| Central Florida SunRail A Government Spending Project We Don’t Need, Paid For With Money We Don’t Have... Why Is The Central Florida SunRail Project Such A Bad Deal For Florida Tax Payers? |
No Guarantee of 50% matching federal funds
Overruns avg 40-45% & could be much higher
Subsidized 70-90% by FL Taxpayers
Unfunded Mandate for 4 local jurisdictions
No Traffic Congestion Relief
Robs Money from Roads to cover cost overruns
Assumes “unheard of” fare-box projections of 54% for Op Costs
Inefficient and ineffective preparation and planning
Liability on ALL Florida Taxpayers, not as promised for the localities only
...................................................................................................................................................................
The transaction document that governs the relationship between the state of Florida and the Federal
Government Grant for the 50% funding of the Sun Rail Project is called the "Full Funding Grant
Agreement [FFGA]. View the FFGA at http://tinyurl.com/SunRail-FFGA-Terms, FDOT Attachments to
the FFGA may be viewed at http://tinyurl.com/FDOT-FFGA and the FTA Letter to members of the
House Transportation Committee can be viewed at: http://tinyurl.com/FTA-Letter
..................................................................................................................................
TIMES HAVE CHANGED…
The fixed rail SunRail project was conceived and encouraged at a time when supporting such projects
seemed worthy of such consideration.
A time when the economy had promise of better times, populations were growing and there was
relatively positive support for fixed rail projects.
A time before there was a $14.3 trillion Federal deficit and a sea of government red ink that appears to
have no limits.
A time before the awakening of the voting public and a change in public sentiment regarding the nation’
s debt crisis, unsustainable and out-of-control government spending and taxation.
A time before the Tea Party Movement had really formed its base of supporters.
A time when there was a promise of $300 in federal funds and when it appeared that all of the facts that
were needed regarding fixed rail projects regarding operating costs, estimated ‘fairbox’ revenues, and
possible risk of cost overruns were fully revealed and understood.
A time when it was anticipated that SunRail would link to and enhance a High Speed Rail (HSR) system.
That was then… This is now.
In 2011, the economy and tax payer voter sentiment has shifted dramatically.
Today, the public discussion is focused on our nation’s debt crisis and the debt ceiling. Taxpayer
voters are demanding fiscal responsibility, accountability and restraint from their government.
In addition, today we have far more information about fixed rail projects and their costs including the
propensity for large cost overruns, overestimated farebox revenues and underestimated costs.
And, in 2011, because of the courage and conviction of Florida elected leaders like Governor Rick
Scott and Senate President Mike Haridopolos regarding restraint in government spending and sound
fiscal policy, the High Speed Rail project is gone.
The bottom line is that conditions change over time.
Government needs to be as flexible as the private sector in making adjustments when conditions
dictate and demand such adjustments.
Taxpaying voters want their government to be accountable in their custodial responsibilities over
federal and state finances, just as the taxpayers must be in the management of their personal
finances.
SUNRAIL IS SIMPLY A VERY BAD DEAL
FOR THE TAXPAYERS OF FLORIDA
Accepting SunRail blindly commits the Florida taxpayer to unlimited expenses.
SunRail will lose the same or more than Miami’s Tri-Rail - $60 million per year for 30 years
By accepting SunRail, the State of Florida is co-signing a $1.3 billion obligation with local governments
that simply do not have the money to meet their share of the obligations. Not a single local operating
partner has funds available or has a dedicated funding source for these payments.
The Full Funding Grant Agreement requires the State of Florida to operate the SunRail system for 30
years, even though local governments are responsible for operating costs only in years 8-30.
THE FULL FUNDING GRANT AGREEMENT (FFGA)
IS A VERY BAD DEAL FOR THE TAXPAYERS OF FLORIDA
At the time that the SunRail project was introduced and passed by the Florida legislature, the
Agreement between the Federal government and the State of Florida that would govern the delivery of
Federal matching funds WAS NOT available to those legislators who voted in favor of the Project.
This governing document, the Full Funding Grant Agreement (FFGA) has finally been provided by the
Federal government for signature to Governor Scott.
Unfortunately, the FFGA is a very bad deal for the tax payers of Florida.
.........................................................................................................................................................................................................................
