Business Member Business Development Committee Sunday, June 12, 2011 ~~ 8 a.m. Exeter Room ~~ Third Floor ~~ Boston Marriott Copley Place Hotel AGENDA Welcome and Introductions Jeff Wharton and Al Engel Meeting Notes May 22, 2011 Meeting Attachment 1 Co Chairs Report Investment Brochure Update (working group report) Attachment 2 2010 HSR Investment Brochure Feedback & Comments Attachment 3 International Program Update Attachment 4 EXPO International Showcase Program Update Attachment 5 EXPO International Delegation Update Sustainability Program Attachment 6 Sputnik Subcommittee Attachment 7 Youth Summit Update Attachment 8 Internship Program (coordinate with COMTO)
A T T A C H M E N T 1
Business Member Business Development Committee May 22, 2011 Meeting Notes The meeting was called to order by Chair Jeff Wharton. Present at the meeting were Karen Becerra, Jeff Boothe, Keith Britton, Bill Correa, Sharon Greene, Delon Hampton, Hugh Harrison, Michael Melaniphy, David Mikoryak, Raquel Olivier, Jim Srygley, Dave Turney, Alan Wulkan, Michele Swayzer, Frank Martin, Don Leidy, Antoinette Medrok, Katrina Simpkins, Kim Green, Cliff Henke, Rosa Navejar and Petra Mollet. Stephanie Pinson participated by phone. The meeting notes from the March 12, 2011 meeting were approved. Stephanie Pinson reported on the work of the Sputnik subcommittee. She noted that the need for more engineering talent is a complex issue, that it involves a number of different technologies, the talent shortage and that current employees are attracted to large projects overseas that are moving forward. She noted that the subcommittee was working on two efforts: first a survey of APTA s business members to get a better understanding of the areas where talent is hard to find and second a survey of universities in other countries with transportation engineering programs to understand how they compare to the curricula of US universities. Karen Becerra asked to be included on the subcommittee. Members noted that it is difficult to recruit US students to engineering programs, that the Executive Committee has agreed to support development of a passenger/freight rail center of excellence program, that to influence US engineering curricula we need to do a better job of interacting with them, that EXPO should be an opportunity for engineering students to learn more about the industry and that we should encourage their attendance, that the first job that graduates get is basic on the job training, that coop programs are an excellent way to get experience, that members who are alumni of engineering schools and/or are on university boards could be of assistance in the effort, that there is also a need for bus engineering in the US and Hungary is a good case study, that waiting until college to get the message out its too late and that Secretary LaHood was working with WTS on the STEM (science, technology, engineering and math) program for young women. Jeff Wharton said that any additional committee members what want to work on the Sputnik subcommittee are welcome. The chair noted that the committee work program was in the agenda package and would become part of the BMBG s work program. With regard to updating the transit investment brochure it was noted that it needs to be kept current and that staff is in the process of updating the data, that we need to understand what it takes to grow the industry and attract investment, that APTA had gotten a lot of earned media from the brochure already and that there are a lot of additional studies that could be incorporated such as housing demand
and the state of good repair study, that we need to connect the dots for the private sector and also include the need for new funding. Bullets were suggested on the first page to clearly identify the focus areas. Jeff Wharton, Sharon Greene, Cliff Henke, Jeff Boothe, David Mikoryak and Alan Wulkan agreed to discuss the updating of the brochure with staff. Areas of discussion included the match between the public and private sectors, the relationship to legislative initiatives, new starts changes, state of good repair and was ARRA successful. With regard to international business issues the chair asked if there is any interest in an international internship program and none was expressed, however there was interest expressed in domestic internships and partnering with COMTO on their effort for the summer. The virtual trade mission in April went well and staff will continue working on future trade missions. It was noted that work on the Panama Canal will be completed in 2014 which may offer additional opportunities. Recruitment of international visitors to EXPO was discussed. Petra Mollet discussed the results of the recent trip to UITP. Members noted the need to show the benefits and success stories of APTA s international market efforts and others noted the return from the San Diego EXPO was great, and that it provides a positive legislative message regarding exports and supports the administration s efforts to double exports. Dave Turney noted that the question was how sustainable the effort is due to industry demands for local presence, particularly for manufacturing. Others asked if there is a quid pro quo with other countries with regard to Buy America and similar requirements that other countries impose and whether there is a way find a partnership solution. Additional international opportunities in India and Germany were noted. With regard to the APTA sustainability program it was noted that 30 business members have now signed up. A webinar for small office based members was suggested along with peer working groups to help encourage more business members to participate. Other suggestions included appealing to Leadership APTA members to encourage their companies to join the program, having a special EXPO booth logo for companies that have joined the sustainability program and giving companies that sign up at EXPO the logo for their booth, and ribbons for signatory members The information on the upcoming Youth Summit was noted and members requested to see the list of the participants this year. The next meeting of the committee will be at the APTA rail conference in Boston. The meeting was adjourned.
