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All Aboard Florida, opponents plead cases in federal court

The fight against All Aboard Florida played out in the nation’s capital Friday, in a federal hearing to decide whether the passenger rail project will get $1.75 billion in tax exempt bonds.

The more than three-hour event outlasted early predictions of time by more than double with U.S. District Court Judge Christopher Cooper picking at each side’s arguments and questioning whether Indian River and Martin counties were hitting the “goal posts” in their attempt to block the financing.

While no ruling is expected for at least 15 days, Washington, D.C-based attorney Steve Ryan, who is representing Martin County, implored that the hearing was the Treasure Coast’s best chance at stopping the Miami to Orlando express passenger rail.

“Today is going to be the day for us,” Ryan told Cooper. “If we don’t get relief, once the bonds are issued, everything changes.”

Private activity bonds are purchased by individual investors at no risk to taxpayers, but once they are bought, that buyer is added to the equation, Ryan said.

All Aboard Florida attorney Gene Stearns announced at the end of the hearing that the Coral Gables-based firm is seeking an extension of a July 1 deadline to issue the bonds.

The deadline is a caveat placed on the provisional approval awarded in December by the U.S. Department of Transportation. But it is in jeopardy of being missed because the final environmental impact statement on All Aboard Florida is still pending. The bonds also still need to be voted on by the Florida Development Finance Corp.

“We want to close these as soon as humanly possible,” Stearns said. “Time is money, and in this case it’s huge amounts of money.”

The $2.9-billion project is hoping to use tax exempt bonds to help complete the project, but Martin and Indian River counties filed federal lawsuits against the U.S. Department of Transportation saying, in part, the bonds can’t be used for projects such as All Aboard Florida. All Aboard Florida is an intervenor in the suit.

“All Aboard Florida appreciates Judge Cooper’s thoughtful questions and the opportunity to present our case,” the company said in a statement Friday. “We look forward to his decision.”

The sixth floor of the E. Barrett Prettyman federal courthouse on Constitution Avenue is far from the heart of the rail battle — the Florida East Coast Railway corridor — but at least two local activists and Indian River County Commissioner Tim Zorc attended the hearing.

“I came because I just think it is so critical,” said Vero Beach resident Susan Mehiel. “We worked hard to get St. Lucie, Martin and Indian River counties to set aside money for this fight.”

St. Lucie County has not filed a lawsuit, but did earmark $500,000 to oppose All Aboard Florida.

A total of about 30 people listened to the proceeding. As many as 15 attorneys and law firm employees participated.

To get an injunction to stop the bonds, the counties had to prove, in part, that the project could not go forward without them. The issue speaks to the right for the counties to sue and whether there will be harm suffered.

The counties pointed to statements All Aboard Florida made in 2013 for a Federal Railroad Administration loan where the company said getting private financing was infeasible, and in August when the private activity bonds were called a “linchpin” to completing the project.

Ryan called the filing Thursday of a ridership study that showed the purported profitability of the project a “judicial drive by shooting,” aimed at back pedaling from the previous statements.

But All Aboard Florida CEO and President Michael Reininger said in court documents the project will go forward without the bonds, although it may be delayed and cost more. Stearns argued Friday that All Aboard Florida parent Fortress Development is a multi-billion dollar hedge fund with the means to find alternative financing.

“But it’s not on record that Fortress would spend the money on this,” Cooper responded.

“All Aboard Florida intends to complete this project,” Stearns said. “They can’t back down now.”

Opponents are also counting on the argument that All Aboard Florida is not eligible for private activity bonds under rules that regulate money going to high-speed rail projects and federal highway financing.

All Aboard Florida trains will travel 125 mph at their fastest, whereas high-speed rail is defined as capable of going 150 mph or more.

But All Aboard Florida and the DOT say because more than $9 million in federal money has already been spent on the project by improving the Florida East Coast Railway corridor, it is eligible.

“The language could not be more clear or unambiguous,” Stearns said.

The two sides couldn’t even agree on what year All Aboard Florida began. While it was announced publicly in 2012, Ryan said planning for it began in 2009, while All Aboard Florida said it was 2007.

All Aboard Florida officials did not want to comment at the hearing. Ryan said afterward, “Win or lose, we were treated with great respect by the court.”

The Palm Beach Post has reported All Aboard Florida’s service, which was originally set to begin in late 2016, has been pushed to early 2017.

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