A DETAILED ANALYSIS OF THE “SUNRAIL” PROJECT WITH SPECIFIC FOCUS ON
THE TERMS & CONDITIONS OF THE FEDERAL FULL FUNDING GRANT
AGREEMENT (FFGA) - JUNE 15TH , 2011
Setting aside the highly charged rhetoric from supporters of the Central Florida Commuter Rail project known as
“SunRail”, the core issues are simple:
1. Can the State of Florida actually afford to pay for this commuter rail project at a time when government debt and
budget deficits are smothering American and Florida taxpayers?
2. Is this public commuter rail project a wise and prudent use of scarce Florida taxpayer dollars, now that the terms
of the Full Funding Grant Agreement (FFGA) have been disclosed, dictating the specific terms and conditions required
of the State of Florida by the Federal government in exchange for accepting any federal funds?
3. Are Florida taxpayers exposed to unnecessary financial risk under the terms and conditions of the FFGA?
Before Governor Rick Scott considers signing the Full Funding Grant Agreement (FFGA), these questions must be
answered objectively and with a single eye to the fiduciary obligations to the tax payers of Florida. This writing provides
an in-depth analysis of the FFGA and several related components of this project relative to the answers to these
questions.
The following are the results of this in-depth analysis:
• NO GUARANTEE OF ANY FUTURE FEDERAL FUNDING.
Section 5309 “New Start Funding” of the Federal Transit Administration (FTA) guidelines promised the SunRail project a
total Federal Funding Grant in the amount of $178,612,505, representing a 50% Federal match of the “capital costs” for
Phase I of the project, (the 32 miles of the system from DeBary, FL down to Sand lake road in Orange County).
Of this $178,612,505 promised, the FTA has provided $61,223,855 (funded in 2010 and prior), leaving an outstanding
balance of funding promised by FTA of $117,388,650.
This $117,388,650 funding is not guaranteed by the Federal Transit Administration (“FTA”,) by law or by the contract (the
FFGA) between the FTA and the State of Florida. That is because the United States Congress must approve any future
appropriations. [see FFGA – Schedule of Federal Funds, Attachment #6]
However, the FTA, through the FFGA, is requiring the state of Florida to build and complete the SunRail project on time
and per specifications regardless of whether any of the $117,388,650 is ever appropriated in the future by the US
Congress.
• THE TAXPAYERS OF FLORIDA ARE IRREVOCABLY OBLIGATED TO DELIVER THEIR 50%
SHARE OF FUNDING, BUT THE FEDERAL GOVERNMENT IS NOT OBLIGATED TO DELIVER THEIR
50% MATCH.
The FFGA irrevocably requires the State of Florida taxpayers, (the Grantee in the FFGA) to pay for any all cost overruns
on the project.
The FFGA further irrevocably obligates the State of Florida to complete the Project, even if total amount of the Federal
funding promised is insufficient, or if the Federal funding is not delivered timely, or if the Federal funding is not delivered
at all.
If the Governor signs this FFGA, he will thereby bind the State of Florida taxpayers to an irrevocable obligation to deliver
their 50% funding commitment under the FFGA, but would not bid the Federal Government in any way, either by law or
under the terms of the FFGA to deliver any or their entire 50% match.
In essence, the Grantee, (the State of Florida taxpayers), certify and warrant under the FFGA hat the Grantee will
irrevocably provide ALL of the funds that they are obligated to commit to complete the project, however the Federal
government is not held to an equal obligation under the FFGA. [see FFGA, Page 7, Sec. 4(a)]
Committing the taxpayers of the State of Florida to such a unilateral financially high risk agreement would represent a
breach of fiduciary duty because it is not in the best interests of the taxpayers of Florida.
• THE STATE OF FLORIDA MUST CERTIFY THAT IT HAS SUFFICIENT FUNDS COMMITTED TO
COMPLETE THIS PROJECT, AND FINANCIALLY MAINTAIN ALL OTHER TRANSPORTATION
SYSTEMS UNDER FDOT.
The FFGA demands that the funding for this project by the State of Florida must come from resources outside of
revenues from any other public transportation systems in which such facilities or equipment are used.
In other words, the Grantee (Florida taxpayers) must warrant and certify that it has sufficient, “stable and dependable”
funds committed, not only for the completion and ongoing annual operations of this SunRail Project, but to financially
maintain all public transportation systems under the authority of the Florida Department of Transportation (FDOT).
[see FFGA –pg 12, Sec. 12]
Making these commitments is unrealistic. [i.e. Lynx Bus System, Tri-Rail, etc.]