A T T A C H M E N T 2
The Case for BUSINESS INVESTMENT in Public Transportation
The Case for BUSINESS INVESTMENT in Public Transportation This report focuses on key issues critical to private investors as they consider investments or future expansion into the public transportation industry. Investment questions typically focus on transit financing, sources, process, and dependability, funding targets for investments, and funding needs. State of the Transit Industry Growth in Ridership, Service and Funding The transit industry has recently experienced significant growth; in ridership, in funding levels, and in service provided. In 2007, America s transit systems carried more than 10 billion passenger trips for the first time since 1957. Between 1995 and 2008, public transportation ridership increased by 38 percent, as compared to a 14 percent growth in population and a 21 percent growth in highway vehicle miles of travel. Systems have responded to increasing demand for service with expanded service and a number of new rail systems. Since 1995, 16 new light rail, heritage light rail, and streetcar systems, and eight new commuter rail lines, one new heavy rail system, and four new bus rapid transit systems have opened. Extensions of a number of existing systems have also been completed since 1995 including 7 busways, 10 commuter rail systems, 18 heavy rail systems, and 68 light rail, heritage light rail, and streetcar systems. Figure 1 Since 1995 Transit Passenger Trips Have Grown More Rapidly Than Population or Highway Vehicle Miles of Travel 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Transit Unlinked Trips Highway Vehicle Miles of Travel Population Source: APTA Fact Book 2009 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N 1
Figure 2 Transit Systems Being Constructed Across the Country (1995-2009) New light rail car systems Ore. Wash. Minn. Wis. N.Y. Maine Mass. New commuter rail New heavy rail New bus rapid transit System extension (rail / bus rapid transit) Calif. Utah Ariz. Colo. N.M. Texas Ill. Mo. Ark. La. Tenn. Ohio Ga. Pa. N.C. N.J. Md. D.C. Fla. P.R. Myth The transit business is subject to city hall politics. Response: Most transit systems are self-governing stand-alone entities within some form of local or regional government structure. A large proportion of transit agency budgets are covered through dedicated revenue sources that are, in comparison to many industries, stable and include a mix of local, state and federal resources. Over that period new light rail, heritage light rail, and streetcar systems opened in Charlotte, NC; Dallas, TX; Houston, TX; Jersey City, NJ; Kenosha, WI; Little Rock, AR; Los Angeles, CA; Minneapolis, MN; Phoenix, AZ; Portland, OR; Salt Lake City, UT; Seattle, WA (2 agencies have opened light rail lines in Seattle); Tacoma, WA; Tampa, FL; and Trenton, NJ. Since 1995, eight new commuter rail lines have opened in Albuquerque, NM; Nashville, TN; Portland, ME; Portland, OR; Salt Lake City, UT; San Diego, CA; Seattle, WA; and Stockton, CA; a new heavy rail system opened in San Juan, PR; and new busways opened in Boston, MA; Eugene, OR; Los Angeles, CA, and Miami, FL. Diverse and Stable Source of Public Transportation Funding Public transit funding is provided from a mix of federal, state, local and transit agency sources. In total, industry revenues reached $49.9 billion in 2007, of which $35.5 billion was provided for agency operations and $14.3 billion for agency capital programs. This report focuses primarily on the capital program. Transit revenue is generated from four primary sources: Directly Generated Revenues are acquired by the transit agency by their own activities including through fares, taxes levied by the system and other revenue, such as advertising, concessions or parking revenues. Local Revenues are taxes or fees generated by a local or regional government. Examples include a local sales tax or income tax, a property tax or other local fees. State Revenues, are taxes or fees is imposed by a state government. Federal Revenues, originate from federal government funds. Most operating revenue is generated by the agency or local tax revenue sources, with only 32% of funds coming from state or federal sources. Capital funds are generated from a more diverse range of resources with the federal government providing more than 40% of these funds. A relatively large proportion of funds are generated from dedicated revenues with the majority coming from sales taxes. Dedicated revenues are taxes or fees levied with the express purpose of funding public transportation and are, therefore, less susceptible to short-term changes in political support. Dedicated revenues may vary depending on economic conditions. 2 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N
Figure X 3 Sources of Capital Public Transportation Funding Funds Sources of Operating Funds Sources of Capital Funds Directly Generated 14% Federal 8% Fares 31% Local 14% State 11% % Federal 41% Local 23% S State 23% Directly Generated 34% % Source: National Transit Database, 2007 Table 1 Year Diverse Funding with Significant Share of Dedicated Funds Sources of Capital Funds Directly Generated by Transit Agency Other Dedicated Federal General Revenue State Dedicated Amount of Funding (Millions of Dollars) General Revenue Local Dedicated Total 2005 1,377 1,903 4,825 334 1,229 330 2,387 12,383 2006 1,713 1,971 5,808 455 1,322 515 1,557 13,340 2007 2,280 2,509 5,864 474 1,127 455 1,601 14,310 Percent of Annual Total 2007 15.9% 17.5% 41.0% 3.3% 7.9% 3.2% 11.2% 100.0% Source: National Transit Database, 2007 Table 2 Type of Tax Dedicated Revenue by Type of Tax Source (capital and operating purposes) Directly Generated by Transit Agency Dedicated Operating Revenue (in millions) State Local Total Percentage of Total Sales Tax 2,300 2,642 3,652 8,594 64% Gasoline Tax 27 703 162 892 7% Income Tax 696 81 777 6% Property Tax 307 1 389 696 5% Other Tax 286 1,082 1,019 2,386 18% Total 2,920 5,123 5,302 13,344 100.0% Source: National Transit Database, 2007 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N 3
