Florida lawmaker reboots regulation drive against Virgin Trains

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A Florida Republican lawmaker plans to pursue new regulations targeting a private passenger train operator and the conduit issuer of its bonds.

State Sen. Debbie Mayfield, whose district includes Indian River County on the east coast, has filed two bills.

One measure would clarify the Florida Department of Transportation’s role in regulating high speed passenger rail service and a second bill would put the Florida Development Finance Corp. under new governance.

The privately owned Virgin Trains USA, formerly known as Brightline and All Aboard Florida, is the only "high-speed rail" system that would be affected by the legislation. FDFC has issued more than $2.6 billion of conduit bonds for its project to link Miami and Orlando with trains running as fast as 125 mph.

Indian River County has opposed the train project, which will carry passengers through the county on existing freight rail right-of-way without stopping.

Officials there are waiting for a ruling from the United States Court of Appeals for District of Columbia to determine if bonds were legally issued for the project.

Mayfield has previously filed bills, without success, that would have required additional street-level crossing safety improvements in part because of the increasing number of fatalities along Virgin Trains’ West Palm Beach-to-Miami route where service began in early 2018.

For next year’s session, which starts Jan. 14, she will try again to pass the “Florida High-Speed Passenger Rail Safety Act.”

Mayfield has filed Senate Bill 676 and Rep. Tyler Sirois, R-Merritt Island, has filed an identical companion measure in House Bill 465.

“Florida has a fatality rate that is 3.5 times the national average,” Mayfield and Sirois said in a joint statement. “This is unacceptable and must be addressed if we are going to continue to encourage additional high-speed passenger trains.”

The first death Virgin Trains encountered was in July 2017 as the company did testing. Since then, 40 others have been killed — a rate of more than one a month and about one for every 29,000 miles the trains have traveled, making that the worst per-mile death rate of the nation’s 821 railroads, according to an analysis of Federal Railroad Administration data by The Associated Press.

While the bills do not mention Virgin Trains or Brightline, its trains have been involved in most of the fatalities along the Florida East Coast Railway line in Palm Beach, Broward and Miami-Dade counties.

According to the Alliance for Safe Trains, which reviewed FRA reports, there were 12 fatalities in Palm Beach County, 16 in Broward and three in Miami-Dade in the first nine months of this year, for a total of 31.

Of those, 29 deaths involved Virgin Trains, which travel through some densely populated areas in the three counties at speeds up to 79 miles per hour. Freight trains, which residents are more accustomed to, travel at half that speed and share the same rail line.

In all of Florida, there were 46 fatalities during the first nine months, and there have been more since September. Car crashes, for context, killed more than 3,100 people last year in Florida, according to state government statistics.

On Nov. 23, a woman and two of her grandchildren died when she drove her SUV into the path of an Amtrak train while crossing tracks near the Jupiter entrance of the Corbett Wildlife Management Area in Palm Beach County. There was no crossing gate and the track was difficult to see because of brush, according to the Palm Beach Post. That line doesn't host Virgin Trains.

The Associated Press reported that none of Brightline’s deaths were caused by crew error or faulty equipment, according to law enforcement and federal reports. The majority were suicides.

Officials with Virgin Trains have said safety is a priority, and that about 75% of incidents have involved suicides and/or drugs. Some have involved people walking or driving around lowered crossing gates. The company has also worked with suicide prevention groups and may use drones to spot people on the tracks.

In June, the company broke ground on the second phase of its project between West Palm Beach and Orlando, where train speeds are expected to exceed 100 mph. The new line is estimated to cost $4 billion and service is expected to begin in 2022.

Susan Mehiel, with the nonprofit Alliance for Safe Trains, said Tuesday that Virgin Trains continues to blame the victims who have been killed.

“Every part of the country has mentally ill and addicted residents but they don’t have skyrocketing railroad deaths,” she wrote in an online publication called “Train Wreck Times.”

“For all of the corporation’s excuses and victim blaming, it is obvious that southeast Florida has a terrible problem that FDOT must address,” Mehiel told The Bond Buyer. “We know there needs to be more pedestrian barriers, channeling at crossing gates and pedestrian bridges but the company refuses to admit this fact or accept any corporate responsibility to save lives.”