• UNDER THE FFGA, THE STATE OF FLORIDA IS OBLIGATED TO BEGIN SUNRAIL
OPERATIONS ON MAY 1, 2014, WITHOUT EXCEPTION.
The Grantee (Florida) is obligated to start running trains and generating revenue from ticket sales (fare box revenues)
no later than May 1, 2014.
The May 1, 2014 date cannot be delayed for any reason under the terms of the FFGA, including due to failure by the
Grantee to receive the full amount of Federal funding promised by the FTA or due to any problems or delays in the
appropriations of those funds from Congress. [see FFGA – Pg 8, Sec. 5]
“Failure for the State of Florida to meet this obligation would place the Grantee in “default”. And, upon default, the FTA
could demand that the Florida tax payers return all Federal funding into this Project to date.”
• SUPPORT FOR SUNRAIL RELIES ON GOVERNMENT PROJECTIONS THAT ARE
HISTORICALLY INACCURATE.
The viability of this project is questionable because it is contingent upon rider projections that are not reliable.
According to the FTA, ridership projections for “new starts” projects are overestimated by 40%.
Further, the FTA 2008 Evaluation of SunRail - provides a medium-low rating for both operating cost estimates and
capital cost estimates. Both ratings are subpar relative to the funding criteria of the FTA.
What that means to the Florida taxpayer is that, in actuality, it will cost far more to build, operate and maintain the rail
system than projected by FDOT and supporters. The Florida Taxpayer is on the hook for all of the cost overruns.
[see FTA 2008 Evaluation of SunRail]
• ONLY PARTIAL FUNDING FOR PART OF THE PROJECT.
The total number of miles of the SunRail project is 61.5 miles. The FFGA only provides a portion of matched funds for
32 miles of the Project (considered Phase I). Unfortunately, this funding only pays for 12 of 17 stations in Phase I, only
provides for one stop in Volusia County and does not provide for any stops anywhere in Osceola County.
The FFGA makes no mention and does not provide approval or funding for the additional 30 miles of the SunRail
project, Phase II. Nor does the FFGA address the 30 more miles of track upgraded with a stop in DeLand and four in
Osceola County.
• PERFORMANCE BY LOCALITIES DEMANDED IN FFGA, EVEN IF ALL PROMISED FEDERAL
FUNDING IS NEVER DELIVERED.
Acceptance of the FFGA commits localities to perform their financial obligations under the FFGA, even if the federal
funds are delayed indefinitely. (FFGA pg. 7, Sec 4)
• THOUGH THEY DO NOT EXIST AT THIS TIME AND MAY NEVER EXIST, UNDER THE FFGA,
THE LOCALITIES SERVICED BY THE SYSTEM ARE OBLIGATED TO PROVIDE DEDICATED
FUNDING FOR THEIR FINANCIAL OBLIGATIONS TO SUNRAIL.
For the first seven (7) years of the Project, the annual operating and maintenance (O&M) costs will be funded by the
Florida Department of Transportation (a Florida taxpayer obligation).
After the first 7 years, the FFGA requires a “stable and dependable” source of funding from the Central Florida localities
serviced by the SunRail System.
However, these Central Florida localities (counties and cities) have not identified or obtained any dedicated funding
source (ie: tax) to cover the O&M costs following the first 7 years of State-run funding of the system. Should the localities
fail to meet their obligations, it will be the responsibility of the State (Florida taxpayers) to cover any funding shortfalls.
[see FFGA pg 12, Sec. 12]
• IN THE FFGA, THE DEAL HAS CHANGED FROM WHAT WAS ORIGINALLY AGREED UPON,
TO WHAT IS NOW BEING DEMANDED BY THE FTA:
THE “BAIT & SWITCH”
o FFGA terms include a requirement for SunRail to provide weekend service (8 a.m. to 10 p.m.) in Phase I. This
was never a requirement between FDOT and the Central FL localities. Adding two more days of service increases
operating costs for the project.
o The more fuel-efficient, less costly to operate “Self-propelled Units” (Diesel Multiple Units) originally planned for
commuter cars are no longer authorized under the FFGA. Instead, SunRail will invest in and commit to old-style
technology: polluting diesel locomotives.
o The concept of two (2) coaches plus a diesel locomotive, results in a much longer train, which means that there
will the need to have much longer passenger platforms than first-promised under the commitment to the use of two
Diesel Multiple Units. This means additional costs than originally projected. These additional costs will impact the
potential for cost overruns, which are the sole responsibility of the Florida taxpayers under the FFGA.