Consistent Growth in Funding for Public Transportation Since 1995, capital funding provided by the combined total of directly generated and local sources increased by 145 percent, Federal funds have grown by 71 percent and state funds have grown by 57 percent. Figure 4 Capital Funding by Source (1995-2007) 8000 7000 Myth But the cities are broke, budgets are drained, so how can a participant in the transit market be a good investment risk? Millions of Dollars 6000 5000 4000 3000 Response: Transit systems are funded by local, regional state and federal resources, which provides a diversity of funding sources. Funding has continued to grow significantly for more than a decade and political support for transit investment continues to increase. 2000 1000 0 1995 1996 Source: National Transit Database, 2007 1997 1998 Federal Assistance 1999 2000 2001 State Assistance 2002 2003 2004 2005 2006 2007 Local Plus Directly Generated Federal authorizations for the transit program have grown from $5.8 billion in FY 2000 to $10.3 billion in FY 2009. The authorizing law passed in 1998 included a guarantee provision which has had the effect of improving the predictability of funding levels. Since its introduction, the appropriation has nearly matched the authorization every year. In addition to funds appropriated to Federal Transit Administration programs, some funds appropriated to Federal Highway Administration programs may be transferred to transit uses at the request of states. The amounts will vary from year to year. Some transit agencies receive limited amounts of federal funds from non-transportation programs that are not shown in these amounts. Table 3 Federal Funding 2005 to 2009 Fiscal Year Authorization (Millions) Appropriation (Millions) Percent of Authorized Appropriated (Millions) Flexed Funds (Millions) Appropriation Plus Flexed Funds (Millions) 2005 7,646 7,646 100.0% 966 8,612 2006 8,623 8,505 98.6% 1,326 9,830 2007 8,975 8,975 100.0% 1,023 9,998 2008 9,731 9,492 97.5% 894 10,386 2009 10,338 10,231 99.0% 4 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N
In addition to relatively stable revenue sources and growing political support, public transportation has generated a high degree of interest among the general public as demonstrated by recent voter referenda across the country. Over the past five years, almost three in four propositions for transit funding put before voters has been approved. Table 4 Year Measures on Ballots Measures Approved Percentage Approved 2008 51 41 80% 2007 18 12 67% 2006 50 32 64% 2005 25 21 84% 2004 50 40 80% 5-Year Total 194 146 75% Source: Center for Transportation Excellence Widespread Political Support for Public Transportation Local Public Transportation Referenda Approvals Nationwide Capital Funding for Public Transportation Supports Wide Range of Business Sectors Based on the most recent data available (2007), the largest portion of capital expenditures was spent on facility construction (61 percent), including fixed-guideways, stations, administration buildings and maintenance facilities. Vehicles account for 27 percent of capital expenditures, including passenger vehicles and service vehicles. Fare revenue collection equipment, communication and information systems, and other capital uses accounted for the remainder. Table 5 Capital Expense by Mode and Type of Investment (Millions $ - All Levels of Government in 2007) Type Bus Commuter Rail Heavy Rail Light Rail Paratransit Trolley- Bus Other Total % of Annual Total Guideway 152 1,046 0 1,391 2,212 18 2 4,820 33% Passenger Vehicles 1,681 428 495 774 323 10 126 3,837 26% Stations 308 419 7 1,105 175 <1 82 2,097 14% Maintenance Facilities 472 329 144 655 119 <1 7 1,726 12% Communication and Information Systems Fare Revenue Collection Equipment 236 77 49 434 86 <1 3 886 6% 97 5 1 84 26 <1 <1 214 2% Administration Buildings 143 19 20 12 6 <1 <1 200 1% Service Vehicles 39 7 5 34 4 <1 <1 90 <1% Other 163 117 27 203 91 <1 58 659 5% Total 3,291 2,446 748 4,691 3,042 32 279 14,529 100.0% Note: All capital as defined by National Transit Database accounting system but also including all transit agencies not in the NTD. T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N 5
Table 6 Type of Vehicle (NTD Categories) The replacement and expansion of the transit vehicle fleet is a significant focus of transit investment. The total roadway vehicle fleet for the transit industry exceeds 100,000. Two out of three vehicles are buses with vans representing the vast majority of the remainder. Among the bus fleet, two out of three buses are approximately 40-feet in length and represent the most significant part of the potential new vehicle market. Transit agencies are able to replace vehicles according to guidance provided by the Federal Transit Administration, which for the typical 40-foot buses is every twelve years, but varies depending on the vehicle type. Mode of Service Bus Service Demand Response Vanpool and Publico Total Number Percent Number Percent Number Percent Number Percent Buses 61,196 95% 8,805 28% 18 <1% 70,019 64% Articulated buses 2,267 4% 0 0% 0 0% 2,267 2% Double decked buses 65 <1% 0 0% 0 0% 65 <1% School buses 51 <1% 27 <1% 0 0% 78 <1% Vans/Taxicab vans 613 1% 16,575 52% 12,908 99% 29,996 28% Taxicab sedan/station wagon/automobiles 2 0% 6,106 19% 21 <1% 6,129 6% Other 146 <1% 40 <1% 0 0% 186 <1% Total 64,340 100% 31,453 100% 12,947 100% 108,740 100.0% Source: National Transit Database, 2007 Active Transit Roadway Vehicle Fleet in Urbanized Areas Table 7 Active Buses by Length and Mode of Services in Urbanized Areas Mode of Service, Buses Only by Length Length Bus Demand Response Vanpool and Publico Total Number Percent Number Percent Number Percent Number Percent 46 ft and Longer 3,563 6% 3 0% 0 0% 3,566 5% 42 ft to 45 ft 3,090 5% 3 0% 0 0% 3,093 4% 35 ft to 41 ft 47,150 75% 96 1% 0 0% 47,246 67% 25 ft to 34 ft 8,090 13% 3521 44% 7 39% 11,618 16% 24 ft and Shorter 1,054 2% 4,418 55% 11 61% 5,483 8% Source: National Transit Database, 2007 6 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N
