The New Incrementalism: Building and Financing US High-Speed Rail Sharon Greene Principal, Sharon Greene and Associates, USA Sasha Page Vice President, Infrastructure Management Group, USA
The New Incrementalism: Building and Financing US High-Speed Rail Refocus of US high-speed rail (HSR) development policy Incremental upgrade of integrated transportation system Integration of HSR with development patterns Prioritization of foundation projects Funding and financing follows form From high-speed to high performance rail: competing service needs + political division + uncertain funding 2
Refocus of US HSR Development Policy Change from high-speed rail to high performance rail Funded US HSR Projects Core Express Regional Emerging Emphasis on incremental implementation: shift from top down to bottom up 3
Refocus of US HSR Development Policy Los Angeles to San Francisco Nation s first 220-mph HSR system Seattle to Portland New stations, new daily trains, and faster service Chicago to St. Louis 110mph speeds and new trains Chicago to Detroit 30-minute reduction in trip time, 110mph service, and enhanced stations Northeast Corridor (NEC): Boston to Washington, D.C. Allow speeds of 160mph between Philadelphia and New York Charlotte to Washington, D.C. New daily trains and decreased travel times 85% of investment in 6 high performance corridors, of which 2 have HSR potential 4
Refocus of US HSR Development Policy Remaining 15% is broadly distributed across 30 states 5
Focus on Integrated Transportation System Development Blended systems, with integrated infrastructure investment Funded US HSR Projects High performance / high-speed rail Amtrak Commuter rail Urban rail feeder services Multimodal hubs Blended operations, with integrated service Progress from shared use, to coordination of service, to interoperability, to exclusivity 6
Focus on Integrated Transportation Systems Development California HSR example: Blended systems & operations key element of implementation strategy Early investment on bookends - early commitments to Caltrain electrification and Metrolink commuter rail upgrades Unified northern California service on first HSR construction section, Amtrak, and ACE commuter rail Build HSR initial operating section from Merced to San Fernando Valley High-priority goal to close gap in state rail system between Bakersfield and Palmdale Linkage to Las Vegas via Xpress West (formerly Desert Express) NEC and California HSR implementation strategy: blending, phasing, investing in early benefits 7
Integration of High Performance/HSR with Urban and Regional Development The Great Reset Holistic approach to planning Regional development patterns, land use planning, transportation oriented development Economic development, job creation Overall mobility and quality of life Frames approach for funding and financing The one technology on the horizon that fits the geographic scale of megaregions and can help spur more intensive development of those regions is high-speed rail. -- Richard Florida 8
Prioritization of Foundation Projects Demonstrate early success Address immediate mobility and congestion needs Develop political support Address funding realities Examples: Gateway Project, NY/NJ cornerstone for start of NEC masterplan; replacement of ARC project; enhance commuter rail, intercity rail, HSR Transbay Terminal Project, San Francisco serve California HSR, Caltrain, MUNI, BART rail and bus Identify consensus projects that will demonstrate early success and garner political support 9
Foundation Projects: Enhancing Existing Intercity Rail Amtrak already provides some Texas intercity services Amtrak Texas Service New commuter, intercity, and potentially HSR will strengthen that network Dallas-Fort Worth: Cotton Belt Line Austin San Antonio: Lone Star Rail District Dallas Houston: HSR studies Focus on Foundation Projects 10
Working Within HSR Corridor Designations Two linked segments are in national HSR plan Designated Texas HSR Corridors One follows existing Amtrak corridor Dallas Houston service not officially in plan TxDOT currently studying potential routes Private consortium, Lone Star High-Speed Rail, also studying this corridor Regional projects are first-of-all intercity projects 11
Austin to San Antonio Provide intercity/commuter rail service within growing Texas region Lone Star Rail District Plan Plan would be to acquire existing United Pacific (UP) line UP would build new alignment outside of urban areas Could expand service north eventually to Dallas Fort Worth Funding options: federal/state grants, tax increment, value capture, local support Project falls into grey area between commuter and intercity rail; could be integrated with HSR in future 12
Dallas to Fort Worth: Cotton Belt Line Provide 60+ mile commuter rail for northern section of DFW Metroplex Cotton Belt Line (in blue) Would link to DFW airport DFW will be connected to light rail Some commuter rail as well DFW might serve as HSR terminus, although planning is uncertain Funding options: federal transit grants, local taxes, value capture, tax increment Not HSR project, yet example of numerous intercity projects under consideration throughout US 13
Funding Federal funding is not expected to grow Current budgets do not fund HSR Innovative finance programs offer greater opportunity Most funding must come from state and local level Private funding is unlikely at this juncture, with some exceptions Xpress West: Palmdale/Victorville to Las Vegas All Aboard Florida (FECI Inc): Miami to Orlando Assume that initial funding will be public; some future segments may be private and/or future private acquisition 14
$ Millions Federal Financing Tools: TIFIA & RRIF TIFIA loans are flexible & low cost: Funds only 1/3 of project at US Treasury rates Limited capacity (up to around $1 B/year) Proposed to grow under new legislation RRIF has over $30 B: Greater project coverage Likely higher costing Project Cashflow with TIFIA Loan Example 300 250 200 150 100 50 0 TIFIA Principal TIFIA Interest Payable Senior DS Net Cash Flow Available for DS 2013 2018 2023 2028 2033 2038 2043 HSR projects should leverage innovative finance that help alleviate early start-up challenges 15
State and Local Funding Integration Existing Grants Federal (limited) State Sales Taxes Levy on Property Tax Lodging Tax Speculative Tax Increments Joint Development Transbay Transit Center Value Capture Financing Instruments (TIFIA, RRIF, SIB) Integrate with state and local grants, sales taxes and value capture sources, where available to realize projects 16
Ancillary Revenue Sources Station concessions - Food and beverage - Rail Advertising - Traditional Parking - Revenues - Increment - Joint development - Wrapping, domination Naming rights Air rights Transbay Transit Center Station Seek ancillary revenue sources wherever possible, recognizing they will not materially aid in funding at start 17
Private Involvement Construction Catenary Joint development New Station New Segment New Bridge O&M Upgraded Segment Availability Payment P3 Private involvement occurs incrementally, from O&M today to design-build-finance in future 18
The Goal: From Incrementalism to Integration Promotion of high-speed rail Google Maps Rail/Transit Trip From Basel to Silvaplana - Conventional and intercity railway systems Stations and intermodal hubs Passenger Telematics Commercial aspects and Services As in Switzerland, goal of US HSR policy should be to integrate all modes and maximize transportation coverage 19
The New Incrementalism: Building and Financing US High-Speed Rail Incrementally enhance and develop high performance corridors Assume initial funding will be public Leverage innovative finance Integrate with state and local funding Identify opportunities for value capture Seek ancillary revenue sources Assume private involvement will occur incrementally Form follows function: new funding reality 20
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