3:10 to Houston…Risk & Reward on the Rails in the Lone Star State

One of the big political issues facing states today is public-private partnerships. To some, these types of partnerships are a slam dunk with the state paying private industry to manage certain traditionally public institutions, often at a cheaper price and with the better management that private industry can bring to the table compared to state bureaucracy. To others, these partnerships are the state ceding its publicly entrusted duties and are vulnerable to corruption and mismanagement. Public-private partnerships aren’t just limited to these major state contracts. Many cities and states engage in such partnerships by offering incentives, usually favorable taxes, to encourage business development or certain business practices that they see as beneficial. Texas excels at this using its lower tax rate, business friendly legal environment, and certain other incentives to lure industries from other states to its borders. Cities across the country, in red states and blue states, offer these partnerships to do things like develop business parks, encourage gentrification in older parts of town, or lure professional sports teams.

One of the bigger potential public-private partnership projects in the works is the Texas Central Railroad. This massive undertaking seeks to link Houston and Dallas together by high speed rail. A train ride from one city to the other should take roughly 90 minutes. The Texas Central Railroad project is largely underwritten by private investment, mainly thanks to Japanese firms specializing in foreign investment and high speed rail projects in Japan itself. This is what separates this project from a similar but state sponsored endeavor in California that has been plagued by delays, is already over budget, and hounded by political interests and mismanagement. With a private railway that seeks to lower costs and be profitable, running the show the hope is the Texas Centrall Railroad will succeed where other U.S. projects have failed.

There are concerns about the development of this railway. State officials from rural areas along the route are vehemently opposed to its development. This is largely because their regions would see little benefit while they would be heavily impacted by the eminent domain property acquisitions critical to making this project work. This reliance on eminent domain is what makes the project a public-private partnership instead of an entirely private endeavor.  Many Tea Party Republicans oppose the project because they believe the railway will require some govenerment assistance either during construction or at some point after if the railway fails financially. These Republicans are pro business but are often of a more libertarian mindset where they oppose most government intervention in the free market. Rural constituents have valid concerns about crossing points along the rail line, noise, and loss of revenue as traffic that would normally drive along I-45 would be siphoned into the non-stop rail cars. The nature of high speed rail also means that stops in rural areas would be few and far between,. The only proposed stop on the Houston to Dallas line at the moment would be a stop near College Station, designed for Houstonian and Dallasite students, not so much for rural travelers. With a handful of exceptions, rural citizens are shut out of these types of lines. There is something to be said also about the fact that mass transit projects are now seen as liberal ideas and many republicans oppose them on principal in favor of increased road spending. This is largely because transit projects are primarily urban, have a history of going over budget, and generally do not cater to the rural and suburban republican base.

There are also concerns about the practicality of the railway itself. While a 90 minute train ride from Houston to Dallas beats a 240 minute car ride, it doesn’t take into account travel time from one’s home or workplace to the station, wait time in the station, or what a passenger does when they arrive in the other city. If someone wanted to travel from Houston to Dallas on a Friday night and they worked in the Galleria area, they are looking at a 15-30 minute trip from their desk to the station before boarding times even add up. This says nothing of the cost of dropping off a car for the weekend or the cost of an Uber trip. Once in the other city the passenger encounters another problem, a lack of transit options. In Washington D.C. one can board to Acela for New York and never have to worry about getting from point A to point B because both cities have capable mass transit options. DFW has some rail lines and Houston has the Metrorail but they don’t really go anywhere practical and neither would suffice for getting a passenger around the city for several days. Potential passengers would have to be picked up at the station or rely on Uber, taxis, or a confusing bus system in a city they likely wouldn’t be overly familiar with. If Houston and DFW had mature mass transit systems like Washington or New York this rail line would be a no brainer, but they don’t and as long as Texas cities are car-oriented rail travel can only go so far.

This isn’t to say their aren’t benefits to the rail line. I-45 is increasingly congested and the four hour trip often draws closer to five hours when traffic builds up. Both DFW and Houston have built up respectable young transit rail systems in a relatively short amount of time and the Uber has revolutionized transit in its own right. Regional rail options working in conjunction with city transit options can work together to create a cycle of growth and public support that could, over time, rival public support for never ending highway construction. Growth of Texas cities in general makes traffic nightmares a perpetual certainty and transit options at the regional and local level will only increase in popularity as people grow tired of wasting critical hours of their day crawling along dilapidated freeways.

There is also the enticing prospect of a regional network allowing for multiple access options beyond 3+ hour drives or expensive flights. A line stretching from Houston to Oklahoma City intersecting a line stretching from San Antonio to New Orleans would provide regional access rivaled only by the Boswash in the United States. Short line extensions to Tulsa and Austin would connect the regions energy sector with its finance and transportation hubs as well as the three key political hubs (Austin, Oklahoma City, and Baton Rouge), and its three Federal hubs (Houston, Dallas, and New Orleans). Business, politics, and especially tourism are fueled by connectivity and such access should spur all kinds of growth if more people decide to travel on rails than are currently traveling in their cars.

The question is, is this a good public-private partnership project? I think the answer has to be yes. We know that redevelopment efforts in cities utilizing publicly funded projects like stadiums or certain tax benefits have a shaky history and poor rate of return. Gentrification that has developed often is thanks to basic infrastructure investments, skyrocketing property values across the country’s cities, and ridiculous commute times coupled with the high price of gasoline. This project isn’t about prestige, nor is it about triggering redevelopment, it is about assisting a private company trying to make what it believes to be a wise investment. Luring companies and assistance with research and development has a strong history of returns on the investment. This says nothing about the gains that could be made in state transportation and the indirect encouragement of developing passenger rail in Texas and the southern part of the country for the first time since the early 1900’s. If the project is a failure, the state won’t be left holding the bag. Yes the rail line would exist in Texas, but the worst case scenario is the state or federal government steps in and runs a railroad without up front infrastructure cost while looking for a private suitor. Don’t tell the critics but the federal government already runs a railroad and the state even runs a steam engine (the Texas State Railroad is one of the country’s coolest “parks”). Yes there is risk, as there is risk in all ambitious projects, but the gains to Texas and the region are substantial to say the least. Failure likely means a slightly expanded Amtrak  while success means a transportation revolution for the region. I’ll push my chips into the middle of the table thank you very much.

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