- Jennifer Sorentrue Palm Beach Post Staff Writer
All Aboard Florida’s Brightline on Friday announced it has won federal approval to sell $1.15 billion in tax-exempt bonds to help pay for the second phase of its passenger rail project connecting West Palm Beach to Orlando.
The decision comes roughly two months after a state financing corporation signed off on a separate sale of $600 million in tax-exempt bonds to help pay for private rail venture’s first phase between West Palm Beach and Miami.
Both bond sales have raised questions from opponents of the rail project, who argue state and federal decisions about the use of tax-exempt financing have been shielded in secrecy.
In a statement released by the company Friday, Brightline’s CEO Dave Howard said the U.S. Department of Transportation’s approval of the second bond sale marks “another major step forward” for the project. The company has said it plans to begin construction on its West Palm Beach to Orlando route early next year.
Brightline said it is working with the Federal Railroad Administration for the launch of introductory service between West Palm Beach and Fort Lauderdale and “will release details soon.”
“After a successful $600 million PAB closing this week, we are pleased to have this financing option available,” Howard said of the federal approval for the $1.15 billion sale. “We appreciate the leadership of U.S. DOT as they work to move major infrastructure projects forward, creating thousands of jobs and stimulating hundreds of millions of dollars in economic development.”
Despite the approval, Brightline said it continues “analyzing all financing options” for the second leg, including the pursuit of a Railroad Rehabilitation and Improvement Financing loan.
Federal and state involvement in the financing of the project has long been a sore spot for Brightline’s opponents, who argue both the tax-exempt bonds and the federal loan amount to a subsidy for the private-rail venture.
In a Dec. 19 letter to the U.S. Department of Transportation, an attorney for Martin and Indian River counties and the Treasure Coast-based group Citizens Against Rail Expansion in Florida questioned why federal officials and Brightline executives have not disclosed which financing option will be used to pay for the project — the tax-exempt private activity bonds or the federal railroad loan.
“For DOT to create ambiguity that sows public confusion about the specific public financing program is extremely troubling for those negatively impacted by the project,” attorney Stephen Ryan wrote to federal officials.
On Friday, Brent Hanlon, chairman of the CARE steering committee said the group will go back to court to fight the rail.
“We have always known that the only way this railroad would be built was through a government subsidy,” he said in a statement. “The fight is far from over.”
Private activity bonds were the center of a 2015 lawsuit filed by Martin and Indian River counties to block the rail project. The counties argued that federal officials violated the National Environmental Policy Act when they approved the sale of $1.75 billion in tax-exempt bonds before an environmental study of the rail project’s second phase was complete.
A federal judge dismissed the lawsuit eariler this year after the U.S. Department of Transportation withdrew its original 2014 approval granting Brightline permission to use the bonds.
Before the dismissal, All Aboard filed an application with the U.S. Department of Transportation requesting permission to move forward with the smaller, $600 million bond sale. At the time, the company said it planned to consider a second, $1.15 billion bond sale to help pay for rail work between West Palm Beach and Orlando.
In October, the Florida Development Finance Corp., a special financing unit created by the state Legislature in 1993 to help businesses and nonprofit groups finance capital projects that promote economic development, approved the $600 million sale. The finance corporation acts as a conduit, issuing both tradition and tax-exempt bonds on behalf of borrowers.
The financing corporation was scheduled to hold an emergency meeting this month to discuss Brightline’s second request to sell $1.15 billion in tax-exempt bonds to fund the Orlando extension, but that meeting was cancelled.
Meanwhile, earlier this month federal officials completed the lengthy environmental study of the project’s second leg, a move the company said was a critical step to extending the service north to Orlando.
The Federal Railroad Administration in 2013 began the environmental review of Brightline’s second phase, including a new east-west stretch from Cocoa to Orlando. A final version of the environmental study was published in 2015, finding the best route for the passenger service would follow the Florida East Coast Railway north to Cocoa, where it would connect to a yet-to-be-built section of rail line that would carry trains to Orlando.
Federal officials, however, never issued a formal “record of decision” solidifying the study’s findings because Brightline dropped its push for a federal loan to help pay for the project.
That decision was issued Dec. 15 — four years after the start of federal review. The Federal Railroad Administration said it completed its review after All Aboard Florida renewed its application process for the federal loan.