When Flagler returned to Florida, in 1885 he began building a grand St. Augustine hotel, the Ponce de Leon Hotel. Flagler realized that the key to developing Florida was a solid transportation system, and consequently purchased the narrow gauge Jacksonville, St. Augustine and Halifax River Railway (JStA&HR) on December 31, 1885. He also discovered that a major problem facing the existing Florida railway systems was that each operated on different gauge systems, making interconnection impossible. He converted the line to in 1890 and the small operation was incorporated in 1892.