Brightline-Virgin proposal for Tampa-to-Orlando rail service clears key state hurdle

Brightline, soon to be known as Virgin Trains USA, won a key state approval on Wednesday in its quest to create a $1.7 billion privately financed passenger rail line between Tampa and Orlando.

A selection committee of officials from the Florida Department of Transportation and Central Florida Expressway Authority awarded the Brightline-Virgin team the right to negotiate for the right-of-way leases the company needs to create the service. The decision does not require further approval from the governor, Legislature or other state agencies, but Brightline still has a lot of work to do before it can build and launch the service, it hopes, in 2021.

Brightline, which already runs passenger trains between Miami and West Palm Beach, with plans to expand to Orlando, will negotiate with both agencies over the next 90 days to use parts of the right of way along Interstate 4, the Florida Turnpike, State Road 528 and State Road 417 for its trains. The state has said the company would have to pay fair market value to lease those rights of way, and there would be "no subsidy of any kind" from either the state or expressway authority.

In a statement issued after the decision, Brightline president Patrick Goddard said the company looks forward to working with the state.

"This is an exciting next step in our efforts to expand intercity passenger rail in Florida," Goddard said. "The private investment we have made has created thousands of jobs and generated substantial economic impact. By connecting Florida's major economic centers, Brightline provides a safe, efficient and productive way for residents and tourists to travel the state."

BACKGROUND: Brightline submits sole proposal for Tampa-to-Orlando passenger rail service

State officials also have said no leases would be approved without a determination that "adequate safeguards" ensure that the public isn't stuck with additional costs or travel disruptions if Brightline defaults on its agreements or quits the project. Brightline also will have to get approval to run the service from the Federal Railway Administration and would need to secure all necessary federal, state and local approvals to obtain the needed rights of way. Wednesday's decision came after a 15-minute meeting in Tallahassee during which no one from the public made any comments on the proposal.

The idea of running passenger trains along the I-4 corridor has a long and controversial history. In 2011, Gov. Rick Scott rejected $2.4 billion in federal funds for high-speed rail between the two cities, saying potential cost overruns and overly optimistic ridership numbers could put Florida taxpayers on the hook to repay the federal funds if the project failed.

This June, Brightline proposed the Tampa-to-Orlando link as a privately funded project, and Scott said the state would solicit bids from any company that wanted to make a proposal.

In August, newly filed financial disclosure reports showed that Scott and his wife Ann last year invested at least $3 million in a credit fund for Brightline's parent company, Fortress Investment Group. That investment produced at least $150,000 in income last year for the couple. A spokeswoman for Scott's Senate campaign said the governor does not discuss with his wife what she invests in and "the governor's blind trust is managed by an independent third party to shield his investments from his direct control and to avoid any potential conflicts of interest. As such, the governor has no control of what is bought or sold in the blind trust."

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On Nov. 7, Brightline submitted the sole response to the state's request for proposals. The following week, the company announced that Sir Richard Branson's Virgin Group had made a minority investment in Brightline, and that the company was changing its name to Virgin Trains USA. Documents filed with the U.S. Securities and Exchange Commission as a result of Virgin's investment disclosed that the Tampa-to-Orlando project would have an estimated average fare of $35 per passenger between Tampa and Orlando.

Virgin has projected 2.9 million passengers a year for the Tampa-to-Orlando line. With Virgin's trains moving at up to 125 mph, the company expects to offer a one-hour trip between the two cities, compared with 90 minutes by car and 2 hours and 5 minutes for Amtrak's Silver Star. Virgin's trains also will have leather seats, food and beverage service and free high-speed WiFi. Virgin projects it can hit these goals by capturing about 2 percent of the travel market between Miami and Tampa, or considerably less than the 10 to 30 percent market share held by established rail service like Acela in the northeastern U.S. or Italo in Italy.

Virgin is looking to put a Tampa terminal somewhere in or near downtown Tampa with "adjacent real estate for commercial development." Brightline's business model combines using rail to connect cities with traffic and congestion, and developing real estate around its terminals to cater to businesses and residents who like the alternative that rail provides in a dense urban environment. In the Overtown area near downtown Miami, its terminal is at the heart of a 1.6 million-square-foot privately financed development that includes two office towers, two apartment towers, 130,000 square feet of stores and restaurants.

In Tampa, Virgin has said it has not yet acquired the land it needs, including some that "must be acquired from private parties." Of the Tampa sites that Brightline is known to have scouted, the old Morgan Street jail site is owned by the state of Florida, Tampa Union Station is owned by the city of Tampa, the Tampa Park Apartments are owned by a nonprofit group headed by Florida Sentinel Bulletin newspaper publisher S. Kay Andrews and the GasWorx property, near the proposed Ybor City site of a new Tampa Bay Rays stadium, is owned by investor Darryl Shaw.

Virgin also has said it expects to contract with "municipal and private parties to purchase, lease or otherwise obtain the right to use land for the construction and operation of the Tampa expansion."

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Contact Richard Danielson at rdanielson@tampabay.com or (813) 226-3403. Follow @Danielson_Times