Days after Brightline completed the first leg of its passenger train service, the battle continued to grow over whether the company should be allowed to use federally approved tax-exempt bonds to finance its extension north to Orlando.
Brightline carried its first paying passengers between West Palm Beach and Miami on Saturday — marking the completion of the first phase of its private service, which is eventually planned to link the company’s three South Florida stations to the Orlando airport.
But before construction begins on the West Palm Beach-to-Orlando leg, Brightline needs to find a way to pay for the work.
Brightline in December won approval from the U.S. Department of Transportation to sell $1.15 billion in private activity bonds to help pay for the second phase, but some members of Congress have questioned whether the project meets the federal requirements to qualify for the tax-free financing.
A group of five Congressmen, including four Florida lawmakers and Rep. Mark Meadows (R-NC), the chairman of the U.S. House of Representative’s Subcommittee on Government Operations, called on federal transportation officials to suspend their approval, saying there are still a number of “yet-to-be answered questions” concerning Brightline’s use of the bonds.
In a letter to Transportation Secretary Elaine Chao, the Congressmen said it was important for the subcommittee to complete its review of the project. The subcommittee held a hearing on Brightline’s bond approval last month.
In a separate letter Monday, nine other lawmakers, including another member of the same subcommittee and U.S. Rep. Lois Frankel, D-West Palm Beach, expressed support for Brightline’s use of the bonds. The lawmakers called Brightline a “project of national and regional significance,” adding that it “clearly serves a public need.”
At issue is whether Brightline can be labeled a “surface transportation project” in order to meet federal requirements for the tax-exempt bonds.
An amendment to Internal Revenue Code set aside $15 billion at the federal level for private activity bonds to pay for transportation projects, including high-speed trains that move up to 150 mph. Brightline’s trains will operate at a maximum speed of 125 mph.
Federal transportation officials, instead, ruled Brightline qualifies for the bonds under another category that applies to highway and surface transportation projects.
Brightline has already sold $600 million in tax-exempt bonds to help pay for its Miami-to-West Palm Beach service. Trains began operating between West Palm Beach and Fort Lauderdale in January, and service to Miami began on Saturday.
Brightline hopes to sell an additional $1.15 billion in tax-exempt bonds to help finance its second phase between West Palm Beach and Orlando.
Brightline executives have said the bonds provide a lower-cost alternative than other financing options.
But as question over the bonds continue to mount, Brightline officials have said they are also pursuing a $1.75 billion federal Railroad Rehabilitation & Improvement Financing loan.
Construction on Brightline’s northern extension includes adding a second set of tracks to the Florida East Coast Railway between West Palm Beach and Cocoa Beach and building a new section of east-west rail between Cocoa Beach and the Orlando airport.
Brightline plans to start service to Central Florida in 2021.