Will Florida’s sleek, for-profit rail project become an advertisement for the limitations of bipartisan compromise?
Money train: Brightline, Florida’s new privately funded, not-quite-high-speed rail, will get you from West Palm Beach to Miami in style.
Barack Obama had a vision—expressed in a literal, color-coded map he carried with him in 2009—for how high-speed rail would transform America. There would be 150,000 jobs, environmental benefits, less highway and airport congestion, and, most importantly, “a smart transportation system equal to the needs of the twenty-first century.” As part of that vision, in his 2010 State of the Union address he announced that the state of Florida would receive a federal grant, later set at $2.4 billion, to build a high-speed rail project that had been shovel ready since the 1990s: an eighty-five-mile line connecting Tampa and Orlando, offering a super-fast alternative to traffic jams along Interstate 4. The young president showed up a day later in a sweaty gymnasium at the University of Tampa to promote the plan. “There’s no reason why other countries can build high-speed rail and we can’t,” he said to applause. “And that’s what’s about to happen right here in Tampa.”
Except it wasn’t. That November, Republican Rick Scott, a Tea Party darling, was elected Florida’s new governor. It took him one month in office to extinguish Obama’s vision. “Put simply,” Scott wrote in a February 2011 letter to Ray LaHood, the transportation secretary, “the proposed high-speed rail line is far too uncertain and offers far too little long-term benefit for me to consider moving forward.”
Ideology was at the core of his decision. For years, mainstream Republicans have rebuked high-speed rail as socialist folly. (They are hardly kinder to Amtrak, a quasi-public, nominally for-profit entity.) Scott was the latest in a long line of Republican governors—including John Kasich in Ohio and Scott Walker in Wisconsin—to reject Obama’s money on the grounds that high-speed rail was too much of a burden on taxpayers.
But a few years ago, a more palatable solution was presented to Florida’s Republicans. The proposed train, called Brightline, wouldn’t quite be “high speed,” which by international standards generally means running on dedicated tracks at speeds over 150 miles per hour, often approaching 200. Brightline trains would run on upgraded tracks laid in the nineteenth century, passing through the centers of many small towns and traversing hundreds of grade crossings, where track and roadway (or track and track) meet. As a result, they would top out at 125 miles per hour. But what really animated Republicans was Brightline’s solution to funding: it would be a for-profit operation funded through private investment. This train wasn’t socialism; it was American free enterprise at work.
Yet Brightline, which started running between Fort Lauderdale and West Palm Beach this past January and extended services to Miami in May, has been controversial. While Scott has praised the project for being “100 percent private,” the project is under siege from a broad coalition of Floridians—including many Republicans—who complain that a high-speed passenger train will disrupt their tranquil communities, and who object to the generous subsidies handed out to private investors in the form of what are known as private activity bonds, or PABs—tax-exempt bonds created by Congress and authorized by the U.S. Department of Transportation. Florida’s state Democrats, for the most part, have been quietly supportive of Brightline.
So many other countries have unveiled state-of-the-art high-speed rail systems in recent years (Uzbekistan, anyone?) that it’s become almost a cliché to wonder why America hasn’t been able to build tracks of its own. Yet the question of what to do about the impasse—along with America’s degenerating infrastructure more broadly—remains perilously unanswered. Brightline, with its supposed combination of public benefit and private enterprise, offers itself as a panacea to the partisan gridlock. But can a for-profit transportation project adequately provide what has traditionally been a publicly subsidized service? Or will the sleek new trains become an advertisement for the limitations of bipartisan compromise?
President Obama wasn’t the first Democrat to make sweeping promises about how high-speed rail would transform Florida. In 1982, the wildly popular Democratic Governor Bob Graham returned from a vacation in Japan convinced that bullet trains were the future. He created the Florida High Speed Rail Commission, a nonpartisan group tasked with determining whether the technology was feasible for Florida. They concluded that it was, and by 1996, it looked as though the project would actually happen. The Florida Department of Transportation agreed to commit $70 million per year for thirty years to build a line between Orlando and Tampa. Companies like Amtrak and the makers of France’s TGV started meeting with the committee to bid for the commission. One consortium even proposed a magnetic levitation train that would travel at 300 miles an hour.
