Texas Central trailblazing privately funded HSR

Written by Keith Barrow, Senior Editor, International Railway Journal
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Despite producing more than one-third of U.S. crude oil output, urbanization, rapid economic growth and congestion mean Texans could be getting out of their cars and on to high-speed trains much sooner than most other Americans, if Texas Central Railway’s plan to link Dallas and Houston without one penny of public funding is successful.

With 28.3 million residents, Texas is the second-most populous state in the U.S. Much of the population is concentrated in and around Houston and North Texas, an area encompassing Dallas, Fort Worth, Garland and Irving. Dallas-Fort Worth is the fourth-largest metropolitan area in the U.S., while Houston and The Woodlands is fifth.

These are among the most dynamic regional economies in North America. According to a recent study by Headlight Data, Dallas-Fort Worth was the fifth fastest-growing metropolitan area in the U.S. in 2016. Only New York has more Fortune 500 headquarters than Houston, which has one of the fastest-growing and youngest populations of any U.S. city.

In both regions, economic activity is not concentrated in the urban core. In addition to their central business districts, Dallas and Houston have multiple commercial centers spread across their respective metropolitan areas, with good access to the highways and public transportation networks that serve their sprawling suburbs.

As the economy booms and the population swells, transportation links between Houston and North Texas are under increasing pressure. Nearly 50,000 Texans travel between the two metropolitan areas at least once a week, 90% of them by car. Interstate 45—one of the country’s deadliest major highways—is forecast to see a 200% increase in vehicular traffic by 2035. The current journey time by road ranges from 3.5 to 5.5 hours, and traffic has increased nearly 10% annually since 2012. A Texas Department of Transportation study estimates journey times could reach 6.5 hours by 2035, even with the additional capacity provided by planned highway enhancements.

Proposals for high-speed rail on this corridor are nothing new. In 1989, the state legislature formed the Texas High Speed Rail Authority (THSRA) to establish the viability of a high-speed network serving the so-called Texas Triangle (Dallas-Houston-San Antonio). THSRA awarded a 50-year finance-design-build-operate-maintain franchise to Texas TGV Corp. in May 1991, but the international consortium failed to secure financial backing and the franchise was rescinded in August 1994. The state abolished THSRA the following year. 

Since the failure of Texas TGV, four additional studies have looked at the potential for high-speed rail development in the Texas Triangle, and all indicated that operating revenues would exceed operating costs.

In May 2009, a study by the Texas Transportation Institute (TTI) at Texas A&M University examined the feasibility of building high-speed lines on 18 corridors in the state based on 15 criteria, and ranked them using two different evaluation methods. In both cases, Dallas/Fort Worth–Houston and Dallas/Fort Worth–Austin/San Antonio emerged as preferred corridors.

Two decades after the collapse of Texas TGV, a new private-sector bid was launched to build a new passenger rail link between North Texas and Houston. Texas Central Railway will rely entirely on private capital for every stage of its development, construction and operation, and it is taking a totally different approach to its ill-fated predecessor.

“This corridor really is the globally recognized sweet spot for high-speed rail,” explains Texas Central Managing Director of External Affairs Holly Reed. “This is a 242-mile route with no mountains, no major bodies of water and only a 500-foot difference in elevation between Dallas and Houston, so it’s easy to build straight and flat. It’s no surprise that this is the best place to build high-speed rail in the U.S. for a commercial endeavor. We looked at more than 90 city pairs, and this was the clear place to build. These two markets are closely aligned and perfect for high-speed rail—too far to drive and too short to fly.”

The high-speed line will remove an estimated 14,630 vehicles a day from I-45, and Texas Central harnessed the latest technologies to gain insights into travel habits as it developed its business case.

“Everything we do is data-driven and combined with the discipline of the market. This ensures we are building the right project in the right place in the right way,” Reed says. “We’ve used aggregated Bluetooth data to understand who makes this trip and by what mode. 80% of the people we have surveyed say they would use the train. This is a project in the right place at the right time. Texans are getting out of their pickup trucks. Students and i-gens don’t want a driver’s license.”

