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Rail Investment and Public/Private Partnerships

Rail Investment and Public/Private Partnerships. Rail Investment and Public Private Partnerships. Can states be more than observers to the process?. Discussion Sequence. Who are the players? What do we know about them? What are the dimensions of the issue? Hotels, apartments or condos?

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Rail Investment and Public/Private Partnerships

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  1. Rail Investment and Public/Private Partnerships David P. Simpson David P. Simpson Consultants LLC

  2. Rail Investment and Public Private Partnerships Can states be more than observers to the process? David P. Simpson David P. Simpson Consultants LLC

  3. Discussion Sequence • Who are the players? • What do we know about them? • What are the dimensions of the issue? • Hotels, apartments or condos? • Next steps – building a business model that works! David P. Simpson David P. Simpson Consultants LLC

  4. Who are the players? • State DOT’s • FHWA / FRA • MPO’s (Large Cities) • Class I carriers David P. Simpson David P. Simpson Consultants LLC

  5. Who are the players? • State DOT’s • FHWA / FRA • MPO’s (Large Cities) • Class I carriers • Short line Carriers • Large Trucking Firms • New Rail Franchisees David P. Simpson David P. Simpson Consultants LLC

  6. What do we know about the the public stakeholders? • Very limited funding for rail • Not part of mainstream planning efforts • Traditional “Niche” focus – • Public safety / grade crossings • Shortlines/branchline preservation • Passenger/commuter rail David P. Simpson David P. Simpson Consultants LLC

  7. What do we know about the private stakeholders? • Rail carriers in capacity rationing mode • Long-haul, high volume corridor emphasis • Threshold volumes for new services rising • Trainload traffic opportunities a priority • Little appetite to broaden market scope • Domestic intermodal becoming more important David P. Simpson David P. Simpson Consultants LLC

  8. What do we know about the private stakeholders? • Real pricing increases • Financials strong • Little incentive to change business model David P. Simpson David P. Simpson Consultants LLC

  9. What do we know about the private stakeholders? • Motor carriers under duress – hours of service and job structure issues • Extreme labor turnover issues • Hours of service regs impact availability • Drug testing • Willingness to explore new structures • Large vs. small firms David P. Simpson David P. Simpson Consultants LLC

  10. What are the dimensions of the issue? David P. Simpson David P. Simpson Consultants LLC

  11. Public is sympathetic to freight rail • AASHTO Freight Rail Bottom Line Report David P. Simpson David P. Simpson Consultants LLC

  12. Public is sympathetic to freight rail • AASHTO Freight Rail Bottom Line Report • Motorist frustration with truck volumes David P. Simpson David P. Simpson Consultants LLC

  13. Public is sympathetic to freight rail • AASHTO Freight Rail Bottom Line Report • Motorist frustration with truck volumes • Corridor studies confirm importance of freight congestion issue David P. Simpson David P. Simpson Consultants LLC

  14. Public is sympathetic to freight rail • AASHTO Freight Rail Bottom Line Report • Motorist frustration with truck volumes • Corridor studies confirm importance of freight congestion issue • No public sector model to move forward with freight rail David P. Simpson David P. Simpson Consultants LLC

  15. Public is sympathetic to freight rail • AASHTO Freight Rail Bottom Line Report • Motorist frustration with truck volumes • Corridor studies confirm importance of freight congestion issue • No structural model to move forward with rail • Geographic scope a big challenge for states David P. Simpson David P. Simpson Consultants LLC

  16. Challenges of Public Rail Investment • Whose assets are they? David P. Simpson David P. Simpson Consultants LLC

  17. Challenges of Public Rail Investment • Whose assets are they? • What are we buying? David P. Simpson David P. Simpson Consultants LLC

  18. Challenges of Public Rail Investment • Whose assets are they? • What are we buying? • How do we measure capacity? David P. Simpson David P. Simpson Consultants LLC

  19. Challenges of Public Rail Investment • Whose assets are they? • What are we buying? • How do we measure capacity? • Who will guarantee service? David P. Simpson David P. Simpson Consultants LLC

  20. Challenges of Public Rail Investment • Whose assets are they? • What are we buying? • How do we measure capacity? • Who will guarantee service? • How do we track investment? David P. Simpson David P. Simpson Consultants LLC

  21. Challenges of Public Rail Investment • Whose assets are they? • What are we buying? • How do we measure capacity? • Who will guarantee service? • How do we track investment? • How to allocate ongoing investment? David P. Simpson David P. Simpson Consultants LLC

  22. Public Sector Evaluation Criteria • Confidence in forecasted impacts David P. Simpson David P. Simpson Consultants LLC

  23. Public Sector Evaluation Criteria • Confidence in forecasted impacts • Clarity of value equation • Capacity vs. investment • Service quality and market fit David P. Simpson David P. Simpson Consultants LLC

  24. Public Sector Evaluation Criteria • Confidence in forecasted impacts • Clarity of value equation • Capacity vs. investment • Service quality and market fit • Conservative market approach David P. Simpson David P. Simpson Consultants LLC

  25. Public Sector Evaluation Criteria • Confidence in forecasted impacts • Clarity of value equation • Capacity vs. investment • Service quality and market fit • Conservative market approach • Capital vs. subsidy bias David P. Simpson David P. Simpson Consultants LLC

  26. Private Sector Evaluation Criteria • Return to shareholders David P. Simpson David P. Simpson Consultants LLC

  27. Private Sector Evaluation Criteria • Return to shareholders • Cash versus annuity value David P. Simpson David P. Simpson Consultants LLC

  28. Private Sector Evaluation Criteria • Return to shareholders • Cash versus annuity value • Relationship to core business focus David P. Simpson David P. Simpson Consultants LLC

  29. Private Sector Evaluation Criteria • Return to shareholders • Cash versus annuity value • Relationship to core business focus • Regulatory risk David P. Simpson David P. Simpson Consultants LLC

  30. Private Sector Evaluation Criteria • Return to shareholders • Cash versus annuity value • Relationship to core business focus • Regulatory risk • Commercial risk David P. Simpson David P. Simpson Consultants LLC

  31. So What? David P. Simpson David P. Simpson Consultants LLC

  32. Hotels, Apartments or Condos? David P. Simpson David P. Simpson Consultants LLC

  33. What are structural options? ASSET NETWORK STRIPPING INTEGRATION Easement sale/lease Broaden Core Biz Limited Corridors Multiple Use Assets Market Isolation Marketing Integration David P. Simpson David P. Simpson Consultants LLC

  34. Next Steps – Building a Business Model That Works! David P. Simpson David P. Simpson Consultants LLC

  35. Next Steps – Building a Business Model That Works! • Identify key advantages and liabilities for various PPP business structures • Carrier perspectives • Public sector perspective David P. Simpson David P. Simpson Consultants LLC

  36. Next Steps • Identify key advantages and liabilities for various PPP business structures • Carrier perspective • Public sector perspective • Develop two or three specific business models that may have application to corridor needs. David P. Simpson David P. Simpson Consultants LLC

  37. Next Steps • Identify key advantages and liabilities for various PPP business structures • Carrier perspective • Public sector perspective • Develop two or three specific business models • Engage in collaborative effort to secure funding and initiate pilot project(s) David P. Simpson David P. Simpson Consultants LLC

  38. Thank You! David P. Simpson David P. Simpson Consultants LLC

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