The Biscayne Times

Jul 05th
Virgin Territory PDF Print E-mail
Written by Erik Bojnansky, BT Senior Writer   
November 2019

The private train system is moving fast on everything but local service and a required safety measure

MTrains_1iami-Dade County is on a path to invest some $81.3 million in building two new train stations for Brightline, the privately run express train system being rebranded as Virgin Trains USA.

During an October 11 special meeting, the Miami-Dade County Commission approved a resolution to allocate up to $76.1 million for land acquisition and the construction of a Virgin Trains station west of Aventura in unincorporated Ojus. It would include two pedestrian bridges, one of which would span Biscayne Boulevard and link to Aventura Mall.

Six days later, a county commission subcommittee endorsed spending $5.2 million toward a possible $15.4 million station at PortMiami that Virgin Trains would build and lease, but that the county would own. Details of that pending deal are due to come before the full county commission within the next six months.

Virgin Trains USA, which already runs express train service between the downtown areas of Miami, Fort Lauderdale, and West Palm Beach (fares run $10-$40 a ride without special offers), is also interested in building stations at Boca Raton, Cocoa, the Orlando airport, Disney World, Universal Studios, and Tampa.

Toward that end, the company has issued about $4 billion in tax-free bonds through the state’s Florida Development Finance Corporation to help underwrite new rail infrastructure. Its plans also include building a $4.8 billion train service between Las Vegas and Southern California.

Even though Virgin Trains USA appears to be rapidly expanding -- with some help from taxpayers -- it has yet to complete installation of a federally mandated safety feature along the Florida East Coast (FEC) train tracks it already uses.

Trains_2The absence of the safety system appears to have caused delays in the implementation of the Tri-Rail Coastal Link, a proposed publicly funded, affordable commuter line with as many as 28 stops between downtown Miami and Jupiter Inlet along the same FEC tracks that freight trains and Virgin Trains now travel. Six of those stops are slated to be located within the Biscayne Corridor, including west of Aventura Mall.

In 2008, Congress passed legislation mandating that all trains and railway corridors be equipped with Positive Train Control (PTC), a computerized system designed to prevent train-on-train collisions and derailments owing to excessive speed. The system includes components installed in trains as well as on tracks.

Railroads that fail to fully implement PTC by December 31, 2020, may be hit with civil penalties of more than $29,000 per day. In fact, federal law allows the Federal Railway Administration (FRA) to seek additional damages to force compliance.

The legislation also prohibits trains from using new railway lines until those lines are equipped with PTC. The railway administration considers a recently upgraded section of the FEC tracks leading from Miami International Airport to downtown’s Virgin MiamiCentral depot to be new.

That upgraded section will connect TriRail’s publicly owned tracks west of I-95, which it has been using since 1989, to the FEC tracks east of I-95. Cost to taxpayers: $69 million, including construction of a Tri-Rail platform within MiaimCentral.

Steven Abrams is the executive director of the South Florida Regional Transportation Authority (SFRTA), which oversees Tri-Rail. Abrams says Tri-Rail’s commuter trains are already equipped with PTC systems, but that equipping the upgraded FEC tracks to downtown is Virgin’s responsibility.

“Tri-Rail is entirely dependent on Virgin obtaining their PTC certification,” Abrams explains. “We can’t go on their tracks until they’re certified and [until] we have been ‘invited’ by them to be a tenant.”

Trains_3Although Virgin Trains USA doesn’t own the tracks, it maintains a use agreement with its owner, the freight train operator Florida East Coast Railway (FECR), which requires Virgin to share in maintenance-related costs. That agreement also gives Virgin a say on what sort of passenger service runs on the very tracks that FECR founder Henry Flagler first laid along the state’s east coast in the 1890s.

As a precondition to funding construction of the Aventura Station, the county required Virgin to negotiate with SFRTA or another entity that would operate an affordable commuter train service along the Biscayne Corridor. Aventura Station, which is required by the county to be operational by October 2022, will include a commuter-train platform in addition to Virgin’s express platform.