A notable trend that emerged in Texas Central’s research is the growth in ride sharing, and Reed says this is a perfect target market for high-speed rail. “Ride share numbers in this part of Texas are really astonishing,” she says. “Adoption rates are significantly higher here than in other parts of the U.S. There is a new definition of freedom emerging here. Freedom used to be defined by the ability to get in the car and drive wherever you want, whenever you want. Now, freedom means the ability to choose how you get to your destination and how you choose to use your travel time.”

A comprehensive ridership study carried out by LEK Consulting concluded that 90% of the population living in the high-speed corridor would save at least one hour on their road or air journeys.

The Federal Railroad Administration (FRA) published its Draft Environmental Impact Statement (DEIS) for the project in December 2017. According to the DEIS, 52% of the alignment will follow existing infrastructure corridors including highways and utilities. Texas Central studied 22 corridors as part of the DEIS process and six were subsequently shortlisted for further environmental analysis. A single preferred route—Build Alternative A—is identified in the DEIS. Advantages of this option include:

  • Fewest acres of wetlands impacted permanently.
  • Fewest businesses displaced.
  • lowest land take.
  • Fewest agricultural structures acquired.
  • Lowest impact on socioeconomic, natural, physical and cultural environments.
  • Low impact on crop yields, livestock and the agricultural economy.
  • Neutral or beneficial impact on most landscapes.

“The final permit from the FRA for environmental and safety-related aspects of the project is expected early next year, which means construction could start in later 2019 or early 2020,” says Reed. “We’re looking at a five-year construction period, so the earliest we could begin running trains will be 2024 or 2025.”

The preferred alignment selected for the railway is the Utility Corridor, so named because it will largely follow the Centerpoint Energy and Oncor Electrical Delivery high-voltage transmission lines from Palmer, near Dallas, to Hockley, near Houston. As the power line does not extend into central Dallas or Houston, the Utility Corridor follows existing Union Pacific Railroad alignments to gain access to the urban areas at its northern and southern extremities. The double-track line will be electrified at 25kV AC, running on an elevated alignment for around 60% of its length.

This corridor was deemed to meet TCR’s technical requirements while also ensuring that the desired 90-minute journey time is achievable.

The line will start at a dedicated terminus station in the Cedars district of Dallas, which is located south of Interstate 30 and the city center. The area around the proposed station site is currently undergoing redevelopment, transforming a district previously dominated by light industrial and manufacturing facilities into a walkable neighborhood with a mixture of repurposed and new-build mixed-use developments. The Cedars is already served by the Dallas Area Rapid Transit (DART) Red and Blue Lines, providing a direct rail connection between the high-speed station, central Dallas and other key centers in North Texas.

Brazos Valley, the line’s only intermediate station, will be located in Grimes County within easy reach of State Highway 90 and roughly equidistant between Huntsville and Bryan/College Station, where Texas A&M University is located. A direct shuttle bus will link the Brazos Valley station with the university campus.

The southern terminus will be located between Interstate Highway 10 and Highway 290 northwest of Houston in an area identified by the FRA as having minimal environmental and community impact. It also allows the line to follow existing transportation corridors and gives passengers easy access to the road network and connectivity with planned public transport extensions. Studies have shown that the population base in Houston is skewed toward the north and west of the city center, and the station location has been selected to take advantage of this distribution.

According to Texas Central, 12.8 million people currently live within an hour’s travel time of one of the three proposed stations. With each station serving a wide catchment area, intermodality is a key consideration, and Texas Central is working to ensure first and last-mile connectivity is an integral part of the system design.

“Our business plan is squarely focused on using the latest technology, and this will be a form of Mobility as a Service, with a high-speed ticket and transit combined in one fare for door-to-door journeys,” Reed explains. “If we can get you between Dallas and Houston in an hour-and-a-half but we can’t get you to your ultimate destination quickly, then the advantage of speed is lost. Stations in Dallas and Houston will be conveniently located for transit and getting to where people work and live.”

Texas Central has also reached an agreement with Amtrak on through-ticketing from the national passenger network, and Texas Central says it will offer a “convenient transfer service” linking its stations with Amtrak stations in Houston and Dallas.

