Members of a congressional oversight committee Thursday took aim at Brightline’s plan to use tax-exempt bonds to pay for its West Palm Beach-to-Orlando extension, questioning whether the project qualifies for the tax-free financing.
Brightline in December won federal approval to sell $1.15 billion in private activity bonds to help pay for the second phase its passenger rail project, which will connect the company’s West Palm Beach station to the Orlando airport and ultimately allow its fleet of trains to shuttle passengers between Miami and Central Florida.
Rep. Brian Mast, R-Palm City, a longtime Brightline critic, called for the oversight hearing in February.
The U.S. House of Representative’s Subcommittee on Government Operations took no formal action in Washington, D.C. on Thursday, but some members questioned whether Brightline’s passenger service meets federal requirements to qualify for the tax-exempt bonds.
The bonds are designed to help private developers finance projects by giving them access to tax-exempt interest rates — lowering their costs.
An amendment to internal revenue code set aside $15 billion at the federal level for private activity bonds to pay for highway projects and freight transfer facilities. The U.S. Department of Transportation had issued $8.2 billion for 23 projects, including $600 million for Brightline’s West Palm Beach-to-Miami leg. Another $2 billion has been allocated for four projects, including Brightline’s northern extension to Orlando.
Rep. Mark Meadows (R-NC) questioned the U.S. Department of Transportation’s decision to classify Brightline as a highway project, saying he had a “real concern that the intent of Congress is being overridden.”
Martin and Indian River counties filed a federal lawsuit in February in an effort to block the bond sale, arguing that the Brightline does not qualify for the bonds. The suit also alleges federal officials either ignored or failed to consider the impacts the company’s trains could have on the environment, public safety and maritime traffic.
Brightline’s President and Chief Operating Officer Patrick Goddard told the committee that the company continues to seek a $1.75 billion federal loan.
During the two-hour hearing, the committee also questioned whether Treasure Coast counties should have to pay for ongoing maintenance of safety upgrades Brightline plans to install at railroad crossings in order to run its fast-moving trains through the region.
Dylan Reingold, Indian River County Attorney, said the maintenance is expected to cost the county $8.2 million through 2030. He argued that local governments have no control over the costs.
“We do not want the bills for these safety and maintenance costs to come from the pockets of our constituents,” Reingold told the committee.
Goddard pointed to decades-old agreements between the railroad and local governments that require cities and counties to pay for the maintenance at rail crossings.
“We have improved all of the crossings up and down the corridor, but yes, they do need to continue to pay the maintenance that they have agreed to pay,” Goddard said.