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I don't understand how previous plans make this less of a subsidy. Most of that would have been paid for by the feds. Its not like OIA was looking to expand without HSR but under the FEC's plans OIA will have to bear the financial burden with no guarantee that they will see a return. More to the point, OIA does not know if FEC will be profitable but is being asked to take on a large amount of the risk. Basically FEC is asking OIA to pay for something that marginally benefits the airport but that is essential to FEC's plans. Its good business for FEC, have others pay for your project and minimize risk but it definitely is a subsidy because
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FECI wants to take money from the public - a subset of it - to pay for the expenses of their private business. That's the definition of a subsidy.
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There is no way around it. Now the question is whether the subsidy is net beneficial for OIA.
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Originally Posted by electricron
Interesting points about OIA subsidies, but........
Wouldn't the parking garages on OIA property be paid for by parking fees, not airline ticket fees? Ie, the subsidy being requested is for the parking garages, which can be used by the airport for both trains and planes - assuming there is a way provided to get people parking in the garage near the train platforms to the airport terminal, and vice versa, a way provided to get people parking near the airport terminal to the train platforms. A monorail line is just one way amongst many that could be used to connect the parking garages and train station and airport terminals together.
It's not unusual for almost all infrastructure located on airport property to be built, financed, and owned by the airport authority. As is, FEC is willing to build, finance, and own the railroad infrastructure.
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Why should OIA pay almost $400 million to build a parking garage/depot that will directly compete with their current parking garages and directly benefit a business that will directly compete with the airlines that pay OIA landing fees. Building a parking garage that is no where near the terminal does not make much sense on its own. Do they need more parking space? Does it make sense to build a garage a mile away from the terminal instead of a more centrally located position? It will only make sense if the parking fees are greater than the construction bonds, plus any loss in landing fees/current parking fees, plus any operating expense of moving passengers from the new garage to the terminal. In the end, they might come to a deal that is beneficial to both parties but it seems that they are farther apart then what FEC wanted to be. Also, in the end it is still a subsidy. It does not matter if it is mutually beneficial. If FEC wants to use OIA's borrowing power and wants them to pay for their parking, then that is a subsidy.
And the same goes for OOCEA. Why give free land to a company that is going to directly compete with you. The first priority should be to the bond holders and if FEC undercuts the tollway, then that would put the authority's financial position at risk. The 2011 annual report lists OOCEA's revenue bonds at $2.7 billion dollars. What effect will giving free land have on the bottom line? Will the new right of way be on the State's tax rolls? Basically, FEC wants as much as it can get from the people of the State of Florida without reverting to a direct infusion of money or loan guarantees. Now the question becomes whether or not the people of Florida think it is in their best interest to go along with the plan.
I have no problem with private rail plans but it seems that private players rarely gauge the complexity of projects and the time necessary to actually implement large scale passenger works. I have always thought that this was too large of a project for FEC/Fortress, they simply are not big enough to commit $1 billion dollars buying and building an HSR line. However, as time goes on, their plan becomes clearer and relies on others to fill in the gaps. If they can get this project complete it will be an amazing business deal. If they get it done in the time frame they set forth, it will be a miracle.