At PortMiami, however, a platform for commuter rail service is not currently under consideration by the county, SFRTA, or Virgin Trains.

In a December 2018 report submitted to the Federal Railway Administration, Virgin Trains and Florida East Coast Railway declared their intent to have the PTC system fully operational along a 67-mile route between Miami and West Palm Beach before December 30, 2020. (Virgin Trains USA did not answer written questions related to PTC.)

As for the tracks between West Palm Beach and Orlando, the train companies stated that PTC won’t be completed until sometime after 2020. During a community outreach meeting in Jupiter last month, a Virgin Trains executive announced that the rail line leading to Orlando would be complete by mid-2022.

Installing PTC is a complicated and expensive endeavor, Abrams says. His organization budgeted $51.2 million for installing the safety system on its trains and the 72.5-miles of tracks between Miami International Airport and West Palm Beach.

“We anticipate it will be an ongoing cost of $5 to $6 million to maintain,” Abrams says.

According to a quarterly progress report the Regional Transportation Authority submitted to the Federal Railway Administration on July 8, all 24 of its Tri-Rail trains are now equipped with PTC, and 160 employees have been trained on the system’s use. The authority has also finished field testing along all its tracks. It is in the final stages of PTC testing, what the feds call “revenue service demonstration.”

CSX freight trains that share Tri-Rail’s tracks are also entering the revenue testing phase. Amtrak, the federally owned passenger train service that also uses Tri-Rail’s tracks, will be ready for final testing by September 30, 2020.

The quarterly report submitted by Florida East Coast Railway on July 30 states that all 69 trains using FEC tracks, including ten Brightline/Virgin Trains, have been equipped with PTC and 371 employees trained in its use. But just 11.7 miles of FEC tracks north of MiamiCentral have undergone field testing, and none of the 67 miles between Miami and West Palm Beach has entered the revenue testing phase.

Changes in ownership were cited by the private companies in a report to the feds as a reason why PTC testing was lagging. Brightline and FECR were both owned by Fortress Investment Group, a multibillion-dollar asset management company headquartered in New York, until Grupo Mexico bought FECR in March 2017 for $2.1 billion.

Seventeen months later, Virgin Group founder Richard Branson announced he’d bought a piece of Brightline and intended to rename the service Virgin Trains USA. In December 2017, Fortress Investment Group was acquired by Tokyo-based SoftBank for $3.3 billion.

Virgin’s corporate owners aren’t just building a train system. They’re developing real estate. Fortress Investment Group co-developed a 290-unit apartment complex, with 12,500 square feet of ground-level retail, near Virgin Train’s West Palm Beach station. In Miami’s downtown area, Fortress built the massive MiamiCentral complex that includes 816 apartments, a 1096-space parking garage, 285,000 square feet of office space, and around 200,000 square feet of retail.

Ridership for Virgin Trains appears to be on an upswing. In its latest financial filing, issued on October 18, Virgin Trains claimed 701,061 passengers between January and September, an increase of 106 percent over the same period last year. Revenue also rose to $15.3 million between January and September, a hike of 193 percent from the year before.

That Virgin financial report didn’t include expenses. However, a June 28 report focusing on the first quarter of 2019 did. Although Virgin Trains carried 244,178 passengers between the months of January and March, the company reported a net loss of $28.1 million after expenses.

Regardless of the profit margins (or losses), Miami-Dade County officials expect a return on the taxpayers’ investments. In an October 17 memo to county commissioners, Deputy Mayor Jack Osterholt stated he anticipates an Aventura Station lease that would allow Miami-Dade to collect $5.5 million per year in rent “in the first five years, plus a $7 million payment from Virgin within the first five years of that station’s existence.”

The exact financial terms for Aventura Station are not yet set, although Miami-Dade Mayor Carlos Gimenez has said the county will charge Virgin Trains “market rent.”