The LEK study estimates ridership of five million passengers annually by 2030 and 10 million by 2050, equivalent to 30% of the forecast transport demand between North Texas and the Greater Houston metropolitan area by the middle of the century.

Project Partners

On Oct. 4, Texas Central signed a Limited Notice to Proceed (LNTP) with Salini Impregilo, which will serve as lead contractor in the civil works consortium, which will also include Fluor. Operating with The Lane Construction, Salini Impregilo will be responsible for all works below the top-of-rail including structures, embankments and drainage. Under the LNTP, the design-build participants will move forward with the front-end engineering and design of civil infrastructure, preparing strategies for logistics and delivery as well as construction cost analysis and scheduling estimates. This planning work will provide a foundation for the design-build contract for the civil works program.

Bechtel has been appointed project manager while WSP will provide engineering support services.

On Oct. 10, Texas Central announced it had selected Spanish national train operator RENFE and infrastructure manager ADIF as strategic partners for the operation and maintenance of the line.

The detailed planning work being carried out by the strategic partners is also a prerequisite for securing financing. “Most major public infrastructure projects in the U.S. get a large federal grant before construction begins, but as a commercial project we need to work differently because we raise money in a different way,” Reed says. “For now, we’re working toward obtaining the necessary permits and this will determine the timeline for construction.

“Unlike most public infrastructure projects we are raising money as we progress through each stage. When we have the federal construction permits, we will go out and raise the debt we need for the construction phase. We are very excited about reaching the point where we can go out there and hit that stage of the project.”

The estimated capital cost of the project is $15 billion to $18 billion, and this will be raised chiefly though debt, with the remainder coming in the form of equity. In September, Texas Central signed a $300 million notes purchase agreement with a special-purpose vehicle of Japan Overseas infrastructure Investment Corporation for Transport and Urban Development (JOIN). The loan is being jointly financed by JOIN and Japan Bank for International Cooperation (JBIC), both of which are backed by the Japanese government. The signing of the agreement follows Join’s decision in September 2015 to purchase a $40 million equity stake in Texas Central.

Japanese Technology

In the initial timetable, services will be operated by a fleet of around 15 high-speed trains based on the N700-I Shinkansen trainset developed by JR Central. Each eight-car set will seat around 400 passengers, and despite the generous width of the train, Texas Central will not be emulating JR Central’s favored 3+2 seating pattern. “We have broad shoulders in Texas, and it’s important to offer a comfortable ride so there will be no middle seats,” Reed says.

The fleet will be maintained at purpose-built depots located at both ends of the route. Texas Central anticipates the maximum operating speed will be 300 kph (186 mph), although this could be raised to 320 kph (200 mph) if market conditions and regulatory approvals allow.

“The technology we have selected for this project is the right solution for the environmental and ridership conditions in Texas,” Reed explains. “The trains are lightweight, which is important for the soil conditions, and we have chosen Japanese technology for its safety record—54 years of high-speed operation with no passenger fatalities. With these advanced operating systems and a dedicated high-speed corridor, the U.S. system will be set up to maintain that perfect safety record.”

Texas Central forecasts the net economic impact of the new line on the Texan economy will be around $US 36bn over 25 years, generating $US 2.5bn in tax revenues for state and local government and employing 10,000 people a year during the construction phase.

Critics of Texas Central frequently claim that Texas TGV conclusively proved high-speed rail cannot be viable in the Lone Star State, but in doing so they fail to recognize that today’s project inhabits a different world from that of its predecessor. The advocacy group CG/LA Infrastructure Inc. recently named Texas Central Railway as a top project in Strategic North American Infrastructure Report, lauding the high-speed line as “a game changer … crucial in advancing public and business interests,” and “the region’s most dynamic and innovative change agent.”

Even in oil-rich Texas, megatrends that promote the rejection of car ownership—congestion, urbanisation, environmental awareness, increased access to public transport, new mobility solutions—are taking hold, strengthening the case for high-speed rail. Furthermore, institutional investors eager to park their wealth in safe, long-term infrastructure schemes have few options when it comes to privately funded passenger rail projects. If it is successful in securing capital, building the infrastructure and attracting ridership, Texas Central could achieve an important breakthrough for high-speed rail in the U.S. and set a precedent for others to follow.

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