“They spent an hour convincing me how they were the best engineers,” said C. C. Dockery, a wealthy, civic-minded businessman who served on the committee, recalling one such meeting. “Finally, I had a chance to cut in and say, ‘If you think this is an engineering job, you’re definitely wrong. This is a political job.’”
By that time, debates over high-speed rail were percolating nationwide. Conservatives objected that it would be an expensive boondoggle leading to bigger government. If countries like Japan and France were surpassing the U.S. in train technology, it was just a sign of their socialist inefficiency. Besides, they argued, we have cars.
Democrats, by contrast, were drawn to the broad social benefits of high-speed rail: the millions of construction jobs they believed it could create, the broader economic development it could stimulate, and, perhaps idealistically, the connections it might encourage between disparate communities. In 1992, then candidate Bill Clinton proposed creating “a high-speed rail network between our nation’s major cities.” Once in office, he wound up prioritizing deficit reduction over his campaign promises for infrastructure investment, but he still managed to put in place a plan to create federal-state partnerships devoted to alternative means of transportation. Florida was first in line to receive the benefits.
But, in 1999, newly elected Governor Jeb Bush killed a $6.3 billion project to build a bullet train linking Miami, Orlando, and Tampa. Billions of public dollars were at stake, he said; who knew whether tourists and auto-loving Floridians would even use it. (Florida would have put up $2 billion, with the rest coming from federal loans and private investment.)
A group of private citizens fought back, led by Dockery. In 2000, following a campaign to which Dockery contributed $3 million of his own money, Florida voted in favor of making high-speed rail a state constitutional mandate. It seemed like Dockery had finally won: construction for a train from Tampa to Orlando was to begin in 2003. But Bush—who later boasted that his nickname was “Veto” Corleone—swooped in to lead an effort to repeal the amendment in 2004. “This little choo-choo could cost us a lot of money,” Bush argued on his way to winning the repeal vote. It seemed clear by that point that Florida’s Republicans would not budge: high-speed rail was all but out of commission.
And then Brightline came along.
When I flew into Fort Lauderdale in July, I had to rent a car. Florida’s southeast corridor is designed for the automobile, with disjointed trenches of soggy swampland and gated communities joined by an epic sprawl of asphalt and traffic. With the exception of Miami, the cities that run along the southeast coast feel more like a disparate string of small neighborhoods, linked by roads with names like Green River Parkway and South Military Trail that ultimately feed into larger highways like Interstate 95.
The Brightline station, built on the outskirts of Fort Lauderdale’s sleepy downtown, stood in stark contrast to its surroundings—a fiercely lit, modern white-winged building spitting out a pair of railway tracks that divide the city. To the east was a mix of fast-rising real estate developments and gentrifying older neighborhoods; to the west, low-income housing. Surrounding the station, on all sides, were streets and highways. Every day, sixteen trains run in each direction between West Palm Beach and Miami, offering a high-end, hospitable alternative to I-95, which runs parallel to the train.
“Nifty,” a man disembarking Brightline said as I stepped past him onto a fluorescently painted train that had slid into the station exactly on time. “Very nifty.”
It was a Wednesday night in the middle of summer, and nearly every other row of seats was empty. The interior glowed in an opalescent sheen, smelling of a fresh grapefruit musk (a scent that Brightline is turning into candles to sell). The plush leather seats reclined to face screens displaying color-coded maps and declaring, “We’re proud to be American-made.” Inscribed on every headrest, in elegant cursive, was the word “Brightline.”
We all but glided up the coast, passing backyard barbecues, empty lots, and low-income communities where, as one man later put it to me by way of explaining the poverty, “People bike.” It was a sharp contrast to the scene inside the train, which seemed built to serve mostly businesspeople and tourists. Smiling stewardesses in matching violet uniforms offered riders in the “Select” class unlimited free beverages. One stewardess, whose hospitality recalled the long-lost days of Pan Am, explained to a middle-aged blond woman who was sipping a vodka with lime that she could even blow-dry her hair on Brightline on her way to work. “It pays to relax!” she said with a laugh, continuing down the aisle.