Virgin Trains officials have said they constructed or plan to install FRA-recommended at-grade crossing improvements, and that some will exceed those recommendations.

Mehiel said her organization conducted extensive research and couldn’t find any other system in the country where high speed passenger trains share tracks with slower freight trains.

“With the death toll mounting, we can’t even imagine what will happen when their trains go over 100 mph,” she said. “Worse, yet, Fortress Investment Group, owner of Brightline, wants to add Liquefied Natural Gas in 30,000 gallon tanker cars to the corridor.”

Mayfield and Sirois planned to discuss their proposed legislation at a local town hall meeting Wednesday night, which they said is designed to “promote and enhance” the safe operation of high-speed passenger rail systems in Florida.

The legislation is based on recommendations of a study done in 2018 that examined existing and planned passenger rail operations across the state.

The Florida Passenger Rail System Study, conducted by CPCS Transcom Inc., found that there are gaps in federal and state regulations governing higher-speed rail. Mayfield said the bill clarifies FDOT’s role in overseeing passenger rail with respect to maintenance, safety, revitalization, and expansion.

Mehiel said she and Tony Brown, president of the Indian River County NAACP, met with Gov. Ron DeSantis on Nov. 14 to discuss concerns about the train as well as its impact on the minority population and poor people.

“The governor listened intently to our description of the issues,” she said. “It was clear he has been working on a lot of issues since his inauguration and we were pushing rail safety up the priority ladder.”

DeSantis made two things clear, Mehiel said. With the recent announcement that several new train stations will be added in south Florida, Virgin Trains may not be able to fulfill their proposed high-speed business model and if they have financial difficulties, he will not favor giving them any state tax dollars, she said.

DeSantis has since asked FDOT to look into the issues raised by Mehiel and Brown.

Mayfield has also filed SB 666, which would essentially reorganize the Florida Development Finance Corp, an independent state-created conduit issuer headquartered in Winter Springs, northeast of Orlando. The governor appoints the five-member board of directors, subject to Senate confirmation.

SB 666 would place FDFC under the Department of Economic Opportunity, which currently oversees the operations of Enterprise Florida, CareerSource Florida, the Florida Tourism Industry Marketing Corp., and Space Florida.

FDFC’s board would expand to seven directors from five. The DEO executive director or a designee would serve as the board chairman, and the director of the Division of Bond Finance or a designee would also serve on the board.

The governor would appoint the remaining five board members, subject to Senate confirmation. At least three directors must be bankers or individuals experienced in finance, and one must be an economic development specialist.

Currently, two board positions are vacant and the appointments of the other three members have expired, though they can continue in their posts until replaced.

DeSantis hasn’t made any appointments to the board since he took office in January.

“At this time all appointments to Florida Development Finance [Corp.] are currently under review,” the governor’s appointment office told The Bond Buyer on Monday.

Bill Spivey, FDFC’s executive director, said the agency is reviewing Mayfield’s bill and the board will be updated on the legislation once the review is complete.

“We appreciate Senator Mayfield’s interest in FDFC and look forward to discussing the proposed legislation with her in coming days,” Spivey said.

The FDFC has served as conduit issuer for three tranches of federal private activity bonds issued on behalf of Virgin Trains: $600 million issued in 2017; $1.15 billion issued in April; and $950 million issued in June. The $600 million of bonds issued in 2017 were redeemed in conjunction with the April sale.

After local groups and county officials questioned procedures used by FDFC in approving the bonds, Mayfield requested that the Joint Legislative Auditing Committee receive a review of the FDFC from the Office of Program Policy Analysis and Government Accountability in November 2017.

JLAC members, who at the time included Mayfield, questioned Spivey about FDFC’s public notice policies, delays in responding to letters from Senators, and how the corporation vets the feasibility of projects before approving debt issuances.

Based on those questions, the OPPAGA issued a follow-up report in February 2018 that suggested several options for the Legislature to consider to improve oversight and accountability of the corporation.

One option was to add executive agency staff from the Department of Economic Opportunity to the FDFC board to provide additional accountability to board decision-making, which Mayfield’s bill proposes.

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Private activity bonds Transportation industry Tax-exempt bonds Lawsuits Ron DeSantis Florida Development Finance Corp. Florida