BRADENTON, Fla. - The Florida agency planning to issue $1.75 billion in bonds for the All Aboard Florida passenger train project plans to consider the resolution authorizing the issuance of the bonds next week amid new questions about whether the conduit issuer is properly constituted.
The Florida Development Finance Corp. posted a notice Monday scheduling the June 10 meeting for 3 p.m. to 6 p.m. in Orlando. Documents to be considered at the meeting were not immediately available.
The legality of next week's meeting was called into question Tuesday by Indian River and Martin counties, opponents of the train project, as well as an anti-passenger train organization Citizens Against Rail Expansion in Florida, or CARE.
Attorneys for CARE and the two counties, which have pending federal lawsuits challenging the bonds, said there are a number of irregularities with FDFC's board and that next week's meeting should be cancelled.
AAF, owned by Fortress Investment Group, plans to use tax-exempt bond proceeds to finance portions of the $3.5 billion, 235-mile inter-city train system that will travel between Orlando and Miami with other stations in West Palm Beach and Fort Lauderdale.
When asked for a comment about the financing, All Aboard said it would not release information about the upcoming bond deal.
"We will not be commenting on our financing activities, and will submit required financing documents directly to the FDFC," AAF said in a statement Tuesday.
Gov. Rick Scott appointed three board members to the FDFC board on March 27, while two other positions remain vacant. The current members are Daniel Davis, president of the Jacksonville Chamber of Commerce, Kevin Hale, executive vice president at Mutual of Omaha Bank, and Frank White, general counsel for Sandy Sansing Dealerships.
In a joint letter to the FDFC on Tuesday, CARE, Indian River and Martin county attorneys claimed that Davis has a conflict of interest and should recuse himself from voting on AAF's bonds. The conflict stems from the fact that officials with Florida East Coast Railway are members of the Jacksonville chamber, they said. FEC, also owned by Fortress, is developing the passenger train project.
If Davis cannot vote on the bond resolution, the attorneys said the board would not have the necessary quorum to take action next week.
The attorneys also said that the FDFC board is not properly constituted because Scott did not appoint three bankers per the agency's enabling legislation. Some newly appointed board members were not confirmed by the Senate in the recent legislative session, and none of the recent appointees have filed financial disclosure forms as required by Florida law, their letter also said.
"In light of these substantial defects, the FDFC board should refrain from acting upon the AAF boards or any other matter until theses serious defects are fixed," the attorneys said.
All Aboard Florida attorneys told a federal judge in a Washington, D.C., hearing last week that AAF plans to issue the bonds as early as June 22.
The hearing was held to consider requests by Indian River and Martin counties for preliminary injunctions to block the bond sale. The injunctions were requested as part of lawsuits they filed in March and April challenging the largest private activity bond allocation ever granted by the U.S. Department of Transportation.
Federal Judge Christopher Cooper said in last week's hearing that he expected to issue a decision on the injunctions sought by the two counties by June 19.
Complicating matters is a pending deadline by USDOT that requires the bonds to be issued by July 1. The letter allocating the bonds also prohibits AAF from using bond proceeds until 45 days after a final environmental impact statement is issued for the project.
USDOT attorneys said during last week's hearing that the agency is expected to consider extending the PAB allocation at a meeting on June 19.
The company approached FDFC last year to be the conduit issuer, which is required for a private entity such as AAF to borrow using private activity bonds.
The FDFC is a public corporation created by the state in 1993 to issue bonds that finance economic development and renewable energy projects.