“I’ll take a Stella Artois,” said a young man playing Sim-City on his computer. He paused, looking up. “Wait—is it cold?”
The stewardess nodded.
“I mean, is it Florida cold?”
It was indeed. This, Brightline seemed to be saying, was no Amtrak ride.
To its boosters, Brightline is a testament to what free enterprise can accomplish—running on privately owned tracks that simultaneously run fleets of money-making freight trains. But the reality is that hauling people has been a money loser since the 1960s, and Brightline wouldn’t exist without some form of government backing.
The project was the brainchild of Wes Edens, the cofounder of Fortress, one of Wall Street’s most powerful private equity firms, which bought Florida East Coast Industries for $3.5 billion in 2007. Eight years later, the company came up with a plan to make passenger trains profitable again. The trick was to get approval from the Florida government and the U.S. Department of Transportation to allow Brightline to float more than $1.7 billion in private activity bonds.
PABs, originally designed to attract investment to private projects with public benefits (like, say, a new hospital), are appealing to investors because the interest they pay is exempt from federal income taxes. For Brightline, they provided a way to finance private infrastructure using public tax subsidies. Although Brightline’s holding company is responsible for paying back the debt created by these bonds, the tax exemption is a pure public expenditure.
In 2000, Florida voted in favor of making high-speed rail a state constitutional mandate. But Governor Jeb Bush swooped in to lead an effort to repeal the amendment in 2004. “This little choo-choo could cost us a lot of money,” he argued.
To survive on PAB funding, Brightline needs to find a way to churn a profit. As Brightline’s president Patrick Goddard explained to me, “Our goal is to provide mobility. And yes, we want to make money while doing so.” In turn, it is pricey. Current rates, which are expected to rise significantly, range from $15 to $30 to ride from Miami to Fort Lauderdale to West Palm Beach. Like airline flights or ride shares, prices fluctuate based on demand. (I paid $20 to ride for thirty minutes between Fort Lauderdale and West Palm Beach in the off-season.)
If all goes right, Brightline will create so much economic development in the communities it serves that it will more than make up for the cost of its tax subsidies. The taxpayers will in effect get a free passenger rail service. But if that sounds too good to be true, maybe it is.
Aprivate, for-profit train seemed to be just the banner Florida’s corporate Republicans needed to pass high-speed rail, even if it was only made possible through the back-end subsidy of tax exemptions. “We changed the conversation,” Dennis Grady, the president of the Chamber of Commerce of the Palm Beaches, told me when I met him at his office, a flat building on the edge of the water just ten minutes from Trump’s Mar-a-Lago estate. Grady, who has been running the Chamber for thirty-three years and likes to refer to the business community as “my people,” has been a leading advocate of Brightline, which is a Chamber member. “We removed the criticism of public dollars, and put in private dollars.”
The business community’s enthusiasm has been key to Brightline’s success. More surprising, though, has been the support of libertarians—erstwhile high-speed rail skeptics who became cheerleaders for Brightline. One of these supporters is Bob Poole, founder of the libertarian Reason Foundation and a member of Scott’s transition team in 2010. The Reason Foundation was instrumental in persuading the governor to reject Obama’s proposed project in 2011. When Scott announced that he was killing the project, he cited a Reason Foundation report as the basis for his decision.
Private activity bonds are appealing to investors because the interest they pay is exempt from federal income taxes. For Brightline, they provided a way to finance private infrastructure using public tax subsidies.
I met Poole at his house, a late-1960s tract house fifteen minutes outside of Fort Lauderdale. The walls were lined with an eclectic book collection, with public policy tomes resting next to Ayn Rand fiction and Hippie Food. Poole told me that Obama’s high-speed rail plan was “just loony tunes.” High-speed rail made sense in Europe, or Japan, where cities were closer together and extensive rail systems already existed, he explained. But in America, preexisting freight tracks have been severely downsized, and trying to revive them doesn’t make sense. Brightline, however, was a different story. “The fact that this is privately funded, and no taxpayer money is at risk, makes this a no-brainer to support.”