Table 8 Length of Vehicle Bus, All Types Cutaway Van Type of Vehicle, Rural Areas Only Automobile, Minivan, and SUV Number Number Number Number Number Number Percent 35 ft and Longer 956 5 1 0 12 974 5% 25 ft to 34 ft 2387 1394 84 42 38 3945 21% 24 ft and Shorter 1,728 3,641 5,226 2,823 137 13,555 73% Total, Number 5,071 5,040 5,311 2,865 187 18,474 100% Total, Percent 27% 27% 29% 16% 1% 100% Source: National Transit Database, 2007 Transit Roadway Vehicle Fleet and Length in Rural Areas Other Total The market for rail vehicles is less consistent year to year with longer life cycles than typical bus vehicles. Rail vehicles by year manufactured data are available in the APTA 2008 Public Transportation Vehicles Inventory and provide an indication of the relative market size year to year. Table 9 Rail Vehicles by Year of Manufacture from 2008 Vehicle Type From 2008 APTA Public Transportation Vehicle Inventory 2007 2006 2005 2004 2003 2002 Commuter Rail Car 69 365 416 487 405 174 Commuter Rail Locomotive 0 11 0 6 51 11 Heavy Rail Car 238 120 92 64 454 576 Light Rail Car 18 39 63 127 133 25 Total 325 535 571 684 1,043 786 The data are as of January 1, 2008, hence many vehicles manufactured in 2007 may not yet have been delivered and accepted by agencies and hence, are not included in 2007 numbers. Source: APTA Public Transportation Vehicle Inventory Myth This is really just a government or federal program business. Response: Not so; most transit systems are selfgoverning stand-alone entities within some form of local or regional government structure. Most have their own Board of Directors and operate in a mode of quasi-private enterprise. Widespread Interest in Expansion of Transit thorough Major Capital Projects The New Starts Program also represents a significant target of investment for the federal transit program with over $1 billion in funding from the federal government alone on an annual basis. Typically projects are matched with state and local funding for approximately half of the total cost, though the proportion of funding varies by project. Projects move through various stages of planning, design and construction with a high degree of oversight from the Federal government. As shown in Figure 5, a number of projects continue to move through the New Starts process. T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N 7
Figure 5 Number of New Start Projects Proposed for Fiscal Year 2010 Myth What happens if Washington just stops funding transit? Response: Funding for public transportation has grown at a faster pace than inflation for more than a decade. The recent economic recovery act targets public transit investment and all political signs suggest an even stronger role for transit. Increasingly, the demographics of modern transit operations are similar to the population served. Environmental concerns, fuel costs, health concerns, traffic congestion, quality of life, all of these drivers of the transit market, are working to push more and more people to transit. Source: National Transit Database Small Start Project Development 16 Preliminary Engineering 13 % % esign 6% Final Design 6 Full Funding Grant Agreements, Actual, Pending, and Recommended (a) 23 Project Construction Grant Agreements, Actual and Pending (a) 2 The American Recovery and Reinvestment Act and Emergence of High-Speed Rail The American Recovery and Reinvestment Act of 2009 (ARRA) provides additional funding for public transit. The ARRA appropriated $48 billion for transportation of which $8.4 billion was specifically for transit capital investment and $8 billion for high speed rail. The ARRA equals 82 percent of the value of FY 2009 FTA appropriations. Table 10 American Recovery and Reinvestment Act of 2009 (ARRA) Program ARRA Appropriation FY 2009 FTA Appropriation ARRA Comparison to FY 2009 Appropriation (Millions) (Millions) (Percent) Urbanized Area Formula 5,440 4,160 131% Nonurbanized Area Rural Formula 663 441 150% Growing States and High Density States 680 465 146% Fixed-Guideway Modernization 750 1,667 45% New Starts and Extensions 750 1,809 42% Public Transportation on Indian Reservations 17 15 113% Energy Consumption and Greenhouse Emissions Reduction 100 Other Program 1,674 Total Public Transportation Funding 8,400 10,231 82% High Speed Rail Funding 8,000 ARRA has solidified the rapidly growing national support for high-speed rail. In 2008, the Passenger Rail Investment and Improvement Act provided the foundation for a high-speed rail program. ARRA built upon this foundation with $8 billion for high-speed rail projects. In April 2009 President Obama announced his support for long-term funding through its Vision for High-Speed Rail. While specific funding levels are being developed, the Vision for the Future: U.S. Passenger Rail Network Through 2050 prepared for the National Surface Transportation Policy and Revenue Study Commission suggests the magnitude of funding needs at more than $350 billion. The Federal Railroad Administration is working on a National Rail Plan which will further define the future of the program. 8 T H E C A S E F O R B U S I N E S S I N V E S T M E N T I N P U B L I C T R A N S P O R T A T I O N
References and Other Resources: Public Transportation Fact Book: The APTA Fact Book is a summary of national total data for the entire transit industry for a single year. Appendix A: Historical Data, provides data for every year as far back as 1902. Appendix B, Transit Agency and Urbanized Area Operating Statistics, ranks transit agencies and urbanized areas by size for six operating statistics. Public Transportation Vehicle Database: The APTA Vehicle Database lists vehicles reported by participating transit agencies for the active fleet, under contract for purchase, and planned purchases. Public Transportation Infrastructure Database: This database produced by APTA lists major transit infrastructure in the U.S. and Canada and includes rail line data and station, stop and parking data for all modes. APTA Primer on Transit Funding: The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, and Other Related Laws, FY 2004 Through FY 2009: The Primer describes the amount of funds from federal transit programs, how they can be used, and how they are distributed among transit agencies and states. Survey of State Funding for Public Transportation: An annual report which provides detail on funding provided from state governments for all 50 states. Annual Report on Funding Recommendations ( New Starts Report ): FTA publishes an annual report outlining the status of various projects being considered for funding under the New Starts program. Statistical Summary: Annual FTA publication which reports how federal funding was used, including the types of equipment purchased. National Transit Database: A comprehensive source of data collected from transit agencies in urbanized areas which operate 10 or more vehicles produced by FTA. Data is typically released 12-18 months after the end of the reporting period. Vision for the Future: US Intercity Passenger Rail Network Through 2050: Report issued in December, 2007 by the Passenger Rail Working Group for the National Surface Transportation and Revenue Study Commission which outlines a recommended rail network in the United States with estimates of funding needs. Vision for High-Speed Rail in America: Report issued in April of 2009 which outlined the Obama administration s vision for a national high-speed rail system.
