BRADENTON, Fla. – An investment banker hired by two Florida counties that oppose the All Aboard Florida passenger train project said in his expert opinion that its financing depends on its ability to issue $1.75 billion of tax exempt private activity bonds.
The opinion is among recent documents filed in the federal suits challenging the U.S. Department of Transportation's largest-ever allocation of PABs for the $3.5 billion privately owned train project.
"It is highly unlikely, if not impossible, for the project to be financed without the very large financial assistance of the tax-exempt PABs," which afford it "significant interest cost savings," William Purcell stated in a Feb. 12 declaration after examining AAF's financing documents.
Purcell, with William H. Purcell Consulting Inc. in Bedminster, N.J., said he has been an investment banker for more than 45 years.
Whether the planned 235-mile intercity train between Miami and Orlando depends on tax exempt bonds is a critical element in the challenges by Indian River and Martin counties filed in the U.S. District Court for the District of Columbia.
The counties lodged the challenges a year ago, and recently completed discovery.
U.S. District Judge Christopher Cooper is expected to determine soon if the cases can proceed to trial.
Indian River and Martin counties, where no stops are planned, have cited potential negative impacts from the project's 32 daily trains such as delays for ambulances and first responders at numerous crossings, as well as harm to archeological resources.
The counties also argued that USDOT violated the National Environmental Policy Act by allocating the bond financing before completion of the federal environmental review process.
The USDOT has contended that its actions do not fall under the purview of NEPA.
Both All Aboard and USDOT filed new motions to dismiss the suits in mid-January contending that the counties failed to prove that they have standing to bring their cases, and that they could not they link allegations of harm from the project to the PAB allocation.
After producing over 13,750 pages of documents and making its president available for deposition, AAF said "the evidence adduced in that process confirms that depriving AAF of the economic benefit of the PABs would increase the overall cost of the project, but would not imperil its completion."
Purcell said that it is highly unlikely, if not impossible, that the project can be successfully financed and completed with taxable bonds at interest rates demanded under current market conditions and in the reasonably foreseeable future.
Attorneys for AAF said Purcell "misrepresented the contents of documents and testimony upon which his opinions are founded," and that his declaration does not provided a legitimate basis to conclude that the project would be abandoned if the PABs were unavailable.
AAF attempted to sell the tax-exempt PABs bonds several times last fall using the Florida Development Finance Corp. as the conduit issuer, but withdrew the deal as market conditions soured amid attention focused on the Fed's plans for interest rates.
"AAF has been proceeding with the project without the benefit of the PABs, and will continue to do so if necessary," All Aboard said in a Feb. 29 court document.
The planned train service, recently branded as Brightline, is expected to start from Miami to West Palm Beach in early 2017, while a new spur will be built from Cocoa to Orlando to start service in late 2017.