Yet even if Brightline wins the praise of self-described market conservatives and Chamber of Commerce types, it’s having a harder time in some other Republican quarters. Florida Senator Marco Rubio, for example, has become an outspoken critic. A few months after Brightline began operations, Rubio wrote a letter to U.S. Transportation Secretary Elaine Chao questioning the legitimacy of its funding. He argued that the project doesn’t meet the standards outlined by the Department of Transportation, which provide that “high-speed rail” must run at a base speed of 150 miles per hour to qualify for funding. Other state Republicans chimed in with letters to Chao.
An unlikely team of allies—nine Democratic and Republican representatives—fired back, assuring Chao that they shared her “vision of identifying innovative approaches to meet our nation’s transportation challenges.” The group argued that Brightline was the “perfect example” of how private activity bonds should be spent, and that it would decongest Florida’s growing population by providing a new transportation alternative. They accused their opponents of “resisting change.”
Meanwhile, opposition is strong at the local level, including among the many Republican retirees who live along Brightline’s right-of-way. A month after the train began operating, a group calling itself Citizens Against Rail Expansion (CARE) filed a lawsuit complaining of crony capitalism. CARE’s suit challenges the legality of Brightline’s PABs while also raising environmental and safety concerns (in six months, for instance, Brightline trains ran over and killed nine people, though more than half may have been cases of suicide). The lawsuit is currently awaiting a court date.
Governor Scott—who is running for Senate this fall—has not responded directly to any of the complaints, beyond repeatedly stressing that Brightline poses no risk to taxpayers. He may be forced to speak more on the topic soon. In August, the Miami Herald reported that Scott and his wife had invested at least $3 million in Fortress, the investment group that owns Brightline, and have earned more than $150,000 in profits from their investment. When I contacted Scott’s office, his spokesperson, Lauren Schenone, said that Scott’s investment was part of a fund “managed by an independent financial professional who decides what assets are bought, sold or changed,” and that Scott, a multimillionaire, has no control over it. “The Governor does not discuss the First Lady’s investments with her or with her financial advisors,” Schenone added.
In August, Brightline got the green light from the Florida Development Finance Corporation to act as the conduit issuer for almost $1.8 billion in PABs, enabling the company to go forward with what they are calling “Phase II”: trains from Miami to the Orlando airport. Construction has begun, with the upgraded track cutting through one of Florida’s most densely populated arteries—a predominantly Republican corridor where many residents are adamantly opposed to seeing fast trains running through their backyard. Ironically, it’s a “backyard” that likely wouldn’t exist if the railway hadn’t been built through it 124 years ago.
“We don’t want this train coming through our town—bottom line,” Brent Hanlon, one of four founding members of CARE, explained to me in his office in an exclusive country club in Hobe Sound. Hanlon, who has sandy blond hair, sun-spotted skin, and speaks with a boyish eagerness, had never been politically active until 2014, when he heard about Brightline. He immediately reached out to the surrounding forty towns to raise awareness about the train, and formed CARE. “We’re a very small town with a small-town feel, and we just think that having a train blow through our community would take away the charm of our downtown. When you see Confusion Corner, you’ll understand why.”
Hobe Sound, in Martin County, is part of a cluster of small communities that make up the “Treasure Coast,” a sprawling beach with silvery blue water where sea turtles nest and “downtown” is a single street with a theater, a café, a barber shop, and a restaurant. Inland, wild swampland wraps tightly around spruced-up golf courses, a parody of the eternal combat between chaos and order.
I followed Hanlon by car to Confusion Corner, which turned out to be the local nickname for a congested roundabout in the middle of the small town of Stuart. Bisecting one edge of the clogged circle are the railway tracks Brightline proposes to use. As we stood there, a freight train passed by, and Hanlon pointed to every “confused” car that had to sit a little longer in traffic. I didn’t completely understand the hype. Trains had been running up and down the tracks for as long as Martin County had existed. While Brightline would add to that traffic, it didn’t seem like something Floridians—who appear to be culturally habituated to congestion—hadn’t seen before.
