Transportation, agreed that the "full system" approach has been the key to France's success.

Those lessons can be applied to a uniquely American system, he said.

"If you want to get into high-speed rail, you have to design the whole thing as a system," Engel said. "I think we've seen the light. All we have to do is develop it well."

Funding sources

The United States began to pursue high-speed passenger rail in earnest in the 1930s, developing ever more efficient streamliners throughout the 1930s and 1940s.

But war, highway construction, and the growth of air travel stifled the growth of the service, as did new federal regulations requiring all lines traveling at over 79 miles per hour to install cab signaling, automatic train stopping, and other safety equipment.

Since the early 1980s, attempts to revive programs in states such as California, Florida and Texas have failed. None had a dedicated funding system.

"We really need a dedicated funding source for high-speed rail," Engel said. "We need the authorization of another transportation act."

Reauthorization of the federal transportation bill is scheduled for this year but is currently stalled in Congress.

But Le Caignec said that France has no single funding model. While there is a large outlay of public funding up front, mostly private funding fuels the system's operation.

"The operators do not own the infrastructure," he said. "That means there is open access to the lines, provided operators pay track access fees."

Passenger fares and assorted fees are expected to raise more than $12 million annually for operation of the 3C – leaving an estimated $17 million annual funding gap.

Christine Vineis, whose company Capital Partnerships helped put together Ohio's ARRA application, said that advertising can help defray some of those costs.

Her firm's exhaustive study showed a conservative estimate of $4.3 million in annual advertising revenue for advertising on the interior and exterior of trains, within the stations, and station branding, assuming three trains per day and only six stations.

A 'game-changer'

In other countries, the development of high-speed rail has taken decades. The 3C Corridor project could take 15 to 20 years to build out, as it is essentially a blank slate.

Calling 3C an economic "powerhouse", Molitoris pointed out that although only 6 percent of federal economic stimulus funding has been dedicated to transportation, 25 percent of the resulting job growth has come from that sector.

"The ROI [return on investment] for transportation infrastructure is beyond anything that most of us ever talk about," she said.

GE Infrastructure President and CEO John Rice agreed that infrastructure is a long-term investment, and should be thought of as such.

"Infrastructure is an investment that defies the traditional cost-benefit payback models," he said. "You're looking at investments that sometimes take 15, 20, 25 years to mature."

Cincinnati Vice Mayor Roxanne Qualls is among those who lament America's neglected infrastructure.

"I consider infrastructure to be the sexiest word in the English language," she said. "But we are on the verge of what we used to call a Third World country when it comes to our infrastructure."

Qualls called the 3C Corridor project a "game-changer" for Cincinnati, saying that the choices we make in our transportation development can either reinforce or undermine our ability to exchange goods, services, and information with the rest of the world.

For the past 25 years, Cincinnati has relied almost solely on the Greater Cincinnati-Northern Kentucky International Airport (CVG) as the driver of economic investment.

But, in 2009, CVG saw the worst decline in passenger traffic of the nation's top 100 airports. Delta has announced massive layoffs and gate closures, and Delta/Northwest flights have increasingly chosen to use Detroit as their hub.

"This will have a direct impact on this area's ability to attract international investment," Qualls said.

A 2005 study by the Brookings Institution entitled U.S. Cities in the 'World City Network' (PDF) ranked Cincinnati and Columbus in the seventh tier of cities when it comes to global connectivity. Cleveland ranked in the sixth tier.

The study concluded that American cities, as a general rule, are less globally-connected than their European Union and Pacific Asian counterparts.

Increased access to America's better-connected counterparts can only help Ohio's cities, Qualls said.

"Intercity high-speed rail is what will allow Cincinnati eventually to become a suburb of Chicago," Qualls said.

Do developers remember how?

The firms of Woolpert and Forest City Enterprises are deeply involved in Ohio's transit-oriented development (TOD) projects. Forest City has done more TOD work than any other firm in the country.

Both Shane Imwalle, senior vice president of client development with Woolpert, and Jim Richardson, vice president of Forest City, took time to highlight their work on Center of Flight, a large mixed-use TOD planned for the 3C stop in Riverside, just northeast of Dayton.

The development will capitalize on the adjacent Wright-Patterson Air Force Base, Ohio's largest employer and its largest attraction outside of the state's amusement parks.

Developers didn't see the project's inherent value until Forest City came along.

"Ohio has had roughly a 40-year drought in the development of its rail infrastructure," Imwalle said. "So developers and planners, quite frankly, don't know how this type of development works."

Richardson said that his company has been able to use its expertise in building public-private partnerships and in plugging into tax increment financing, U.S. Department of Housing and Urban Development funding, and local parks and recreation money to move the project forward.

These partnerships are important because they can benefit the state, and the country, as a whole, he said.

"We hear a lot about speed in Ohio," Richardson said. "Speed is important, and speed will eventually come. But I think, ultimately, that this project provides the opportunity for cities to connect their assets together."

'You can't use what you don't have'

"Going from 0 to 79 is a really big step," Molitoris said.

But ODOT and the ORDC are ever mindful of how to continue to get their message out. In addition to the project website and public meetings, they have been focusing on talking to groups like EACC and meeting with Ohio businesses and city leaders.

"Ohioans really underestimate the productivity, safety, and benefits that rail transportation provides," Molitoris said. "Nobody has to ride a train. They can still drive if they choose."

Still, many remain unsure whether or not the service will be competitive or convenient enough. Sixty percent of American's have never ridden public transportation.

"You can't use what you don't have," Millar said. "When we go out and discuss rail transportation, we often have to go in and actually explain what public transportation is to people."

Millar said that energy prices, environmental concerns, and population growth are all trends that help the high-speed rail cause.

The rising costs of regional flights could potentially open new rail markets as well. Today's median flight length is 750 miles, with the half of flights below the median only carrying 25 percent of the total passenger volume.

He also pointed out that, when put to a public vote, public transportation tax and bond issues pass approximately 70 percent of the time. Levies for schools, libraries and parks pass at approximately half that rate.

What is really needed, Millar said, is a national policy that maximizes public support. He cited as an example early maps of the Interstate Highway System, where a person could visualize being able to drive from Cleveland to San Francisco without encountering one stop light.

"We need to come up with a concept that the American people can look at and say, 'That makes sense,'" Millar said.

The bottom line

Qualls said that there are several steps that the state, region, and nation need to take in pursuit of a well-connected high-speed rail system:

  • Start "singing off the same page", and be prepared to come to the table with the required local match that makes things work;
  • Become more sophisticated with public-private partnerships;
  • Start educating policymakers about the benefits of high-speed rail; and
  • Figure out how to create a communications program that connects with taxpayers and real voters.
"The bottom line for Cincinnati, if we are not connected, if people are not mobile, we become a backwater," Qualls said. "If the U.S. does not [pursue high-speed intercity rail], people from Europe and Asia will be visiting us because we're 'charming'. And not too soon."

Aerials courtesy of Google Maps.

Previous reading on BC:
Implications of 3C, high-speed passenger rail subject of EACC conference (4/26/10)
EACC to hold public transportation conference here (4/6/10)
Cincinnati to apply for federal transportation grants (4/1/10)
ORDC study: 26,000 Ohio residents employed due to rail, with more to come (3/30/10)
Transportation task force wants your input (5/27/08)