What is certain is that the county’s half-penny transportation sales tax, enacted in 2002 to pay for and expand transit, will be funding the $76.1 million project.

Part of that amount, around $18 million, will be used to purchase two vacant lots along the 19700 block of W. Dixie Highway from Eliahu Ben-Shmuel and his son, Daniel Mims Ben-Shmuel. The north parcel will be the site of the train station. The south parcel will be used for a park-and-ride lot and a possible 200-unit workforce apartment building.

The remaining $57.4 million will be used to fund development of Aventura Station, parking, a station platform, “necessary track and signalization improvements,” and a pair of pedestrian bridges -- all of which will be owned by the county but built by Virgin Trains.

One of the pedestrian bridges will be built over two-lane W. Dixie Highway, allowing people to cross from the parking lot and train station to the tracks. The second bridge will stretch across a ten-lane section of Biscayne Boulevard toward Aventura Mall, in close proximity to a busy bus depot located on the ground floor of a parking garage.

The cost of that second bridge, $4 million, will be reimbursed by Aventura Mall owner Turnberry Associates and Seritage Growth Properties, developer of an adjacent retail complex called Esplanade at Aventura. During a special October 14 meeting, the Aventura City Commission agreed to act as a conduit for those funds under the condition that the municipality has a say in the design of the bridge and that the bridge be closed to the public when the station isn’t in operation.

Residents west of Aventura who attended the meeting feared the bridge over Biscayne Boulevard might not be built at all. Richard Edwards, a real estate broker who lives in Highland Lakes, says roadways west of Aventura are already clogged. If there’s no bridge, Edwards says, shuttle buses transporting train passengers to Aventura Mall will tie up the Ojus region’s streets. “I feel like our needs are not being met like Aventura’s,” he tells the BT.

Besides paying rent, Virgin Trains promised to slash by 36 percent the cost of its economy-class tickets for riders traveling between MiamiCentral and Aventura Station, a rate equivalent to $9.75 a ride, if they book their tickets in advance. That’s still higher than the $8.75 ticket price Tri-Rail will charge riders traveling all the way from MIA to West Palm Beach after its January 1 rate increase. And much higher than the $2.25 it costs to ride Metro buses or Metrorail.

Frank Guyamier, a deputy director of Miami-Dade’s Department of Transportation, says county officials are negotiating for more discounts. “The county right now subsidizes a lot of transit passes, so we have...the ability to negotiate further,” Guyamier says.

But that wasn’t enough for Javier Betancourt, executive director of the Citizens Independent Transportation Trust, the board that oversees how the half-penny tax is spent. It was Betancourt who drafted language requiring an earnest effort on the part of Virgin Trains to work out an arrangement that would allow a commuter rail service to run along the FEC corridor within Miami-Dade.

Without an affordable commuter service, Betancourt feels the Aventura Station will fall short. So, too, will the county’s plans to create a rapid transit corridor along the FEC tracks as part of its Strategic Miami Area Rapid Transit (SMART) plan.

“It would certainly not meet with our expectations and hopes with the corridor, and it would leave an essential promise of the People’s Transportation Plan and SMART plan unfilled,” Betancourt says.

But Steven Abrams of the Regional Transportation Authority is more optimistic about Tri-Rail Coastal Link’s prospects. Despite the lack of a funding commitment to build the entire commuter line, Abrams says, the Aventura Station deal now requires Virgin Trains USA to seriously discuss commuter rail.

“I have had ongoing discussions with Brightline [Virgin Trains USA] executives, but I would not consider them negotiations,” Abrams says. “I think it was welcome for the county commission to approve a resolution that pushes those discussions more into a posture of negotiations.”

The county agreement with Virgin Trains doesn’t require that Tri-Rail operate that commuter line. Nevertheless, Abrams is sure that his organization will be providing the service. “We’re the only entity that has successfully provided commuter service in the South Florida region -- for 30 years,” he says. “We would be the logical choice.”


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