• THE FDOT COMMITTED DIVERTING TRANSPORTATION FUNDS FROM ROAD PROJECTS TO
COVER SUNRAIL SHORTFALLS
To satisfy FTA’s requirement for stable and dependable funding sources, FDOT and Central Florida localities have
promised to make up for shortfalls by diverting funds for other transportation project to pay for SunRail deficits.
In other words, if the counties (localities) do not have enough money to meet their financial obligations to the project that
FDOT will simply take money from the highway fund and pay it over to the SunRail project, thereby letting the highways
and streets across the state fall into disrepair to the benefit of SunRail in Central Florida.
• REPAYMENT OF ALL FEDERAL FUNDS REQUIRED SHOULD FTA DETERMINE, AT ITS
DISCRETION, THAT SUNRAIL SERVICE LEVELS ARE “UNACCEPTABLE”.
Under the FFGA, the federal government may require repayment of all Federal funds paid into the Project if service
drops below “acceptable levels.” A clear definition of what is meant by “acceptable levels” is not provided for in the
FFGA. Should the Central Florida Commuter Rail System, SunRail, fail to adhere to required service levels, the State of
Florida would have to bail out the Central Florida localities with additional subsidies in the Project, as is the case with
Tri-Rail. (see FFGA Sec. 19, pgs 14-15)
OTHER ISSUES THAT HAVE SIGNIFICANT IMPACT ON THE PROJECT,
NOT ADDRESSED OR MENTIONED IN FFGA:
• WHY PURCHASE 61 MILES OF TRACK WHEN IT IS MORE COST EFFECTIVE TO LEASE THE
32 MILES OF TRACK THAT WOULD BE USED FOR COMMUTER RAIL? The FFGA does not include
federal matched funding for the $150 million purchase of 61 miles of track by FDOT or for the $23M expenditure for a
new CSX rail yard. Federal funding is only provided for half of the total 61 miles of the Project…..and 50% of that is not
guaranteed.
In addition, the State of Florida is required to pay 100% of the cost to maintain the entire 61- mile corridor while CSX will
run their freight 50% of the time (12 hours per day).
This is not cost effective and represents a public use of funds for private benefit. Why is the state purchasing 61 miles
of track when only 32 miles is needed for the project?
• WHY IS THE FDOT PAYING TO RELOCATE CSX’S TAFT FREIGHT YARD? The FFGA does not
include the $23 million to be paid by FDOT for relocation of Taft freight yard to Winter Haven Intermodal Logistics Center,
a public expenditure for private benefit.
• WHY IS THE STATE OF FLORIDA AGREEING TO FUND $2 MILLION PER YEAR IN INSURANCE PREMIUMS TO
COVER CSX LIABILITY? $200 million in liability insurance is required as part of the SunRail–CSX deal and represents
public use of funds for a private benefit (Frost Sessums van den Boom & Smith legal opinion to Florida Legislature,
2008), setting a dangerous precedent.
• TWO CENTRAL FLORIDA MUNICIPALITIES CAN OPT OUT OF THEIR COMMITMENT TO
SUNRAIL IF THERE IS NO DEDICATING FUNDING SOURCE, LEAVING THE STATE AND THE
OTHER CENTRAL FLORIDA TO ABSORB THEIR SHARE OF OPERATING COSTS. Two Orange County
cities (Maitland and Winter Park) have recently negotiated SunRail dropout options if there is no dedicated and
sustainable funding source after seven years of state funding, jeopardizing the system’s viability.
• IS SUNRAIL ANOTHER “TRI-RAIL” FIASCO IN THE MAKING? With a Medium-Low rating for
estimated operating costs and an overly optimistic projection for fare box recovery, the likelihood that the State would
end up providing a bailout, similar to the Tri-Rail subsidy of $15 million per year, is real. This could be necessary in
order to keep the Federal government from demanding a return of the federal funds resulting from a default on any of
the FFGA terms.
• THE CONVENTIONAL DIESEL LOCOMOTIVES THAT WILL BE UTILIZED REQUIRE 2.55 %
MORE FUEL THAN ALTERNATIVES. Conventional locomotives with two coaches that are to be used by SunRail
consume 2.55 times the diesel fuel for the same load as the originally proposed DMUs, as demonstrated in a 2008 test
run by Tri-Rail.