For further details and updated information, please visit www.apta.com or contact us at: 1666 K Street, N.W., Washington, DC 20006-1215 Phone: (202) 496-4800 Fax: (202) 496-4324 This report was developed by the private-sector business members of the American Public Transportation Association.
A T T A C H M E N T 3
The Case for Business investment in High-Speed and Intercity Passenger Rail
Introduction This report focuses on key issues critical to private investors as they consider investments or future expansion into business serving growing passenger rail markets. It highlights national and international trends, the market potential in the U.S. future funding sources, and the need for public support. Intercity rail services in the United States are provided by the National Railroad Passenger Corporation, better known as Amtrak. Amtrak operates a national network of routes that serve all regions of the country. The Federal Railroad Administration has identified additional corridors where travel markets are ripe for high-speed corridor services to be managed by states or teams of states. These corridors are at the core of President Obama s vision for high-speed rail in America. Many believe this vision will be a legacy of his Administration, and provides a forward looking transportation vision similar to the Interstate Highway system in the 1950s. These designated high-speed rail corridors, to be augmented over time, will complement and connect to the national system. High-speed and intercity passenger rail services are part of a U.S. rail market that also includes commuter railroads, rail transit systems, and the freight rail industry.
A Growing Rail Passenger Base-Market: The overall rail passenger market in the United States is growing at an impressive rate, sustained by a multi-decade trend. The scale of this growing market is reaching the critical mass that will make the market for vehicle procurements and state-of-good-repair investments strong and consistent year in and year out. Market growth can be measured in a number of ways. Of the 35 light rail systems in existence today, only seven were present in 1980. Of the 28 commuter rail systems today, only 10 were in operation in 1980. Ridership on commuter rail, light rail, and heavy rail grew from 2.627 billion trips in 1995 to 4.513 billion trips in 2008, an increase of 72 percent. Despite chronic underinvestment, annual passenger trips aboard Amtrak have risen from 21 million in 2000 to 28.7 million in 2010, a 37 percent increase. In 2010, annual passenger trips were at their highest level ever. 1 Figure 1 Amtrak Annual Ridership Trend Millions of Passengers 30 29 28 27 26 25 24 23 22 21 20 2000 2002 2004 2006 2008 2010 Fiscal Year Source: Amtrak The Case for Business Investm ent in High-Speed and Intercity Passenger Rail 1
Amtrak has proposed the development of Next Generation High-Speed Rail service for the Northeast Corridor. 2 As demand for travel in this corridor is projected to grow, congestion levels will increase to the point of corridor gridlock by 2035. Neither highway expansion nor increased air travel are practical responses to the problem. Amtrak s proposal calls for a $52 billion investment to the existing Northeast Corridor rail system to handle a projected 60 percent increase in intercity and commuter rail trips. Preliminary studies indicate that a dedicated high-speed rail alignment would require approximately $117 billion in construction investment. High-speed rail ridership would increase five-fold and the project would have a high benefit-tocost ratio. The current fleet of rolling stock owned by Amtrak has an average age in excess of 25 years. Amtrak has announced a new fleet improvement strategy designed to meet future travel demands, simplify fleet maintenance, provide the best service for passengers, and renew the vehicle fleet in an organized manner over time while creating a constant demand to support a competitive supplier base. Amtrak projects that the desirable procurement program would each year acquire 65 single level passenger cars, 35 bi-level cars, a total of 70 electric locomotives, 25 high-speed diesel locomotives, and the expansion and replacement of the existing high-speed Acela fleet. 3 A National Vision for High-Speed Rail Corridors: On February 17, 2009 the American Recovery and Reinvestment Act (ARRA) was signed into law. As part of this legislation, $8 billion was provided for intercity and high-speed rail projects. On July 10, the Federal Railroad Administration (FRA) received pre-applications from 40 states totaling $103 billion. The FRA is implementing these passenger rail programs through the statutory program structure of the Passenger Rail Investment and Improvement Act of 2008, signed into law by President Bush. Congress has supplemented the initial $8 billion with additional appropriations of $2.5 billion in FY 2010. The Administration has proposed an authorization of $53 billion for high-speed rail over the six years from FY 2012 through 2017. This is a high priority program in the FY 2012 budget that highlights the importance of transportation infrastructure for jobs, economic growth, and international competition. This has been presented by the White House as a down payment on future investment. A U.S. Department of Treasury report found this to be an ideal time for such investment given the low cost of capital, low construction costs, and high levels of unemployment in the construction industry. 4 The FRA has identified corridors as the initial recipients of funds, based on states services those states would help support. The identified corridors, including all proposed routes, are shown in Figure 2. 5 2 The Case for Business Investm ent in High-Speed and Intercity Passenger Rail