“Is there anything Brightline could do to change your mind?” I asked Hanlon as we watched the freight chug past.
“Yeah,” he said quickly. “They could, uh, not run.”
CARE has been repeatedly accused of being a classic case of NIMBYism. At a congressional hearing last April, Brightline’s president, Patrick Goddard, accused the group of being “a minority of narrow-minded residents . . . who are willing to support passenger rail everywhere, it seems, except in their own backyard.” When I spoke with Goddard on the phone more recently, he said he wished he’d handled the situation differently. “We’re married now,” he said, referring to the fact that Brightline is beginning to build through the Treasure Coast en route to Orlando. “We’re going to have to find a way to get along.”
Naturally, Brightline opponents see the NIMBY label as a way of trivializing their objections. “We have really legitimate reasons for being concerned about safety, and to say that we’re just anti-progress is very shortsighted,” said Erin Grall, the state representative for Vero Beach, and a Republican. “The reality of these coastal communities is that they have been built up by a railway, but not one running at 110 miles per hour through our communities.” She argued that Brightline hadn’t put the proper safety features in place: the train would pass through 100 grade crossings, and the burden of maintaining them, according to Grall, would fall on local taxpayers. “This state’s been talking about high-speed rail for a really long time,” she said. “The conversation does change a little if it’s privately funded, but safety is still an issue and there isn’t really an entity on the state level that has stepped up to say, ‘Okay, we’re going to make sure our citizens will be safe.’”
CARE casts itself as the voice of the community—a bipartisan advocate for what it claims are the roughly ten million people who live in areas that could be affected by rail expansion. At the same time, CARE has powerful supporting players of its own. In the group’s short life-span, it has raised $2 million from private “crowdsourcing” (the community is mostly wealthy retirees). It is backed by the former CEO of American Airlines and employs a global PR firm and a legal team consisting of two county attorneys and two outside counsels.
Brightline is continuing to expand. In September, the company announced that it would be starting a high-speed passenger service connecting Southern California with Las Vegas. But it’s not clear how successful the Florida operation has been. When I spoke with Goddard, he said Brightline’s first-quarter numbers were “higher than expected.” The company generated $663,000 in ticket revenue, and carried close to 75,000 passengers, from January to March. But according to Brightline’s unaudited quarterly report, the company lost roughly $28 million in the same period. A Brightline spokeswoman, however, said those numbers only reflected ridership for Brightline’s introductory service, and added that ridership and revenue increased 35 percent from January to March. The project’s fate may depend on whether it can sell the more than $1.1 billion in remaining PABs by the end of January (an extension granted by the Department of Transportation in May). If Brightline fails, private investors will lose their money, with no responsibility on the government itself. But what may be lost, in that case, is the opportunity to have applied the PABs to a project that could have succeeded.
The larger question raised by Brightline is whether its mixture of private ownership and public subsidies, which the Trump administration proposed in its infrastructure bill in February, makes either political or economic sense. “Almost invariably, the issue is that when private capital is at risk, the arrangement is structured so that private returns are prioritized,” said Elliott Sclar, a professor of urban planning at Columbia University. “Either way, the public sector always bears the lion’s share of risk for the entire project.”
“We don’t want this train coming through our town—bottom line,” said Brent Hanlon, a founding member of Citizens Against Rail Expansion. “Is there anything Brightline could do to change your mind?” I asked. “Yeah,” he said quickly. “They could, uh, not run.”
In a way, the combination of private financing for public railways is nothing new. From the beginning, rail infrastructure in the U.S. was privately owned, but largely financed through considerable grants of public land. Railroads, in turn, used a small part of the land for their rights-of-way, selling the rest at an enormous profit. The very track on which Brightline runs exists because back in the 1880s Florida gave Henry Flagler, one of John D. Rockefeller’s close friends, a grant of more than two million acres of land in return for his building the Florida East Coast Railway.
