BRADENTON, Fla. – A federal judge dismissed two lawsuits challenging the use of $1.75 billion of tax-exempt bonds to finance a privately owned Florida passenger train project.

U.S. District Judge Christopher R. Cooper ruled in favor of the U.S. Department of Transportation and All Aboard Florida late Wednesday. There is a 60-day appeal period.

All Aboard Florida’s Brightline-branded passenger train service is expected to launch between West Palm Beach and Miami this fall.
All Aboard Florida’s Brightline-branded passenger train service is expected to launch between West Palm Beach and Miami this fall. All Aboard Florida/Brightline

Cooper said the suits filed by Indian River and Martin counties are moot because All Aboard Florida withdrew its request for $1.75 billion of private activity bonds to finance its 235-mile project from Miami to Orlando.

AAF then received a $600 million bond allocation from the USDOT to finance phase 1 from Miami to West Palm Beach, which does not affect the two counties and eliminates a basis for ruling on the lawsuits, the judge said.

“All Aboard Florida believes Judge Cooper properly dismissed the case, and we appreciate his thoughtful review and articulation of the facts and the law,” the company said in a statement. “We look forward to working with the [counties] in a cooperative and more productive fashion as we advance this important infrastructure project.”

The company declined to comment on when the $600 million of bonds would be issued or if it has submitted a new application to USDOT to finance phase 2 of the project – the 128 miles from West Palm Beach to Orlando.

Despite losing the suits, Indian River and Martin counties said litigation was successful in compelling All Aboard Florida and USDOT to withdraw the bond allocation for phase 2, to build infrastructure for passenger trains that would pass through their counties without stopping.

AAF does not have the financing the counties proved in their suits was necessary to build the West Palm Beach-to-Orlando segment, they said.

“This is a success story and a hard-fought win for our community, and it confirms our thoughtful litigation strategy was successful,” said Martin County Attorney Sarah Woods.

The counties said they are reviewing their legal options.

Both counties have objected to the project for years, citing public safety, historic, and quality-of-life issues.

All Aboard Florida has said it remains committed to completing the $3.5 billion intercity passenger train project, which will use existing tracks along the Atlantic coast currently co-owned by Florida East Coast Railway and AAF.

In court filings, the company said it planned to file an application for $1.15 billion of private-activity bonds with the USDOT in the future to finance the second phase.

Indian River and Martin counties filed lawsuits in early 2015 against the USDOT and the Under Secretary of Transportation for Policy challenging the $1.75 billion in PAB authority awarded to All Aboard Florida.

Both counties said the bond allocation should not have been granted because a final environmental impact statement had not been issued for the West Palm Beach-to-Orlando segment.

Since that time, a final EIS has been released but the environmental review process has not been completed with a written “record of decision” from the Federal Railroad Administration.

Last year, Cooper said in a potentially precedent-setting ruling that the counties had proved that the allocation should have been considered in the federal review process because of certain actions the USDOT required before the bonds could be issued, and because the counties proved that the financing was instrumental for the project to be completed.

Cooper’s decision led AAF to withdraw its application for the larger PAB allotment that included financing for phase 2.

While the counties argued that their cases should not be dismissed because All Aboard Florida intended to submit a new bond application in the future, Cooper said Wednesday it would be USDOT’s decision to award the PABs and the circumstances at that time would determine if the allocation was improper.

Cooper also said there is doubt about whether the Trump administration will support “federal subsidies for high-speed rail projects” through the use of tax-exempt bonds.

The Trump administration has proposed a budget that reduces USDOT funding by 13%, reduces subsidies to Amtrak, limits funding for the Federal Transit Administration, and states that future “investments in new transit projects would be funded by the localities that use and benefit from these localized projects,” Cooper said.

“The counties won a huge victory in forcing the federal government to rescind the tax-exempt bond allocation for phase 2 of the All Aboard Florida project,” said Indian River County Attorney Dylan Reingold. “The court also acknowledged that All Aboard Florida appears to have no alternative source of financing for phase 2.”

Reingold said Indian River will follow the project closely to ensure All Aboard Florida adheres to environmental, safety, and historic preservation requirements, and “will take additional legal action” as warranted.

AAF said Thursday that it has begun hiring and continues to plan for “pre-launch service” to begin between Fort Lauderdale and West Palm Beach this summer, with service extending to Miami in the fall.

The company has received several train sets and has nearly completed work on stations in West Palm Beach and Fort Lauderdale.

The Florida Development Finance Corp. has agreed to issue bonds for AAF.

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