High-Speed Rail Corridors as Illustrated by the Federal Railroad Administration Figure 2 Northern New England Pacific Northwest Empire Chicago Hub Network Keystone NEC California Southeast South Central Key Designated High-speed Rail Corridor Northeast Corridor (NEC) Other Passenger Rail Routes Alaska Railroad (Seward to Fairbanks/Eielson) not shown Gulf Coast Florida Source: Federal Railroad Administration In funding projects in these corridors, much of the country has been immediately engaged in the new federal program. In addition to the corridors that are receiving immediate funding, there is a much larger pipeline of projects. America 2050, the Regional Plan Association s national infrastructure planning and policy initiative, looked at city-pairs in corridors of 200-600 miles, and identified a phased program which, when complete, would enhance mobility options for the 440 million Americans who will live in the United States by the mid-century. 6 Duke University looked at this growing market in its report U.S. Manufacture of Rail Vehicles for Intercity Passenger Rail and Urban Transit. 7 It found that an extensive supply chain for rail manufacturing already exists in large part, and that this geographically diverse network stands ready to respond to a spark in demand. America has a multiple market tailor-made for highspeed rail. This supply chain includes at least 249 U.S. manufacturing locations in 35 states. The report identified a total of 15 railcar builders, 5 locomotive builders, and 159 component suppliers. These ranged from small firms with fewer than 20 employees and only one manufacturing site, to large, diverse firms with thousands of employees and several relevant U.S. manufacturing locations. The report also noted that the U.S. value chain includes several gaps specific manufacturing activities that are not typically performed in the United States. The White House and the U.S. Department of Transportation consider passenger rail to be central to an economic strategy that will lead to hundreds of thousands of forward looking clean energy jobs. The Case for Business Investm ent in High-Speed and Intercity Passenger Rail 3
International Trends Could Influence the Pace for U.S. Investments: The United States has a long way to go to catch up with high-speed rail investment levels in other developed nations. The U.S. ranks 8 th in miles of high-speed rail in operation, 8 th in miles under construction, 6 th in miles planned, and 9 th in total miles according to data reported by the International Union of Railways (UIC) in 2011 and shown in the table below. 8 table 1 Miles of High-Speed Rail Lines by Country May 2010 Miles of High-Speed Passenger Railway Lines Operating Under Construction Planned Total Country Miles Percent of Total Highest Speed (mph) (a) Miles Percent of Total Miles Percent of Total Miles Percent of Total China 2,609 28.4% 219 3,786 58.5% 1,813 16.5% 8,208 30.8% France 1,185 12.9% 200 131 2.0% 1,635 14.9% 2,951 11.1% Germany 803 8.7% 188 236 3.6% 419 3.8% 1,458 5.5% Italy 577 6.3% 188 0 0.0% 247 2.2% 824 3.1% Japan 1,584 17.2% 188 318 4.9% 364 3.3% 2,266 8.5% Portugal 0 0.0% --- 0 0.0% 629 5.7% 629 2.4% Russia 0 0.0% --- 406 6.3% 406 3.7% 812 3.0% South Korea 258 2.8% 188 0 0.0% 0 0.0% 258 1.0% Spain 1,285 14.0% 188 1,104 17.1% 1,064 9.7% 3,453 13.0% Taiwan-China 216 2.4% 188 0 0.0% 0 0.0% 216 0.8% Turkey 147 1.6% 156 319 4.9% 1,049 9.5% 1,515 5.7% USA 226 2.5% 150 0 0.0% 563 5.1% 789 3.0% World Total 9,188 100.0% --- 6,471 100.0% 10,996 100.0% 26,655 100.0% (a) Highest speed of any line currently in operation. Includes only selected countries. Source: International Union of Railways, 2011. 4 The Case for Business Investm ent in High-Speed and Intercity Passenger Rail
At its December 2010 High-Speed Rail World Congress in Beijing, UIC announced it will hold its next High-Speed Rail World Congress in the United States. This July 2012 event will help focus United States decisionmakers on the international success stories in the development of high-speed rail. High-Speed Rail Development is In-Step with All Long-Term U.S. Trends and Market Directions: The Need for Jobs and Economic Development: High-speed rail has arrived just in time for America to incorporate it into a forward-looking economic policy. Its economic returns are demonstrated in numerous national and international studies. Expenditures for high-speed rail construction are estimated to support 24,000 jobs for each billion dollars of investment. 9 The California High-Speed Rail Authority projects 600,000 full time construction jobs will be created over the course of building their project and 450,000 permanent new jobs will result from high-speed rail related economic growth over the next 25 years. 10 The Economic Development Research Group for the U.S. Conference of Mayor s studied the economic impact of high-speed rail on four different urban regions. The results focused on five factors. High-speed-rail service can help drive higher density, mixed use development at train stations; increase business productivity through travel efficiency gains; help expand visitor markets and generate additional spending; broaden regional labor markets; and support the growth of technology clusters. 11 The impacts calculated are shown in the table below: Impacts of High-Speed Rail for Four Urban Regions, U.S. Conference of Mayors table 2 Urban Region Employment (Number of Jobs) Projected Annual Total Economic Impact of HSR Service in 2035 (2009 $) Output (Sales) Value-Added (Gross Regional Product) Los Angeles, CA 55,000 $ 7.6 Billion $ 4.3 Billion $ 3.0 Billion Chicago, IL-IN 42,000 $ 6.1 Billion $ 3.5 Billion $ 2.5 Billion Orlando, FL 27,500 $ 2.9 Billion $ 1.7 Billion $ 1.2 Billion Albany, NY 21,000 $ 2.5 Billion $ 1.4 Billion $ 1.1 Billion Source: U.S. Conference of Mayors/Economic Development Research Group, 2010. Wages The Case for Business Investm ent in High-Speed and Intercity Passenger Rail 5