This model has led to problems and contradictions over the years. Even before the coming of autos and planes, most passenger trains historically lost money, especially ones serving small towns on lightly traveled branch lines. The government had to force railroads to run those unprofitable trains, often pointing to the generous land grants and other subsidies the railroads received. But in the mid-twentieth century, a variety of forces made this harder to sustain. (Depending who you ask, it was Dwight Eisenhower’s interstate system, a cultural shift toward driving, the railroad unions, or all of the above.) The decline of passenger rail was slow, until suddenly, it happened all at once: October, 30, 1970, the day the government passed the Rail Passenger Service Act “to revitalize rail transportation service in the expectation that the rendering of such service along certain corridors can be made a profitable commercial undertaking.” Today, we know that act as “Amtrak.”
That system hasn’t worked out so well either. Outside of the corridor between Boston and Washington, D.C., and a few other routes, Amtrak trains run on tracks owned by private railroads. These railroads charge Amtrak rent for using their rails and often for the cost of maintaining their infrastructure, then routinely delay Amtrak trains for hours by making them cede priority to freight trains. Republicans in Congress keep insisting that Amtrak must nonetheless make a profit on each train, even if it means cutting service standards to the bone. Recently, under pressure to show a profit, Amtrak has cut dining car service on two of its long-distance trains and is rapidly cutting back the number of manned stations across the country.
Maybe a model like Brightline’s is the best America can do. But it doesn’t solve the basic contradiction between expecting trains, or any other form of transportation, to turn a profit on every run while also expecting the system to serve the public’s broad needs for service.
Those who have supported and advocated for Brightline—from Rick Scott to the Chamber of Commerce to the company itself—embrace an ethos of efficiency, but it is an efficiency that, as so often happens when the state looks for private solutions to public problems, tends to achieve its effect by separating the few from the many. As the Chamber’s Dennis Grady told me, “My people want to get from A to B, and they aren’t anxious to stop a lot. That’s why Brightline is successful.”
Maybe, if it is necessary to get conservative buy-in for improved passenger rail service, a model like Brightline’s is the best America can do. But it doesn’t solve the basic contradiction between expecting trains, or any other form of transportation, to turn a profit on every run while also expecting the system to serve the public’s broad needs for service. “The paradox of public transport, quite simply, is that the better it does its job, the less ‘efficient’ it may be,” wrote the historian Tony Judt, a social democrat and a lifelong devotee of railways. “[W]hat of rail links to and from places where people take the train only occasionally? No single person is going to set aside sufficient funds to pay the economic cost of supporting such a service for the infrequent occasions when she uses it. Only the collectivity—the state, the government, the local authorities—can do this.”
When I left Florida to return home to New York, I decided to take Amtrak. The ride from Tampa took twenty-five hours, traveling along tracks, congested with freight trains, that are owned by the CSX corporation—or, more exactly, by the hedge funds and other financial institutions that own CSX. The station in Tampa was true to Amtrak’s reputation—a decrepit and tired-looking gray. Water dripped on our heads as we waited for a man with a whistle to allow us to board. But every seat was full. Next to me, an elderly woman was traveling to visit her son, somewhere in Virginia. She couldn’t drive and depended on Amtrak to see her family. She asked what had brought me to Florida, and I explained that I was writing about Brightline, the new high-speed rail. “What is high-speed rail?” she asked, yawning.
For all its built-in handicaps and acute underfunding, Amtrak remains an essential public service—and a social good. As an eerie midnight blue set in, and everyone fell asleep, the train rocked forward, stopping deep into the night in the tiny hamlets of the south—the Villages, Waldo, Ocala, Wildwood—to carry passengers who look very different from those riding Brightline to the cities of the Mid-Atlantic. I woke up when the sky turned white and we were passing through someone’s backyard in rural South Carolina, a thick fog settling in over tangles of overgrown mossy fields. Only twelve hours had passed; thirteen, give or take a few, to go.