In its 2010 publication, High-Speed Rail: The Fast Track to Economic Development?, the World Bank explained the contributions that high-speed rail makes to economic prosperity: In operational terms a high-speed line will naturally provide valuable travel time savings to its users but it may also free up capacity on existing lines for other transport users, and enable performance improvements on those lines due to lower congestion. 12 The Need to Connect America s Economic Engines: Population growth in the United States has and will continue to concentrate in areas of economic opportunity. Several parts of the United States have seen the emergence of very high population clustering, accompanied by integrated regional labor markets, infrastructure, cultural and land-use patterns. Economically, these megaregions have become the engines of American prosperity. Connecting these regions to one another has become a key objective for our transportation system. The Urban Land Institute s Infrastructure 2010: Investment Imperative asserts that failure to invest could delay economic recovery and put the United States at increased disadvantages in the global marketplace. The report clarifies the need for infrastructure investment including investment in high-speed rail to modernize America s rail transportation system. High-speed rail is seen as the solution for taking pressure off airports and highways in regional intercity markets as travel demand increases. The report states that: Car dependence and ever-escalating driving delays in most large American cities have exposed the need for more passenger rail service to take the pressure off crowded interstates and clogged airports, which struggle to handle current traffic volumes. The urgency of addressing the issue becomes more apparent since the country s population will increase by 120 million over the next 40 years, with growth concentrated in the nation s primary urban centers and surrounding suburbs. All these people will want to move around and current systems won t be able to handle prospective volumes. 13 The Need for Transportation Investments that are Consistent with Energy and Environmental Policies: Looking long term, it will be both economically prudent and politically necessary to justify transportation investments with energy and environmental trends. Just ask Warren Buffett, who last year invested more than 26 billion in the BNSF Railroad, in recognition of this bright future. In his Annual Report to Berkshire Hathaway shareholders, Mr. Buffett wrote, The highlight of 2010 was our acquisition of Burlington Northern Santa Fe, a purchase that s working out even better than I expected. 14 Numerous studies have shown high-speed rail to be the route of energy and carbon savings. Figure 3 shows energy efficiency among intercity travel modes determined by the International Union of Railways. For the same energy use, high-speed rail provides eight times the passenger travel as aircraft and four times that of private cars. 15 The Center for Neighborhood Technology found that high-speed rail cuts CO 2 emissions nationwide and in every corridor where it is proposed to be built. It projected total emissions savings of 6 billion pounds of CO 2 per year if all proposed high-speed rail systems studied are built. Their results are summarized on Figure 4. In all cases, high-speed rail creates lower emissions than air or auto travel. 16 6 The Case for Business Investm ent in High-Speed and Intercity Passenger Rail
Energy Efficiency: Passenger Miles per Kilowatt Hour Figure 3 Plane 13 Private Car 24 Bus 34 Regional Train 33 Commuter Train 56 Rapid Train 66 High-Speed Train 106 0 20 40 60 80 100 120 Passsenger Miles per Kilowatt Hour Source: International Union of Railways CO 2 Emissions per Passenger Mile Figure 4 Airplane Automobile High Speed Rail: IC-3 - Denmark (Diesel) High Speed Rail: TGV Atlantique - France High Speed Rail: ICE Line 6 - Germany High Speed Rail: Tokaido Shinkansen 700 - Japan Conventional Rail 0 0.1 0. 2 0. 3 0. 4 0. 5 0. 6 0.7 Emissions per Passenger Mile (lbs CO 2 ) Source: Center for Neighborhood Technology The Need for a Balanced Transportation System with Options: International examples show that given good travel options, people will use high-speed rail systems in large numbers. In Japan, their high-speed train, the Shinkansen, has been a very effective competitor with air transportation. In the market between Tokyo and Osaka (the two major metropolitan areas in Japan), the Shinkansen accounts for about 88 percent of the market share. 17 The Case for Business Investm ent in High-Speed and Intercity Passenger Rail 7
An International Union of Railways report provides two comparisons of the percentage of traffic carried by rail in a corridor before and after high-speed rail was introduced. Rail travel between Paris and Brussels as a percentage of travel by all modes increased 108 percent, from 24 percent of travel before the introduction of high-speed rail to 50 percent after whereas between Madrid and Seville, rail travel went from 33 percent of rail and air travel only to 84 percent, a 155 percent increase. 18 table 3 Rail Use Change After Introduction of High-Speed Rail in Two Corridors Corridor Percent Trips on Train Before High-Speed Rail Percent Trips on Train Now Percent Change in Train Share of Trips Paris - Brussels (All Travel Modes) 24 % 50 % 108 % Madrid - Seville (Train and Air Travel Only) 33 % 84 % 155 % Source: International Union of Railways, 2008 According to CALPRIG:, even in the northeastern U.S., where Amtrak Acela Express service is slow by international standards, rail service accounts for 62 percent of the air/rail market on trips between New York and Washington, D.C., and 47 percent of the air/rail market on trips between Boston and New York. 19 A Spark for Economic Growth: In a study of high-speed rail investment financing mechanisms, Mercator Advisors and Vantage Point Associates found that: Investment in a regional rail corridors program...will result in the creation of both direct jobs related to the construction and operation of the system and additional jobs due to the regional benefits and economic activity over the long-term operating period. 20 The Need for Projects Ripe for Public-Private Partnerships: As America looks to involve the private sector to the fullest extent possible, high-speed rail projects lend themselves well to various models, including operating contracts, concessions, and Design-Build-Operate-Maintain- Finance arrangements. Around the world, support of the central government has been needed for the initial construction of the project, with the private sector assuming a large role in project delivery and operations. table 4 Cumulative Road Construction Cost Savings from High-Speed Rail and Transit Investment in the Florida I-4 Corridor Time Period By 2030 By 2050 Cumulative Road Construction Savings $178 Billion $270 Billion Source: University of Pennsylvania Design Studio I-4 Corridor Study Providing Balance to the Transportation System: In an illustrative example, the University of Pennsylvania Urban Design Studio found that 1 million fewer acres of land would need to be developed in the I-4 Corridor than otherwise would result from current growth trends over the next 40 years given a sound transportation investment scenario including high-speed rail and transit. 21 The high-speed rail and transit-based scenarios would result in significant savings in road investments. Cumulative savings in new road construction costs of $178 billion by 2030 and $270 billion by 2050 are projected. 8 The Case for Business Investm ent in High-Speed and Intercity Passenger Rail
Growth in Rail Vehicle Demand Figure 5 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Commuter Rail Heavy Rail Light Rail Intercity Rail High-Speed Rail Total Rail Cars 5,000 0 1980 2010 2040 Source: See Text An Ongoing Program of Passenger Rail Investments: Drawing APTA s Vehicle Database, FTA s New Starts report and projected pipeline of projects, Amtrak s vehicle fleet inventory for 2010 and replacement plan for 2040, and FRA s plans for a desired construction schedule for high-speed rail, the growth in rail car needs are projected as shown in Figure 5. While many things will need to fall into place for this projection to be realized, this is the plan which stakeholders are working toward. 22 Such levels of activity will spark business opportunities to plan, design, build, manage and operate systems, and to manufacture and supply rail equipment. All this activity will be dependent on the availability of funding. At the moment, this is an issue for high-speed rail just as it is for all surface transportation infrastructure. This report demonstrates that long-term trends support the growth of passenger rail with the market rising to promising heights. It is expected that a federal surface transportation bill will be considered in the coming year. APTA and partnering organizations are mounting an advocacy campaign in the coming months to make the case for investment in transportation infrastructure. We know that for more than 10 years, the public has voted overwhelmingly to approve ballot measures calling for an increase in public transportation investments, even when this required an increase in taxes. The Case for Business Investm ent in High-Speed and Intercity Passenger Rail 9
1 6 6 6 K St r e e t, N. W. Was h i n gto n, D C 2 0 0 0 6 w w w. a p ta. c o m Printed on recycled paper High-Speed Rail Brochure End Notes 1. More Passengers Choosing Amtrak. News Release ATK-11-019. Washington: Amtrak, February 10, 2011. 2. A Vision for High-Speed Rail in the Northeast Corridor. Washington: Amtrak, September 2010. 3. Amtrak Fleet Strategy: Building a Sustainable Fleet in the Future of America s Intercity and High-Speed Passenger Railroad. Washington: Amtrak, February 2010. 4. An Economic Analysis of Infrastructure Investment. Washington: The Department of the Treasury with the Council of Economic Advisors. October 11, 2010. 5. Chronology of High-Speed Rail Corridors: Designations and Extensions. Washington, Federal Railroad Administration, accessed February 2011. 6. Todorovich, Petra and Yoav Hagler. High Speed Rail in America. New York: America 2050, January 2011. 7. Lowe, Marcy, Saori Tokuoka, Kristen Dubay, and Gary Gereffi. U.S. Manufacture of Rail Vehicles for Intercity Passenger Rail and Urban Transit: A Value Chain Analysis. Durham, NC: Center on Globalization, Governance and Competitiveness, Duke University, June 22, 2010. 8. Document 1.4.3. Miles of High Speed Lines in the World. Paris: International Union of Railways (UIC), January 2011. 9. Economic Impact of Public Transportation Spending. Washington: American Public Transportation Association, 2009. 10. California High-Speed Train Creates Jobs. Sacramento: California High-Speed Rail Authority, 2010. 11. Economic Development Research Group. The Economic Impacts of High- Speed Rail on Cities and Their Metropolitan Areas. Washington: U.S. Conference of Mayors, June 14, 2010. 12. Amos, Paul, Dick Bullock, and Jitendra Sondhi. High-Speed Rail: The Fast Track to Economic Development? Washington: The World Bank, July 2010. Page 16. 13. Infrastructure 2010: Investment Imperative. Washington, : The Urban Land Institute, 2010. Page 19. 14. Buffett, Warren. To the Shareholders of Berkshire Hathaway, Inc. February 26, 2011. Page 3. 15. High Speed Rail: Fast Tracks to Sustainable Mobility. Paris: International Union of Railways (UIC), 2010. 16. High Speed Rail and Greenhouse Gas Emissions in the U.S. Chicago: Center for Neighborhood Technology. January, 2006. 17. News and Facts: Other High-Speed Train Systems. Sacramento: California High-Speed Rail Authority, 2010. 18. High Speed Rail: Fast Track to Sustainable Mobility. Paris: International Union of Railways (UIC), 2010. 19. Dutzik, Tony and Erin Steva. Next Stop: California, The Benefits of High- Speed Rail Around the World and What s in Store for California. Sacramento: CALPRIG Education Fund, June 2010. Page 1. 20. Financing High-Speed Intercity Passenger Rail with Tax Credit Bonds: Policy Issues and Fiscal Impacts. Washington: Mercator Advisors and VantagePoint Associates for the American Public Transportation Association, June 2008. Page 2. 21. Connecting for Global Competitiveness: Florida s Super Region. Philadelphia: University of Pennsylvania Department of Regional Planning, Tampa Bay Partnership, Central Florida Partnership, Spring 2010. 22. High Speed Rail Investment Background Data. Washington: American Public Transportation Association, January 2011. February 2011